ABB LTD FORM 20-F - Shareholder.com

ABB LTD
FORM 20-F
(Annual and Transition Report (foreign private issuer))
Filed 03/17/11 for the Period Ending 12/31/10
CIK 0001091587
Symbol ABB
SIC Code 3613 - Switchgear and Switchboard Apparatus
Industry Electronic Instr. & Controls
Sector Technology
Fiscal Year 12/31
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�
�
Securities registered or to be registered pursuant to Section 12(b) of the Act:
As filed with the Securities and Exchange Commission on March 17, 2011
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities registered or to be registered pursuant to Section 12(g) of the Act: None.
FORM 20-F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2010
OR
� TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
� SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 001-16429
ABB Ltd
(Exact name of registrant as specified in its charter)
Switzerland
(Jurisdiction of incorporation or organization)
Affolternstrasse 44
CH-8050 Zurich
Switzerland
(Address of principal executive offices)
Richard A. Brown
Affolternstrasse 44
CH-8050 Zurich
Switzerland
Telephone: +41-43-317-7111
Facsimile: +41-43-317-7992
(Name, Telephone, E-mail and/or Facsimile
number and Address of Company Contact Person)
Title of each class Name of each exchange on which registered
American Depositary Shares,
each representing one Registered Share
New York Stock Exchange
Registered Shares, par value CHF 1.03
New York Stock Exchange*
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 2,283,464,611 Registered

Shares
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes � No �
If this is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes
� No �
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes � No �
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes � No �
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer � Accelerated filer � Non-accelerated filer �
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP � International Financial Reporting
Standards as issued by the International Accounting Standards Board � Other �
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. item 17 � item 18 �
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes � No �
* Listed on the New York Stock Exchange not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares pursuant to the
requirements of the Securities and Exchange Commission.

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TABLE OF CONTENTS
Page
PART I 3
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on the Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other than Equity Securities
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 15T. Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions from the Listing Standards for Audit Committees
Item 16E. Purchase of equity securities by Issuer & Affiliated Purchases
Item 16F. Change in Registrant's Certifying Accountant
Item 16G. Corporate Governance
PART III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
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INTRODUCTION
ABB Ltd is a corporation organized under the laws of Switzerland. In this Annual Report, "the ABB Group," "ABB," the "Company," "we,"
"our" and "us" refer to ABB Ltd and its consolidated subsidiaries (unless the context otherwise requires). We also use these terms to refer to
ABB Asea Brown Boveri Ltd and its subsidiaries prior to the establishment of ABB Ltd as the holding company for the entire ABB Group
in 1999, as described in this Annual Report under "Item 4. Information on the Company—Introduction—History of the ABB Group." Our
American Depositary Shares (each representing one registered share of ABB Ltd) are referred to as "ADSs." The registered shares of ABB Ltd
are referred to as "shares." Our principal corporate offices are located at Affolternstrasse 44, CH-8050 Zurich, Switzerland, telephone number
+41-43-317-7111.
FINANCIAL AND OTHER INFORMATION
ABB Ltd has prepared its statutory unconsolidated financial statements in accordance with the Swiss Code of Obligations. The
Consolidated Financial Statements of ABB Ltd, including the notes thereto, as of December 31, 2010 and 2009 and for each of the years in the
three-year period ended December 31, 2010 (our Consolidated Financial Statements) have been prepared in accordance with United States
generally accepted accounting principles (U.S. GAAP).
In this Annual Report: (i) "$," "U.S. dollar" and "USD" refer to the lawful currency of the United States of America; (ii) "CHF" and "Swiss
franc" refer to the lawful currency of Switzerland; (iii) "EUR" and "euro" refer to the lawful currency of the participating member states of the
European Economic and Monetary Union (Eurozone); (iv) "SEK" and "Swedish krona" refer to the lawful currency of Sweden; (v) "GBP" and
"pound sterling" refer to the lawful currency of the United Kingdom; (vi) "Indian rupee" refers to the lawful currency of India; and (vii) "Chinese
renminbi" refers to the lawful currency of the People's Republic of China.
Except as otherwise stated, all monetary amounts in this Annual Report are presented in U.S. dollars. Where specifically indicated, amounts
in Swiss francs have been translated into U.S. dollars. These translations are provided for convenience only, and they are not representations that
the Swiss franc could be converted into U.S. dollars at the rate indicated. These translations have been made using the twelve o'clock buying rate
in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York as of December 30,
2010, unless otherwise indicated. The twelve o'clock buying rate for Swiss francs on December 30, 2010 was $1.00 = CHF 0.9369. The twelve
o'clock buying rate for Swiss francs on March 11, 2011 was $1.00 = CHF 0.9276.
FORWARD-LOOKING STATEMENTS
This Annual Report includes forward-looking statements. These forward-looking statements can be identified by the use of forward-looking
terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "may," "will," or "should" or, in each case, their
negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They
appear in a number of places throughout this Annual Report and include statements regarding our intentions, beliefs or current expectations
concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, dispositions, strategies and the
countries and industries in which we operate.
These forward-looking statements include, but are not limited to the following:
• statements in "Item 3. Key Information—Dividends and Dividend Policy" regarding our policy on future dividend payments,
• statements in "Item 3. Key Information—Risk Factors,"
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• statements in "Item 4. Information on the Company" regarding the timing of intended capital expenditures,
• statements in "Item 5. Operating and Financial Review and Prospects" regarding our management objectives, including our midterm
outlook, as well as trends in results, prices, volumes, operations, margins and overall market trends, and
• statements in "Item 8. Financial Information—Legal Proceedings" regarding the outcome of certain legal and compliance matters.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual
results of operations, financial condition and liquidity, and the development of the countries and industries in which we operate, may differ
materially from those described in or suggested by the forward-looking statements contained in this Annual Report. In addition, even if our
results of operations, financial condition and liquidity, and the development of the countries and industries in which we operate, are consistent
with the forward-looking statements contained in this Annual Report, those results or developments may not be indicative of results or
developments in subsequent periods. Important factors that could cause actual results to differ materially from our expectations are contained in
cautionary statements in this Annual Report and include, without limitation, the following:
• Our business is exposed to risks associated with the volatile global economic environment and political conditions.
• Illegal behavior by any of our employees or agents could have a material adverse impact on our consolidated operating results,
cash flows, and financial position as well as on our reputation and our ability to do business.
• Our operations in emerging markets expose us to risks associated with conditions in those markets.
• Undertaking long-term, fixed price or turnkey projects exposes our businesses to risk of loss should our actual costs exceed our
estimated or budgeted costs.
• Our international operations expose us to the risk of fluctuations in currency exchange rates.
• Our hedging activities may not protect us against the consequences of significant fluctuations in exchange rates, interest rates or
commodity prices on our earnings and cash flows.
• Increases in costs or limitation of supplies of raw materials may adversely affect our financial performance.
• The weakening or unavailability of our intellectual property rights could adversely affect our business.
• We operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.
• Many of our contracts contain performance obligations that require innovative design capabilities, are technologically complex,
require state-of-the-art manufacturing expertise or are dependent upon factors not wholly within our control. Failure to meet these
obligations could adversely affect our profitability and future prospects.
• Industry consolidation could result in more powerful competitors and fewer customers.
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• We are subject to environmental laws and regulations in the countries in which we operate. We incur costs to comply with such
regulations, and our ongoing operations may expose us to environmental liabilities.
• We may be the subject of product liability claims.
• We may encounter difficulty in managing our business due to the global nature of our operations.
• If we are unable to obtain performance and other guarantees from financial institutions, we may be prevented from bidding on, or
obtaining, some contracts, or our costs with respect to such contracts could be higher.
• Examinations by tax authorities and changes in tax regulations could result in lower earnings and cash flows.
• If we are unable to attract and retain qualified management and personnel then our business may be adversely affected.
• Anticipated benefits of mergers, acquisitions, joint ventures or strategic alliances may not be realized.
• We could be affected by future laws or regulations enacted to address climate change concerns as well as the physical effects of
climate change.
• Increased information technology (IT) security threats and more sophisticated and targeted computer crime could pose a risk to
our systems, networks, products, solutions and services.
We urge you to read the sections of this Annual Report entitled "Item 3. Key Information—Risk Factors," "Item 4. Information on the
Company" and "Item 5. Operating and Financial Review and Prospects" for a more complete discussion of the factors that could affect our future
performance and the countries and industries in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking
circumstances described in this Annual Report and the assumptions underlying them may not occur.
Except as required by law or applicable stock exchange rules or regulations, we undertake no obligation to update or revise publicly any
forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking
statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to
above and contained elsewhere in this Annual Report.
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable
Item 2. Offer Statistics and Expected Timetable
Not applicable
Item 3. Key Information
PART I
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SELECTED FINANCIAL DATA
The following table presents our selected financial and operating information at the dates and for each of the periods indicated. You should
read the following information together with the information contained in "Item 5. Operating and Financial Review and Prospects," as well as
our Consolidated Financial Statements and the Notes thereto, included elsewhere in this Annual Report.
Our selected financial data are presented in the following tables in accordance with U.S. GAAP and have been derived from our published
Consolidated Financial Statements. Our Consolidated Financial Statements as of and for each of the years ended December 31, 2010, 2009,
2008, 2007 and 2006 were audited by Ernst & Young AG.
INCOME STATEMENT DATA (1) :
($ in millions, except per share data in $) 2010 2009 2008 2007 2006
Total revenues 31,589 31,795 34,912 29,183 23,281
Total cost of sales (22,060 ) (22,470 ) (23,972 ) (20,215 ) (16,537 )
Gross profit 9,529 9,325 10,940 8,968 6,744
Selling, general and administrative expenses (4,615 ) (4,491 ) (4,795 ) (4,104 ) (3,568 )
Non-order related research and development
expenses (1,082 ) (1,037 ) (1,027 ) (871 ) (758 )
Other income (expense), net (14 ) 329 (566 ) 30 139
Earnings before interest and taxes 3,818 4,126 4,552 4,023 2,557
Interest and dividend income 95 121 315 273 147
Interest and other finance expense (2) (173 ) (127 ) (349 ) (383 ) (307 )
Income from continuing operations before
taxes and cumulative effect of accounting
change 3,740 4,120 4,518 3,913 2,397
Provision for taxes (1,018 ) (1,001 ) (1,119 ) (595 ) (686 )
Income from continuing operations before
cumulative effect of accounting change,
net of tax 2,722 3,119 3,399 3,318 1,711
Income (loss) from discontinued operations,
net of tax (3) 10 17 (21 ) 586 (142 )
Income before cumulative effect of
accounting change, net of tax 2,732 3,136 3,378 3,904 1,569
Cumulative effect of accounting change, net of
tax (2) — — — (49 ) —
Net income 2,732 3,136 3,378 3,855 1,569
Net income attributable to noncontrolling
interests (171 ) (235 ) (260 ) (244 ) (179 )
Net income attributable to ABB 2,561 2,901 3,118 3,611 1,390
Amounts attributable to ABB shareholders:
Income from continuing operations before
cumulative effect of accounting change,
net of tax 2,551 2,884 3,142 3,083 1,544
Net income 2,561 2,901 3,118 3,611 1,390
Basic earnings per share attributable to ABB
shareholders:
Income from continuing operations before
cumulative effect of accounting change,
net of tax 1.12 1.26 1.37 1.37 0.73
Net income 1.12 1.27 1.36 1.60 0.65
Diluted earnings per share attributable to
ABB shareholders:
Income from continuing operations before
cumulative effect of accounting change,
net of tax 1.11 1.26 1.37 1.34 0.70
Net income 1.12 1.27 1.36 1.57 0.63
Weighted-average number of shares
outstanding (in millions) used to compute:
Basic earnings per share attributable to ABB

shareholders 2,287 2,284 2,287 2,258 2,128
Diluted earnings per share attributable to
ABB shareholders 2,291 2,288 2,296 2,308 2,248
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BALANCE SHEET DATA (1) :
CASH FLOW DATA (1) :
December 31,
($ in millions) 2010 2009 2008 2007 2006
Cash and equivalents 5,897 7,119 6,399 4,650 4,198
Marketable securities and short-term
investments 2,713 2,433 1,354 3,240 351
Total assets 36,295 34,728 33,011 30,841 24,922
Long-term debt 1,139 2,172 2,009 2,138 3,160
Total debt (4) 2,182 2,333 2,363 2,674 3,282
Capital stock and additional paid-in capital 1,454 3,943 4,841 5,780 4,514
Total stockholders' equity (including
noncontrolling interests) 15,458 14,473 11,770 11,549 6,489
($ in millions) 2010 2009 2008 2007 2006
Net cash provided by operating activities 4,197 4,027 3,958 3,054 1,939
Net cash provided by (used in) investing activities (2,747 ) (2,172 ) 114 (2,291 ) (694 )
Net cash used in financing activities (2,530 ) (1,349 ) (2,119 ) (625 ) (392 )
(1)
Certain amounts reported in prior years have been reclassified to conform to the current year's presentation. These changes primarily relate to the presentation of
non-order related research and development expenses as a separate line in the Consolidated Income Statements and the reclassification from investing activities to
financing activities in the Consolidated Statements of Cash Flows of cash paid for the acquisition of noncontrolling interests.
(2) In 2009, we adopted a new accounting standard that changed the accounting for convertible debt instruments that contained cash settlement features. Although we
did not have any convertible debt instruments outstanding at December 31, 2009, 2008 and 2007, we adopted the provisions of this new standard on a retroactive
basis to January 1, 2007, as they related to our 1 billion Swiss francs 3.5% convertible bonds (issued 2003) fully converted by bondholders in 2007. The impact on
our Consolidated Income Statement in 2007 was (i) a loss of $49 million from the effect of the accounting change and (ii) a loss of $97 million from the
conversion of bonds and amortization of discount, recorded in "Interest and other finance expense". As permitted under this standard, we elected to apply the
provisions of the standard only to those convertible instruments outstanding at any time during the periods presented in our Consolidated Financial Statements as
of and for the each of the three years ended December 31, 2009. Consequently, the provisions of this standard have not been applied to the above selected financial
data for 2006.
(3) Income (loss) from discontinued operations, net of tax, included costs related to the asbestos obligations of our U.S. subsidiary Combustion Engineering Inc, as
well as various other minor gains and losses related to business divestments. Income from discontinued operations in 2007 primarily related to the gain of
$530 million realized on the sale of the downstream oil and gas business.
(4) Total debt is equal to the sum of short-term debt (including current maturities of long-term debt) and long-term debt.
DIVIDENDS AND DIVIDEND POLICY
Payment of dividends is subject to general business conditions, ABB's current and expected financial condition and performance and other
relevant factors including growth opportunities. ABB's current dividend policy is to pay a steadily rising, sustainable annual dividend over time.
Dividends may be paid only if ABB Ltd has sufficient distributable profits from previous fiscal years or sufficient free reserves to allow the
distribution of a dividend. In addition, at least 5 percent of ABB Ltd's annual net profits must be retained and booked as legal reserves (which is
comprised of ordinary reserves, capital contribution reserve and reserve for own shares), unless these reserves already amount to 20 percent of
ABB Ltd's share capital. As a holding company, ABB Ltd's main sources of income are dividend and interest from its subsidiaries. At
December 31, 2010, of the CHF 12,493 million of stockholders' equity recorded in the unconsolidated statutory financial
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statements of ABB Ltd prepared in accordance with Swiss law, CHF 2,378 million was attributable to share capital, CHF 4,425 million was
attributable to the capital contribution reserve (approximately 90 percent of which are available for distribution), CHF 532 million was
attributable to the reserve for own shares, and CHF 5,158 million represents net income and retained earnings available for distribution.
ABB Ltd may only pay out a dividend if it has been proposed by a shareholder or the board of directors of ABB Ltd and approved at a
general meeting of shareholders, and the auditors confirm that the dividend conforms to statutory law and the Articles of Incorporation of
ABB Ltd. In practice, the shareholders' meeting usually approves dividends as proposed by the board of directors, if the board of directors'
proposal is confirmed by the statutory auditors.
Dividends are usually due and payable no earlier than three trading days after the shareholders' resolution, and when paid by way of a
nominal value reduction after a two month period from public calls to creditors and certain subsequent actions as required under Swiss law.
Dividends not collected within five years after the due date accrue to ABB Ltd and are allocated to its other reserves. For information about the
deduction of withholding taxes from dividend payments, see "Item 10. Additional Information—Taxation."
We have established a dividend access facility for shareholders who are resident in Sweden under which these shareholders may register
with Euroclear Sweden AB, as a holder of up to 600,004,716 shares, and receive dividends in the Swedish kronor equivalent to the dividend paid
in Swiss francs without deduction of Swiss withholding tax. For further information, see "Item 10. Additional Information—Taxation."
Because ABB Ltd pays cash dividends, if any, in Swiss francs (subject to the exception for certain shareholders in Sweden described
above), exchange rate fluctuations will affect the U.S. dollar amounts received by holders of ADSs upon conversion of those cash dividends by
Citibank, N.A., the depositary, in accordance with the Amended and Restated Deposit Agreement dated May 7, 2001.
With respect to the year ended December 31, 2006, ABB Ltd paid a dividend of CHF 0.24 (USD 0.20) per share. With respect to each of
the years ended December 31, 2007 and 2008, ABB Ltd paid a dividend of CHF 0.48 (USD 0.46 for 2007 and USD 0.45 for 2008) and with
respect to the year ended December 31, 2009, CHF 0.51 (USD 0.48 for 2009) per share. The dividends with respect to each of the years ended
December 31, 2007, 2008 and 2009, were paid by way of a nominal value reduction (reduction in the par value of each share). The USD
amounts for each of the foregoing dividend payments made in CHF have been translated using the average rates of the month in which the
dividends were paid.
With respect to the year ended December 31, 2010, ABB Ltd's board of directors has proposed to pay a dividend of CHF 0.60 per share out
of the capital contribution reserve, subject to approval by shareholders at ABB's 2011 Annual General Meeting.
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RISK FACTORS
You should carefully consider all of the information set forth in this Annual Report and the following description of risks and uncertainties
that we currently believe may exist. Our business, financial condition or results of operations could be adversely affected by any of these risks.
Additional risks of which we are unaware or that we currently deem immaterial may also impair our business operations. This Annual Report
also contains forward-looking statements that involve risks and uncertainties. Our results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those described below and elsewhere in this Annual Report. See "Forward-
Looking Statements."
Our business is exposed to risks associated with the volatile global economic environment and political conditions.
Adverse changes in economic or political conditions, both inside and outside the U.S., could have a material adverse effect on our business,
financial condition, results of operations and liquidity. Volatility in the global financial markets continues to be at high levels. Volatile oil prices,
equity market values, weakened consumer confidence, risks of increased inflation and deflation and increased unemployment rates have created
fears of a severe recession. These disruptions may continue to have an ongoing adverse effect on the world economy. Continuing economic
volatility and financial market disruptions may adversely impact the demand for our products and services. For example, the current lack of
confidence and the shortage of credit in the financial markets may prevent our customers and suppliers from obtaining the financing required to
pursue their business activities as planned, which may force them to modify, delay or cancel plans to purchase or supply our products or
services. Payment terms, especially the level of advance payments in large orders, may become less favorable. In addition, if our customers do
not generate sufficient revenue, or fail to obtain access to the capital markets, they may not be able to pay, or may delay payment of, the amounts
they owe us. Customers with liquidity issues may lead to additional bad debt expense for us, which may adversely affect our results of operations
and cash flows. We are also subject to the risk that the counterparties to our credit agreements and hedging transactions may go bankrupt if they
suffer catastrophic demand on their liquidity that prevents them from fulfilling their contractual obligations to us.
Apart from the effects of the credit crisis and the economic slowdown that it entailed, our business environment is influenced by numerous
other economic or political uncertainties which will affect the global economy and the international capital markets. In periods of slow economic
growth or decline, our customers are more likely to decrease expenditures on the types of products and systems we supply and we are more
likely to experience decreased revenues as a result. Our power technology divisions are affected by the level of investments by utilities, and our
automation technology divisions are affected by conditions in a broad range of industries, including the automotive, pharmaceutical, pulp and
paper, marine, metals and minerals and manufacturing and consumer industries. At various times during the last several years, we also have
experienced, and may experience in the future, gross margin declines in certain businesses, reflecting the effect of items such as competitive
pricing pressures, inventory write-downs, charges associated with the cancellation of planned expansion, increases in pension and postretirement
benefit expenses, and increases in component and manufacturing costs resulting from higher labor and material costs borne by our manufacturers
and suppliers that, as a result of competitive pricing pressures or other factors, we are unable to pass on to our customers. Economic downturns
also may lead to restructuring actions and associated expenses. Uncertainty about future economic conditions makes it difficult for us to forecast
operating results and to make decisions about future investments.
In addition, we are subject to the risks that our business operations in or with certain countries, including those identified by the U.S.
government as state sponsors of terrorism, may be adversely affected by trade or economic sanctions or other restrictions imposed on these
countries and that
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actual or potential investors that object to these business operations may adversely affect the price of our shares by disposing of, or deciding not
to, purchase our shares.
Illegal behavior by any of our employees or agents could have a material adverse impact on our consolidated operating results, cash flows,
and financial position as well as on our reputation and our ability to do business.
Certain of our employees or agents have taken, and may in the future take, actions that violate or are alleged to violate the U.S. Foreign
Corrupt Practices Act of 1977 (FCPA), legislation promulgated pursuant to the 1997 Organisation for Economic Co-operation and Development
(OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, applicable antitrust laws and
other applicable laws or regulations. For more information regarding investigations of past actions taken by certain of our employees, see
"Item 8. Financial Information—Legal Proceedings." Such actions have resulted, and in the future could result, in governmental investigations,
enforcement actions and civil and criminal penalties, including monetary penalties and other sanctions. It is possible that any governmental
investigation or enforcement action arising from such matters could conclude that a violation of applicable law has occurred and the
consequences of any such investigation or enforcement action may have a material adverse impact on our consolidated operating results, cash
flows and financial position. In addition, such actions, whether actual or alleged, could damage our reputation and ability to do business.
Further, detecting, investigating and resolving such actions could be expensive and could consume significant time and attention of our
senior management. While we are committed to conducting business in a legal and ethical manner, our internal control systems have not been,
and in the future may not be, completely effective to prevent and detect such improper activities by our employees and agents.
Our operations in emerging markets expose us to risks associated with conditions in those markets.
A significant amount of our operations is conducted in the emerging markets of Latin America, Asia, the Middle East and Africa. In 2010,
approximately 50 percent of our consolidated revenues were generated from these emerging markets. Operations in emerging markets can
present risks that are not encountered in countries with well-established economic and political systems, including:
• economic instability, which could make it difficult for us to anticipate future business conditions in these markets, cause delays in
the placement of orders for projects that we have been awarded and subject us to volatile geographic markets,
• political or social instability, such as the recent political unrest in Egypt and Libya, which could make our customers less willing
to make cross-border investments in such regions and could complicate our dealings with governments regarding permits or other
regulatory matters, local businesses and workforces,
• boycotts and embargoes that may be imposed by the international community on countries in which we operate could adversely
affect the ability of our operations in those countries to obtain the materials necessary to fulfill contracts and our ability to pursue
business or establish operations in those countries,
• foreign state takeovers of our facilities in these countries,
• significant fluctuations in interest rates and currency exchange rates,
• the imposition of unexpected taxes or other payments on our revenues in these markets,
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• the ability to obtain financing and/or insurance coverage from export credit agencies, and
• the introduction of exchange controls and other restrictions by foreign governments.
Additionally, political and social instability resulting from increased violence in certain countries in which we do business has raised
concerns about the safety of our personnel. These concerns may hinder our ability to send domestic personnel abroad and to hire and retain local
personnel. Such concerns may require us to increase security for personnel traveling to such facilities or to conduct more operations from our
other facilities rather than from facilities located in these political and socially unstable countries, which may negatively impact our operations
and result in higher costs and inefficiencies.
In addition, the legal and regulatory systems of many emerging market countries are less developed and less well-enforced than in
industrialized countries. Therefore, our ability to protect our contractual and other legal rights in these countries could be limited. Consequently,
our exposure to the conditions in or affecting emerging markets may adversely affect our business, financial condition, results of operations and
liquidity.
Undertaking long-term, fixed price or turnkey projects exposes our businesses to risk of loss should our actual costs exceed our estimated or
budgeted costs.
We derive a portion of our revenues from long-term, fixed price or turnkey projects that are awarded on a competitive basis and can take
many months, or even years, to complete. Such contracts involve substantial risks, including the possibility that we may underbid and the fact
that we typically assume substantially all of the risks associated with completing the project and the post-completion warranty obligations. These
risks include the project's technical risk, meaning that we must tailor our products and systems to satisfy the technical requirements of a project
even though, at the time we are awarded the project, we may not have previously produced such a product or system. The revenue, cost and
gross profit realized on such contracts can vary, sometimes substantially, from our original projections because of changes in conditions,
including but not limited to:
• unanticipated technical problems with the equipment being supplied or developed by us which may require us to incur
incremental expenses to remedy the problem,
• changes in the cost of components, materials or labor,
• difficulties in obtaining required governmental permits or approvals,
• project modifications that create unanticipated costs,
• delays caused by local weather and geological conditions, including natural disasters,
• customer delays,
• shortages of construction equipment,
• changes in law or government policy,
• supply bottlenecks, especially of key components, and
• suppliers', subcontractors' or consortium partners' failure to perform.
These risks are exacerbated if the duration of the project is extended because then there is an increased risk that the circumstances upon
which we originally bid and quoted a price change in a manner that increases our costs. In addition, we sometimes bear the risk of delays caused
by unexpected conditions or events. Our project contracts often make us subject to penalties if we cannot complete portions of the project in
accordance with agreed-upon time limits and guaranteed performance levels.
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Our international operations expose us to the risk of fluctuations in currency exchange rates.
Exchange rate fluctuations have had, and could continue to have, a material impact on our operating results, the comparability of our results
between periods, the value of assets or liabilities as recorded on our Consolidated Balance Sheet and the price of our securities. The global
financial crisis has led to increased volatility in exchange rates, which makes it harder to predict exchange rates and thus do accurate financial
planning. Changes in exchange rates can unpredictably and adversely affect our consolidated operating results, and could result in exchange
losses.
Currency Translation Risk. The results of operations and financial position of most of our non-U.S. companies are initially recorded in
the currency, which we call "local currency," of the country in which the respective company resides. That financial information is then
translated into U.S. dollars at the applicable exchange rates for inclusion in our Consolidated Financial Statements. The exchange rates between
local currencies and the U.S. dollar can fluctuate substantially, which could have a significant translation effect on our reported consolidated
results of operations and financial position.
Increases and decreases in the value of the U.S. dollar versus local currencies will affect the reported value of our local currency assets,
liabilities, revenues and costs in our Consolidated Financial Statements, even if the value of these items has not changed in local currency terms.
These translations could significantly and adversely affect our results of operations and financial position from period to period.
Currency Transaction Risk. Currency risk exposure also affects our operations when our sales are denominated in currencies that are
different from those in which our manufacturing or sourcing costs are incurred. In this case, if after the parties agree on a price, the value of the
currency in which the price is to be paid were to weaken relative to the currency in which we incur manufacturing or sourcing costs, there would
be a negative impact on the profit margin for any such transaction. This transaction risk may exist regardless of whether or not there is also a
currency translation risk as described above.
Currency exchange rate fluctuations in those currencies in which we incur our principal manufacturing expenses or sourcing costs may
adversely affect our ability to compete with companies whose costs are incurred in other currencies. If our principal expense currencies
appreciate in value against such other currencies, our competitiveness may be weakened.
Our hedging activities may not protect us against the consequences of significant fluctuations in exchange rates, interest rates or commodity
prices on our earnings and cash flows.
Our policy is to hedge material currency exposures by entering into offsetting transactions with third party financial institutions. Given the
effective horizons of our risk management activities and the anticipatory nature of the exposures intended to be hedged, there can be no
assurance that our currency hedging activities will fully offset the adverse financial impact resulting from unfavorable movements in foreign
exchange rates. In addition, the timing of the accounting for recognition of gains and losses related to a hedging instrument may not coincide
with the timing of gains and losses related to the underlying economic exposures.
As a resource-intensive operation, we are exposed to a variety of market and asset risks, including the effects of changes in commodity
prices and interest rates. We monitor and manage these exposures as an integral part of our overall risk management program, which recognizes
the unpredictability of markets and seeks to reduce the potentially adverse effects on our business. Nevertheless, changes in commodity prices
and interest rates cannot always be predicted or hedged.
If we are unable to successfully manage the risk of changes in exchange rates, interest rates or commodity prices or if our hedging
counterparties are unable to perform their obligations under our
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hedging agreements with them, then changes in these rates and prices could have an adverse effect on our financial condition and results of
operations.
Increases in costs or limitation of supplies of raw materials may adversely affect our financial performance.
We purchase large amounts of commodity-based raw materials, including steel, copper, aluminum, and oil. Prevailing prices for such
commodities are subject to fluctuations due to changes in supply and demand and a variety of additional factors beyond our control, such as
global political and economic conditions. Historically, prices for some of these raw materials have been volatile and unpredictable, and such
volatility is expected to continue. Therefore, commodity price changes may result in unexpected increases in raw material costs, and we may be
unable to increase our prices to offset these increased costs without suffering reduced volumes, revenues or operating income. We do not fully
hedge against changes in commodity prices and our hedging procedures may not work as planned.
We depend on third parties to supply raw materials and other components and may not be able to obtain sufficient quantities of these
materials and components, which could limit our ability to manufacture products on a timely basis and could harm our profitability. For some
raw materials and components, we rely on a single supplier or a small number of suppliers. If one of these suppliers were unable to provide us
with a raw material or component we need, our ability to manufacture some of our products could be adversely affected until we are able to
establish a new supply arrangement. We may be unable to find a sufficient alternative supply channel in a reasonable time period or on
commercially reasonable terms, if at all. If our suppliers are unable to deliver sufficient quantities of materials on a timely basis, the manufacture
and sale of our products may be disrupted, we might have obligations under our performance guarantees and our sales and profitability could be
materially adversely affected.
The weakening or unavailability of our intellectual property rights could adversely affect our business.
Our intellectual property rights are fundamental to all of our businesses. We generate, maintain, utilize and enforce a substantial portfolio of
trademarks, trade dress, patents and other intellectual property rights. We use our intellectual property rights to protect the goodwill of our
products, promote our product recognition, protect our proprietary technology and development activities, enhance our competitiveness and
otherwise support our business goals and objectives. However, there can be no assurance that the steps we take to obtain, maintain and protect
our intellectual property rights will be adequate. Our intellectual property rights may fail to provide us with significant competitive advantages,
particularly in foreign jurisdictions that do not have, or do not enforce, strong intellectual property rights. The weakening or unavailability of our
trademarks, trade dress, patents and other intellectual property rights could adversely affect our business.
We operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.
We operate in very competitive environments in particular with respect to product performance, developing integrated systems and
applications that address the business challenges faced by our customers, pricing, new product introduction time and customer service. The
relative importance of these factors differs across the geographic markets and product areas that we serve. The markets for our products and
services are characterized by evolving industry standards (particularly for our automation technology products and systems), rapidly changing
technology and increased competition as a result of privatization (particularly for our power products and systems). For example, for a number of
years, power transmission and distribution providers throughout the world have been undergoing substantial privatization. This has increased
their need for timely product and service innovations that increase efficiency and allow them to compete in a deregulated environment.
Additionally, the continual development of advanced technologies for new products and product
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enhancements is an important way in which we maintain acceptable pricing levels. If we fail to keep pace with technological changes in the
industrial sectors that we serve, we may experience price erosion and lower margins.
The principal competitors for our automation technology products, systems and services include Emerson, Honeywell, Invensys, Schneider
and Siemens. We primarily compete with Areva, Schneider and Siemens in sales of our power technology products and systems. All of our
primary competitors are sophisticated companies with significant resources that may develop products and services that are superior to our
products and services or may adapt more quickly than we do to new technologies, industry changes or evolving customer requirements. We are
also facing increased competition from competitors in emerging markets, which may give rise to increased pressure to reduce our prices. Our
failure to anticipate or respond quickly to technological developments or customer requirements could adversely affect our business, results of
operations, financial condition and liquidity.
Many of our contracts contain performance obligations that require innovative design capabilities, are technologically complex, require
state-of-the-art manufacturing expertise or are dependent upon factors not wholly within our control. Failure to meet these obligations could
adversely affect our profitability and future prospects.
We design, develop and manufacture technologically advanced and innovative products and services applied by our customers in a variety
of environments. Problems and delays in development or delivery as a result of issues with respect to design, technology, licensing and patent
rights, labor, learning curve assumptions or materials and components could prevent us from achieving contractual requirements.
In addition, our products cannot be tested and proven in all situations and are otherwise subject to unforeseen problems. Examples of
unforeseen problems that could negatively affect revenue and profitability include premature failure of products that cannot be accessed for
repair or replacement, problems with quality, country of origin, delivery of subcontractor components or services and unplanned degradation of
product performance. Among the factors that may affect revenue and profits could be unforeseen costs and expenses not covered by insurance or
indemnification from the customer, diversion of management focus in responding to unforeseen problems, loss of follow-on work, and, in the
case of certain contracts, repayment to the customer of contract cost and fee payments we previously received.
Industry consolidation could result in more powerful competitors and fewer customers.
Competitors in the industries in which our business divisions operate are consolidating. In particular, the automation industry is undergoing
consolidation that is reducing the number but increasing the size of companies that compete with us. As our competitors consolidate, they likely
will increase their market share, gain economies of scale that enhance their ability to compete with us and/or acquire additional products and
technologies that could displace our product offerings.
Our customer base also is undergoing consolidation. Consolidation within our customers' industries (such as the marine and cruise industry,
the automotive, aluminum, steel, pulp and paper, pharmaceutical industries and the oil and gas industry) could affect our customers and their
relationships with us. If one of our competitors' customers acquires any of our customers, we may lose that business. Additionally, as our
customers become larger and more concentrated, they could exert pricing pressure on all suppliers, including us. For example, in an industry
such as power transmission, which historically has consisted of large and concentrated customers such as utilities, price competition can be a
factor in determining which products and services will be selected by a customer.
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We are subject to environmental laws and regulations in the countries in which we operate. We incur costs to comply with such regulations,
and our ongoing operations may expose us to environmental liabilities.
Our operations are subject to U.S., European and other laws and regulations governing the discharge of materials into the environment or
otherwise relating to environmental protection. Our manufacturing facilities use and produce paint residues, solvents, metals, oils and related
residues. We use petroleum-based insulation in transformers, polyvinylchloride (PVC) resin to manufacture PVC cable and chloroparaffin as a
flame retardant. We have manufactured and sold, and we are using in some of our factories, certain types of transformers and capacitors
containing polychlorinated biphenyls (PCBs). These are considered to be hazardous substances in many jurisdictions in which we operate. We
may be subject to substantial liabilities for environmental contamination arising from the use of such substances. All of our manufacturing
operations are subject to ongoing compliance costs in respect of environmental matters and the associated capital expenditure requirements.
In addition, we may be subject to significant fines and penalties if we do not comply with environmental laws and regulations including
those referred to above. Some environmental laws provide for joint and several strict liability for remediation of releases of hazardous
substances, which could result in us incurring a liability for environmental damage without regard to our negligence or fault. Such laws and
regulations could expose us to liability arising out of the conduct of operations or conditions caused by others, or for our acts which were in
compliance with all applicable laws at the time the acts were performed. Additionally, we may be subject to claims alleging personal injury or
property damage as a result of alleged exposure to hazardous substances. Changes in the environmental laws and regulations, or claims for
damages to persons, property, natural resources or the environment, could result in substantial costs and liabilities to us.
We may be the subject of product liability claims.
We may be required to pay for losses or injuries purportedly caused by the design, manufacture or operation of our products and systems.
Additionally, we may be subject to product liability claims for the improper installation of products and systems designed and manufactured by
others.
Product liability claims brought against us may be based in tort or in contract, and typically involve claims seeking compensation for
personal injury or property damage. If the claimant runs a commercial business, claims are often made also for financial losses arising from
interruption of operations. Based on the nature and application of many of the products we manufacture, a defect or alleged defect in one of these
products could have serious consequences. For example:
• If the products produced by our power technology divisions are defective, there is a risk of fires, explosions and power surges and
significant damage to electricity generating, transmission and distribution facilities as well as electrical shock causing injury or
death.
• If the products produced by our automation technology divisions are defective, our customers could suffer significant damage to
facilities and equipment that rely on these products and systems to properly monitor and control their manufacturing processes.
Additionally, people could be exposed to electrical shock and/or other harm causing injury or death.
• If any of the products produced by us contain hazardous substances then there is a risk that such products or substances could
injure or kill people.
If we were to incur a very large product liability claim, our insurance protection might not be adequate or sufficient to cover such a claim in
terms of paying any awards or settlements, and/or paying for our defense costs. Further, some claims may be outside the scope of our insurance
coverage. If a litigant were successful against us, a lack or insufficiency of insurance coverage could result in an adverse effect on our business,
financial condition, results of operations and liquidity. Additionally, a
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well-publicized actual or perceived problem could adversely affect our market reputation which could result in a decline in demand for our
products.
We may encounter difficulty in managing our business due to the global nature of our operations.
We operate in approximately 100 countries around the world and, as of December 31, 2010, employed approximately 116,500 people. As of
December 31, 2010, approximately 50 percent of our employees were located in Europe, approximately 15 percent in the Americas,
approximately 27 percent in Asia and approximately 8 percent in the Middle East and Africa. In order to manage our day-to-day operations, we
must overcome cultural and language barriers and assimilate different business practices. In addition, we are required to create compensation
programs, employment policies and other administrative programs that comply with the laws of multiple countries. We also must communicate
and monitor group-wide standards and directives across our global network. Our failure to manage successfully our geographically diverse
operations could impair our ability to react quickly to changing business and market conditions and to enforce compliance with group-wide
standards and procedures.
If we are unable to obtain performance and other guarantees from financial institutions, we may be prevented from bidding on, or obtaining,
some contracts, or our costs with respect to such contracts could be higher.
In the normal course of our business and in accordance with industry practice, we provide a number of guarantees including bid-bonds,
advance payment guarantees and performance guarantees, which guarantee our own performance. These guarantees may include guarantees that
a project will be completed or that a project or particular equipment will achieve defined performance criteria. If we fail to attain the defined
criteria, we must make payments in cash or in kind. Performance guarantees frequently are requested in relation to large projects in our core
power and automation businesses.
Some customers require that performance guarantees be issued by a financial institution. In considering whether to issue a guarantee on our
behalf, financial institutions consider our credit ratings. In addition, the global financial crisis has made it more difficult and expensive to obtain
these guarantees. If, in the future, we cannot obtain such a guarantee from a financial institution on reasonable terms, we could be prevented
from bidding on, or obtaining, some contracts, or our costs with respect to such contracts could be higher, which would reduce the profitability
of the contracts. If we cannot obtain guarantees on commercially reasonable terms from financial institutions in the future, there could be a
material impact on our business, financial condition, results of operations or liquidity.
Examinations by tax authorities and changes in tax regulations could result in lower earnings and cash flows.
We operate in approximately 100 countries and therefore are subject to different tax regulations. Changes in tax law could result in higher
tax expense and payments. Furthermore, this could materially impact our tax receivables and liabilities as well as deferred tax assets and deferred
tax liabilities. In addition, the uncertainty of tax environment in some regions could limit our ability to enforce our rights. As a globally
operating organization, we conduct business in countries subject to complex tax rules, which may be interpreted in different ways. Future
interpretations or developments of tax regimes may affect our tax liability, return on investments and business operations. We are regularly
examined by tax authorities in various jurisdictions.
If we are unable to attract and retain qualified management and personnel then our business may be adversely affected.
Our success depends in part on our continued ability to hire, assimilate and retain our highly qualified personnel, particularly our senior
management team and key employees. Competition for highly qualified management and technical personnel remains intense in the industries
and regions in
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which we operate. If we are unable to attract and retain members of our senior management team and key employees this could have an adverse
effect on our business.
Anticipated benefits of mergers, acquisitions, joint ventures or strategic alliances may not be realized.
As part of our overall strategy, we may, from time to time, merge with or acquire businesses or interests in businesses, including
noncontrolling interests, or form joint ventures or create strategic alliances. Whether we realize the anticipated benefits from these transactions
depends, in part, upon the integration between the businesses involved, the performance and development of the underlying products,
capabilities or technologies, our correct assessment of assumed liabilities and the management of the transacted operations. Accordingly, our
financial results could be adversely affected from unanticipated performance and liability issues, transaction-related charges, amortization related
to intangibles, charges for impairment of long-term assets and partner performance. Although we believe that we have established appropriate
and adequate procedures and processes to identify and mitigate these risks, there is no assurance that these transactions will be successful.
We could be affected by future laws or regulations enacted to address climate change concerns as well as the physical effects of climate
change.
Although we do not believe existing or pending laws and regulations intended to address climate change concerns will materially adversely
affect our current business or operations, such laws and regulations could materially affect us in the future. We may need to incur additional
costs to comply with these laws and regulations. We could also be affected indirectly by increased prices for goods or services provided to us by
companies that are directly affected by these laws and regulations and pass their increased costs through to their customers. At this time, we
cannot estimate what impact such costs may have on our business, results of operations or financial condition. We could also be affected by the
physical consequences of climate change itself, although we cannot estimate what impact those consequences might have on our business or
operations.
Increased information technology (IT) security threats and more sophisticated and targeted computer crime could pose a risk to our systems,
networks, products, solutions and services.
We have observed a global increase in IT security threats and more sophisticated and targeted computer crime, which pose a risk to the
security of systems and networks and the confidentiality, availability and integrity of our data. While we attempt to mitigate these risks by
employing a number of measures, including employee training, comprehensive monitoring of our networks and systems, and maintenance of
backup and protective systems such as firewalls and virus scanners, our systems, networks, products, solutions and services remain potentially
vulnerable to attacks. Depending on their nature and scope, such attacks could potentially lead to the compromising of confidential information,
improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and supply
shortages, which in turn could adversely affect our reputation, competitiveness and results of operations.
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Item 4. Information on the Company
About ABB
INTRODUCTION
We are a global leader in power and automation technologies aimed at improving performance and lowering the environmental impact for
our utility and industrial customers. We provide a broad range of products, systems, solutions and services that are designed to improve power
grid reliability, increase industrial productivity and enhance energy efficiency. Our power businesses focus on power transmission, distribution
and power-plant automation and serve electric, gas and water utilities, as well as industrial and commercial customers. Our automation
businesses serve a full range of industries with measurement, control, protection and process optimization applications.
History of the ABB Group
The ABB Group was formed in 1988 through a merger between Asea AB and BBC Brown Boveri AG. Initially founded in 1883, Asea AB
was a major participant in the introduction of electricity into Swedish homes and businesses and in the development of Sweden's railway
network. In the 1940s and 1950s, Asea AB expanded into the power, mining and steel industries. Brown Boveri and Cie. (later renamed
BBC Brown Boveri AG) was formed in Switzerland in 1891 and initially specialized in power generation and turbines. In the early to mid 1900s,
it expanded its operations throughout Europe and broadened its business operations to include a wide range of electrical engineering activities.
In January 1988, Asea AB and BBC Brown Boveri AG each contributed almost all of their businesses to the newly formed ABB Asea
Brown Boveri Ltd, of which they each owned 50 percent. In 1996, Asea AB was renamed ABB AB and BBC Brown Boveri AG was renamed
ABB AG. In February 1999, the ABB Group announced a group reconfiguration designed to establish a single parent holding company and a
single class of shares. ABB Ltd was incorporated on March 5, 1999, under the laws of Switzerland. In June 1999, ABB Ltd became the holding
company for the entire ABB Group. This was accomplished by having ABB Ltd issue shares to the shareholders of ABB AG and ABB AB, the
two companies that formerly owned the ABB Group. The ABB Ltd shares were exchanged for the shares of those two companies, which, as a
result of the share exchange and certain related transactions, became wholly-owned subsidiaries of ABB Ltd. ABB Ltd shares are currently listed
on the SIX Swiss Exchange, the NASDAQ OMX Stockholm Exchange and the New York Stock Exchange (in the form of American Depositary
Shares).
Organizational structure
Our business is international in scope and we generate revenues in numerous currencies. We operate in approximately 100 countries and
have structured our global organization into four regions: Europe, the Americas, Asia, and the Middle East and Africa (MEA). We are
headquartered in Zurich, Switzerland.
We manage our business based on a divisional structure. As of January 1, 2010, our automation divisions—primarily the former
Automation Products and Robotics divisions—were reorganized to align their activities more closely with those of our customers, in order to
better capture growth opportunities in service, expand our presence in the discrete manufacturing sector and better respond to the increasing
demand for energy efficient solutions. Under the realignment, the Automation Products division and the Robotics division were regrouped into
two new divisions—the Discrete Automation and Motion division and the Low Voltage Products division. The Process Automation division
remained unchanged except for the addition of the instrumentation business from the Automation Products division. Consequently, in 2010, our
business comprised five divisions: Power Products, Power Systems, Discrete Automation and Motion, Low Voltage Products and Process
Automation. For a breakdown of our consolidated revenues (i) by operating division and (ii) derived
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from each geographic region in which we operate, see "Item 5. Operating and Financial Review and Prospects—Analysis of Results of
Operations—Revenues."
Our principal corporate offices are located at Affolternstrasse 44, CH-8050 Zurich, Switzerland, telephone number +41-43-317-7111. Our
agent for U.S. federal securities law purposes is ABB Holdings Inc., located at 12040 Regency Parkway, Suite 200, Cary, North Carolina 27518.
Industry Background
BUSINESS DIVISIONS
Our five divisions operate across two key markets: the power market and the automation market. Revenue figures presented in this Business
Divisions section are before interdivisional eliminations.
Power Market
The power market uses products, systems and services designed primarily to deliver electricity. Electricity is generated in power stations
and is then fed into an electricity grid, through which it is transmitted and distributed to consumers. The parts of an electricity grid that operate at
the highest voltages (110 kilovolts and above) are "transmission" systems, while those that operate at lower voltages (below 110 kilovolts) are
"distribution" systems. Transmission systems link power generation sources to distribution systems, often over long distances. Distribution
systems then branch out over shorter distances to carry electricity from the transmission system to end users. These electricity networks
incorporate sophisticated devices to control and monitor operations and to prevent damage from failures or stresses.
The primary demand drivers in the power market are the growing need for reliable electricity supplies to support economic growth in all
parts of the world, and the global climate change challenge which has created increased demand for renewable energy and high-efficiency power
systems and equipment. Additional drivers vary by region. In North America the focus is on replacing aged infrastructure and improving grid
reliability. In Europe the focus is on replacing aged infrastructure, integrating renewable energy sources, such as wind power, into existing grids,
and connecting grids between countries to allow energy trading and more efficient use of existing power generation capacity. In both North
America and in Europe, improving energy efficiency also stimulates power investment. In the Middle East, a high level of investments is driven
by large infrastructure projects and the related need for electricity. In emerging markets, including most parts of Asia, there is a need for
electricity grid increases to cope with rising energy needs.
Furthermore, as more disturbance-sensitive loads, such as data processing and telecommunications, have been added to networks, demand
has increased for reliable, high-quality electricity and technologies that allow utility customers, for example, to automate their grids, service their
power assets remotely, measure and process consumption and load data and store electrical energy to compensate power outages. Power
suppliers can achieve this efficiency and reliability in a number of ways, including the following:
• replacing and modernizing assets and investing in information technology-based control and monitoring equipment and
communications networks to control and supervise power networks based on real-time access to information,
• upgrading current technologies and introducing new technologies to improve network reliability, increase network power ratings
and enhance the control of power flow through existing transmission and distribution assets,
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• developing new power transmission systems to link power generation sources with distant load centers or to link neighboring
power grids in order to optimize existing power generation capacity across borders, and
• developing energy trading systems.
We strive to meet these customer needs through our two power divisions—Power Products and Power Systems—which are discussed in
more detail below.
Automation Market
The automation market uses products, systems and services designed primarily to improve product quality, energy efficiency and
productivity in industrial and manufacturing applications. The automation market can be divided into three sectors:
• Process automation refers to control systems, plant electrification and other applications used in processes where the main
objective is continuous production, such as in the oil and gas, power, chemicals, minerals, metals and pulp and paper industries.
Product lines for this market include plant electrification, instrumentation, analytical measurement and control products and
systems, as well as motors and drives.
• Factory automation refers to discrete operations that manufacture individual items in applications such as foundry, metal
fabrication, packaging, welding and painting. Typical industries where factory automation is used include automotive, consumer
electronics and food and beverage. Product lines for this market include robots and application equipment, product and system
services and modular manufacturing solutions, as well as motors, drives, and low voltage products for control and power
applications.
• Building automation comprises product lines and applications aimed at improving the energy efficiency of buildings through
automated control of indoor climate, lighting and security. Product lines for this market include a wide range of low-voltage
products.
Our three automation divisions—Process Automation, Discrete Automation and Motion, and Low Voltage Products—serve these markets
through a global production, engineering and service base. These divisions are discussed in more detail below.
Power Products Division
Overview
Our Power Products division primarily serves electric utilities, as well as gas and water utilities and industrial and commercial customers,
with a broad range of products and services to facilitate power generation, transmission and distribution. Direct sales account for a majority of
the division's total product sales, and sales through external channel partners, such as wholesalers, distributors and original equipment
manufacturers (OEMs), account for the remainder. Key technologies include high- and medium-voltage switchgear, circuit breakers for a range
of current ratings and voltage levels, power, distribution, traction and other special transformers, as well as products to help control electrical
networks. The division had approximately 32,500 employees as of December 31, 2010 and generated $10.2 billion of revenues in 2010.
The Power Products Division
Our Power Products division manufactures products that can be placed in three broad categories: high-voltage products, medium-voltage
products and transformers. The division sells primarily to utilities and also through channels such as distributors, wholesalers, installers and
OEMs. Some of the division's products are also integrated into the turnkey offerings of the Power Systems and Process Automation divisions or
sold through engineering, procurement and construction (EPC) firms.
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The transformers business of the division designs and manufactures power transformers (72.5 to 1,000 kilovolts) for utility and industrial
customers as well as transformer components and insulation material, such as bushings and tap changers. Generator transformers are used in
power generation to increase power voltage from a power plant and enable transmission over long-distances with low losses. It also
manufactures a wide range of distribution transformers (up to 72.5 kilovolts) for use in the power distribution sector, industrial facilities and
commercial buildings. These transformers are designed to step down electrical voltage bringing it to consumption levels. They can be oil or drytype
and, although oil-type transformers are more commonly used, demand for dry-type transformers is growing because they minimize fire
hazards and have applications in high-density office buildings, windmills, offshore drilling platforms, marine vessels and large industrial plants.
The business also produces traction transformers for use in electric locomotives and other special application transformers. It also offers a wide
range of service and retrofit solutions for utilities and industry customers.
The high voltage products business provides high-voltage equipment, ranging from 50 to 1,000 kilovolts, mainly to serve power
transmission utilities. This equipment primarily enables the transmission grid to operate more reliably and efficiently, minimizing environmental
impact at the same time—all significant focus areas for our customers and the power sector. As part of its portfolio, this business designs and
manufactures a range of air- and gas-insulated switchgear, capacitors, high-voltage circuit breakers, surge arresters, instrument transformers,
cable accessories and a variety of high voltage components.
The medium-voltage business offers products and solutions that largely serve the power distribution sector, often serving as the link
between high voltage transmission systems and lower voltage users. Medium-voltage products help utility and industrial customers to improve
power quality and control, reduce outage time and enhance operational reliability and efficiency. This business reaches customers directly and
through distributors and OEMs with a comprehensive line of medium-voltage equipment (1 to 50 kilovolts), including products such as indoor
and outdoor circuit breakers, reclosers, fuses, contactors, instrument transformers, sensors, motor control centers, ring main units for primary and
secondary distribution, as well as a range of air- and gas-insulated switchgear. It also produces indoor and outdoor modular systems and other
solutions to facilitate power distribution.
Customers
The Power Products division's principal customers are electric utilities. This includes owners and operators of power generating plants as
well as power transmission and distribution networks. Other customers include gas, water and other utilities and industrial and commercial
customers, including operators of heavy industrial plants and large commercial buildings.
Sales and Marketing
The Power Products division sells its products individually and as part of larger systems through our Power Systems and Process
Automation divisions. Direct sales account for a majority of the division's business but a significant amount of products also go through external
channel partners, such as wholesalers, distributors, system integrators, EPCs and OEMs. As the Power Products and Power Systems divisions
share many of the same customers and technologies and are influenced by similar market drivers, they also have a common front-end sales
organization that helps maximize market synergies across countries and regions.
Competition
On a global basis, the main competitors for the Power Products division are Siemens, Alstom (which also includes the former transmission
portfolio of Areva), and Schneider Electric (which also includes the former distribution portfolio of Areva). The division also faces global
competition specific
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to particular products from South Korean, Chinese, Indian and Brazilian companies. It also competes in specific geographies with companies
such as Cooper, Eaton Corporation, Hyundai, Hyosung, Crompton Greaves, Larsen and Toubro, and Bharat Heavy Electricals.
Capital Expenditure
The Power Products division's capital expenditures for property, plant and equipment totaled $200 million in 2010, compared to
$272 million and $305 million in 2009 and 2008, respectively. Principal investments in 2010 were in China, Sweden, Germany and the Unites
States. Geographically, in 2010, Europe represented 52 percent of the capital expenditures, followed by Asia (20 percent), the Americas
(20 percent) and the Middle East and Africa (8 percent).
Power Systems Division
Overview
Our Power Systems division serves utilities, industrial and commercial customers with system solutions and services for the generation,
transmission and distribution of electricity. Turnkey solutions include power plant electrification and automation, bulk power transmission,
substations and network management. The division had approximately 17,300 employees in more than 80 countries as of December 31, 2010
and generated $6.8 billion of revenues in 2010.
The Power Systems Division
Our Power Systems division delivers solutions through four businesses: power generation, grid systems, substations and network
management, primarily serving utilities and EPC companies. The scope of work in a typical turnkey contract includes design, system
engineering, supply, installation, commissioning and testing of the system. As part of the business model, the Power Systems division integrates
products from both the Power Products division and external suppliers.
Our power generation business is a leading provider of integrated power and automation solutions for all types of power generation plants,
including coal, gas, combined-cycle, nuclear, waste-to-energy and a range of renewables including hydro, solar, and bio-mass. With an extensive
offering that includes electrical balance of plant and instrumentation and control systems, ABB technologies help optimize performance,
improve reliability, enhance efficiency and minimize environmental impact throughout the plant life-cycle. The business also serves the water
industry, including applications such as pumping stations and desalination plants.
As part of the grid systems business, ABB provides a comprehensive offering of alternating current (AC) and direct current (DC)
transmission systems, which help customers to reduce transmission losses, maximize efficiency and improve grid reliability. ABB pioneered
HVDC (high-voltage direct current) technology more than 50 years ago. HVDC technology is designed for high-efficiency power transmission
via overhead transmission lines and underground or submarine cables. HVDC is also widely used for grid interconnections. HVDC Light®, a
more compact form of ABB's classic HVDC technology, is ideal for linking offshore installations, such as wind farms or oil and gas platforms,
to mainland grids. It is used to overcome limitations of distance and grid incompatibility, while ensuring robust performance and minimal
electrical losses. The environmental benefits of HVDC Light®, include neutral electromagnetic fields, oil-free cables and compact converter
stations.
Also part of the grid systems offering, FACTS (flexible alternating current systems) technologies improve power quality and can
significantly increase the capacity of existing AC transmission lines—by as much as 50 percent—while maintaining or improving the system's
reliability. FACTS technologies also boost transmission efficiency, relieve bottlenecks and can be used for the safe integration of unpredictable
power sources, such as wind and solar, into the grid. By enhancing the capacity of existing transmission infrastructure, FACTS solutions can
alleviate the need for capital investment, reducing the time, cost and environmental impact associated with the construction of new generating
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facilities and transmission lines. By improving efficiency, FACTS technologies help to deliver more power to consumers, reducing the need for
more electricity generation, improving power supply and quality. ABB has more than 700 FACTS installations in operation or under
construction around the world.
ABB also offers a comprehensive range of land and submarine cables through its grid systems business, as well as accessories and services
for a range of applications from medium- to high-voltage AC and DC systems. The portfolio includes high-performance XLPE (cross-linked
polyethylene) insulated cables for high efficiency transmission systems at voltages up to 500 kilovolts. ABB has delivered more than
7,000 kilometers of XLPE cables for voltages in excess of 100 kilovolts for projects around the world. When it comes to transmission grid
solutions, ABB manufactures its own power semiconductors, which is a key enabler for HVDC, FACTS and other technologies, serving a range
of industries including transportation and wind.
Substations are key installations in the power grid that facilitate the efficient transmission and distribution of electricity. They perform the
vital function of monitoring and controlling power flows, feeding power from generating stations into the grid and providing the link between
transmission and distribution networks as well as end consumers. ABB has successfully delivered air- and gas-insulated substations in all kinds
of environments, from deserts and mountains to offshore rigs and crowded city centers. ABB's substation automation offering is compliant with
IEC 61850, the open communication standard, which provides a common framework for substation control and protection and facilitates
interoperability across devices and systems. ABB's substation offering covers a range of voltage levels up to 1,100 kilovolts.
ABB's network management business offers solutions to help manage power networks. The offering covers network management and
utility communications solutions to monitor, control, operate and protect power systems. These solutions are designed to ensure the reliability of
electricity supplies and enable real-time management of power plants, transmission grids, distribution networks and energy trading markets. The
portfolio includes control and protection systems for power generation, transmission and distribution, supervisory control and data acquisition
(SCADA) systems, as well as software solutions for central electricity markets and mixed utilities (electricity, district heating, gas and water).
The portfolio also includes wireless and fixed communication systems for power, water and gas utilities, including both operational and
corporate communication networks. It includes fiber optics, microwave radio and power line applications for data networking and broadband
network management, as well as teleprotection and substation communication networks and voice switching management systems.
Network management systems are a key smart-grid component enabling highly automated power systems to incorporate and manage
centralized and distributed power generation, intermittent sources of renewable energy, real-time pricing and load-management data. With the
recent addition of Ventyx, ABB provides an end-to-end software offering in addition to a comprehensive range of operational technologies—a
valuable combination for the development of smart grids.
In addition, the Power Systems division offers a range of services aimed at optimizing operations and reducing maintenance requirements
of customers, across the value chain. These services range from support agreements and retrofits to spare parts, service, consulting and training.
The division also undertakes analyses and design of new transmission and distribution systems as well as asset optimization based on technical,
economic and environmental considerations.
Customers
The Power Systems division's principal customers include power generation utilities and companies, transmission and distribution utilities,
owners and operators as well as industrial and commercial customers. Other customers include gas and water utilities including multi-utilities,
which are involved in the transmission or distribution of more than one commodity.
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Sales and Marketing
The Power Systems division sells its offering primarily through a direct sales force of specialized sales engineering teams. Some sales are
also handled through third-party channels, such as EPC firms, OEMs and system integrators. As the Power Products and Power Systems
divisions share many of the same customers and technologies and are influenced by similar market drivers, they also have a common front-end
sales organization that helps maximize market synergies across countries and regions.
Competition
On a global basis, the Power Systems division faces competition mainly from Siemens and Alstom (which also includes the former
transmission portfolio of Areva). Emerson Electric, General Electric and Invensys are additional competitors seen in parts of the business. The
division also faces competitors from emerging countries in specific regions.
Capital Expenditure
The Power Systems division's capital expenditures for property, plant and equipment totaled $119 million in 2010, compared to
$131 million and $89 million in 2009 and 2008, respectively. Principal investments in 2010 were related to capacity expansion in our
semiconductor and cable facilities in Switzerland and Sweden, respectively, primarily related to machinery and equipment. Geographically, in
2010, Europe represented 87 percent of the capital expenditures, followed by the Middle East and Africa (6 percent), the Americas (5 percent)
and Asia (2 percent).
Discrete Automation and Motion Division
Overview
The Discrete Automation and Motion division's offering covers a wide range of products and services including drives, motors, generators,
power electronics systems, rectifiers, power quality products, photovoltaic inverters, programmable logic controllers (PLCs), and robots. These
products help customers to improve productivity, save energy, improve quality, and generate energy from renewable sources. Key applications
include energy conversion, data acquisition and processing, actuation, automation, standardized manufacturing cells for applications such as
machine tending, welding, cutting, painting, finishing and packing, and engineered systems for the automotive industry. The majority of these
applications are for industrial applications, with others provided for building construction, rail transportation, and utilities. The division also
provides a full range of life-cycle services, from product and system maintenance to system design, including energy appraisals and preventive
maintenance services.
Revenues are generated both from direct sales to end users as well as from indirect sales through distributors, machine builders and OEMs,
system integrators, and panel builders.
The Discrete Automation and Motion division had approximately 18,300 employees worldwide as of December 31, 2010, and generated
$5.6 billion of revenues in 2010 through sales activities in more than 100 countries. In January 2011, ABB completed the acquisition of Baldor
Electric Company (Baldor), a North American leader in industrial motors, based in Fort Smith, Arkansas, U.S.A. Baldor, which is being
integrated into the Discrete Automation and Motion division, reported net sales in 2009 of approximately $1.5 billion and employed
approximately 7,000 people.
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The Discrete Automation and Motion division
The Discrete Automation and Motion division provides low-voltage and medium-voltage AC drive products and systems for industrial,
commercial and residential applications. Drives provide motion and torque while adding control and efficiency to equipment such as fans,
pumps, compressors, conveyors, kilns, centrifuges, mixers, hoists, cranes, extruders, printing machinery and textile machines. Our drives are
used in the building automation, marine, power, transportation and manufacturing industries, among others.
The division also produces a range of power electronics products. These include static excitation and synchronizing systems that provide
stability for power stations, as well as high power rectifiers that convert AC power to DC power for very high-amperage applications such as
furnaces in zinc plants and aluminum and magnesium smelters. The division also manufactures frequency converters that use semiconductor
technology to convert electrical power into the type and frequency required by individual customers.
Further, the division supplies a comprehensive range of electrical motors and generators, including high-efficiency motors that conform to
leading environmental and efficiency standards. Efficiency is an important criterion for selection by customers, because electric motors account
for nearly two-thirds of the electricity consumed by industrial plants. The Discrete Automation and Motion division manufactures synchronous
motors for the most demanding applications and a full range of low and high-voltage induction motors.
The Discrete Automation and Motion division offers robot products, systems and services for the automotive manufacturers and their subsuppliers
as well as for general manufacturing industries, to improve product quality, productivity and consistency in manufacturing processes.
Robots are also used in inhospitable environments which may be hazardous to employee health and safety, such as repetitive lifting, cold rooms
or painting booths. In the automotive industry, the robot products and systems are used in such areas as press shop, body shop, paint shop, power
train assembly, trim and final assembly. General industry segments in which robotics solutions are used range from metal fabrication, foundry,
plastics, food and beverage, chemicals and pharmaceuticals to consumer electronics, solar and wood. Typical general industry applications
include welding, material handling, painting, picking, packing and palletizing.
The division also offers services that complement its products, including design and project management, engineering, installation, training
and life-cycle care, energy appraisals and preventive maintenance.
Customers
The Discrete Automation and Motion division serves a wide range of customers. Customers include machinery manufacturers, process
industries such as pulp and paper, oil and gas and metals and mining companies, rail equipment manufacturers, discrete manufacturing
companies, utilities and renewable energy suppliers, particularly in the wind and solar sectors, as well as customers in the automotive industry.
Sales and Marketing
Sales are made both through direct sales forces as well as through third-party channel partners, such as distributors, wholesalers, installers,
machine builders and OEMs, system integrators, and panel builders. The proportion of direct sales compared to channel partner sales varies
among the different industries, product technologies and geographic markets.
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Competition
The Discrete Automation and Motion division's principal competitors vary by product line but include Alstom, Fanuc Robotics, Kuka
Robot Group, Rockwell, Schneider, Siemens, Yaskawa, and WEG Industries.
Capital Expenditures
The Discrete Automation and Motion division's capital expenditures for property, plant and equipment totaled $98 million in 2010,
compared to $119 million and $148 million in 2009 and in 2008, respectively. Principal investments in 2010 were primarily related to ongoing
replacements of machinery and equipment, mainly in China and Finland. Geographically, in 2010, Europe represented 60 percent of the capital
expenditures, followed by Asia (26 percent), the Middle East and Africa (9 percent) and the Americas (5 percent).
Low Voltage Products Division
Overview
The Low Voltage Products division helps customers to improve productivity, save energy and increase safety. The division offers a wide
range of products and systems, with related services, that provide protection, control and measurement for electrical installations, enclosures,
switchboards, electronics and electromechanical devices for industrial machines and plants. The main applications are in industry, building,
infrastructures, rail and sustainable transportation, renewable energies and e-mobility applications.
The Low Voltage Products division had approximately 19,800 employees worldwide as of December 31, 2010, and generated $4.6 billion
of revenues in 2010 through sales activities in more than 100 countries.
A majority of the division's revenues comes from sales through distributors, wholesalers, OEMs, system integrators, and panel builders,
although a portion of the division's revenues comes from direct sales to end users and utilities.
The Low Voltage Products Division
The Low Voltage Products division offering covers a wide range of products and services including low voltage switchgears, breakers,
switches, control products, DIN-rail components, automation and distribution enclosures, wiring accessories and installation material for any
kind of application.
The division offers solutions for restoring service rapidly in case of a fault and providing optimum protection of the electrical installation.
The product offering ranges from miniature circuit-breakers to high-capacity molded-case and air circuit-breakers, and includes safety switches
used for power distribution in factories and buildings, fuse gear systems for short circuit and overload protection as well as cabling and
connection components.
The Low Voltage Products division also offers terminal blocks and printed circuit board connectors used by panel builders and OEMs to
produce standard distribution and control panels as well as specialized applications in industries such as traction, energy, maritime, explosive
atmospheres or electronics. In addition, the division offers a range of contactors, soft starters, starters, proximity sensors, safety products for
industrial protection, limit switches, manual motor starters, along with electronic relays and overload relays.
The division provides smart home and intelligent building control systems, also known as KNX protocol, a complete system for all energy
reducing building application areas such as lighting and
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shutters, heating, ventilation, cooling and security. In addition, the division's IEC (International Electrotechnical Commission) and NEMA
(National Electrical Manufacturers Association) compliant switchgear technology integrates intelligent motor and feeder control solutions to
enhance protection, digital control, condition monitoring and plant wide data access by process control systems, electrical control systems and
other plant computers.
The Low Voltage Products Division has also developed a range of products for new markets, such as those used by electric vehicles (emobility)
and in photovoltaic, solar and wind applications. These include energy meters, switch-disconnectors, residual current-operated circuitbreakers,
interface relays and other products designed for outdoor installation.
Customers
The Low Voltage Products division serves a wide range of customers, including residential and commercial building contractors, process
industries, rail equipment manufacturers, manufacturing companies, utilities and renewable energy suppliers, particularly in the wind and solar
sectors.
Sales and Marketing
Sales are made both through direct sales forces as well as through third-party channel partners, such as distributors, wholesalers, installers,
machine builders and OEMs, system integrators, and panel builders. The proportion of direct sales compared to channel partner sales varies
among the different industries, product technologies and geographic markets.
Competition
The Low Voltage Products division's principal competitors vary by product line but include Eaton Corporation, Legrand, Mitsubishi,
Schneider, Siemens, Leviton and Rittal.
Capital Expenditures
The Low Voltage Products division's capital expenditures for property, plant and equipment totaled $100 million in 2010, compared to
$150 million and $174 million in 2009 and 2008, respectively. Principal investments in 2010 included replacement of existing equipment in
Germany and Italy and capacity expansion in China. Geographically, in 2010, Europe represented 72 percent of the capital expenditures,
followed by Asia (20 percent), the Middle East and Africa (7 percent) and the Americas (1 percent).
Process Automation Division
Overview
The Process Automation division provides products, systems, and services for the automation and optimization of industrial processes. Our
main offerings are process automation, plant electrification and quality control systems, analytical measurement devices, turbochargers and
marine propulsion systems. Our key end markets are the oil and gas, pulp and paper, metals and minerals, chemicals and pharmaceuticals,
turbocharging and marine industries. The division had approximately 26,700 employees as of December 31, 2010, and generated revenues of
$7.4 billion in 2010.
The Process Automation division offers its products both as separately sold devices and as part of a total automation system. Our
technologies are marketed both through direct sales forces and third party channels.
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The Process Automation Division
The Process Automation division offers integrated process control and instrumentation systems, plant electrification systems, information
management systems and industry-specific application knowledge for a variety of industries, primarily pulp and paper, minerals and mining,
metals, chemicals and pharmaceuticals, oil and gas, turbocharging, power and the marine industry. Some of the Discrete Automation and
Motion, Power Products and Low Voltage Products divisions' products are integrated into the offering of the Process Automation division.
Our control systems are used in applications such as batch management, asset optimization, energy management and safety control. They
are the hubs that link instrumentation, devices and systems for control and supervision of industrial processes and enable customers to integrate
their production systems with their enterprise, resource and planning systems, thereby providing a link to their ordering, billing and shipping
processes. This link allows customers to manage their entire manufacturing and business process based on real-time access to plant information.
Additionally, it allows customers to increase production efficiency, optimize their assets and reduce environmental waste.
The division's offering focuses on Open Control Systems, including batch control systems, supervisory control and data acquisition
systems, and, to a lesser extent, programmable logic controls and remote terminal units.
Batch control systems control the production of a variety of products in shorter runs, such as certain pharmaceutical and food and beverage
products. Supervisory control and data acquisition systems are used to collect and manage data over wide areas or long distances such as those
involved in operating electric power networks.
A key element of this division's product offering is its System 800xA process automation platform. This product extends the capability of
traditional process control systems, introducing advanced functions such as batch management, asset optimization and field device integration
which "plug in" to a common user environment. The same user interface may also be used to manage components of existing multiple ABB
control systems that have been installed in the market over approximately the past 20 years. In this way, System 800xA gives customers a way to
migrate to new functions one step at a time, rather than having to make a large-scale capital investment to replace their entire control system. By
creating a common user interface that can be used to manage multiple systems, the System 800xA also reduces the research and development
investment needed to achieve a "one size fits all" solution across our large installed systems base. The division also offers a full line of
instrumentation and analytical products to actuate, measure, record and control industrial and power processes.
The division's product offerings for the pulp and paper industries include quality control systems for pulp and paper mills, control systems,
drive systems, on-line sensors, actuators and field instruments. On-line sensors measure product properties, such as weight, thickness, color,
brightness, moisture content and additive content. Actuators allow the customer to make automatic adjustments during the production process to
improve the quality and consistency of the product. Field instruments measure properties of the process, such as flow rate, chemical content and
temperature.
We offer our customers in the metals and minerals industries specialized products and services, as well as total production systems. We
design, plan, engineer, supply, erect and commission electric equipment, drives, motors and equipment for automation and supervisory control
within a variety of areas including mining, mineral handling, aluminum smelting, hot and cold steel applications and cement production.
In the oil and gas sector, we provide solutions for onshore and offshore production and exploration, refining, and petrochemical processes,
and oil/gas transportation and distribution. In the
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pharmaceuticals and fine chemicals areas, we offer applications to support manufacturing, packaging, quality control and compliance with
regulatory agencies.
In the marine field, we provide global shipbuilders with power and automation technologies for luxury cruise liners, ferries, tankers,
offshore oil rigs and special purpose vessels. We design, engineer, build, supply and commission electrical systems for marine power generation,
power distribution and diesel electric propulsion, as well as turbochargers to improve efficiency for diesel and gasoline engines.
We also offer full-service contracts across all of our customer segments, in which we take over in-house maintenance activities for
customers and apply strategies to reduce overall maintenance costs and help optimize these investments. Demand for our process automation
services is increasing as our customers seek to increase productivity by improving the performance of existing assets.
Customers
The Process Automation division's end customers are primarily companies in the oil and gas, minerals and mining, metals, pulp and paper,
chemicals and pharmaceuticals, turbocharging and the marine industries.
Sales and Marketing
The Process Automation division uses a direct sales force as well as third-party channel partners, such as distributors, system integrators
and OEMs. For the division as a whole, the majority of revenues are derived through the division's own direct sales channels.
Competition
The Process Automation division's principal competitors vary by industry or product line but include Emerson, Honeywell, Invensys, Metso
Automation, Rockwell, Schneider, Siemens, Voith, Aspen Technologies, and Yokogawa Electric Corporation.
Capital Expenditures
The Process Automation division's capital expenditures for property, plant and equipment totaled $76 million in 2010, compared to
$99 million and $90 million in 2009 and 2008, respectively. Principal investments in 2010 were to our turbocharging production facilities in
Switzerland and China, our pulp and paper business in China, and our oil and gas business in Algeria. Geographically, in 2010, Europe
represented 66 percent of the capital expenditures, followed by Asia (19 percent), the Americas (9 percent) and the Middle East and Africa
(6 percent).
CAPITAL EXPENDITURES
Total capital expenditures for property, plant and equipment including intangible assets not acquired through a business combination
amounted to $840 million, $967 million and $1,171 million in 2010, 2009 and 2008, respectively. Compared to the corresponding depreciation
expense of the respective year, capital expenditures were 20 percent higher in 2010, 48 percent higher in 2009 and 77 percent higher in 2008.
Due to the current geographic distribution of our production facilities, capital expenditures in 2010 remained at a significant level in mature
markets, about the same as the previous year's level. Capital expenditures in Europe were primarily driven by maintenance and upgrades of
existing production facilities to improve productivity, mainly in Switzerland, Sweden and Germany. Capital expenditures in emerging markets
decreased from 2009. Expenditures were highest in China, India and Poland. Capital expenditures in emerging markets were mostly made to
expand or build new facilities to increase the
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production capacity. The share of emerging markets capital expenditures as a percentage of total capital expenditures was 31 percent in 2010.
The carrying value of property, plant and equipment sold amounted to $8 million, $22 million and $50 million in 2010, 2009 and 2008,
respectively.
The sales of property, plant and equipment in 2010 related to real estate properties in various locations. Of the total sales of property, plant
and equipment in 2009, a significant portion was related to real estate properties, mainly in Norway, France, Brazil and Switzerland. The
remainder was related to machinery and equipment in various locations. Of the total sales of property, plant and equipment in 2008, the majority
related to real estate properties in Switzerland, Brazil, Mexico, Poland and Italy.
Construction in progress for property, plant and equipment at December 31, 2010, was $447 million, mainly in Switzerland, Sweden,
Germany, the United States, China and Poland. Construction in progress for property, plant and equipment at December 31, 2009, was
$564 million, mainly in Switzerland, Sweden, Germany, China, India and Poland. Construction in progress for property, plant and equipment at
December 31, 2008, was $534 million, mainly in Sweden, the United States, Switzerland, China and Germany.
In 2011, we plan to increase our capital expenditures and estimate the amount will be higher than our annual depreciation and amortization
charge. We anticipate investments to be higher in the Americas and Asia but to remain at approximately the same level in Europe.
SUPPLIES AND RAW MATERIALS
We purchase a variety of raw materials for use in our production and project execution processes. The primary materials used in our
products, by weight, are steel, copper, aluminum, mineral oil and various plastics. We also purchase a wide variety of fabricated products and
electronic components. We operate a worldwide supply chain management network with employees dedicated to this function in business units
and key countries. Over twenty global, and many divisional, commodity teams take advantage of opportunities to leverage the scale of ABB, to
optimize the efficiency of our supply networks, and to capture lowest possible costs worldwide.
Our supply chain management organization's activities have continued to expand in recent years, to:
• pool and leverage procurement of materials and services used by many of our production facilities,
• improve our collaboration with supplier partners, through tools such as our supplier portal,
• enhance the transparency of our spending through a comprehensive performance and reporting system linked to all of our
enterprise resource planning (ERP) systems, and
• build on the experience in our organization to establish a supply chain management excellence network that supports the day-today
requirements of our supply chain employees worldwide.
The price of raw materials is highly volatile, and has varied substantially, from year to year. For many commodities we purchase, such as
steel, copper, aluminum and products derived from crude oil, continuing global economic growth in China and other emerging economies,
coupled with the uncertainty of volatility in foreign exchange rates, led to significant fluctuations in raw material costs over the last few years.
While some market volatility will be offset through the use of either long-term contracts or hedging, we expect global commodity prices to
remain highly volatile.
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We mitigate the majority of our exposure to commodity risk arising from changes in prices of raw materials by entering into hedges. For
example, we manage copper and aluminum price risk using principally swap contracts based on prices for these commodities quoted on leading
exchanges. Our hedging policy is designed to minimize price volatility and create a stable cost base. Hedging has the effect of minimizing the
unfavorable impact of price increases in commodities, but it also limits the favorable impact of decreasing prices. Certain gains and losses
derived from our commodity hedging transactions are deferred and reflected in the cost of goods sold when the underlying physical transaction
affects cost of goods sold. In addition to using hedging to reduce our exposure to fluctuations in raw materials prices, in some cases we can
reduce this risk by incorporating changes in raw materials prices into the prices of our products.
The costs for our electronic components, subassemblies and fabricated products, in many cases, reduced compared to 2009, in line with our
cost reduction initiatives. Procurement personnel in the business units, and in the countries in which we operate, along with the global
commodities teams, continued to focus on component cost reduction efforts in all areas, while maintaining and improving quality and delivery
performance.
PATENTS AND TRADEMARKS
We believe that intellectual property is as important as tangible assets for a technology group such as ABB. Over the past ten years, we
have almost doubled our total number of first patent filings, and we intend to continue our aggressive approach to seeking patent protection.
Currently, we have about 21,000 patent applications and registrations, of which more than 9,000 are pending applications. In 2010, we filed
patent applications for approximately 800 new inventions. Based on our existing intellectual property strategy, we believe that we have adequate
control over our core technologies. The "ABB" trademarks and logo are protected in all of the countries in which we operate. We aggressively
defend the reputation associated with the ABB brand.
SUSTAINABILITY ACTIVITIES
Sustainability management is one of our highest business priorities. We seek to address sustainability issues in all our business operations in
order to improve our social, safety and environmental performance continuously, and to enhance the quality of life in the communities and
countries where we operate.
Our social and environmental efforts include:
• regularly implementing sustainability objectives covering all relevant parts of our operations,
• joining initiatives that foster economic, environmental, social and educational development, and strengthen observance of human
rights in business practice,
• making positive contributions in the communities where we operate so they will welcome us and consider ABB an attractive
employer and a good investment,
• offering our customers eco-efficient products that save energy and are safe to use, that optimize the use of natural resources,
minimize waste and reduce environmental impact over their complete life cycles,
• applying non-financial risk assessment to projects, and key business decision-making processes,
• sharing our latest technologies with emerging markets by, for example, helping customers in developing countries implement
environmentally sound processes and technologies and providing environmental awareness and safety training,
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• ensuring that our operations and processes comply with applicable environmental and health and safety standards and social
legislation. Specifically, every operating unit must implement an environmental management system that seeks to continuously
improve its environmental performance and a health and safety management system that similarly seeks to continuously improve
health and safety performance.
• ensuring that our social, health and safety and environmental policies are communicated and implemented,
• working towards achieving best practices in occupational health and safety, and ensuring the health and safety of our employees,
contractors and others involved in or affected by our activities,
• ensuring that suppliers have sustainability policies and systems similar to our own, and
• continuing our program to decontaminate sites that were polluted by historical manufacturing processes.
To manage environmental aspects of our own operations, we have implemented environmental management systems according to the
ISO 14001 standard at our manufacturing and service sites. For non-manufacturing sites we have implemented an adapted environmental
management system in order to ensure management of environmental aspects and continual improvement of performance. Almost all of these
sites currently work in compliance with the requirements of the standard (approximately 360 sites and offices) and our environmental
management program now covers operations in 59 countries.
We have Environmental Product Declarations to communicate the environmental performance of our core products. These describe the
significant environmental aspects and impacts of a product line, viewed over its complete life cycle. Declarations are based on Life Cycle
Assessment studies, created according to the international standard ISO/TR 14025. More than 70 declarations for major product lines are
published on our Web site ( www.abb.com ), some of which have been externally certified by agencies such as Det Norske Veritas (DNV) of
Norway and the RINA Management System Certification Society in Italy.
In 2010, a total of 87 percent of our employees were covered by confirmed data gathered through ABB's formal environmental reporting
system that is verified by an independent verification body. The parts of our business that are not yet covered by our reporting system, mainly
sales offices in countries where we do not perform manufacturing, have very limited environmental exposure. A total of seven environmental
incidents were reported in 2010, none of which had a material environmental impact.
In 2010, a total of 95 percent of employees were covered by confirmed data gathered through ABB's formal social reporting system that is
verified by an independent verification body. The parts of our business that are not yet covered by our reporting system, mainly sales offices in
countries where we do not perform manufacturing, have very limited social exposure.
One of our corporate objectives is to phase out the use of the hazardous substances that are recorded on our list of "restricted" substances.
Priorities for replacement are set by each business using criteria such as the environmental aspects of alternatives, the risk of the substance
escaping into the environment, how hazardous the substance is, whether we can use the substance under strict control and whether there are any
technically acceptable alternatives.
We retained liability for environmental remediation costs at two sites in the United States that were operated by our former nuclear
business, which we have sold to BNFL. The primary environmental liabilities associated with these sites relate to the costs of remediating
radiological contamination upon decommissioning the facilities. In February 2011, we agreed to settle with Westinghouse Electric
Company LLC (BNFL's former subsidiary, overseeing remediation activities at
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one of the sites) and were released from our continuing environmental obligations at this one site. See "Note 15 Commitments and
contingencies" to our Consolidated Financial Statements.
REGULATION
Our operations are subject to numerous governmental laws and regulations including those governing antitrust and competition, corruption,
the environment, securities transactions and disclosures, import and export of products, currency conversions and repatriation, taxation of foreign
earnings and earnings of expatriate personnel and use of local employees and suppliers.
As a reporting company under Section 12 of the U.S. Securities Exchange Act of 1934, we are subject to the FCPA's antibribery provisions
with respect to our conduct around the world.
Our operations are also subject to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business
Transactions. The convention obliges signatories to adopt national legislation that makes it a crime to bribe foreign public officials. As of
December 31, 2010, those countries which have adopted implementing legislation and have ratified the convention include the United States and
several European nations in which we have significant operations.
We conduct business in certain countries known to experience governmental corruption. While we are committed to conducting business in
a legal and ethical manner, our employees or agents have taken, and in the future may take, actions that violate the U.S. FCPA, legislation
promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions,
antitrust laws or other laws or regulations. These actions have resulted and could result in monetary or other penalties against us and could
damage our reputation and, therefore, our ability to do business. For more information, see "Item 8. Financial Information—Legal Proceedings."
SIGNIFICANT SUBSIDIARIES
ABB Ltd, Switzerland, is the ultimate parent company of the ABB Group, which comprises 298 consolidated operating and holding
subsidiaries worldwide as of February 28, 2011. ABB Ltd's shares are listed on the SIX Swiss Exchange, the NASDAQ OMX Stockholm
Exchange and the New York Stock Exchange (where its shares are traded in the form of ADS—each ADS representing one registered ABB
share).
The only consolidated subsidiary in the ABB Group with listed shares is ABB Limited, Bangalore, India, which is listed on the Bombay
Stock Exchange and the National Stock Exchange of India.
The following table sets forth, as of February 28, 2011, the name, country of incorporation and ownership interest of ABB Ltd, Switzerland,
in its significant subsidiaries:
Company name & location Country
31
ABB Group
interest %
ABB S.A., Buenos Aires ARGENTINA 100.00
ABB Australia Pty Limited, Sydney
ABB AG, Vienna
ABB N.V., Zaventem
ABB Ltda., Osasco
ABB Bulgaria EOOD, Sofia
ABB Inc., St. Laurent, Quebec
ABB (China) Ltd., Beijing
AUSTRALIA
AUSTRIA
BELGIUM
BRAZIL
BULGARIA
CANADA
CHINA
100.00
100.00
100.00
100.00
100.00
100.00
100.00

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Company name & location Country
ABB Group
interest %
Asea Brown Boveri Ltda., Bogotá COLOMBIA 99.99
ABB Ltd., Zagreb
ABB s.r.o., Prague
ABB A/S, Skovlunde
ABB Equador S.A., Quito
Asea Brown Boveri S.A.E., Cairo
ABB AS, Tallinn
ABB Oy, Helsinki
ABB S.A., Rueil-Malmaison
ABB AG, Mannheim
ABB Automation GmbH, Mannheim
ABB Automation Products GmbH, Ladenburg
ABB Beteiligungs- und Verwaltungsges. mbH,
Mannheim
ABB Stotz-Kontakt GmbH, Heidelberg
Busch-Jaeger Elektro GmbH, Mannheim/Lüdenscheid
Asea Brown Boveri S.A., Metamorphossis Attica
ABB (Hong Kong) Ltd., Hong Kong
ABB Engineering Trading and Service Ltd., Budapest
ABB Limited, Bangalore
ABB Ltd, Dublin
ABB Technologies Ltd., Tirat Carmel
ABB S.p.A., Milan
ABB K.K., Tokyo
ABB Ltd., Seoul
ABB Holdings Sdn. Bhd., Subang Jaya
Asea Brown Boveri S.A. de C.V., Tlalnepantla
ABB BV, Rotterdam
ABB Finance B.V., Amsterdam
ABB Holdings BV, Amsterdam
ABB Investments B.V.
ABB Limited, Auckland
CROATIA
CZECH REPUBLIC
DENMARK
ECUADOR
EGYPT
ESTONIA
FINLAND
FRANCE
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GREECE
HONG KONG
HUNGARY
INDIA
IRELAND
ISRAEL
ITALY
JAPAN
KOREA, REPUBLIC OF
MALAYSIA
MEXICO
NETHERLANDS
NETHERLANDS
NETHERLANDS
NETHERLANDS
NEW ZEALAND
100.00
100.00
100.00
96.87
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
75.00
100.00
99.99
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00

ABB Holding AS, Billingstad
ABB S.A., Lima
32
NORWAY
PERU
100.00
80.60

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Company name & location Country
DESCRIPTION OF PROPERTY
As of December 31, 2010, we occupied real estate in more than 100 countries throughout the world. The facilities consist mainly of
manufacturing plants, office buildings, research centers and warehouses. A substantial portion of our production and development facilities are
situated in Germany, Sweden, the United States, Switzerland, China, Finland, India and Italy. We also own or lease other properties, including
office buildings, warehouses, research and development facilities and sales offices in many countries. We own essentially all of the machinery
and equipment used in our manufacturing operations.
From time to time, we have a surplus of space arising from acquisitions, production efficiencies and/or restructuring of operations.
Normally, we seek to sell such surplus space which may involve leasing property to third parties for an interim period.
The net book value of our property, plant and equipment at December 31, 2010, was $4,356 million, of which machinery and equipment
represented $1,944 million, land and buildings represented $1,965 million and construction in progress represented $447 million. We believe
that our
33
ABB Group
interest %
ABB Inc., Paranaque, Metro Manila PHILIPPINES 100.00
ABB Sp. z o.o., Warsaw
ABB (Asea Brown Boveri), S.A., Paco de Arcos
Asea Brown Boveri Ltd., Moscow
ABB Contracting Company Ltd., Riyadh
ABB Holdings Pte. Ltd., Singapore
ABB Holdings (Pty) Ltd., Sunninghill
Asea Brown Boveri S.A., Madrid
ABB AB, Västerås
ABB Norden Holding AB, Västerås
ABB Asea Brown Boveri Ltd, Zurich
ABB Schweiz AG, Baden
ABB LIMITED, Bangkok
ABB Holding A.S., Istanbul
ABB Ltd., Kiev
ABB Industries (L.L.C.), Dubai
ABB Holdings Limited, Warrington
ABB Limited, Warrington
ABB Holdings Inc., Cary, NC
ABB Inc., Cary, NC
Baldor Electric Company, MO
Kuhlman Electric Corporation, Crystal Springs, MS
POLAND
PORTUGAL
RUSSIAN FEDERATION
SAUDI ARABIA
SINGAPORE
SOUTH AFRICA
SPAIN
SWEDEN
SWEDEN
SWITZERLAND
SWITZERLAND
THAILAND
TURKEY
UKRAINE
UAE
UNITED KINGDOM
UNITED KINGDOM
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
99.89
100.00
100.00
65.00
100.00
80.00
100.00
100.00
100.00
100.00
100.00
100.00
99.95
100.00
49.00
100.00
100.00
100.00
100.00
100.00
100.00

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current facilities are in good condition and are adequate to meet the requirements of our present and foreseeable future industrial operations.
Item 4A. Unresolved Staff Comments
Not applicable.
Item 5. Operating and Financial Review and Prospects
MANAGEMENT OVERVIEW
During 2010, we continued to deliver power and automation solutions that help our customers meet the challenges of a rapidly-changing
world. Foremost among these are climate change and the need to use electrical energy more efficiently and with less impact on the environment.
We achieved this in several ways.
One is a long-term commitment to technology leadership in areas such as high-efficiency power transmission; automation and control
systems to manage complex industrial processes using less energy; and technologies to capture the full potential of renewable energies, such as
wind and solar power. In 2010, for example, we were awarded orders to connect offshore wind farms to Germany's mainland power grids, to
automate a new copper mine in Peru, and to build a subsea power link between Sweden and Lithuania.
Another is our presence in more than 100 countries around the world. This allows us to meet the needs of our customers faster and with
solutions that are best suited to their local requirements. It positions us to benefit from the rapid growth expected in the emerging markets in the
coming years while also supporting our large and important markets in the world's mature economies. Furthermore, our geographic scope
provides us with access to a large pool of talented and highly qualified people from very diverse cultural and business backgrounds—a key
competitive advantage. In 2010, we generated approximately half of our revenues from emerging markets while also recording order increases of
more than 10 percent in countries such as Germany, Sweden and the United States.
A third way is our ability to combine both power and automation technologies into packaged solutions that meet the new needs of emerging
growth sectors, such as integrating renewable energy into existing power grids, delivering high-quality "mission-critical" power to data centers
and hospitals, and providing the infrastructure needed to rapidly charge electric vehicles. For example, in 2010 we embarked on a project to
build a smart grid in Helsinki, Finland; delivered fast direct-current charging stations for an e-mobility project in Hong Kong; and launched a
type of solar inverter from our Discrete Automation and Motion division that is used in large-scale solar power generation. We view this
convergence of power and automation technologies as a long-term trend for which ABB is well positioned.
Despite uncertainties surrounding the economic situation in 2010, we continued to benefit from the broad scope of our business portfolio.
For example, we saw a recovery during the year in some of our early-cycle businesses, such as Low Voltage Products, which are more exposed
to consumer demand and which respond early to increases in economic activity. This recovery helped to offset continued low levels of demand
in some of our later-cycle businesses, such as parts of our Power Products and Process Automation divisions, which depend more on large
capital expenditures by our utility and industrial customers that generally come later in the economic cycle. Our strong positions in emerging
markets, our flexible global production base and our technological leadership, as well as the operational improvements we continue to make in
our businesses, also supported our business in 2010.
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Foremost among these improvements was the successful reduction of costs to adapt to changing demand. Savings were principally achieved
in four areas: making better use of global sourcing opportunities; reducing general and administrative expenses; eliminating operational and
process inefficiencies; and optimizing our global footprint in order to match the geographic scope of our business with changing demand
patterns, such as rapid growth in emerging markets. Our cost reduction program was key to maintaining profitability in a challenging
environment.
Outlook
For 2011, we expect continued demand growth in all regions for power and automation solutions that help customers build and upgrade
power infrastructure and improve industrial efficiency and productivity.
Emerging markets will again be significant drivers of growth as they build up their electrical grids and expand industrial production with a
major focus on improving energy efficiency and industrial process quality. An important demand driver in these countries is the development of
power resources, such as hydro and wind, which are often long distances from end users and require reliable, high-efficiency power transmission
technologies. Demand for commodities to fuel economic growth and the need to become more globally competitive in product quality is
expected to drive demand for industrial automation solutions in the emerging markets.
Demand in mature markets is also expected to improve. Utilities are expected to continue investments in grid interconnections, the
integration of renewable energies into existing grids, the replacement and refurbishment of existing grid assets, and smart grid technologies.
Following two years of lower capital investment in power transmission in many regions, we expect an increase in utility spending on standard
power transmission products, most likely beginning in the second half of the year.
Industrial customers in the mature economies are also expected to invest further in improving the productivity of their existing
manufacturing assets. Increased construction activity in parts of northern Europe and the trend towards intelligent buildings are further demand
drivers for our automation solutions in mature markets.
At the same time, recent competitive trends are expected to continue through 2011 and beyond. Increased capacity in the power equipment
sector over the past several years will continue to exert price pressure on suppliers. This pressure is expected to persist for several quarters after
demand begins to recover. Emerging market players are expected to continue to expand beyond their home markets with competitive products
aimed mainly at the mid-quality segment and primarily in power equipment.
Therefore, in 2011 we will focus on taking advantage of the significant growth opportunities that are emerging across our technology and
geographic portfolio. We intend to increase our capital expenditures, again with a focus on building our position in emerging markets.
Investment in sales and research and development activities will also increase to support both growth and profitability. Cost control will also
remain a high priority to ensure both our competitiveness in the market as well as securing profitability within our target ranges.
General
This outlook section does not reflect the recent earthquake and related developments in Japan, the impact of which is too early to assess.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
We prepare our Consolidated Financial Statements in accordance with U.S. GAAP and present the same in United States dollars unless
otherwise stated.
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The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis,
including, but not limited to, those related to: costs expected to be incurred to complete projects; costs of product guarantees and warranties;
provisions for bad debts; recoverability of inventories, investments, fixed assets, goodwill and other intangible assets; the fair values of assets
and liabilities assumed in business combinations; income tax related expenses and accruals; provisions for restructuring; gross profit margins on
long-term construction-type contracts; pensions and other postretirement benefit assumptions and contingencies and litigation. We base our
estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from our estimates and assumptions.
We deem an accounting policy to be critical if it requires an accounting estimate to be made based on assumptions about matters that are
highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or if changes in the accounting
estimates that are reasonably likely to occur periodically, could materially impact our Consolidated Financial Statements. We also deem an
accounting policy to be critical when the application of such policy is essential to our ongoing operations. We believe the following critical
accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that
are inherently uncertain. These policies should be considered when reading our Consolidated Financial Statements.
Revenues and cost of sales recognition
We generally recognize revenues for the sale of goods when persuasive evidence of an arrangement exists, delivery has occurred, the price
is fixed or determinable, and collectability is reasonably assured. Delivery is considered to occur upon transfer of title and risks and rewards of
ownership.
Revenues under long-term construction-type contracts are generally recognized using the percentage-of-completion method of accounting.
We principally use the cost-to-cost method to measure progress towards completion on contracts. Under this method, progress of contracts is
measured by actual costs incurred in relation to management's best estimate of total estimated costs, which are reviewed and updated routinely
for contracts in progress. The cumulative effects of such adjustments are reported in the current period.
The percentage-of-completion method of accounting involves the use of assumptions and projections, principally relating to future material,
labor and overhead costs. As a consequence, there is a risk that total contract costs will exceed those we originally estimated and the margin will
decrease. This risk increases if the duration of a contract increases because there is a higher probability that the circumstances upon which we
originally developed estimates will change, resulting in increased costs that we may not recover. Factors that could cause costs to increase
include:
• unanticipated technical problems with equipment supplied or developed by us which may require us to incur additional costs to
remedy,
• changes in the cost of components, materials or labor,
• difficulties in obtaining required governmental permits or approvals,
• project modifications creating unanticipated costs,
• suppliers' or subcontractors' failure to perform,
• penalties incurred as a result of not completing portions of the project in accordance with agreed-upon time limits, and
• delays caused by unexpected conditions or events.
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Changes in our initial assumptions, which we review on a regular basis between balance sheet dates, may result in revisions to estimated
costs, current earnings and anticipated earnings. We recognize these changes in the period in which the changes in estimates are determined. By
recognizing changes in estimates cumulatively, recorded revenue and costs to date reflect the current estimates of the stage of completion of each
project. Additionally, losses on long-term contracts are recognized in the period when they are identified and are based upon the anticipated
excess of contract costs over the related contract revenues.
Short-term construction-type contracts, or long-term construction-type contracts for which reasonably dependable estimates cannot be made
or for which inherent hazards make estimates difficult, are accounted for under the completed-contract method. Revenues under the completedcontract
method are recognized upon substantial completion—that is: acceptance by the customer, compliance with performance specifications
demonstrated in a factory acceptance test or similar event.
For non construction-type contracts that contain customer acceptance provisions, revenue is deferred until customer acceptance occurs or
we have demonstrated the customer-specified objective criteria have been met or the contractual acceptance period has lapsed.
Revenues from service transactions are recognized as services are performed. For long-term service contracts, revenues are recognized on a
straight-line basis over the term of the contract or, if the performance pattern is other than straight-line, as the services are provided. Service
revenues reflect revenues earned from our activities in providing services to customers primarily subsequent to the sale and delivery of a product
or complete system. Such revenues consist of maintenance-type contracts, field service activities that include personnel and accompanying spare
parts, and installation and commissioning of products as a standalone service or as part of a service contract.
We offer multiple solutions to meet our customers' needs. These solutions may involve the delivery of multiple products and/or
performance of services and the delivery and/or performance may occur at different points in time or over different periods of time. In such
circumstances, if certain criteria are met, we allocate revenues to each delivery of product or performance of service based on the individual
elements' relative fair value. If there is no evidence for the fair value of the delivered item, the revenue is allocated based on the residual method,
provided that the elements meet the criteria for treatment as a separate unit of accounting.
Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between us and our customers,
such as sales, use, value-added and some excise taxes are presented on a net basis (excluded from revenues).
These revenue recognition methods require the collectability of the revenues recognized to be reasonably assured. When recording the
respective accounts receivable, allowances are calculated to estimate those receivables that will not be collected. These reserves assume a level
of default based on historical information, as well as knowledge about specific invoices and customers. The risk remains that a different number
of defaults will occur than originally estimated. As such, the amount of revenues recognized might exceed or fall below that which will be
collected, resulting in a change in earnings in the future. The risk of deterioration is likely to increase during periods of significant negative
industry or economic trends.
As a result of the above policies, judgment in the selection and application of revenue recognition methods must be made.
Contingencies
As more fully described in the section below entitled "Environmental liabilities", in "Item 8. Financial Information—Legal Proceedings"
and in "Note 15 Commitments and contingencies" to our Consolidated Financial Statements, we are subject to proceedings, litigation or
threatened litigation and
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other claims and inquiries related to taxes other than income tax, environmental, labor, product, regulatory and other matters. We are required to
assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of
the provision required, if any, for these contingencies is made after analysis of each individual issue, often with assistance from both internal and
external legal counsel and technical experts. The required amount of a provision for a contingency of any type may change in the future due to
new developments in the particular matter, including changes in the approach to its resolution.
We record provisions for our contingent obligations when it is probable that a loss will be incurred and the amount can be reasonably
estimated. Any such provision is generally recognized on an undiscounted basis using our best estimate of the amount of loss incurred or at the
lower end of an estimated range when a single best estimate is not determinable. In some cases, we may be able to recover a portion of the costs
relating to these obligations from insurers or other third parties; however, we record such amounts only when it is probable that they will be
collected.
We provide for anticipated costs for warranties when we recognize revenues on the related products or contracts. Warranty costs include
calculated costs arising from imperfections in design, material and workmanship in our products. We generally make individual assessments on
contracts with risks resulting from order-specific conditions or guarantees and assessments on an overall, statistical basis for similar products
sold in larger quantities. There is a risk that actual warranty costs may exceed the amounts provided for, which would result in a deterioration of
earnings in the future when these actual costs are determined.
We may have a legal obligation to perform environmental clean-up activities as a result of the normal operation of our business or have
other asset retirement obligations. In some cases, the timing or the method of settlement, or both are conditional upon a future event that may or
may not be within our control, but the underlying obligation itself is unconditional and certain. We recognize a provision for these and other
asset retirement obligations when a liability for the retirement or clean-up activity has been incurred and a reasonable estimate of its fair value
can be made. These provisions are initially recognized at fair value, and subsequently adjusted for accrued interest and changes in estimates.
Provisions for environmental obligations are not discounted to their present value when the timing of payments cannot be reasonably estimated.
Pension and postretirement benefits
As more fully described in "Note 17 Employee benefits" to our Consolidated Financial Statements, we have a number of defined benefit
pension and other postretirement plans and recognize an asset for such a plan's overfunded status or a liability for such a plan's underfunded
status in our Consolidated Balance Sheets. Additionally, we measure such a plan's assets and obligations that determine its funded status as of
the end of the year and recognize the changes in the funded status in the year in which the changes occur. Those changes are reported in
"Accumulated other comprehensive loss" and as a separate component of stockholders' equity.
We use actuarial valuations to determine our pension and postretirement benefit costs and credits. The amounts calculated depend on a
variety of key assumptions, including discount rates, mortality rates and expected return on plan assets. Under U.S. GAAP, we are required to
consider current market conditions in making these assumptions. In particular, the discount rates are reviewed annually based on changes in
long-term, highly-rated corporate bond yields. Decreases in the discount rates result in an increase in the projected benefit obligation to
employees (PBO) and in pension costs. Conversely, an increase in the discount rates results in a decrease in the PBO and in pension costs. The
mortality assumptions are reviewed annually by management. Decreases in mortality rates result in an increase in the PBO and in pension costs.
Conversely, an increase in mortality rates results in a decrease in the PBO and in pension costs.
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Holding all other assumptions constant, a 0.25 percentage point decrease in the discount rate would have increased the PBO related to our
pension plans by approximately $287 million, while a 0.25 percentage point increase in the discount rate would have decreased the PBO related
to our pension plans by approximately $267 million.
The expected return on plan assets is reviewed regularly and considered for adjustment annually based on current and expected asset
allocations and represents the long-term return expected to be achieved. Decreases in the expected return on plan assets result in an increase to
pension costs. An increase or decrease of 0.25 percent in the expected long-term rate of asset return would have decreased or increased,
respectively, the net periodic benefit cost in 2010 by approximately $20 million.
Under U.S. GAAP, we accumulate and amortize over future periods any difference between actual results and the assumptions used.
Therefore, actual results generally affect our recognized expense for pension and other postretirement benefit obligations in future periods.
The funded status, which can increase or decrease based on the performance of the financial markets or changes in our assumptions
regarding rates, does not represent a mandatory short-term cash obligation. Instead, the funded status of a pension plan is the difference between
the PBO and the fair value of the plan assets. At December 31, 2010, our pension plans were $327 million underfunded compared to an
underfunding of $765 million at December 31, 2009. Our other postretirement plans were underfunded by $214 million and $219 million at
December 31, 2010 and 2009, respectively.
We have multiple non-pension postretirement benefit plans. Our health care plans are generally contributory with participants' contributions
adjusted annually. For purposes of estimating our health care costs, we have assumed health care cost increases to be 7.93 percent per annum for
2011, gradually declining to 5 percent per annum by 2017 and to remain at that level thereafter.
Income taxes
In preparing our Consolidated Financial Statements, we are required to estimate income taxes in each of the jurisdictions in which we
operate. We account for deferred taxes by using the asset and liability method. Under this method, we determine deferred tax assets and
liabilities based on temporary differences between the financial reporting and the tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We
recognize a deferred tax asset when it is more likely than not that the asset will be realized. We regularly review our deferred tax assets for
recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the
reversals of existing temporary differences. To the extent we increase or decrease this allowance in a period, we recognize the change in the
allowance within "Provision for taxes" in the Consolidated Income Statements unless the change relates to discontinued operations, in which
case the change is recorded in "Income (loss) from discontinued operations, net of tax". Unforeseen changes in tax rates and tax laws, as well as
differences in the projected taxable income as compared to the actual taxable income, may affect these estimates.
We operate in numerous tax jurisdictions and, as a result, are regularly subject to audit by tax authorities. We provide for tax contingencies,
including potential tax audits, on the basis of the technical merits of the contingency, including applicable tax law, OECD guidelines, as well as
on items relating to potential audits by tax authorities based on our evaluations of facts and circumstances. Changes in the facts and
circumstances could result in a material change to the tax accruals. We provide for tax contingencies whenever it is deemed more likely than not
that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Although we believe
that our tax estimates are reasonable and that appropriate tax reserves have been made, the final determination of tax audits and any related
litigation could be different than that which is reflected in our income tax provisions and accruals.
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An estimated loss from a tax contingency must be accrued as a charge to income if it is more likely than not that a tax asset has been
impaired or a tax liability has been incurred and the amount of the loss can be reasonably estimated. We apply a two-step approach to recognize
and measure uncertainty in income taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available
evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation
processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50 percent likely of being realized upon
ultimate settlement. The required amount of provisions for contingencies of any type may change in the future due to new developments.
Goodwill and other intangible assets
We review goodwill for impairment annually as of October 1, or more frequently if events or circumstances indicate the carrying value may
not be recoverable. We perform a two-step impairment test on a reporting unit level.
Our reporting units are the same as our divisions for Power Systems, Discrete Automation and Motion, and Low Voltage Products. For
Power Products and Process Automation, we determined that the reporting units are one level below the division, as the different products
produced or services provided by these divisions do not share sufficiently similar economic characteristics to permit testing of goodwill on a
total operating segment level. In the case of Power Products, there are separate reporting units based on the category of product produced—
High-Voltage Products, Medium-Voltage Products and Transformers. In the case of Process Automation, we have determined that there are two
reporting units, the Turbocharger product business and the remainder of Process Automation.
In the first step of the impairment test, we compare the fair value of each reporting unit to its carrying value. The fair value of each
reporting unit is calculated using an income approach, whereby the fair value is calculated based on the present value of future cash flows,
applying a discount rate that represents our weighted-average cost of capital. If the fair value of the reporting unit exceeds the carrying value of
the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. We assess the reasonableness of the fair value
calculations of our reporting units by reconciling the sum of the fair values for all our reporting units to our total market capitalization. On
October 1, 2010, the calculated fair values for each of our reporting units exceeded their respective carrying values and we concluded that none
was "at risk" of failing the goodwill impairment test. Consequently, the second step of the impairment test was not performed. The assumptions
used in the fair value calculation are challenged each year (through the use of sensitivity analysis) to determine the impact on the resulting fair
value of the reporting units. Our sensitivity analysis in 2010 showed no significant change in fair values if the assumptions change (a
1 percentage-point increase in the discount rate would reduce the calculated fair values by approximately 12 percent).
However, if the carrying value of the net assets assigned to the reporting unit were to exceed its fair value, then we would perform the
second step to determine the implied fair value of the reporting unit's goodwill and compare it to the carrying value of the reporting unit's
goodwill. If the carrying value of a reporting unit's goodwill were to exceed its implied fair value, then we would record an impairment loss
equal to the difference. Any goodwill impairment losses would be recorded as a separate line item in the income statement in continuing
operations, unless related to a discontinued operation, in which case the losses would be recorded in "Income (loss) from discontinued
operations, net of tax". There were no goodwill impairment charges in 2010, 2009 and 2008.
We review intangible assets for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable upon the occurrence of certain triggering events, such as a decision to divest a business or projected losses of an entity. We record
impairment charges in "Other income (expense), net", in our Consolidated Income Statements, unless they relate to a
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discontinued operation, in which case the charges are recorded in "Income (loss) from discontinued operations, net of tax".
Cash flow models used in evaluating impairments are dependent on a number of factors including estimates of future cash flows and other
variables and require that we make significant estimates and judgments, involving variables such as sales volumes, sales prices, sales growth,
production and operating costs, capital expenditures, market conditions and other economic factors. Further, discount rates used in discounted
cash flow models to calculate fair values require the determination of variables such as the risk-free rates and equity market risk premiums. We
base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future
results may differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated
effects, if any, on our Consolidated Financial Statements, see "Note 2 Significant accounting policies" to our Consolidated Financial Statements.
RESEARCH AND DEVELOPMENT
Each year, we invest significantly in research and development. Our research and development area focuses on developing and
commercializing the technologies of our businesses that are of strategic importance to our future growth. In 2010, 2009 and 2008, we invested
$1,082 million, $1,037 million and $1,027 million, respectively, or approximately 3.4 percent, 3.3 percent, and 2.9 percent of annual
consolidated revenues, respectively, on research and development activities. We also had expenditures of $253 million, $265 million and
$214 million, respectively, or approximately 0.8 percent, 0.8 percent and 0.6 percent, respectively, of annual consolidated revenues in 2010,
2009 and 2008, on order-related development activities. These are customer- and project-specific development efforts that we undertake to
develop or adapt equipment and systems to the unique needs of our customers in connection with specific orders or projects. Order-related
development amounts are initially recorded in inventories as part of the work in process of a contract and then are reflected in cost of sales at the
time revenue is recognized in accordance with our accounting policies.
In addition to continuous product development, and order-related engineering work, we develop platforms for technology applications in
our automation and power businesses in our Group research and development laboratories, which operate on a global basis. Through active
management of our investment in research and development, we seek to maintain a balance between short-term and long-term research and
development programs and optimize our return on investment.
Our research and development strategy focuses on three objectives:
• to monitor and develop emerging technologies and create an innovative, sustainable technology base for ABB,
• to develop technology platforms that enable efficient product design for our power and automation customers, and
• to create the next generation of power and automation products and systems that we believe will be the engines of profitable
growth.
Universities are the incubators of future technology, and a central task of our research and development team is to transform university
research into industry-ready technology platforms. We collaborate with a number of universities and research institutions to build research
networks and foster new technologies. We believe these collaborations shorten the amount of time required to turn basic ideas into viable
products, and they additionally help us recruit and train new personnel. We have built
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more than 50 university partnerships in the U.S., Europe and Asia, including long-term, strategic relationships with Stanford University, the
Massachusetts Institute of Technology, Carnegie Mellon University, Cambridge University, ETH Zurich and Imperial College London. Our
collaborative projects include research on materials, sensors, micro-engineered mechanical systems, robotics, controls, manufacturing,
distributed power and communication. Common platforms for power and automation technologies are developed around advanced materials,
efficient manufacturing, information technology and data communication, as well as sensor and actuator technology.
Common applications of basic power and automation technologies can also be found in power electronics, electrical insulation, and control
and optimization. Our power technologies, including our insulation technologies, current interruption and limitation devices, power electronics,
flow control and power protection processes, apply as much to large, reliable, blackout-free transmission systems as they do to everyday
household needs. Our automation technologies, including our control and optimization processes, power electronics, sensors and
microelectronics, mechatronics and wireless communication processes, are designed to improve efficiency in plants and factories around the
world, including our own.
Acquisitions
ACQUISITIONS, INVESTMENTS AND DIVESTITURES
During 2010, 2009 and 2008, ABB invested $1,275 million, $159 million and $651 million in 9, 8 and 7 new businesses and joint ventures,
respectively. The amounts exclude changes in cost and equity investments.
The principal acquisition in 2010 was that of the Ventyx group. In June, 2010, we acquired all of the shares of Ventyx Inc., Ventyx
Software Inc. and Ventyx Dutch Holding B.V., representing substantially all of the revenues, assets and liabilities of the Ventyx group. Ventyx
provides software solutions to global energy, utility, communications and other asset-intensive businesses and was integrated into the network
management business within the Power Systems division to form a single unit for energy management software solutions. During 2009 and
2008, acquisitions were not significant either individually or in aggregate. The principal acquisition in 2008 was that of Kuhlman Electric
Corporation (Kuhlman), a U.S.-based transformer company. Kuhlman manufactures a wide range of high-quality transformers for the industrial
and electric utility sectors and has a strong reputation for innovative products and solid, long-term customer relationships. The acquisition was
integrated into our Power Products division in North America and complements both our product range and geographical presence.
Increase in controlling interests in India
In 2010, we increased our ownership interest in ABB Limited, India (our publicly-listed subsidiary in India) from approximately 52 percent
to 75 percent. Cash paid up to December 31, 2010, including transaction costs, amounted to $956 million. The offer of 900 rupees per share
resulted in a charge to "Capital stock and additional paid-in capital" of $838 million, including expenses related to the transaction.
Baldor
In January 2011, we completed the acquisition of Baldor Electric Company (Baldor) for $63.50 per share in cash. Baldor markets, designs
and manufactures industrial electric motors, mechanical power transmission products, drives and generators and employs approximately 7,000
people. In 2009, Baldor had net sales of $1,524 million and an operating profit of $181 million. The resulting cash outflows for ABB in the first
quarter of 2011 amount to approximately $4.2 billion, representing approximately
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$3 billion for the purchase of the shares and approximately $1.2 billion for the repayment of debt assumed upon acquisition.
For more information on our acquisitions, see "Note 3 Acquisitions, divestments and discontinued operations" to our Consolidated
Financial Statements.
Divestitures of businesses and equity-accounted companies
In 2010, 2009 and 2008, we received cash, net of cash disposed, from sales of businesses and equity-accounted companies of $83 million,
$16 million and $27 million, respectively. In relation to transactions included in continuing operations, we recognized gains (losses) in 2010,
2009 and 2008, in "Other income (expense), net", of $12 million, $(1) million and $24 million, respectively. We also recognized gains (losses)
from dispositions, net of tax, in 2010, 2009 and 2008, in "Income (loss) from discontinued operations, net of tax", of $(2) million, $18 million
and $9 million, respectively. Included in the $9 million gain from dispositions, net of tax, in 2008, was a gain of $11 million on the sale of our
50 percent stake in ABB Powertech Transformers, located in South Africa, to Powertech, a wholly-owned subsidiary of the Altron Group. This
business was part of our Power Products division prior to being reclassified to discontinued operations. In 2008, this business had revenues and
income of $29 million and $2 million, respectively, recorded in "Income (loss) from discontinued operations, net of tax". All revenues and
income reported in the year of sale are through the date of divestment.
EXCHANGE RATES
We report our financial results in U.S. dollars. Due to our global operations, a significant amount of our revenues, expenses, assets and
liabilities are denominated in other currencies. As a consequence, movements in exchange rates between currencies may affect:
• our profitability,
• the comparability of our results between periods, and
• the carrying value of our assets and liabilities.
We translate non-USD denominated results of operations, assets and liabilities to USD in our Consolidated Financial Statements. Balance
sheet items are translated to USD using year-end currency exchange rates. Income statement and cash flow items are translated to USD using the
average currency exchange rate over the relevant period.
Increases and decreases in the value of the USD against other currencies will affect the reported results of operations in our Consolidated
Income Statements and the value of certain of our assets and liabilities in our Consolidated Balance Sheets, even if our results of operations or
the value of those assets and liabilities have not changed in their original currency. Because of the impact foreign exchange rates have on our
reported results of operations and the reported value of our assets and liabilities, changes in foreign exchange rates could significantly affect the
comparability of our reported results of operations between periods and result in significant changes to the reported value of our assets, liabilities
and shareholders' equity, as has been the case during the period from 2008 through 2010.
While we operate globally and report our financial results in USD, exchange rate movements between the USD and both the euro and the
Swiss franc are of particular importance to us due to (i) the location of our significant operations and (ii) our corporate headquarters being in
Switzerland.
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The exchange rates between the USD and the EUR and the USD and the CHF at December 31, 2010, 2009 and 2008, were as follows:
The average exchange rates between the USD and the EUR and the USD and the CHF for the years ended December 31, 2010, 2009 and
2008, were as follows:
When we incur expenses that are not denominated in the same currency as the related revenues, foreign exchange rate fluctuations could
affect our profitability. To mitigate the impact of exchange rate movements on our profitability, it is our policy to enter into forward foreign
exchange contracts to manage the foreign exchange transaction risk of our operations.
In 2010, approximately 89 percent of our consolidated revenues were reported in currencies other than USD. Of that amount, the following
percentages were reported in the following currencies:
• Euro, approximately 26 percent,
• Chinese renminbi, approximately 11 percent,
• Swiss franc, approximately 6 percent,
• Swedish krona, approximately 6 percent, and
• Indian rupee, approximately 4 percent.
In 2010, approximately 89 percent of our cost of sales and selling, general and administrative expenses were reported in currencies other
than USD. Of that amount, the following percentages were reported in the following currencies:
• Euro, approximately 25 percent,
Exchange rates into $ 2010 2009 2008
EUR 1.00 1.34 1.44 1.40
CHF 1.00 1.07 0.97 0.94
Exchange rates into $ 2010 2009 2008
EUR 1.00 1.33 1.40 1.47
CHF 1.00 0.97 0.93 0.93
• Chinese renminbi, approximately 10 percent,
• Swedish krona, approximately 6 percent,
• Swiss franc, approximately 5 percent, and
• Indian rupee, approximately 5 percent.
We also incur expenses other than cost of sales and selling, general and administrative expenses in various currencies.
The results of operations and financial position of many of our subsidiaries outside of the United States are reported in the currencies of the
countries in which those subsidiaries are located. We refer to these currencies as "local currencies." Local currency financial information is then
translated into USD at applicable exchange rates for inclusion in our Consolidated Financial Statements.
The discussion of our results of operations below provides certain information with respect to orders, revenues, earnings before interest and
taxes and other measures as reported in USD (as well as in local currencies). We measure period-to-period variations in local currency results by
using a constant foreign exchange rate for all periods under comparison. Differences in our results of
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operations in local currencies as compared to our results of operations in USD are caused exclusively by changes in currency exchange rates.
While we consider our results of operations as measured in local currencies to be a significant indicator of business performance, local
currency information should not be relied upon to the exclusion of U.S. GAAP financial measures. Instead, local currencies reflect an additional
measure of comparability and provide a means of viewing aspects of our operations that, when viewed together with the U.S. GAAP results and
our reconciliations, provide a more complete understanding of factors and trends affecting the business. Because local currency information is
not standardized, it may not be possible to compare our local currency information to other companies' financial measures that have the same or
a similar title. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single
financial measure.
ORDERS
We book and report an order when a binding contractual agreement has been concluded with the customer covering, at a minimum, the
price and scope of products or services to be supplied, the delivery schedule and the payment terms. The reported value of an order corresponds
to the undiscounted value of revenues that we expect to recognize following delivery of the goods or services subject to the order, less any trade
discounts and excluding any value added or sales tax. The value of orders received during a given period of time represents the sum of the value
of all orders received during the period, adjusted to reflect the aggregate value of any changes to the value of orders received during the period
and orders existing at the beginning of the period. These adjustments, which may in the aggregate increase or decrease the orders reported during
the period, may include changes in the estimated order price up to the date of contractual performance, changes in the scope of products or
services ordered and cancellations of orders.
The undiscounted value of revenues we expect to generate from our orders at any point in time is represented by our order backlog.
Approximately 17 percent of the value of total orders we recorded in 2010 were "large orders," which we define as orders from third parties
involving a value of at least $15 million for products or services. Approximately 67 percent of the large orders in 2010 were recorded by our
Power Systems division and 23 percent in our Process Automation division. The Power Products and Discrete Automation and Motion divisions
accounted for the remainder of the total large orders recorded during 2010. The remaining portion of total orders recorded in 2010 was "base
orders," which we define as orders from third parties with a value of less than $15 million for products or services.
The level of orders fluctuates from year to year. Arrangements included in any particular order can be complex and unique to that order.
Portions of our business involve orders for long-term projects that can take months or years to complete and many large orders result in revenues
in periods after the order is booked. However, the level of large orders and orders generally cannot be used to accurately predict future revenues
or operating performance. Orders that have been placed can be cancelled, delayed or modified by the customer. These actions can reduce or
delay any future revenues from the order or may result in the elimination of the order.
PERFORMANCE MEASURES
We evaluate the performance of our divisions primarily based on orders received, revenues, earnings before interest and taxes (EBIT) and
EBIT as a percentage of revenues (EBIT margin). EBIT is the amount resulting from the subtraction of our cost of sales, selling, general and
administrative expenses, non-order related research and development expenses, and other income (expense), net, from our revenues.
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Our consolidated results from operations were as follows:
ANALYSIS OF RESULTS OF OPERATIONS
A more detailed discussion of the orders, revenues and EBIT for our divisions follows in the sections below entitled "Power Products,"
"Power Systems," "Discrete Automation and Motion", "Low Voltage Products," "Process Automation" and "Corporate and Other." Orders and
revenues of our divisions include interdivisional transactions which are eliminated in the "Corporate and Other" line in the tables below.
Orders
($ in millions, except per share data in $) 2010 2009 2008
Orders 32,681 30,969 38,282
Order backlog at December 31, 26,193 24,771 23,837
Revenues 31,589 31,795 34,912
Cost of sales (22,060 ) (22,470 ) (23,972 )
Gross profit 9,529 9,325 10,940
Selling, general and administrative expenses (4,615 ) (4,491 ) (4,795 )
Non-order related research and development expenses (1,082 ) (1,037 ) (1,027 )
Other income (expense), net (14 ) 329 (566 )
Earnings before interest and taxes 3,818 4,126 4,552
Net interest and other finance expense (78 ) (6 ) (34 )
Provision for taxes (1,018 ) (1,001 ) (1,119 )
Income from continuing operations, net of tax 2,722 3,119 3,399
Income (loss) from discontinued operations, net of tax 10 17 (21 )
Net income 2,732 3,136 3,378
Net income attributable to noncontrolling interests (171 ) (235 ) (260 )
Net income attributable to ABB 2,561 2,901 3,118
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax 2,551 2,884 3,142
Net income 2,561 2,901 3,118
Basic earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax 1.12 1.26 1.37
Net income 1.12 1.27 1.36
Diluted earnings per share attributable to ABB shareholders :
Income from continuing operations, net of tax 1.11 1.26 1.37
Net income 1.12 1.27 1.36
% Change
($ in millions) 2010 2009 2008 2010 2009
Power Products 9,778 10,940 13,627 (11 )% (20 )%
Power Systems 7,896 7,830 7,408 1 % 6 %
Discrete Automation and Motion 5,862 4,702 7,129 25 % (34 )%
Low Voltage Products 4,686 4,079 4,865 15 % (16 )%
Process Automation 7,383 6,684 9,244 10 % (28 )%
Operating divisions 35,605 34,235 42,273 4 % (19 )%
Corporate and Other (1) (2,924 ) (3,266 ) (3,991 ) n.a. n.a.
Total 32,681 30,969 38,282 6 % (19 )%
(1)
Includes interdivisional eliminations
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Total orders in 2010 increased by 6 percent (4 percent in local currencies) compared to 2009 as the global economy began to recover, as
reflected in increased spending by industrial customers in energy-efficient automation and power solutions to increase productivity and quality.
Investments by utilities in large power transmission projects, however, remained cautious.
In 2010, orders in our Power Products division decreased by 11 percent (13 percent in local currencies) as transmission spending remained
low, resulting in lower order volumes, especially in large power transformers and high voltage equipment. The economic recovery however did
lead to an increase in the power distribution segments with higher orders in the medium voltage product lines. Orders in our Power Systems
division were up 1 percent (down 1 percent in local currencies). Large orders were down, while the division has seen a large increase in base
orders in substations and power generation due to an ongoing focus on renewable energy and grid reliability. Orders in our automation divisions,
which are typically earlier in the business cycle, have benefited from increased investments by industrial customers on the back of an upturn in
the global economy. Discrete Automation and Motion orders grew by 25 percent (23 percent in local currencies) as industrial customers
increased investments in automation solutions to increase productivity and energy efficiency. Within the Discrete Automation and Motion
division, order growth was especially strong in the robotics business, which experienced a turnaround, and in the low voltage drives business.
Towards the end of 2010, mid- to late-cycle businesses also began seeing order growth. Orders in the Low Voltage Products division increased
by 15 percent (15 percent in local currencies) as demand from general industry and construction improved in most regions. In our Process
Automation division, orders grew by 10 percent (7 percent in local currencies) as investments in the energy and commodity-based sectors
recovered and activity in the marine business also improved, however from low levels.
As base orders began recovering on the upturn in the global economy, we continued to see for the first half of 2010 that large scale
investments in both industry and utilities were delayed as customers assessed the stability of the recovery. Later in 2010 customers became more
optimistic, which materialized into a number of large order awards in the fourth quarter of 2010. However, this attitude shift was not enough to
compensate the low levels of large orders in the first half of 2010. Consequently, large orders were down 17 percent (20 percent in local
currencies).
Total orders in 2009 decreased 19 percent (13 percent in local currencies) compared to 2008 due to (i) the global economic downturn which
had significantly weakened demand particularly in the industrial and construction related markets and (ii) price erosion in both utilities and
industrial sectors in many geographical markets.
In 2009, orders in our Power Products division declined 20 percent (14 percent in local currencies) as most customers held back their
investment plans as a response to market uncertainties amid the global financial crisis. The government-funded stimulus programs for funding
electric power investments had not had a significant impact on orders in this division. Orders declined across all product lines in the mediumvoltage
products, high-voltage products and transformers businesses. Orders in our Power Systems division increased 6 percent (17 percent in
local currencies), benefiting from strong demand in the power generation and transmission sectors where infrastructure projects, addressing the
integration of renewals, energy efficiency improvement and environmental concerns, were realized. Orders in our Discrete Automation and
Motion Products division declined 34 percent (30 percent in local currencies), on weak demand in the automotive and industrial sectors. The
Low Voltage Products division orders declined 16 percent (11 percent in local currencies) primarily as a result of contraction in industrial
markets particularly the building, residential and commercial construction markets. In our Process Automation division, orders declined
28 percent (22 percent in local currencies) as investments in the process automation sector have mostly been delayed due to limited access to
capital and increased uncertainty of future demand.
In spite of the weakened economic conditions in many countries around the world, large orders increased as power utilities continued to
realize their high-priority project commitments particularly in
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the grid systems and substations sectors. Large orders in the industrial sectors however remained weak, as large scale investments in this area
were mostly delayed due to unstable global demand.
Driven by higher investments in large scale utilities projects, large orders in 2009 increased 10 percent (25 percent in local currencies) to
$6,603 million, compared to the 5 percent increase (flat in local currencies) reported in 2008. The share of large orders compared to total orders
increased from 16 percent in 2008 to 21 percent in 2009. The increase in the share of large orders in 2009 was driven not only by growth in large
orders volume, but also by a decline in base orders whose volume during the year decreased by 25 percent (20 percent in local currencies).
We determine the geographic distribution of our orders based on the location of the customer, which may be different from the ultimate
destination of the products' end use. The geographic distribution of our consolidated orders was as follows:
% Change
($ in millions) 2010 2009 2008 2010 2009
Europe 13,781 11,983 16,633 15 % (28 )%
The Americas 6,223 5,996 7,235 4 % (17 )%
Asia 8,720 8,197 10,242 6 % (20 )%
Middle East and Africa 3,957 4,793 4,172 (17 )% 15 %
Total 32,681 30,969 38,282 6 % (19 )%
In 2010, order volumes grew in all markets except in the Middle East and Africa which were down 17 percent (19 percent in local
currencies), where we were unable to repeat the large order intake of 2009 from utility and oil and gas customers in Algeria, Kuwait and Saudi
Arabia. Orders from Europe grew 15 percent (16 percent in local currencies) as a result of large order awards to the Power Systems division
from Belgium, Germany, Norway and Sweden as well as a turnaround in the robotics business of the Discrete Automation and Motion division.
In the Americas, orders increased 4 percent (down 1 percent in local currencies) on strong growth in the automation divisions, while Power
Systems' orders were down as the level of large orders in Brazil in 2009 could not be matched in 2010. Orders received in the Power Products
division in the Americas remained at the same level as 2009 as lower volumes in the transformer business were offset by growth in high and
medium voltage equipment. Orders in Asia increased 6 percent (2 percent in local currencies) as growth in the automation divisions offset lower
volumes in the transformer business in China.
Orders from Europe in 2009 were down 28 percent (20 percent in local currencies) as growth in the Power Systems division, driven mainly
by power grid upgrades in Western Europe, was more than offset by broad declines in all other divisions, reflecting the generally weak economic
environment. Orders in the Americas decreased 17 percent (11 percent in local currencies) driven by a 33 percent decline in the United States on
account of weak demand in the utilities and industrial sectors. Orders however grew significantly in South America due to strong demand in the
utilities sector particularly in Brazil. Orders in Asia were down 20 percent (16 percent in local currencies), mainly due to lower demand in all
sectors in countries across the region especially for the Process Automation business. Orders in MEA increased 15 percent (22 percent in local
currencies) resulting from higher investment in the utility and oil and gas sectors. In this region, orders grew strongly in Algeria driven primarily
by a very large Process Automation project. Orders also increased significantly in Kuwait and Saudi Arabia as these countries benefited from
higher investment in power infrastructure.
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Order backlog
Order backlog increased 6 percent (4 percent in local currency) compared to 2009, following the growth in orders received. Growth of order
backlog in the Power Systems division continued to be driven by large orders which typically have longer execution times. Order backlog also
increased in the Discrete Automation and Motion and Low Voltage Products divisions as orders received grew faster than revenues reflecting
market recovery in the industrial sector. Orders backlog was flat in the Process Automation division and in the Power Products division backlog
declined, primarily due to weak orders in the transmission sector.
Changes in the order backlog balance at the end of 2009 as compared to the end of 2008 were mainly due to foreign currency exchange
fluctuations. The order backlog in the Power Systems division, however, increased due to the high volume of large orders booked throughout
2009.
Revenues
December 31, % Change
($ in millions) 2010 2009 2008 2010 2009
Power Products 7,930 8,226 7,977 (4 )% 3 %
Power Systems 10,929 9,675 7,704 13 % 26 %
Discrete Automation and Motion 3,350 3,046 3,595 10 % (15 )%
Low Voltage Products 838 734 710 14 % 3 %
Process Automation 5,530 5,523 6,230 0 % (11 )%
Operating divisions 28,577 27,204 26,216 5 % 4 %
Corporate and Other (1) (2,384 ) (2,433 ) (2,379 ) n.a. n.a.
Total 26,193 24,771 23,837 6 % 4 %
(1)
Includes interdivisional eliminations
% Change
($ in millions) 2010 2009 2008 2010 2009
Power Products 10,199 11,239 11,890 (9 )% (5 )%
Power Systems 6,786 6,549 6,912 4 % (5 )%
Discrete Automation and Motion 5,617 5,405 6,588 4 % (18 )%
Low Voltage Products 4,554 4,071 4,747 12 % (14 )%
Process Automation 7,432 7,839 8,397 (5 )% (7 )%
Operating divisions 34,588 35,103 38,534 (1 )% (9 )%
Corporate and Other (1) (2,999 ) (3,308 ) (3,622 ) n.a. n.a.
Total 31,589 31,795 34,912 (1 )% (9 )%
(1)
Includes interdivisional eliminations
Revenues in 2010 declined 1 percent (2 percent in local currencies) due primarily to the impact of lower orders received in the prior year.
The short-cycle business improvement in the second half of the year and the good large order execution in 2010 could not compensate for the
impact of weak revenues generated at the beginning of the year.
Revenues in the Power Products division decreased 9 percent (11 percent in local currencies) due to lower opening backlog and continued
weak orders in high voltage and transformers products. The Power Systems division's revenues increased 4 percent (2 percent in local
currencies) on order execution especially in substations and power generation projects. Revenues in the Discrete Automation and Motion
division increased 4 percent (3 percent in local currencies) driven by a turnaround in the robotics business, as well as growth in industrial and
commercial sectors in many countries around the world. Revenues rose 12 percent (13 percent in local currencies) in the Low Voltage Products
division
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reflecting a strong recovery of our short-cycle business. In the Process Automation division, revenues decreased 5 percent (6 percent in local
currencies) mainly due to a decline of orders in the metal, marine and full services businesses.
Revenues in 2009 declined 9 percent (4 percent in local currencies), primarily driven by lower orders received in the shorter-cycle product
business, price erosion, and to a lesser extent, delivery delays triggered by customer schedule changes.
Revenues in the Power Products division decreased 5 percent (1 percent in local currencies) despite a double-digit decline in orders, as the
division benefited from high initial backlog, particularly in transformers and high-voltage products. The Power Systems division reported a
decline in revenues of 5 percent (1 percent increase in local currencies) where a significant increase of revenues from project implementation in
grid systems mostly offset the decline of revenues in substations projects. Revenues in the Discrete Automation and Motion division decreased
18 percent (14 percent in local currencies) driven by (i) lower orders received, as the division generated a significant portion of its revenues from
the book-and-bill orders of standard products and (ii) a decline of revenues in robotics due to declining orders and a weak backlog. Revenues in
the Low Voltage Products division declined 14 percent (9 percent in local currencies) driven by lower orders in all business units. Revenues in
the Process Automation division declined 7 percent (1 percent in local currencies) as a result of declining backlog in pulp and paper, process
industries products and turbocharging. Revenues, however, increased in the oil and gas and in the minerals businesses of the Process Automation
division upon execution of large projects.
We determine the geographic distribution of our revenues based on the location of the customer, which may be different from the ultimate
destination of the products' end use. The geographic distribution of our consolidated revenues was as follows:
% Change
($ in millions) 2010 2009 2008 2010 2009
Europe 12,378 13,093 15,815 (5 )% (17 )%
The Americas 6,213 6,049 6,428 3 % (6 )%
Asia 8,872 8,684 8,967 2 % (3 )%
Middle East and Africa 4,126 3,969 3,702 4 % 7 %
Total 31,589 31,795 34,912 (1 )% (9 )%
In 2010, revenues in Europe decreased 5 percent (4 percent in local currencies) driven mainly by weak revenue generation from the utilities
sector in Germany, Spain and also the industrial sector in Finland, Denmark and Norway. Revenues in other major countries in the region were
slightly lower or nearly flat compared to 2009 except in Italy and Netherlands where revenues increased in all divisions. Revenues from the
Americas increased 3 percent (decreased 1 percent in local currencies) as a result of higher invoicing from the execution of large orders in Brazil
which more than offset lower revenues in the U.S. transmission and distribution market. Revenues from Asia increased 2 percent (decreased
2 percent in local currencies) as revenues increased in China, triggered by growth in the industrial sector and decreased in India (in local
currencies) on account of weak orders in both utilities and industrial sectors. Revenues in MEA increased 4 percent (4 percent in local
currencies) driven by the execution of large orders in system businesses in Kuwait, Iraq, Saudi Arabia and Algeria which were partly offset by
lower revenues in Congo and Qatar.
In 2009, revenues in Europe decreased 17 percent. Revenues were lower in all major countries within the region including Germany and
Switzerland due to weak orders and declining backlog especially in the industrial sector. Revenues from the Americas were down 6 percent
driven by lower orders in the U.S. market. Revenues however increased in Brazil and Canada on the execution of large projects in the power
utilities sector. Revenues from Asia decreased 3 percent with growth in China and South Korea offset by declines in India, Australia and Japan.
Revenues from MEA increased
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7 percent backed by strong orders and high initial backlog of large projects in the Power Products, Power Systems and Process Automation
divisions.
Cost of sales
Cost of sales consists primarily of labor, raw materials and components but also includes expenses for warranty, contract losses and project
penalties, as well as order-related development expenses incurred in connection with projects for which corresponding revenues were
recognized.
In 2010, cost of sales decreased 2 percent (3 percent in local currencies) to $22,060 million in line with the decline in revenues volume.
Cost of sales, as a percentage of revenues, decreased to 69.8 percent from 70.7 percent in 2009. The reduction in cost of sales reflected measures
mainly taken in the areas of supply management, global footprint and operational excellence as part of the cost take-out program. Restructuring
programs implemented in many countries also helped to reduce costs as our operations benefited from higher production utilization. Savings
from these programs were however partly offset by cost overruns in our cables business in our Power Systems division (see "Item 5. Operating
and Financial Review and Prospects—Analysis of Results of Operations—Power Systems"). Improvement in the cost of sales as a percentage of
revenues in 2010 was also limited by the continued impact of price erosion.
Cost of sales decreased 6 percent to $22,470 million in 2009, mainly due to lower revenues. However, as a percentage of revenues, cost of
sales increased to 70.7 percent from 68.7 percent in 2008. This increase was primarily attributable to higher under-absorption costs arising from
lower business volumes, the impact of price erosion, higher restructuring-related charges, and changes in business and product mix (the
proportion of revenues from high margin businesses is relatively lower in 2009). The impact of these factors was partly offset by savings realized
from measures taken in the areas of supply management, global footprint and operational excellence.
Selling, general and administrative expenses
The components of selling, general and administrative expenses were as follows:
($ in millions) 2010 2009 2008
Selling expenses (2,947 ) (2,868 ) (2,943 )
Selling expenses as a percentage of orders received 9.0 % 9.3 % 7.7 %
General and administrative expenses (1,668 ) (1,623 ) (1,852 )
General and administrative expenses as a percentage of revenues 5.3 % 5.1 % 5.3 %
Total selling, general and administrative expenses (4,615 ) (4,491 ) (4,795 )
Total selling, general and administrative expenses as a percentage of
revenues 14.6 % 14.1 % 13.7 %
Total selling, general and administrative expenses as a percentage of
the average of orders received and revenues 14.4 % 14.3 % 13.1 %
In 2010, selling expenses increased 3 percent (2 percent in local currencies) due to (i) expenses from newly acquired companies, (ii) more
sales resources employed, especially in emerging markets to support order growth and (iii) an increase in variable selling expenses, such as
commissions and the costs associated with pursuing orders. Due to the higher orders volume, selling expenses as a percentage of orders received
decreased to 9.0 percent from 9.3 percent in 2009.
Selling expenses in 2009 decreased 3 percent from 2008 (but increased 3 percent in local currencies). The local currency increase was the
result of an increase in doubtful debt allowance, higher expenses associated with longer tender phases in our systems business, offset in part by
strict cost controls leading to a reduction of expenses and lower volume-related expenses such as sales commissions. Expressed as a percentage
of orders received, selling expenses increased 1.6 percentage-points in 2009, mainly the result of lower orders received.
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In 2010, general and administrative expenses increased 3 percent (2 percent in local currencies) compared to 2009. Excluding expenses
from newly acquired companies, general and administrative expenses were flat (decreased 1 percent in local currencies).
In 2009, general and administrative expenses decreased 12 percent, reflecting savings achieved from our cost take-out program. Total
general and administrative expenses, as a percentage of revenues, decreased to 5.1 percent from 5.3 percent in 2008.
Non-order related research and development expenses
In 2010, non-order related research and development expenses increased 4 percent (4 percent in local currencies) to $1,082 million in line
with our commitment to maintain a high level of research and development activity.
In 2009, non-order related research and development expenses increased 1 percent (6 percent in local currencies) compared to 2008.
Non-order related research and development expenses as a percentage of revenues increased to 3.4 percent in 2010 after increasing to 3.3
percent in 2009 from 2.9 percent in 2008.
Other income (expense), net
($ in millions) 2010 2009 2008
Restructuring expenses (1) (54 ) (111 ) (5 )
Capital gains, net 51 14 73
Asset write-downs (57 ) (50 ) (11 )
Income from licenses, equity-accounted
companies and other income (expense) 46 476 (623 )
Total (14 ) 329 (566 )
(1)
Excluding asset write-downs
"Other income (expense), net", typically consists of restructuring expenses, gains or losses from the sale of businesses, gains or losses from
the sale or disposal of property, plant and equipment, asset write-downs, our share of income or loss from equity-accounted companies and
license income.
Restructuring and related expenses are recorded in various lines within the Consolidated Income Statements depending on the nature of the
charges. In 2010, restructuring expenses reported in "Other income (expense), net" were incurred for restructuring projects across all our
divisions, principally in the Process Automation, Discrete Automation and Motion as well as the Power Products divisions. In 2009,
restructuring expenses reported in "Other income (expense), net" were incurred for restructuring projects in all of our divisions but mainly in the
Discrete Automation and Motion and Process Automation divisions. In 2008, restructuring expenses reported in "Other income (expense), net"
were incurred for restructuring projects mainly in the Power Products and Process Automation divisions.
In 2010, "Capital gains, net" consisted mainly of $35 million in gains on the sale of land and buildings, mainly in Sweden, Norway and
Austria, as well as a $13 million gain on the sale of an equity-accounted company in Colombia. In 2009, "Capital gains, net" consisted primarily
of gains from the sale of real estate properties, mainly in Norway, France, Switzerland and the Netherlands. In 2008, "Capital gains, net"
consisted mainly of $14 million in gains from the sale of shares and participations, $10 million income from the release of a provision from a
legal claim settlement related to the sold Air Handling business and $47 million capital gains from the sale of real estate properties, mainly in
Switzerland, Brazil, Italy, Norway, the United Kingdom, Mexico, and Poland. Additionally, in 2008, we
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recorded adjustments to the gain on the sale of Jorf Lasfar and Neyveli (two power plants in which we held a 50 percent stake) of $16 million
related to the favorable outcome on an outstanding tax case.
In 2010, "Asset write-downs" included $23 million for the impairment prior to the sale of two equity-accounted companies in the Ivory
Coast, and other impairments and write-downs of tangible and intangible assets primarily related to Russia, Thailand, Czech Republic and the
United States. Asset write-downs in 2009 included the impairment of certain fixed assets in the United States ($10 million) and other
impairments and write-downs of tangible and intangible assets primarily relating to ongoing restructuring programs in various countries. Asset
write-downs in 2008 mainly related to the distributed energy business in Great Britain and other minor impairments.
In 2010, "Income from licenses, equity-accounted companies and other income (expense)" primarily consist of a $22 million release of
provisions and income of $13 million from a break-fee related to the withdrawn bid to acquire Chloride Group PLC. In 2009, "Income from
licenses, equity-accounted companies and other income (expense)" primarily consisted of the partial release of provisions related to the
investigations in the power transformers business after the European Commission imposed a fine of 33.75 million euros (equivalent to
$49 million on date of payment) in October 2009. Additionally, license income of approximately $5 million, mainly from Switzerland and
Germany, was included in this line item. In 2008, "Income from licenses, equity-accounted companies and other income (expense)" primarily
consisted of provisions for the ongoing investigations in the power transformers business by the European Commission, the German Federal
Cartel Office, as well as the investigations by the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DoJ)
which were recorded in Corporate and Other (see "Note 15 Commitments and contingencies" to our Consolidated Financial Statements). Income
from equity-accounted companies in 2008 was generated from our equity ventures investment in Colombia and other investments in Italy,
Finland and Germany and license income was generated mainly from Japan.
Earnings before interest and taxes
% Change
($ in millions) 2010 2009 2008 2010 2009
Power Products 1,622 1,969 2,100 (18 )% (6 )%
Power Systems 111 388 592 (71 )% (34 )%
Discrete Automation and Motion 926 557 1,066 66 % (48 )%
Low Voltage Products 806 519 819 55 % (37 )%
Process Automation 755 643 958 17 % (33 )%
Operating divisions 4,220 4,076 5,535 4 % (26 )%
Corporate and Other (402 ) 50 (983 ) n.a. n.a.
Total 3,818 4,126 4,552 (7 )% (9 )%
In 2010 EBIT decreased 7 percent (8 percent in local currencies) while in 2009, EBIT decreased 9 percent (8 percent in local currencies) as
a result of the factors discussed above.
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EBIT margins were as follows:
In 2010, EBIT margin in the operating divisions increased, driven by a strong recovery in the short-cycle business, particularly in our
automation divisions. Price pressures continued in 2010; however the impact on earnings was more than offset by savings generated from the
cost take-out program. EBIT margin in 2010 was lower in Power Products compared to 2009, mainly due to lower revenues (see "Item 5.
Operating and Financial Review and Prospects—Analysis of Results of Operations—Power Products"), while in Power Systems EBIT margin
declined as a result of losses in the cables business (see "Item 5. Operating and Financial Review and Prospects—Analysis of Results of
Operations—Power Systems").
In 2009, EBIT margins in the divisions were negatively impacted by restructuring-related costs, price pressures mainly in our short-cycle
businesses, lower volume and decreased capacity utilization, and lower revenues from higher-margin product businesses. These impacts were
partly offset by cost savings in sourcing, general and administrative expenses as well as footprint adjustments and operational excellence
initiatives. The release of compliance provisions recorded in "Corporate and Other" positively impacted the consolidated margin in 2009
compared to 2008.
Net interest and other finance expense
(in %) 2010 2009 2008
Power Products 15.9 17.5 17.7
Power Systems 1.6 5.9 8.6
Discrete Automation and Motion 16.5 10.3 16.2
Low Voltage Products 17.7 12.7 17.3
Process Automation 10.2 8.2 11.4
Operating divisions 12.2 11.6 14.4
Total 12.1 13.0 13.0
Net interest and other finance expense consists of "Interest and dividend income" offset by "Interest and other finance expense".
"Interest and other finance expense" includes interest expense on our debt, the amortization of upfront costs associated with our credit
facility and our debt securities, commitment fees on our bank facility and exchange losses on financial items, offset by gains on marketable
securities and exchange gains on financial items.
($ in millions) 2010 2009 2008
Interest and dividend income 95 121 315
Interest and other finance expense (173 ) (127 ) (349 )
Net interest and other finance expense (78 ) (6 ) (34 )
"Interest and dividend income" decreased in 2010 compared to 2009. This decrease is primarily due to the lower level of interest rates
during 2010 as a whole, compared to 2009. During the first six months of 2009, interest rates on euro-denominated balances, which constitute a
significant portion of our total "Cash and equivalents" and "Marketable securities and short-term investments" balances, were higher than during
the rest of 2009 and 2010.
"Interest and dividend income" decreased in 2009 compared to 2008 due to the continued fall in market interest rates and despite the
increase of $1,829 million in our net cash (defined as "Cash and equivalents" and "Marketable securities and short-term investments" less the
sum of "Short-term debt and current maturities of long-term debt" and "Long-term debt"—see "Liquidity and Capital Resources" for further
discussion).
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"Interest and other finance expense" increased in 2010 compared to 2009. However, the 2009 figure of $127 million includes the realization
of foreign exchange gains on certain government bonds that were recorded in "Accumulated other comprehensive loss" at December 31, 2008
(as described below). If these gains are excluded to allow comparability between 2009 and 2008, "Interest and other finance expense" decreased
compared to 2009, reflecting the continued low level of interest rates throughout 2010.
"Interest and other finance expense" decreased in 2009 compared to 2008 primarily due to certain one-off items described below and the
overall fall in market interest rates over the period. Firstly, in 2008, we recorded a $20 million other-than-temporary impairment on availablefor-sale
equity fund securities held by our captive insurance business, as we did not expect the market values of these securities to recover to
their cost basis in the near term, given the market conditions at that time. Secondly, at December 31, 2008, we recorded $102 million in foreign
exchange losses on the remeasurement into U.S. dollars of funding (in euro) of our euro-denominated investment in government bonds,
designated as available-for-sale securities. The corresponding foreign exchange gains on these securities were part of their change in market
values recorded in "Accumulated other comprehensive loss" in equity at December 31, 2008 and were the result of the significant move in the
EUR/USD exchange rate in the month of December 2008 and the amount of the EUR-denominated funding of these securities (1.06 billion
euro). The foreign exchange gains on the government bonds were released to the income statement in 2009, when these securities matured and
contributed to the reduction in the total "Interest and other finance expense" in 2009 compared to 2008.
Provision for taxes
($ in millions) 2010 2009 2008
Income from continuing operations,
before taxes 3,740 4,120 4,518
Provision for taxes (1,018 ) (1,001 ) (1,119 )
Effective tax rate for the year 27.2 % 24.3 % 24.8 %
The provision for taxes in 2010 represented an effective tax rate of 27.2 percent and included:
• a net increase in valuation allowance on deferred taxes by $60 million, as we determined it was no longer more likely than not
that such deferred tax assets would be realized. This amount included $44 million related to certain of our operations in Central
Europe.
The provision for taxes in 2009 represented an effective tax rate of 24.3 percent and included:
• the net reduction in valuation allowance of approximately $46 million on deferred taxes, as we determined it was more likely than
not that such deferred tax assets would be realized. This net reduction in valuation allowance included a benefit of $60 million
related to our operations in Central Europe.
• a benefit of approximately $74 million related to the release of provisions for previously disclosed investigations by European
authorities into suspect payments and alleged anti-competitive practices that were recognized as income for financial accounting
purposes, but were not taxable.
Certain provisions recorded as an expense in 2008 and the release of certain of these provisions in 2009, primarily related to alleged anticompetitive
practices, originated in jurisdictions with a tax rate other than the weighted-average tax rate.
The provision for taxes in 2008 represented an effective tax rate of 24.8 percent and included:
• the net reduction in valuation allowance of approximately $414 million on deferred taxes, as we determined it was more likely
than not that such deferred tax assets would be realized. The
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reduction in valuation allowance was predominantly related to our operations in North America (of approximately $330 million).
• an expense of approximately $140 million relating to a pending tax dispute in Northern Europe.
• approximately $100 million related to costs of previously disclosed investigations by the U.S. and European authorities into
suspect payments and alleged anti-competitive practices that were deducted for financial accounting purposes, but were not tax
deductible.
Income from continuing operations, net of tax
As a result of the factors discussed above, income from continuing operations, net of tax, decreased by $397 million to $2,722 million in
2010 compared to 2009, and decreased by $280 million to $3,119 in 2009 compared to 2008.
Income (loss) from discontinued operations, net of tax
"Income (loss) from discontinued operations, net of tax" was as follows:
The $23 million net income in "Other" in 2010 included $29 million related to the release of provisions for certain environmental
obligations that were subsequently settled in February 2011, offset by several insignificant expenses. For further discussion on the discontinued
operations see "Note 3 Acquisitions, divestments and discontinued operations" and "Note 15 Commitments and contingencies" to our
Consolidated Financial Statements.
Net income attributable to ABB
($ in millions) 2010 2009 2008
Downstream Oil and Gas business sold in
2007 (13 ) 21 (5 )
Transformer business in South Africa sold
in 2008 — — 13
Asbestos — — (31 )
Other 23 (4 ) 2
Total 10 17 (21 )
As a result of the factors discussed above, net income attributable to ABB decreased by $340 million to $2,561 million in 2010 compared to
2009 and decreased by $217 million to $2,901 million in 2009 compared to 2008.
Earnings (loss) per share attributable to ABB shareholders
(in $) 2010 2009 2008
Income from continuing operations, net of
tax:
Basic 1.12 1.26 1.37
Diluted 1.11 1.26 1.37
Net income attributable to ABB:
Basic 1.12 1.27 1.36
Diluted 1.12 1.27 1.36
Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the
year. Diluted earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the
year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call
options; outstanding options and shares granted subject to certain conditions
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under our share-based payment arrangements. See "Note 20 Earnings per share" to our Consolidated Financial Statements.
Divisional analysis
Power Products
Orders
The financial results of our Power Products division were as follows:
% Change
($ in millions except EBIT Margin %) 2010 2009 2008 2010 2009
Orders 9,778 10,940 13,627 (11 )% (20 )%
Order backlog at December 31, 7,930 8,226 7,977 (4 )% 3 %
Revenues 10,199 11,239 11,890 (9 )% (5 )%
EBIT 1,622 1,969 2,100 (18 )% (6 )%
EBIT Margin % (1) 15.9 % 17.5 % 17.7 % n.a. n.a.
(1)
EBIT Margin % is calculated as EBIT divided by revenues
In 2010, orders were down 11 percent (13 percent in local currencies) primarily due to lower large orders in the transmission sector, which
could not be compensated by an improvement in the distribution and industrial sectors. Order intake was further impacted by lower price levels
due to weaker market conditions and increased competition.
In 2009, orders were down 20 percent (14 percent in local currencies) primarily due to lower demand from industrial and constructionrelated
markets as well as from the distribution sector. Order intake was further impacted by lower price levels due to weaker market conditions
and the pass-through of reduced commodity costs.
The geographic distribution of orders as a percentage of total orders for our Power Products division was as follows:
(in %) 2010 2009 2008
Europe 35 34 38
The Americas 26 23 24
Asia 29 33 30
Middle East and Africa 10 10 8
Total 100 100 100
In 2010, the share of orders from Europe and the Americas improved despite declining order intake due to lower volumes in emerging
markets. We saw a significant slowdown in China, resulting from local buying preference, and also in India. MEA remained flat as a percentage
of total orders but declined in volume terms due to less large orders.
In 2009, the share of orders from Europe and the Americas decreased due to unfavorable macro-economic conditions. However, these
regions continued to generate over 50 percent of our order volume. Meanwhile, emerging markets in Asia and MEA showed relatively greater
resilience and continued to invest in infrastructure projects, leading to an increase in their share of the total order volume.
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Order backlog
In 2010, order backlog decreased 4 percent (5 percent in local currencies) after increasing 3 percent (decreased 2 percent in local currencies)
in 2009. This was mainly the result of the lower large order intake in the transmission sector which forms a significant part of the order backlog.
Revenues
In 2010, revenues decreased 9 percent (11 percent in local currencies) due to the slower conversion cycle of large projects in the order
backlog. However, the short and mid-cycle businesses (for example, medium-voltage equipment and distribution transformers), increased their
contribution as a result of the revival in the distribution and industrial sectors.
Revenues decreased 5 percent (1 percent in local currencies) in 2009 due to the lower contribution of shorter-cycle businesses mainly
related to the industrial and construction sectors, as reflected in the order intake. This includes businesses such as medium-voltage equipment
and distribution transformers.
The geographic distribution of revenues for our Power Products division was as follows:
In 2010, the geographical distribution of revenues followed similar trends as orders but revenues were down in all the regions. Europe's
share declined marginally due to slower order backlog conversion of large projects and the Americas' share improved due to increased book and
bill revenues from the distribution related businesses. In Asia and MEA the share of revenues remained at similar levels as the previous year.
In 2009, the geographical distribution of revenues followed similar trends as orders but Europe's share declined slightly due to lower
revenues in Russia and a challenging market environment. The Americas reported marginally positive growth in local currencies mainly due to
increased revenues from transmission sector related products which compensated for the lower sales of distribution related products. In Asia,
revenues dipped marginally due to delays in customer acceptance of deliveries due to the slowdown in execution of infrastructure projects in a
weaker market environment. MEA recorded positive growth in revenues, as several large projects were executed during the year.
Earnings before interest and taxes
Lower EBIT and EBIT margin in 2010 were mainly the result of lower cost absorption on the basis of lower revenues as well as the impact
of price declines in certain emerging markets. In 2009, EBIT and EBIT margin were lower, mainly due to reduced revenues and a lower share of
higher-margin short-cycle product revenues compared to 2008. Total restructuring-related charges in 2010 and 2009 amounted to $44 million
and $77 million, respectively. In 2008, the transformer consolidation program was completed and $46 million of charges were recorded.
Fiscal year 2011 outlook
(in %) 2010 2009 2008
Europe 34 35 38
The Americas 26 25 24
Asia 31 31 30
Middle East and Africa 9 9 8
Total 100 100 100
We see signs of improvement in the power distribution and industrial sectors, which is reflected in our distribution related businesses such
as medium voltage products and distribution transformers. Investments in power transmission are expected to pick up in the second half of 2011.
The medium and long-term growth drivers for this business remain intact. This includes the buildup of capacity in
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emerging markets, increasing focus on renewables, energy efficiency, development of smarter, more reliable and flexible grids as well as
economic stimulus packages targeted at strengthening power infrastructure.
Power Systems
Orders
The financial results of our Power Systems division were as follows:
% Change
($ in millions except EBIT Margin %) 2010 2009 2008 2010 2009
Orders 7,896 7,830 7,408 1 % 6 %
Order backlog at December 31, 10,929 9,675 7,704 13 % 26 %
Revenues 6,786 6,549 6,912 4 % (5 )%
EBIT 111 388 592 (71 )% (34 )%
EBIT Margin % (1) 1.6 % 5.9 % 8.6 % n.a. n.a.
(1)
EBIT Margin % is calculated as EBIT divided by revenues
Order intake in 2010 increased 1 percent (decreased 1 percent in local currencies). Strong growth in base orders, seen in industrial and
distribution markets, more than compensated for a decrease in large orders resulting from the timing of large scale transmission infrastructure
investments. The demand drivers for power systems business remain favorable, as the focus on renewable energy, interconnections and grid
reliability is expected to continue. Large orders secured in 2010 included HVDC Light® transmission links connecting three North Sea wind
farms to the German power grid (project DolWin with value of approximately $700 million), and another between the Nordic and Baltic regions
(project NordBalt with value of approximately $580 million). Continuous price pressure in some of our key geographical markets negatively
impacted orders in 2010. Orders in 2010 included $97 million from Ventyx, a software provider and key player in the field of energy
management that was acquired in the second quarter of 2010.
Order intake in 2009 increased 6 percent (17 percent in local currencies), compared to 2008, with power transmission orders from utility
customers compensating for lower demand in the industrial and power distribution sectors. A slow-down in base orders was more than offset by
strong growth in large orders. Large orders secured in 2009 included the $550 million EirGrid power link project where our HVDC Light®
technology will facilitate the integration of renewable energy and enhance capacity and stability of both the Irish and the U.K. transmission
grids. A $540 million HVDC contract was received for the world's longest power transmission link (project Rio Madeira) to be constructed in
Brazil, bringing remote hydro power to urban centers around São Paulo. Orders in 2009 also included a $400 million substation project in
Kuwait to further enhance the country's electrical transmission grid.
The geographic distribution of orders as a percentage of total orders for our Power Systems division was as follows:
(in %) 2010 2009 2008
Europe 47 33 39
The Americas 14 22 16
Asia 15 16 20
Middle East and Africa 24 29 25
Total 100 100 100
In 2010, Europe remained the largest region in terms of order intake. As in 2009, the strong political commitment in Europe to increase the
share of renewables and adapt the grids to make them
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"smarter" and more reliable was increasingly being translated into actions and hence orders. MEA continued to be our second largest region in
terms of orders in 2010, despite a lower order intake than in 2009. The order share from the Americas decreased as a drop in large orders offset a
growth in base orders. Lower orders from Asia mainly reflected an order decline in India from a high level the year before, relating to the timing
of large order awards.
Europe was the largest region in terms of order intake in 2009, followed by MEA, where demand growth in several countries in the Middle
East, led by Kuwait and Saudi Arabia, more than offset a slower order intake in Southern Africa. Significant growth in the Americas was helped
by the large order intake in Brazil. Orders also grew in Mexico as further investments were made to meet the rising demand for energy and
enhance grid reliability and efficiency. The share of orders from Asia decreased as lower volumes in China and Australia could not be fully
compensated by a higher order intake in India.
Order backlog
Order backlog at December 31, 2010, increased 13 percent (12 percent in local currencies), resulting mainly from a further increase in the
share of large orders as a proportion of total orders. Large projects stay longer in the order backlog than base orders, as the project execution
time is considerably longer.
Order backlog at December 31, 2009, increased 26 percent (20 percent in local currencies), due mainly to the strong growth in large order
intake.
Revenues
In 2010, revenues increased 4 percent (2 percent in local currencies). Among our businesses, the revenue growth was led by power
generation, reflecting the strong order backlog at the beginning of the year and a higher book and bill ratio in 2010 than in 2009 (orders that can
be converted to revenues within the same calendar year). Revenues in 2010 included $97 million from Ventyx since the date of acquisition.
Revenues decreased 5 percent (increased 1 percent in local currencies) in 2009 as compared with 2008. The revenue development in 2009
mainly reflected the scheduled project execution of the order backlog. The lower share of base orders led to a lower book and bill ratio in 2009
than in 2008.
The geographic distribution of revenues for our Power Systems division was as follows:
(in %) 2010 2009 2008
Europe 34 39 42
The Americas 21 15 14
Asia 17 18 18
Middle East and Africa 28 28 26
Total 100 100 100
Europe continued to be the largest region in terms of revenues in 2010, even though revenues from the region were lower than in 2009,
mainly reflecting scheduled project execution. The share of revenues from the MEA region remained largely unchanged, while revenues from
the Americas increased, led by growth in Brazil. Revenues were flat in Asia, as an increase in India helped offset lower revenues from other
parts of the region.
2009 revenues in Europe were lower than in 2008, reflecting the project execution scheduled, as well as lower book and bill volumes. There
was a small increase in revenues in the Americas, led by growth in Mexico and Brazil. In the MEA region, revenues increased on project
progress particularly in
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Namibia, Saudi Arabia and Kuwait, which more than compensated for the postponements of a few projects in the United Arab Emirates.
Earnings before interest and taxes
EBIT for the Power Systems division decreased 71 percent (77 percent in local currencies) in 2010, compared with a decrease of 34 percent
(29 percent in local currencies) in 2009. The EBIT margin for the division decreased to 1.6 percent in 2010, compared with 5.9 percent and
8.6 percent in 2009 and 2008, respectively.
The decrease in EBIT and EBIT margin in 2010 was primarily attributable to cost overruns exceeding $200 million in a small number of
subsea cable projects. The cost overruns mainly related to cable laying and trenching activities. Lower prices on past orders, now flowing
through to revenues, negatively impacted the gross margin and the EBIT margin. EBIT was also impacted by increased sales expenses, following
high tendering activity, as well as increased spending for research and development. Amortization expenses increased, mainly following the
acquisition of Ventyx. These negative EBIT impacts were partly offset by savings from the cost take-out program and the release of provisions
related to the business in Russia and settlements with the U.S. Securities and Exchange Commission and Department of Justice. Restructuringrelated
expenses in 2010 were $48 million compared to $90 million in 2009, but remained at a relatively high level.
The lower EBIT and EBIT margin in 2009, compared to 2008, were primarily the result of restructuring-related charges, lower revenues,
higher research and development spending, as well as increased sales cost from higher tendering activity.
Fiscal year 2011 outlook
While we already see the revival of the distribution and industrial sectors, transmission activity is expected to pick up towards the second
half of 2011. Key market drivers for the Power Systems division continue to be economic growth and power infrastructure investment on new
capacities in emerging markets, integration of renewable energy sources, upgrades of aging infrastructure, energy efficiency, and the
development of more reliable, flexible and smarter grids.
Discrete Automation and Motion
Orders
The financial results of our Discrete Automation and Motion division were as follows:
% Change
($ in millions except EBIT Margin %) 2010 2009 2008 2010 2009
Orders 5,862 4,702 7,129 25 % (34 )%
Order backlog at December 31, 3,350 3,046 3,595 10 % (15 )%
Revenues 5,617 5,405 6,588 4 % (18 )%
EBIT 926 557 1,066 66 % (48 )%
EBIT Margin % (1) 16.5 % 10.3 % 16.2 % n.a. n.a.
(1)
EBIT Margin % is calculated as EBIT divided by revenues
Orders grew strongly in 2010, due to increased market demand compared to the low level of 2009. Orders in low-voltage (LV) drives and
LV motors increased in 2010 as a result of increased demand in process industries segment and investments in renewable energy sectors such as
wind and solar. The automotive industry recovered from the low level of 2009 and increased investments made by car manufacturers as well as
general industry customers led to strong order growth for our robotics business.
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In 2009, orders declined by 34 percent due to the economic downturn worldwide. All businesses reported lower orders as most market
segments and regions were negatively affected by the worldwide economic recession. Our robotics business decreased 54 percent as the
automotive industry postponed or cancelled many investments.
The geographic distribution of orders as a percentage of total orders for our Discrete Automation and Motion division was as follows:
Orders grew in most of the regions in 2010, with the most significant increases being in Asia and the Americas. A strong recovery in the
automotive and process industry markets in the United States contributed to the high increase in the Americas. Orders in China grew 44 percent,
mainly driven by the robotics and LV drives businesses. In Europe orders increased 18 percent due to improved market demand but Europe's
share of total orders decreased as other regions grew more.
In 2009, the share of orders from Europe and the Americas declined as the recession affected these regions more than the emerging markets
in Asia. Orders in China and India increased, albeit at a lower rate than prior years.
Order backlog
Order backlog in 2010 increased 10 percent as orders were higher than revenues for most businesses, especially in the LV drives, robotics
and LV motors businesses. Order backlog in the machines business decreased as large orders were delivered during the year.
The backlog was substantially reduced in 2009 following the weak order intake for products due to the recession. The reduction of order
backlog in 2009 was also the result of high shipments by businesses with longer delivery times such as power electronics.
Revenues
(in %) 2010 2009 2008
Europe 46 49 57
The Americas 16 13 15
Asia 34 33 25
Middle East and Africa 4 5 3
Total 100 100 100
Revenues in 2010 increased 4 percent as a result of the high order growth for products such as LV drives, robotics and LV motors. Longercycle
businesses such as power electronics and machines reported lower revenues due to weak backlog at the beginning of the year.
Revenues declined 18 percent in 2009 mainly due to weak order intake. Robotics declined 41 percent as projects were postponed or
cancelled. Also LV drives, machines and LV motors had lower revenues due to the weak business environment. However, power electronics and
MV drives increased revenues due to a strong order backlog at the start of 2009.
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The geographic distribution of revenues for our Discrete Automation and Motion division was as follows:
Favorable market development and a focused build-up of local activities have contributed to the increased share from Asia. Europe's share
declined in 2010 due to low order backlog at the beginning of the year caused by the weak order intake in 2009.
In 2009, Europe's share of revenues was reduced as most mature markets were negatively affected by the global recession. Revenue growth
in China and India contributed to the increase in Asia's share of total revenues.
Earnings before interest and taxes
In 2010, EBIT improved substantially as a result of cost savings and a turnaround in the robotics business. LV drives further increased
EBIT, while LV motors recovered from the low level of 2009. The robotics business returned to profitability in 2010, on the basis of higher
revenues, supported by executed restructuring initiatives and cost saving measures. EBIT in the machines and power electronics business and
MV drives business deteriorated in 2010, due to lower capacity utilization and the project mix.
EBIT in 2009 decreased 48 percent due to lower revenues, reduced capacity utilization and restructuring-related costs to adapt to weaker
demand. Negative EBIT in the robotics business was caused by low factory loadings, declining service revenues and capacity adjustments.
Lower EBIT in LV drives was mainly due to decreased revenues while LV motors and machines experienced low capacity utilization. Power
electronics and MV drives increased EBIT as a result of higher revenues due to a high opening backlog.
Fiscal year 2011 outlook
Excluding the impact from the acquisition of Baldor, we expect continued growth in orders and revenues, especially in emerging markets,
led by China and India. Key market drivers for the Discrete Automation and Motion division include the need for improved energy efficiency
and productivity in a wide range of industries, demand for reliable and high-quality power supply to industry and commercial facilities, and
demand for automation solutions that make better use of renewable energies.
Low Voltage Products
(in %) 2010 2009 2008
Europe 48 54 58
The Americas 14 14 15
Asia 34 29 24
Middle East and Africa 4 3 3
Total 100 100 100
The financial results of our Low Voltage Products division were as follows:
% Change
($ in millions except EBIT Margin %) 2010 2009 2008 2010 2009
Orders 4,686 4,079 4,865 15 % (16 )%
Order backlog at December 31, 838 734 710 14 % 3 %
Revenues 4,554 4,071 4,747 12 % (14 )%
EBIT 806 519 819 55 % (37 )%
EBIT Margin % (1) 17.7 % 12.7 % 17.3 % n.a. n.a.
(1)
EBIT Margin % is calculated as EBIT divided by revenues
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Orders
Orders increased 15 percent (15 percent in local currencies) in 2010 and decreased 16 percent (11 percent in local currencies) in 2009. In
2010 orders grew on higher demand from industrial customers, the solar energy market and construction-related sectors. Strong order growth
was recorded across all product businesses, whereas the system business was affected by weaker market conditions in the beginning of 2010
which gradually recovered during the second half of 2010. In 2009, the demand in industrial and construction markets deteriorated leading to a
decline in orders across most regions and all product lines. However, the order trend improved at the end of 2009 for some standard products
such as wiring accessories, as the construction markets started recovering from a low level.
The geographic distribution of orders as a percentage of total orders for our Low Voltage Products division was as follows:
In 2010, orders grew across all regions as market conditions improved. The share of orders from Europe, the largest region, continued to
decrease as the share from Asia increased, led by strong growth in China. Orders from the Americas increased as South America continued to
grow strongly, particularly from the key market of Brazil. The share of orders from MEA remained stable, although orders grew in absolute
terms. The share of orders from Europe in 2009 decreased due to the weak construction market, particularly in Western Europe. The share of
orders in the Americas remained stable as order growth in South America compensated for the weakening construction sector in the United
States. The share of orders from Asia increased as a result of industrial infrastructure investments in China and India.
Order backlog
Order backlog in 2010 increased 14 percent (14 percent in local currencies) as orders were higher than revenues across all businesses,
especially in the LV system business which typically has longer delivery schedules than the product business. Order backlog in 2009, compared
to 2008, increased 3 percent (decreased 1 percent in local currencies) which was mainly influenced by weak demand in the LV system business.
Revenues
(in %) 2010 2009 2008
Europe 56 60 64
The Americas 9 8 9
Asia 26 23 20
Middle East and Africa 9 9 7
Total 100 100 100
Revenues in 2010 increased 12 percent (13 percent in local currencies), as the strong order growth and the short execution cycle in the
product business was converted to revenues. Revenues grew across all product businesses, whereas revenues in the LV system business
decreased due to a weak opening backlog. Revenues in 2009 decreased 14 percent (9 percent in local currencies), due to low demand from
industrial and construction markets as reflected in the order intake. Revenues declined across all product businesses as well as in the LV system
business where the decrease was slightly offset by backlog execution.
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The geographic distribution of revenues for our Low Voltage Products division was as follows:
In 2010, all regions recorded growth in revenues compared to the previous year, as the demand from the construction market started to
recover from low levels. Despite positive growth, the share of revenues from Europe continued to decrease as growth rates were higher in Asia
and the Americas. The increased share of revenues from Asia was the result of order growth and the build-up of local resources in sales, service
and production in this region. In 2009, the geographical distribution of revenues followed a similar trend to orders. The share of revenues from
Europe decreased due to weak order development and short execution cycle in the product business. The Americas and MEA remained stable,
whereas the share of revenues from Asia increased as a result of high order intake, as well as strong backlog in China.
Earnings before interest and taxes
In 2010, EBIT increased 55 percent (58 percent in local currencies) as a result of higher revenues, a favorable product mix and the positive
effects of cost reduction initiatives including restructuring measures. In 2009, EBIT decreased 37 percent (33 percent in local currencies) as a
result of lower revenues, reduced capacity utilization and restructuring-related costs to adapt to weaker demand.
Fiscal year 2011 outlook
We expect continued growth in Asia and South America, as well as an increased focus in the areas of renewable energy and energy
efficiency applications which will benefit the Low Voltage Products division in 2011.
Process Automation
Orders
(in %) 2010 2009 2008
Europe 57 60 65
The Americas 9 8 9
Asia 26 24 19
Middle East and Africa 8 8 7
Total 100 100 100
The financial results of our Process Automation division were as follows:
% Change
($ in millions except EBIT Margin %) 2010 2009 2008 2010 2009
Orders 7,383 6,684 9,244 10 % (28 )%
Order backlog at December 31, 5,530 5,523 6,230 0 % (11 )%
Revenues 7,432 7,839 8,397 (5 )% (7 )%
EBIT 755 643 958 17 % (33 )%
EBIT Margin % (1) 10.2 % 8.2 % 11.4 % n.a. n.a.
(1)
EBIT Margin % is calculated as EBIT divided by revenues
Orders grew in 2010 despite continued uncertainty in the market regarding the strength of the industrial recovery. Base orders grew
significantly recording a double-digit growth compared to 2009. Order growth was led by marine, minerals and pulp and paper reflecting
ongoing investments in the energy and commodity based sectors. Orders in oil and gas were down as large orders booked in the previous year
were not repeated, while the base order business remained at a similar level. Life cycle
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services orders also increased as customers brought existing capacity back online following the business downturn of 2009.
In 2009, orders decreased 28 percent (22 percent in local currencies) as both large orders and base orders were down during 2009 compared
with the strong performance in 2008. The market slowdown in the fourth quarter of 2008 continued during 2009 with some stabilization of
orders at the end of the year. The market was still driven by cost savings and energy and production efficiency requirements.
Lower orders in 2009, was the result of lower investments in the marine, minerals, metals, and pulp and paper markets, as due to the
financial crisis, customers reduced investments due to uncertainty of future demand and limited access to project financing. Orders from the oil
and gas sector remained strong in 2009 and grew 16 percent due to several large orders from the MEA region. The performance services
business grew due to the joint venture formed with Stora Enso to provide maintenance operations and improve efficiency at six pulp, paper and
board mills in Finland.
The geographic distribution of orders as a percentage of total orders for our Process Automation division was as follows:
In 2010, order growth was led by the emerging markets in Asia and South America. In South America, order growth was led by investments
in the minerals sector in Chile and Peru, whereas in Asia, demand increased from the minerals sector in China and the marine sector in South
Korea. Orders also increased in mature markets in Europe and North America.
In 2009, European orders were down due to lower investments in the marine and minerals markets; however the region continued to
represent the largest share of orders for Process Automation. In the Americas, the higher demand in Peru and Colombia was insufficient to offset
the lower order intake from the United States, Brazil, Canada and Mexico. The strong growth in Asia during 2008 could not be repeated during
2009 due to lack of large orders from the marine, metals and pulp and paper market sectors. MEA recorded significant order growth during 2009
led by strong oil and gas investments in Algeria.
Order backlog
Order backlog at December 31, 2010 remained at the same level as the previous year. Order backlog at December 31, 2009, decreased
11 percent (17 percent in local currencies) compared to a year earlier. This reduction was the result of lower order intake combined with strong
execution of projects in our opening backlog, principally in the marine, minerals and metals business sectors. Order cancellations of
approximately $300 million were received from customers in 2009, reducing our orders received and order backlog correspondingly.
Revenues
(in %) 2010 2009 2008
Europe 39 40 41
The Americas 22 19 19
Asia 29 22 29
Middle East and Africa 10 19 11
Total 100 100 100
Revenues in 2010 were down significantly in the systems business as a result of a lower backlog, whereas revenues in products and lifecycle
services grew. In the systems business, revenues were down in the metals, marine and minerals sectors, whereas the pulp and paper sector
recorded an increase, reflecting the ongoing execution of projects from order backlog. Revenues in 2009 from our systems business decreased
2 percent. The increase was led by minerals and oil and gas due to the strong
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backlog built up in the systems business during 2008. Revenues in pulp and paper were down due to the low activity levels in the market already
prior to the financial crisis with several customers shutting down mills in America and Europe. Service revenues were approximately at the same
level as a year earlier in local currencies, due to the strong installed base and the contribution from the newly formed joint venture with Stora
Enso. The products business was lower across all product lines during 2009 due to the short revenue conversion cycle (from orders received into
revenues). Higher operational expenditure in the maintenance areas supported revenue growth in marine and metals services.
The geographic distribution of revenues for our Process Automation division was as follows:
In 2010, revenues were lower in most parts of Europe with the exception of Italy. In the Americas, the United States recorded revenue
growth, although the region overall recorded a decline. In Asia, South Korea recorded double-digit growth, while India and China recorded a
decrease. MEA recorded growth in revenues primarily reflecting ongoing execution of the El Merk project in Algeria. Higher revenues in 2009
from Finland and Norway were insufficient to maintain the same high level of revenues recorded in 2008 in Europe, as revenues were lower in
the United Kingdom, Germany and Russia. Revenues in the Americas were slightly lower when compared with a strong performance a year
earlier; Canada and Chile recorded significant growth while revenues from the United States and Brazil were lower. In Asia, revenues were
down mainly in Japan, Australia and Vietnam while Singapore experienced double-digit growth. Revenues in 2009 from MEA recorded
significant growth due to the execution of several large projects in Congo, Qatar and Pakistan.
Earnings before interest and taxes
Despite lower revenues, EBIT and EBIT margin increased in 2010, partly reflecting the successful implementation of cost reduction
measures and a higher share of revenues from products and services business, which usually carries higher margin than the systems business.
Improved project execution and project cost control also contributed to the strong result. EBIT for the Process Automation division decreased
33 percent (29 percent in local currencies) in 2009. EBIT in 2009 included restructuring-related charges of $114 million, compared with
$25 million recorded during 2008.
Fiscal year 2011 outlook
(in %) 2010 2009 2008
Europe 39 42 45
The Americas 19 19 19
Asia 27 27 27
Middle East and Africa 15 12 9
Total 100 100 100
Most process industries are showing signs of recovery, but because capital expenditure in these sectors typically occurs later in the
economic cycle we expect a continued challenging market environment in 2011 with customer decision making being slow and continuing price
pressure in certain sectors. Order growth will be primarily driven by energy and commodity-based segments. Our life-cycle services business is
also expected to grow in 2011.
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Corporate and Other
EBIT for Corporate and Other was as follows:
($ in millions) 2010 2009 2008
Corporate headquarters and stewardship (296 ) (296 ) (277 )
Corporate research and development (120 ) (115 ) (118 )
Corporate real estate 48 30 49
Equity investments (11 ) (8 ) (1 )
Other (23 ) 439 (636 )
Total Corporate and Other (402 ) 50 (983 )
In 2010, Corporate headquarters and stewardship costs remain flat as a result of continued focus on cost control. Corporate costs in
countries decreased and the savings generated were used to finance global corporate initiatives to support growth. In 2009, Corporate
headquarters and stewardship costs increased mainly due to higher pension funding costs related to divested business. This increase was partly
offset by lower expenses for our executive committee, lower corporate costs in the countries and an improved result in our captive insurance
company.
In 2010, Corporate research and development costs increased slightly, in line with the strategy to maintain a high focus in this area.
Corporate research and development costs in 2009 remained at a similar level as in 2008.
Corporate real estate consists primarily of rental income. In addition, in 2010, Corporate real estate reported gains of $33 million from the
sale of land and buildings, mainly in Sweden, Norway, Austria and Venezuela. In 2009, gains of $12 million from the sale of facilities mainly in
Switzerland, the Netherlands and Norway were offset by a $10 million asset impairment charge in the United States. EBIT of real estate
operations in 2008 included a $33 million gain from the sale of properties mainly in Switzerland, Brazil, Italy, Mexico and Poland.
In 2010, EBIT from Equity investments resulted in a loss of $11 million, primarily due to an impairment of $23 million of two equityaccounted
companies in the Ivory Coast that were subsequently sold, and a net gain of $13 million on the sale of an equity-accounted company
in Colombia. In 2009, EBIT from equity investments was an $8 million loss, primarily representing an operating loss of our equity investment in
a power plant in Colombia. EBIT from Equity investments decreased in 2008 as most investments were sold in previous years.
In 2010, EBIT from "Other" included $9 million operational costs of our Global Treasury Operations and $5 million losses from our
distributed energy business in Great Britain which is currently in the divestment process. In 2009, EBIT from "Other" of $439 million included
primarily the partial release of provisions (related to the investigations into our Power Transformers business) following the European
Commission's decision to impose a fine in October 2009. It also included the costs of our Group Treasury Operations. The negative EBIT from
"Other" in 2008 was the result of provisions related to the investigations into our Power Transformers business and the voluntary disclosures to
the SEC and DoJ regarding suspect payments (see "Note 15 Commitments and contingencies" to our Consolidated Financial Statements). Also
included are the costs of our Group Treasury Operations of $10 million in 2008. Furthermore, "Other" in 2008 included $7 million in losses
mainly related to the write-down of assets of our distributed energy business in Great Britain.
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Restructuring programs
Cost take-out program
In December 2008, we announced a two-year cost take-out program to adjust our cost base to rapidly changing market conditions and
protect our profitability. The program's original target was to reduce our costs—comprising both cost of sales and general and administrative
expenses—from 2008 levels by a total of $1.3 billion by the end of 2010. As a result of the ongoing deterioration of ABB's markets over most of
2009, the cost take-out goal was expanded to $3 billion. The savings were focused on low-cost sourcing, reduced general and administrative
expenses, internal process improvements and adjustments to our global manufacturing and engineering footprint.
Cost reductions for 2009 were significantly ahead of plan and exceeded $1.5 billion. In 2010, the cost take-out goal was achieved and total
cost reductions for the whole program exceeded $3.3 billion. Approximately 50 percent of these savings were achieved by optimizing global
sourcing (excluding changes in commodity prices). The remainder was achieved through reductions to general and administrative expenses, as
well as global footprint and operational excellence measures.
We have substantially completed the cost take-out program with total charges of $836 million.
The following table outlines the total costs incurred in 2010 and the cumulative amount of costs incurred to December 31, 2010, under the
program.
For details of the nature of the costs incurred and their impact on the Consolidated Financial Statements, see "Note 21 Restructuring and
related expenses" to our Consolidated Financial Statements.
The majority of the remaining cash outlays, primarily for employee severance benefits, are expected to occur in 2011 as the employees
leave ABB. We expect to finance these restructuring activities from our cash flow from operations.
Principal sources of funding
($ in millions)
Costs
incurred in
2010
LIQUIDITY AND CAPITAL RESOURCES
In 2010, 2009 and 2008, we met our liquidity needs principally using cash from operations and bank borrowings.
During 2010, 2009 and 2008, our financial position was strengthened by the positive cash flow from operating activities of $4,197 million,
$4,027 million and $3,958 million, respectively.
69
Cumulative costs
incurred to
December 31, 2010
Power Products 44 122
Power Systems 48 139
Discrete Automation and Motion 35 256
Low Voltage Products 36 114
Process Automation 44 183
Corporate and Other 6 22
Total 213 836

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Our financial position is shown in the table below:
December 31,
($ in millions) 2010 2009
Cash and equivalents 5,897 7,119
Marketable securities and short-term
investments 2,713 2,433
Short-term debt and current maturities of
long-term debt (1,043 ) (161 )
Long-term debt (1,139 ) (2,172 )
Net cash (defined as the sum of the above
lines) 6,428 7,219
Net cash at December 31, 2010, decreased compared to the balance at December 31, 2009, primarily due to the cash outflow for the
acquisition of businesses ($1,313 million), the increase in our ownership interest in our Indian publicly-listed subsidiary from approximately 52
percent to 75 percent ($956 million) and the dividends paid in the form of a nominal value reduction ($1,112 million). Net cash therefore
decreased compared to the balance at December 31, 2009, despite the cash generated by operations during 2010 of $4,197 million. See
"Financial Position", "Net cash provided by (used in) investing activities" and "Net cash used in financing activities" for further details.
Our Group Treasury Operations is responsible for providing a range of treasury management services to our group companies and is also
responsible for investing cash in excess of current business requirements. At December 31, 2010 and 2009, the proportion of our aggregate
"Cash and equivalents" and "Marketable securities and short-term investments" managed by our Group Treasury Operations amounted to
71 percent and 78 percent, respectively.
In 2010, the overall investment strategy of maintaining diversification and flexibility in our investment portfolio continued with a mix of
government securities, highly-rated corporate short-dated paper and time deposits of short duration with banks. During the second quarter of
2010, we began to invest in AAA-rated liquidity (money market) funds in order to diversify our investment base and increase the yield on our
investments. At December 31, 2010, such investment represented $1,789 million of the total marketable securities and short-term investments
balance of $2,713 million in table above.
In January 2011, we sold the $1,789 million money market funds. Also in January 2011, we used $4.2 billion of our cash in connection with
the purchase of Baldor Electric Company and the repayment of debt assumed upon acquisition.
In the first half of 2009, the market in general rebounded and with investors' risk appetites returning; equities improved and credit spreads
tightened. Consequently, we increased our investments in corporate papers and extended the duration on our time deposits with banks to enhance
the return on our investments. Towards the end of 2009, we again invested in government securities, as better returns could be made than with
some banks who were offering low rates due to the amount of liquidity in the market.
We actively monitor credit risk in our investment portfolio and hedging activities. Credit risk exposures are controlled in accordance with
policies approved by our senior management to identify, measure, monitor and control credit risks. We closely monitor developments in the
credit markets and make appropriate changes to our investment policy as deemed necessary. The rating criteria we require for our counterparts
have remained unchanged during 2010 as follows—a minimum of A rating for our banking counterparts, while the minimum required rating for
investments in short-term corporate paper is A-1/P-1. In addition to rating criteria, we have specific investment criteria and restrictions on the
sectors we invest in. These parameters are closely monitored on an ongoing basis and amended as we consider necessary.
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We believe the cash flows generated from our business are sufficient to support business operations, capital expenditures, business
acquisitions, the payment of dividends to shareholders and contributions to pension plans. Due to the nature of our operations, our cash flow
from operations generally tends to be weaker in the first half of the year than in the second half of the year. We have the ability to supplement
this near-term liquidity, if necessary, through access to the capital markets (including short-term commercial paper) and credit facilities.
Consequently, we believe that our ability to obtain funding from these sources will continue to provide the cash flows necessary to satisfy our
working capital and capital expenditure requirements, as well as meet our debt repayments and other financial commitments for the next
12 months. See "Contractual obligations".
Debt and interest rates
Total outstanding debt was as follows:
The decrease in debt in 2010 was primarily due to exchange rate movements.
Our debt has been obtained in a range of currencies and maturities and on various interest rate terms. We use derivatives to reduce the
interest rate exposures arising on our debt. For example, we use interest rate swaps to effectively convert fixed rate debt into floating rate
liabilities.
After considering the effects of interest rate swaps, the effective average interest rate on our floating rate long-term debt (including current
maturities) of $1,919 million and our fixed rate long-term debt (including current maturities) of $139 million was 3.2 percent and 5.6 percent,
respectively. This compares with an effective rate of 3.0 percent for floating rate long-term debt of $2,072 million and 5.0 percent for fixed-rate
long-term debt of $133 million at December 31, 2009.
For a discussion of our use of derivatives to modify the characteristics of our individual bond issuances, see "Note 12 Debt" to our
Consolidated Financial Statements.
Credit facilities
December 31,
($ in millions) 2010 2009
Short-term debt including current maturities of
long-term debt (including bonds) 1,043 161
Long-term debt:
—bonds (excluding portion due within one
year) 946 1,961
—other long-term debt 193 211
Total debt 2,182 2,333
During 2010, we amended our $2 billion multicurrency revolving credit facility, extending its maturity to 2015 and reducing the costs and
fees related to it. For further details of this credit facility, see "Note 12 Debt" to our Consolidated Financial Statements.
No amount was drawn under the facility at December 31, 2010 and 2009. The facility is for general corporate purposes and will serve as a
back-stop facility to our commercial paper programs in the event that we issue commercial paper under the programs described below. The
facility contains cross-default clauses whereby an event of default would occur if we were to default on indebtedness, as defined in the facility, at
or above a specified threshold.
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Commercial paper
We have in place 3 commercial paper programs:
• a $1 billion commercial paper program for the private placement of USD denominated commercial paper in the United States,
• a $1 billion Euro-commercial paper program for the issuance of commercial paper in a variety of currencies, and
• a 5 billion Swedish krona program (equivalent to approximately $746 million, using December 31, 2010, exchange rates),
allowing us to issue short-term commercial paper in either Swedish krona or euro.
At December 31, 2010 and 2009, no amounts had been issued or were outstanding under these commercial paper programs.
Medium Term Note Program (MTN)
At December 31, 2010 and 2009, $1,828 million and $1,961 million, respectively, of our total debt outstanding, were debt issuances under
the MTN Program that allows the issuance of up to (the equivalent of) $5,250 million in certain debt instruments. The terms of the MTN
Program do not obligate any third party to extend credit to us and the terms and possibility of issuing any debt under the MTN Program are
determined with respect to, and as of the date of issuance of, each debt instrument. At December 31, 2010, it was more than 12 months since the
Program was last updated. New bonds could be issued under the Program but could not be listed without us formally updating the Program.
Credit ratings
Credit ratings are assessments by the rating agencies of the credit risk associated with ABB and are based on information provided by us or
other sources that the rating agencies consider reliable. Higher ratings generally result in lower borrowing costs and increased access to capital
markets. Our ratings are of "investment grade" which is defined as Baa3 (or above) from Moody's and BBB- (or above) from Standard & Poor's.
At December 31, 2010, our long-term company ratings were A3 and A from Moody's and Standard & Poor's, respectively, compared to A3
and A- at December 31, 2009.
Limitations on transfers of funds
Currency and other local regulatory limitations related to the transfer of funds exist in a number of countries where we operate, including
Algeria, China, Egypt, India, Korea, Kuwait, Malaysia, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and Venezuela. Funds,
other than regular dividends, fees or loan repayments, cannot be readily transferred offshore from these countries and are therefore deposited and
used for working capital needs locally. In addition, there are certain countries where, for tax reasons, it is not considered optimal to transfer the
cash offshore. As a consequence, these funds are not available within our Group Treasury Operations to meet short-term cash obligations outside
the relevant country. The above described funds are reported as cash in our Consolidated Balance Sheets, but we do not consider these funds
immediately available for the repayment of debt outside the respective countries where the cash is situated, including those described above. At
December 31, 2010 and 2009, the balance of "Cash and equivalents" and "Marketable securities and other short-term investments" under such
limitations (either regulatory or sub-optimal from a tax perspective) totaled approximately $1,745 million and $1,460 million, respectively.
During 2010, we continued to direct our subsidiaries in countries with restrictions to place such cash with our core banks or investment
grade banks, in order to minimize credit risk on such cash positions. Consequently, cash placed with non-rated or sub-investment grade banks
has remained at less than 5 percent of cash outside of our Group Treasury Operations. We continue to closely monitor the situation to ensure
bank counterparty risks are minimized.
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Balance sheet
FINANCIAL POSITION
December 31,
($ in millions) 2010 2009
Current assets
Cash and equivalents 5,897 7,119
Marketable securities and short-term
investments 2,713 2,433
Receivables, net 9,970 9,451
Inventories, net 4,878 4,550
Prepaid expenses 193 236
Deferred taxes 896 900
Other current assets 801 540
Total current assets 25,348 25,229
For a discussion on cash and equivalents and marketable securities and short-term investments, see "Liquidity and capital resources—
Principal sources of funding" for further details.
Receivables, net, at the end of 2010, increased from the end of 2009 by approximately 5.5 percent (5.9 percent in local currencies). The
increase was primarily driven by higher revenues in the automation businesses and higher project-related sales in the Power Systems division.
These increases were partially offset by lower levels of receivables in the Power Products division, which saw a 9 percent decline in revenues in
2010 compared to 2009.
Inventories, net, increased 7.2 percent compared to the level at the end of 2009 (7.6 percent in local currencies). Inventories increased
across most divisions largely driven by the increasing order volumes.
For a discussion on deferred taxes see "Note 16 Taxes" to our Consolidated Financial Statements.
Other current assets include derivative and embedded derivative assets and income tax receivables. The increase primarily reflects higher
derivative market values.
December 31,
($ in millions) 2010 2009
Current liabilities
Accounts payable, trade 4,555 3,853
Billings in excess of sales 1,730 1,623
Employee and other payables 1,526 1,326
Short-term debt and current maturities of
long-term debt 1,043 161
Advances from customers 1,764 1,806
Deferred taxes 357 327
Provisions for warranties 1,393 1,280
Provisions and other current liabilities 2,726 2,603
Accrued expenses 1,644 1,600
Total current liabilities 16,738 14,579
Total current liabilities at December 31, 2010, increased 14.8 percent (15.1 percent in local currencies) compared to December 31, 2009,
primarily driven by the reclassification of EUR 650 million bonds from long-term debt as they will become due in November 2011. The increase
is also due to higher trade accounts payable as a result of the build-up of inventories resulting from increased orders received in 2010. Similarly,
billings in excess of sales have increased with the higher order
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volumes. Provisions for warranties have increased across all divisions, reflecting an ongoing assessment of our warranty accruals on both new
product launches and existing products.
The increase in provisions and other current liabilities is largely due to a reclassification of environmental liabilities from other non-current
liabilities and higher provisions for loss orders. Partially offsetting the increase is a net reduction in restructuring provisions, largely due to usage
of provision related to the cost take-out program. Also partially driving the reduction were payments made to settle certain asbestos obligations.
December 31,
($ in millions) 2010 2009
Non-current assets
Financing receivables, net 420 452
Property, plant and equipment, net 4,356 4,072
Goodwill 4,085 3,026
Other intangible assets, net 701 443
Prepaid pension and other employee benefits 173 112
Investments in equity method companies 19 49
Deferred taxes 846 1,052
Other non-current assets 347 293
Total non-current assets 10,947 9,499
Property, plant and equipment, net, increased 7.0 percent (5.5 percent in local currencies) between December 31, 2009 and December 31,
2010. The major capital expenditures during 2010 were for investments in Sweden, Switzerland and China.
The increase in goodwill and other intangible assets, net was mainly due to the Ventyx acquisition (see "Note 3 Acquisitions, divestments
and discontinued operations" and "Note 11 Goodwill and other intangible assets" to our Consolidated Financial Statements). The increase in
prepaid pension and other employee benefits reflects the change in the funded status of our overfunded pension plans. See "Note 17 Employee
benefits" to our Consolidated Financial Statements.
For an explanation on the reduction in Deferred taxes, refer to "Note 16—Taxes" to our Consolidated Financial Statements.
Other non-current assets mainly include derivative and embedded derivative assets.
December 31,
($ in millions) 2010 2009
Non-current liabilities
Long-term debt 1,139 2,172
Pension and other employee benefits 831 1,179
Deferred taxes 411 328
Other non-current liabilities 1,718 1,997
Total non-current liabilities 4,099 5,676
The decrease in our long-term debt was largely due to the reclassification of the EUR 650 million bonds to current maturities of short-term
debt as these bonds mature in November 2011. Also influencing the changes in long-term debt were: (i) foreign exchange movements on
outstanding debt (a large part being bonds denominated in euros), (ii) fair value hedge adjustments on our outstanding bonds and (iii) decreases
in bank debt in certain countries. See "Liquidity and Capital Resources—Debt and interest rates".
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The decrease in pension and other employee benefits substantially reflects the remeasurement of benefit obligations for updated
assumptions and plan assets to fair value of our defined benefit pension plans, partly offset by employer contributions, see "Note 17 Employee
benefits" to our Consolidated Financial Statements.
Other non-current liabilities decreased primarily due to the reclassification of provisions for environmental liabilities to current provisions,
as well as a reduction in tax contingencies.
Cash flows
In the Consolidated Statements of Cash Flows, the effects of discontinued operations are not segregated.
The Consolidated Statements of Cash Flows can be summarized as follows:
Net cash provided by operating activities
($ in millions) 2010 2009 2008
Net cash provided by operating
activities 4,197 4,027 3,958
Net cash provided by (used in)
investing activities (2,747 ) (2,172 ) 114
Net cash used in financing
activities (2,530 ) (1,349 ) (2,119 )
Effects of exchange rate changes on
cash and equivalents (142 ) 214 (230 )
Adjustment for the net change in
cash and equivalents in assets
held for sale and in discontinued
operations — — 26
Net change in cash and
equivalents—continuing
operations (1,222 ) 720 1,749
In 2010, operating activities provided net cash of $4,197 million, an increase of 4 percent on the prior year, reflecting our working capital
management. Stable levels of working capital were achieved despite increasing order volumes, as cash outlays for higher inventories and trade
receivables could be offset through increased levels of trade payables.
Operating activities in 2009 provided net cash of $4,027 million. Net cash provided by operating activities included a $135 million cash
outflow related to our ongoing restructuring-related activities. Net cash provided by operating activities was particularly high in our Power
Products division (with the Discrete Automation and Motion and Low Voltage Products divisions also showing an increase), mainly due to lower
inventories and improved cash collection. This was partially offset by lower advance payments from customers in the wake of decreasing orders.
Net cash provided by operating activities in 2008 included $100 million of asbestos payments (see "Note 15 Commitments and
contingencies" to our Consolidated Financial Statements).
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Net cash provided by (used in) investing activities
($ in millions) 2010 2009 2008
Changes in financing receivables, net (7 ) (7 ) 7
Purchases of marketable securities (available-for-sale) (3,391 ) (243 ) (1,081 )
Purchases of marketable securities (held-to-maturity) (65 ) (918 ) —
Purchases of short-term investments (2,165 ) (3,824 ) (2,512 )
Purchases of property, plant and equipment and intangible assets (840 ) (967 ) (1,171 )
Acquisitions of businesses (net of cash acquired) and changes in cost
and equity investments (1,313 ) (161 ) (653 )
Proceeds from sales of marketable securities (available-for-sale) 807 79 110
Proceeds from maturity of marketable securities (available-for-sale) 531 855 —
Proceeds from maturity of marketable securities (held-to-maturity) 290 730 —
Proceeds from short-term investments 3,276 2,253 5,305
Proceeds from sales of property, plant and equipment 47 36 94
Proceeds from sales of businesses and equity-accounted companies
(net of cash disposed) 83 16 46
Other — (21 ) (31 )
Net cash provided by (used in) investing activities (2,747 ) (2,172 ) 114
Investing activities include accounts receivable from leases and third-party loans (financing receivables), net investments in marketable
securities that are not held for trading purposes, asset purchases, net of disposals and acquisitions of, investments in, and divestitures of
businesses.
Net cash used in investing activities during 2010 was $2,747 million. Aggregate purchases of marketable securities and short-term
investments amounted to $5,621 million in 2010. Compared to 2009, there has been an increase in the purchases of marketable securities
(available-for-sale), while at the same time a reduction in the purchases of marketable securities (held-to-maturity) and short-term investments.
Aggregate proceeds from the sales and maturities of marketable securities and short-term investments during 2010 amounted to $4,904 million.
Total cash disbursements for the purchase of property, plant and equipment and intangibles in 2010 amounted to $840 million, including
$164 million for the purchase of machinery and equipment, $175 million for the purchase of land and buildings, $54 million for the purchase of
intangible assets and $447 million capital expenditures for construction in progress.
Acquisitions of businesses (net of cash acquired), in 2010, primarily related to the acquisition of Ventyx and certain smaller acquisitions
such as K-TEK in the United States and the Jokab Safety in Sweden.
Net cash used in investing activities during 2009 was $2,172 million. Aggregate purchases of marketable securities and short-term
investments amounted to $4,985 million in 2009.
Total cash disbursements for the purchase of property, plant and equipment and intangibles in 2009 amounted to $967 million reflecting
capital expenditures to expand our manufacturing footprint in emerging markets and selective expenditures to refocus our facilities in mature
markets. Capital expenditures in 2009 included $258 million for the purchase of machinery and equipment, $48 million for the purchase of land
and buildings, $77 million for the purchase of intangible assets and $584 million capital expenditures for construction in progress.
Acquisitions of businesses (net of cash acquired), in 2009, mainly included the acquisition of Comem and the purchase of the remaining
shares in Ensto Busch-Jaeger in Finland, a company in which ABB previously had a noncontrolling ownership stake.
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Aggregate proceeds from the sales of marketable securities and short-term investments during 2009 amounted to $3,917 million as
compared with $5,415 million for 2008. The decrease reflects the change in investment strategy discussed under "Liquidity and Capital
Resources".
Cash received from the sale of property, plant and equipment during 2009 included $23 million of proceeds from the sale of real estate
properties, mainly in Norway, France, Brazil and Switzerland, and $13 million from the sale of machinery and equipment in various locations.
In 2009, net cash inflows from the sale of businesses and equity-accounted companies amounted to $16 million, which included
approximately $8 million net proceeds from the sale of the mechanical marine thruster business in Poland.
Net cash flow provided by investing activities during 2008 was $114 million. Aggregate purchases of marketable securities and short-term
investments amounted to $3,593 million in 2008.
Total cash disbursements for the purchase of property, plant and equipment and intangibles amounted to $1,171 million, reflecting high
capital expenditures due to new growth projects and increasing capacity requirements. Capital expenditures in 2008 included $308 million for
the purchase of machinery and equipment, $78 million for the purchase of land and buildings, $134 million for the purchase of intangible assets,
mainly software, and $651 million capital expenditures for construction in progress.
Acquisitions and divestments, net, in 2008, mainly included the acquisition of Kuhlman in the United States. The preliminary purchase
price for Kuhlman was $520 million including assumed debt, which was subsequently adjusted in 2009.
Aggregate proceeds from sales of marketable securities and short-term investments during 2008 amounted to $5,415 million.
Cash received from the sale of property, plant and equipment during 2008 included $78 million proceeds from the sale of real estate
properties, mainly in Switzerland, Italy, Mexico and Poland and $15 million from the sale of machinery and equipment in various locations.
Net cash inflows from the sale of businesses and equity-accounted companies amounted to $46 million in 2008. This net inflow included
approximately $14 million net proceeds from the sale of the distributed energy business in Germany, $16 million net proceeds from the sale of
the ABB Powertech Transformer business in South Africa, as well as $11 million net proceeds from two businesses in Norway, $10 million net
proceeds from the sale of the lighting business in the United Kingdom, and approximately $15 million net proceeds from the sale of other minor
businesses during 2008. These inflows were partly offset by a claim settlement payment of approximately $20 million related to the former airhandling
business that was sold in 2002.
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Net cash used in financing activities
($ in millions) 2010 2009 2008
Net changes in debt with maturities
of 90 days or less 52 (59 ) (10 )
Increase in debt 277 586 458
Repayment of debt (497 ) (705 ) (786 )
Issuance of shares 16 89 49
Transactions in treasury shares (166 ) — (621 )
Dividends paid in the form of
nominal value reduction (1,112 ) (1,027 ) (1,060 )
Acquisition of noncontrolling
interests (956 ) (48 ) —
Dividends paid to noncontrolling
shareholders (193 ) (193 ) (152 )
Other 49 8 3
Net cash used in financing
activities (2,530 ) (1,349 ) (2,119 )
Our financing activities primarily include debt, both from the issuance of debt securities and borrowings directly from banks, capital and
treasury stock transactions and dividends paid.
The cash inflows from increases in debt primarily relate to short-term borrowings.
During 2010, $497 million of debt was repaid at maturity. During 2009, $705 million of bonds and other debt was repaid at maturity,
including the 108 million Swiss francs of 3.75% CHF bonds, due 2009, (equivalent to $105 million at date of repayment) and 20 million pounds
sterling 10% GBP Instruments, due 2009, (equivalent to $33 million at date of repayment, excluding the effect of cross-currency swaps). During
2008, $786 million of bonds and other debt was repaid at maturity, including the remaining (77 million euro) 9.5% EUR Instruments, due 2008,
as well as several private placements and short-term debt upon maturity.
During 2010, we purchased, on the open market, 12.1 million of our own shares for use in connection with our employee share-based
programs, resulting in a cash outflow of $228 million. This cash outflow was offset by cash inflow of $62 million from the issuance of
3.2 million shares out of treasury stock to employees in connection with our employee share acquisition plan (ESAP). During 2008, we
purchased 22.675 million ABB shares at a cost of $621 million in connection with the share buyback program launched in 2008. These shares
were subsequently cancelled in July 2010. During 2009, there were no purchases or sales of treasury stock.
Dividends paid in the form of a nominal value reduction in 2010, 2009 and 2008 represented a reduction in nominal value of CHF 0.51 per
share in 2010 and CHF 0.48 per share in each of 2009 and 2008. As a result of these nominal value reductions, the par value of each of our
shares was reduced from CHF 2.02 in 2008 to CHF 1.54 in 2009 and to CHF 1.03 in 2010.
The acquisition of noncontrolling interests in 2010 of $956 million represented the cost of increasing our ownership interest in ABB
Limited, India (our publicly-listed subsidiary in India) from approximately 52 percent to 75 percent. In 2009, the $48 million represents an
increase in ownership interests, primarily in China.
Disclosures about contractual obligations and commitments
The contractual obligations presented in the table below represent our estimates of future payments under fixed contractual obligations and
commitments. The amounts in the table may differ from those reported in our Consolidated Balance Sheet at December 31, 2010. Changes in our
business needs, cancellation provisions and changes in interest rates, as well as actions by third parties and other factors, may cause these
estimates to change. Therefore, our actual payments in future periods may vary from those presented in the table. The following table
summarizes certain of our contractual
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obligations and principal and interest payments under our debt instruments, leases and purchase obligations at December 31, 2010:
We have determined the interest payments related to long-term debt obligations by reference to the payments due under the terms of our
debt obligations at the time such obligations were incurred. However, we use interest rate swaps to modify the characteristics of certain of our
debt obligations. The net effect of these swaps may be to increase or decrease the actual amount of our cash interest payment obligations, which
may differ from those stated in the above table. For further details on our debt obligations and the related hedges, see "Note 12 Debt" to our
Consolidated Financial Statements.
Of the total of $870 million unrecognized tax benefits (net of deferred tax assets) at December 31, 2010, it is expected that $72 million will
be paid within less than a year. However, we cannot make a reasonably reliable estimate as to the related future payments for the remaining
amount.
Off balance sheet arrangements
Commercial commitments
For certain guarantees issued or modified after December 31, 2002, a liability equal to the fair value of the guarantee is recorded.
We disclose the maximum potential exposure of certain guarantees, as well as possible recourse provisions that may allow us to recover
from third parties amounts paid out under such guarantees. The maximum potential exposure does not allow any discounting of our assessment
of actual exposure under the guarantees. The information below reflects our maximum potential exposure under the guarantees, which is higher
than our assessment of the expected exposure.
Guarantees
($ in millions) Total
The following table provides quantitative data regarding our third-party guarantees. The maximum potential payments represent a worstcase
scenario, and do not reflect our expected results.
79
Less
than 1 year
1-3
years
3-5
years
More than
5 years
Payments due by period
Long-term debt obligations 2,058 919 1,023 27 89
Interest payments related to long-term debt
obligations 316 115 112 21 68
Operating lease obligations 2,201 463 752 571 415
Capital lease obligations (1) 257 33 52 36 136
Purchase obligations 4,887 3,635 987 187 78
Total 9,719 5,165 2,926 842 786
(1)
Capital lease obligations represent the total cash payments to be made in the future and include interest expense of $127 million and executory cost of $6 million.
December 31,
($ in millions) 2010 2009
Maximum potential payments
Performance guarantees 125 214
Financial guarantees 84 91
Indemnification guarantees 203 282
Total 412 587

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The carrying amounts of liabilities recorded in the Consolidated Balance Sheets in respect of the above guarantees, were not significant at
December 31, 2010 and 2009 and reflect our best estimate of future payments, which we may incur as part of fulfilling our guarantee
obligations.
For additional descriptions of our performance, financial and indemnification guarantees see "Note 15 Commitments and contingencies" to
our Consolidated Financial Statements.
ENVIRONMENTAL LIABILITIES
We are engaged in environmental clean-up activities at certain sites principally in the United States, arising under various United States and
other environmental protection laws and under certain agreements with third parties. In some cases, these environmental remediation actions are
subject to legal proceedings, investigations or claims, and it is uncertain to which extent we are actually obligated to perform. Provisions for
these unresolved matters have been set up if it is probable that we have incurred a liability and the amount of loss can be reasonably estimated. If
a provision has been recognized for any of these matters we record an asset when it is probable that we will recover a portion of the costs
expected to be incurred to settle them. We are of the opinion, based upon information presently available, that the resolution of any such
obligations and non-collection of recoverable costs would not have a further material adverse effect on our Consolidated Financial Statements.
Contingencies related to former Nuclear Technology business
We retained liabilities for certain specific environmental remediation costs at two sites in the United States that were operated by our former
subsidiary, ABB CE-Nuclear Power Inc., which we sold to British Nuclear Fuels PLC (BNFL) in 2000.
We established a provision of $300 million in "Income (loss) from discontinued operations, net of tax" in 2000 for our estimated share of
the remediation costs for these sites. At December 31, 2010 and 2009, we have recorded in current and non-current other liabilities provisions of
$181 million and $230 million, respectively, net of payments from inception of $85 million and $65 million, respectively, as well as certain
adjustments. Expenditures charged against the provision were $20 million, $11 million and $4 million during 2010, 2009 and 2008, respectively.
We have estimated that during 2011 we will charge expenditures of approximately $148 million to the provision.
For a detailed description of these and other contingencies see "Note 15 Commitments and contingencies" to our Consolidated Financial
Statements.
Item 6. Directors, Senior Management and Employees
Principles of Corporate Governance
General principles
ABB is committed to the highest international standards of corporate governance, and supports the general principles as set forth in the
Swiss Code of Best Practice for Corporate Governance, as well as those of the capital markets where its shares are listed and traded.
In addition to the provisions of the Swiss Code of Obligations, ABB's key principles and rules on corporate governance are set out in ABB's
Articles of Incorporation, the ABB Ltd Board Regulations and Corporate Governance Guidelines (which includes the regulations of ABB's
board committees and the ABB Ltd Related Party Transaction Policy), and the ABB Code of Conduct and the Addendum to the ABB Code of
Conduct for Members of the Board of Directors and the Executive Committee. It is the duty of ABB's Board of Directors (the Board) to review
and amend or propose amendments to those documents from time to time to reflect the most recent developments and practices, as well as to
ensure compliance with applicable laws and regulations.
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This section of the Annual Report is based on the Directive on Information Relating to Corporate Governance published by the SIX Swiss
Exchange. Where an item listed in the directive is not addressed in this report, it is either inapplicable to or immaterial for ABB.
In accordance with the requirements of the New York Stock Exchange (NYSE), a comparison of how the corporate governance practices
followed by ABB differ from those required under the NYSE listing standards can be found in the section "Corporate governance" at
www.abb.com/investorrelations
Duties of directors and officers
The directors and officers of a Swiss corporation are bound, as specified in the Swiss Code of Obligations, to perform their duties with all
due care, to safeguard the interests of the corporation in good faith and to extend equal treatment to shareholders in like circumstances.
The Swiss Code of Obligations does not specify what standard of due care is required of the directors of a corporate board. However, it is
generally held by Swiss legal scholars and jurisprudence that the directors must have the requisite capability and skill to fulfill their function, and
must devote the necessary time to the discharge of their duties. Moreover, the directors must exercise all due care that a prudent and diligent
director would have taken in like circumstances. Finally, the directors are required to take actions in the best interests of the corporation and may
not take any actions that may be harmful to the corporation.
Exercise of powers
Directors, as well as other persons authorized to act on behalf of a Swiss corporation, may perform all legal acts on behalf of the
corporation which the business purpose, as set forth in the articles of incorporation of the corporation, may entail. Pursuant to court practice,
such directors and officers can take any action that is not explicitly excluded by the business purpose of the corporation. In so doing, however,
the directors and officers must still pursue the duty of due care and the duty of loyalty described above and must extend equal treatment to the
corporation's shareholders in like circumstances. ABB's Articles of Incorporation do not contain provisions concerning a director's power, in the
absence of an independent quorum, to vote on the compensation to themselves or any members of their body.
Conflicts of interest
Swiss law does not have a general provision on conflicts of interest and our Articles of Incorporation do not limit our directors' power to
vote on a proposal, arrangement or contract in which the director or officer is materially interested. However, the Swiss Code of Obligations
requires directors and officers to safeguard the interests of the corporation and, in this connection, imposes a duty of care and loyalty on directors
and officers. This rule is generally understood and so recommended by the Swiss Code of Best Practice for Corporate Governance as
disqualifying directors and officers from participating in decisions, other than in the shareholders' meeting, that directly affect them.
Confidentiality
Confidential information obtained by directors and officers of a Swiss corporation acting in such capacity must be kept confidential during
and after their term of office.
Sanctions
If directors and officers transact business on behalf of the corporation with bona fide third parties in violation of their statutory duties, the
transaction is nevertheless valid, as long as it is not explicitly excluded by the corporation's business purpose as set forth in its articles of
incorporation. Directors and officers acting in violation of their statutory duties—whether transacting business with bona fide
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third parties or performing any other acts on behalf of the company—may, however, become liable to the corporation, its shareholders and its
creditors for damages. The liability is joint and several, but the courts may apportion the liability among the directors and officers in accordance
with their degree of culpability.
In addition, Swiss law contains a provision under which payments made to a shareholder or a director or any person(s) associated therewith,
other than at arm's length, must be repaid to the company if the shareholder or director or any person associated therewith was acting in bad
faith.
If the board of directors has lawfully delegated the power to carry out day-to-day management to a different corporate body, e.g., the
executive committee, it is not liable for the acts of the members of that different corporate body. Instead, the directors can be held liable only for
their failure to properly select, instruct and supervise the members of that different corporate body.
Board of Directors
Responsibilities and organization
The Board defines the ultimate direction of the business of ABB and issues the necessary instructions. It determines the organization of the
ABB Group and appoints, removes and supervises the persons entrusted with the management and representation of ABB.
The internal organizational structure and the definition of the areas of responsibility of the Board, as well as the information and control
instruments vis-à-vis the Group Executive Committee, are set forth in the ABB Ltd Board Regulations and Corporate Governance Guidelines, a
copy of which can be found in the section "Corporate governance" at www.abb.com/investorrelations
The Board meets as frequently as needed but at least four times per annual Board term. Board meetings are convened by the chairman or
upon request by a director or the chief executive officer (CEO). Written documentation covering the various items of the agenda for each Board
meeting is sent out in advance to each Board member in order to allow each member time to study the covered matters prior to the meetings.
Decisions made at the Board meetings are recorded in written minutes of the meetings.
The CEO shall regularly, and whenever extraordinary circumstances so require, report to the Board about ABB's overall business and
affairs. Further, Board members are entitled to information concerning ABB's business and affairs. Additional details are set forth in the
ABB Ltd Board Regulations and Corporate Governance Guidelines.
Term and members
The members of the Board are elected individually at the ordinary general meeting of the shareholders for a term of one year; re-election is
possible. Our Articles of Incorporation, a copy of which can be found in the section "Corporate governance" at www.abb.com/investorrelations ,
do not provide for the retirement of directors based on their age. However, an age limit for members of the Board is set forth in the ABB Ltd
Board Regulations and Corporate Governance Guidelines (although waivers are possible and subject to Board discretion), a copy of which can
be found in the section "Corporate governance" at www.abb.com/investorrelations
As at December 31, 2010, the members of the Board (Board term April 2010 to April 2011) were:
Hubertus von Grünberg has been a member and chairman of ABB's Board of Directors since May 3, 2007. He is a member of the
supervisory boards of Allianz Versicherungs AG and Deutsche Telekom AG (both Germany). He is a member of the board of directors of
Schindler Holding AG (Switzerland). Mr. von Grünberg was born in 1942 and is a German citizen.
Roger Agnelli has been a member of ABB's Board of Directors since March 12, 2002. He is the president and chief executive officer of
Vale S.A. (Brazil). Mr. Agnelli was born in 1959 and is a Brazilian citizen.
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Louis R. Hughes has been a member of ABB's Board of Directors since May 16, 2003. Mr. Hughes is the chairman and chief executive
officer of InZero Systems (formerly GBS Laboratories LLC) (U.S.). He is also a member of the boards of directors of Akzo Nobel (The
Netherlands) and Alcatel Lucent (France). Mr. Hughes was born in 1949 and is an U.S. citizen.
Hans Ulrich Märki has been a member of ABB's Board of Directors since March 12, 2002. He is the retired chairman of IBM Europe,
Middle East and Africa (France), and a member of the board of directors of Mettler-Toledo International (U.S.) and Swiss Re and Menuhin
Festival Gstaad AG (both Switzerland). He is also a member of the foundation board of Schulthess Klinik, Zurich (Switzerland) and the board of
trustees of the Hermitage Museum, St. Petersburg (Russia). Mr. Märki was born in 1946 and is a Swiss citizen.
Michel de Rosen has been a member of ABB's Board of Directors since March 12, 2002. He is the chief executive officer of and member of
the board of directors of Eutelsat Communications (France). Mr. de Rosen was born in 1951 and is a French citizen.
Michael Treschow has been a member of ABB's Board of Directors since May 16, 2003. He is the chairman of the boards of directors of
Ericsson (Sweden), Unilever NV (The Netherlands), and Unilever PLC (U.K.). He is also a member of the board of directors of the Knut and
Alice Wallenberg Foundation (Sweden). Mr. Treschow was born in 1943 and is a Swedish citizen.
Bernd W. Voss has been a member of ABB's Board of Directors since March 12, 2002. He is a member of the supervisory boards of
Continental AG and Wacker Chemie (both Germany). Mr. Voss was born in 1939 and is a German citizen.
Jacob Wallenberg has been a member of ABB's Board of Directors since June 26, 1999. From March 1999 to June 1999, he served as a
member of the board of directors of ABB Asea Brown Boveri Ltd, the former parent company of the ABB Group. He is the chairman of the
board of directors of Investor AB (Sweden). He is vice chairman of SEB Skandinaviska Enskilda Banken, Atlas Copco AB and SAS AB (all
Sweden). He is also a member of the boards of directors of the Knut and Alice Wallenberg Foundation and the Stockholm School of Economics
(both Sweden), and The Coca-Cola Company (U.S.). Mr. Wallenberg was born in 1956 and is a Swedish citizen.
As of December 31, 2010, all Board members were non-executive and independent directors (see also "Item 7. Major Shareholders and
Related Party Transactions—Related Party Transactions"), and none of ABB's Board members held any official functions or political posts.
Further information on ABB's Board members can be found by clicking on the ABB Board of Directors CV link in the section "Corporate
governance" at www.abb.com/investorrelations
Board committees
From among its members, the Board has appointed two Board committees: the Governance, Nomination and Compensation Committee
(GNCC) and the Finance, Audit and Compliance Committee (FACC). The duties and objectives of the Board committees are set forth in the
ABB Ltd Board Regulations and Corporate Governance Guidelines, a copy of which can be found in the section "Corporate governance" at
www.abb.com/investorrelations . These committees assist the Board in its tasks and report regularly to the Board. The members of the Board
committees are required to be independent.
Governance, Nomination and Compensation Committee
The GNCC is responsible for (1) overseeing corporate governance practices within ABB, (2) nominating candidates for the Board, the role
of CEO and other positions on the Group Executive Committee, and (3) succession planning, employment and compensation matters relating to
the Board and the Group Executive Committee. The GNCC is also responsible for maintaining an orientation program for new Board members
and an ongoing education program for existing Board members.
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The GNCC must comprise three or more independent directors. The chairman of the Board and, upon invitation by the committee's
chairman, the CEO or other members of the Group Executive Committee may participate in the committee meetings, provided that any potential
conflict of interest is avoided and confidentiality of the discussions is maintained.
As at December 31, 2010, the members of the GNCC were:
Hans Ulrich Märki (chairman)
Michel de Rosen
Roger Agnelli
Finance, Audit and Compliance Committee
The FACC is responsible for overseeing (1) the integrity of ABB's financial statements, (2) ABB's compliance with legal, tax and
regulatory requirements, (3) the independent auditors' qualifications and independence, (4) the performance of ABB's internal audit function and
external auditors and (5) ABB's capital structure, funding requirements and financial risk policies.
The FACC must comprise three or more independent directors who have a thorough understanding of finance and accounting. The
chairman of the Board and, upon invitation by the committee's chairman, the CEO or other members of the Group Executive Committee may
participate in the committee meetings, provided that any potential conflict of interest is avoided and confidentiality of the discussions is
maintained. In addition, the Chief Integrity Officer, the Head of Internal Audit and the external auditors participate in the meetings as
appropriate. As required by the U.S. Securities and Exchange Commission (SEC), the Board has determined that Bernd W. Voss is an audit
committee financial expert.
As at December 31, 2010, the members of the FACC were:
Meetings and attendance
Bernd W. Voss (chairman)
Jacob Wallenberg
Louis R. Hughes
The Board and its committees have regularly-scheduled meetings throughout the year. These meetings are supplemented by additional
meetings (either in person or by conference call), as necessary. The average planned duration of each regularly-scheduled Board, GNCC and
FACC meeting is 7 hours, 3 hours and 4 hours, respectively.
The table below shows the number of meetings held during 2010 by the Board and its committees, their average duration, as well as the
attendance of the individual Board members. In addition, members of the Board and the Group Executive Committee participated in a two-day
strategic retreat.
Meetings and attendance
Average duration
Board
Regular Additional
84
GNCC FACC
(hours) 7.1 1.2 3 2.8
Number of meetings 5 8 5 7
Meetings attended:
Hubertus von
Grünberg 5 8 — —
Roger Agnelli 3 7 2 —
Louis R. Hughes 5 8 — 7
Hans Ulrich Märki 5 8 5 —
Michel de Rosen 5 7 5 —
Michael Treschow 5 7 — —
Bernd W. Voss 5 8 — 7
Jacob Wallenberg 5 8 — 6

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5.7 Secretary to the Board
Diane de Saint Victor is the secretary to the Board.
Group Executive Committee
Responsibilities and organization
The Board has delegated the executive management of ABB to the CEO and the other members of the Group Executive Committee. The
CEO and under his direction the other members of the Group Executive Committee are responsible for ABB's overall business and affairs and
day-to-day management.
The CEO reports to the Board regularly, and whenever extraordinary circumstances so require, on the course of ABB's business and
financial performance and on all organizational and personnel matters, transactions and other issues relevant to the Group.
Each member of the Group Executive Committee is appointed and discharged by the Board.
Members of the Group Executive Committee
As at December 31, 2010, the members of the Group Executive Committee were:
Joe Hogan joined ABB's Group Executive Committee as Chief Executive Officer in September 2008. Before joining ABB, Mr. Hogan was
the CEO and President of General Electric's GE Healthcare unit from 2000 to 2008. From 1985 to 2000, Mr. Hogan held various positions at
General Electric. Mr. Hogan was born in 1957 and is an U.S. citizen.
Michel Demaré joined ABB's Group Executive Committee as Chief Financial Officer in January 2005, and he assumed responsibilities as
Head of Global Markets in October 2008. From February 2008 to August 2008 he was appointed interim CEO in addition to his duties as CFO.
He is also vice chairman of the board of directors of UBS AG and a board member of IMD Foundation (all Switzerland). From 2002 until 2004
Mr. Demaré was vice president and chief financial officer of Baxter Europe. From 1984 until 2002, he held various positions within Dow
Chemical (U.S.). Mr. Demaré was born in 1956 and is a Belgian citizen.
Gary Steel joined ABB's Group Executive Committee as Head of Human Resources in January 2003. Mr. Steel is a member of the board of
directors of Harman International Industries Inc. (U.S.) and a non-executive director of Aquamarine Power, UK. In 2002, he was the human
resources director, group finance at Royal Dutch Shell (Netherlands). Between 1976 and 2002, he held several human resources and employee
relations positions at Royal Dutch Shell. Mr. Steel was born in 1952 and is a British citizen.
Diane de Saint Victor joined ABB' Group Executive Committee as General Counsel in January 2007. From 2004 to 2006, she was general
counsel of European Aeronautic Defence and Space, EADS (France/Germany). From 2003 to 2004, she was general counsel of SCA Hygiene
Products (Germany). From 1993 to 2003, she held various legal positions with Honeywell International (France/ Belgium). From 1988 to 1993,
she held various legal positions with General Electric (U.S.). Ms. de Saint Victor was born in 1955 and is a French citizen.
Brice Koch was appointed Executive Committee member responsible for Marketing and Customer Solutions in January 2010. From 2007
to 2009 he was the Manager of ABB in China and of ABB's North Asia Region. Between 1994 and 2006 he held several management positions
with ABB. He is also member of the board of directors of Rector S.A., France. Mr. Koch was born in 1964 and is a French citizen.
Bernhard Jucker was appointed Executive Committee member responsible for the Power Products division in January 2006. From 2003 to
2005, he was ABB's country manager for Germany. From 1980 to 2003 he held various positions in ABB. Mr. Jucker was born in 1954 and is a
Swiss citizen.
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Peter Leupp was appointed Executive Committee member responsible for the Power Systems division in January 2007. He is also a
member of the board of directors of Gurit Holding AG (Switzerland). From 2005 to 2006, he was ABB's regional manager for North Asia and
from 2001 to 2006 he was ABB's country manager for China. From 1989 to 2001, he held various positions in ABB. Mr. Leupp was born in
1951 and is a Swiss citizen.
Ulrich Spiesshofer was appointed Executive Committee member responsible for the Discrete Automation and Motion division in January
2010. He joined ABB in November 2005 as Executive Committee member responsible for Corporate Development. From 2002 until he joined
ABB, he was senior partner, global head of operations practice at Roland Berger AG. Prior to 2002, he held various positions with A.T.
Kearney Ltd. and its affiliates. Mr. Spiesshofer was born in 1964 and is a German citizen.
Tarak Mehta was appointed Executive Committee member responsible for the Low Voltage Products division in October 2010. From 2007
to 2010 he was head of the Transformers business. Between 1998 and 2006 he held several management positions with ABB. Mr. Mehta was
born in 1966 and is an U.S. citizen.
Veli-Matti Reinikkala was appointed Executive Committee member responsible for the Process Automation division in January 2006. He is
a member of the board of directors of UPM-Kymmene (Finland). In 2005, he was the head of the Process Automation business area. From 1993
to 2005, he held several positions with ABB. Mr. Reinikkala was born in 1957 and is a Finnish citizen.
In addition, as of March 1, 2011, Frank Duggan was appointed Executive Committee member responsible for Global Markets in March
2011. He remains ABB's region manager for India, Middle East and Africa, a position he has held since 2008. In addition, from 2008 to 2011
Mr. Duggan was ABB's country manager for the United Arab Emirates. From 2004 to 2007 he was head of ABB's Group Account Management
and ABB's country manager for Ireland. Between 1986 and 2004 he held several management positions with ABB. Mr. Duggan was born in
1959 and is an Irish citizen.
Further information about the members of the Group Executive Committee can be found by clicking on the Group Executive Committee
CV link in the section "Corporate governance" at www.abb.com/investorrelations
Management contracts
There are no management contracts between ABB and companies or natural persons not belonging to the ABB Group.
Employee Participation Programs
Incentive plans linked to ABB shares
In order to align its employees' interests with the business goals and financial results of the company, ABB operates a number of incentive
plans, linked to ABB's shares, which are summarized below (for a more detailed description of each incentive plan, please refer to "Note 18
Share-based payments arrangements" to our Consolidated Financial Statements.
Employee Share Acquisition Plan
The ESAP is an employee stock-option plan with a savings feature. Employees save over a 12-month period, by way of monthly salary
deductions. The maximum monthly savings amount is the lower of 10 percent of gross monthly salary or the local currency equivalent of
CHF 750. At the end of the savings period, employees choose whether to exercise their stock options to buy ABB shares (ADSs in the case of
employees in the U.S.) at the exercise price set at the grant date, or have their savings returned with interest. The savings are accumulated in a
bank account held by a third-party trustee on behalf of the participants and earn interest.
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The maximum number of shares that each employee can purchase has been determined based on the exercise price and the aggregate
savings for the 12-month period, increased by 10 percent to allow for currency fluctuations. If, at the exercise date, the balance of savings plus
interest exceeds the maximum amount of cash the employee must pay to fully exercise their stock options, the excess funds will be returned to
the employee. If the balance of savings and interest is insufficient to permit the employee to fully exercise their stock options, the employee has
the choice, but not the obligation, to make an additional payment so that they may fully exercise their stock options.
If an employee ceases to be employed by ABB, the accumulated savings as of the date of cessation of employment will be returned to the
employee and the employee's right to exercise their stock options will be forfeited. Employees can withdraw from the ESAP at any time during
the savings period and will be entitled to a refund of their accumulated savings.
The exercise price per share and ADS of CHF 20.46 and USD 20.55, respectively, for the 2010 grant, was determined using the closing
price of the ABB share on the SIX Swiss Exchange and ADS on the New York Stock Exchange on the grant date.
Management Incentive Plan
ABB maintains a management incentive plan (MIP) under which it offers stock options and cash-settled warrant appreciation rights
(WARs) (and through the launch in 2009 also offered stock warrants) to key employees for no consideration.
The warrants and options granted under the MIP allow participants to purchase shares of ABB at predetermined prices. Participants may
sell the warrants and options rather than exercise the right to purchase shares. Equivalent warrants are listed by a third-party bank on the SIX
Swiss Exchange, which facilitates pricing and transferability of warrants granted under the MIP. The options entitle the holder to request that a
third-party bank purchase such options at the market price of equivalent warrants listed by the third-party bank in connection with that MIP
launch. If the participant elects to sell the warrants or options, the instruments will then be held by a third party and, consequently, ABB's
obligation to deliver shares will be to this third party. Each WAR gives the participant the right to receive, in cash, the market price of the
equivalent listed warrant on the date of exercise of the WAR. The WARs are non-transferable.
Participants may exercise or sell warrants and options and exercise WARs after the vesting period, which is three years from the date of
grant. Vesting restrictions can be waived in certain circumstances, such as death or disability. All warrants, options and WARs expire six years
from the date of grant.
Long-Term Incentive Plan
ABB has an long-term incentive plan (LTIP) for members of its Group Executive Committee and certain other executives. In 2010, the
LTIP involved cash-settled conditional grants of ABB's stock and contained a retention component. The plan is described in the
"Remuneration—Components of executive compensation" section below.
Remuneration
ABB's success depends on its ability to attract and retain people who will drive the business to outperform competitors over the long term.
This is an important consideration in the development of its remuneration policy, which is presented in this section of the Annual Report together
with details of compensation in 2010 for members of the Board of Directors and the Executive Committee.
Remuneration principles and governance
The Board of Directors and its Governance, Nomination and Compensation Committee (GNCC) have direct oversight of compensation
policy at ABB. The GNCC has primary responsibility for
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elaborating the general remuneration principles and practice of the ABB Group, while the full Board of Directors takes the final decisions.
The GNCC also plays a role in setting compensation for members of the Board through recommendations that it makes to the full Board of
Directors. The GNCC's recommendations are based on regular comparisons with compensation at other major Swiss companies, as outlined
under "—Components of compensation to Board of Directors" below.
The Board and GNCC are actively involved in the development of ABB's executive remuneration system, which has been evolving since
2004 to reflect a remuneration philosophy that is based on the principles of market orientation, performance and shareholder value. In 2010,
measures aimed at retaining executives were strengthened and have become a further pillar of the remuneration system. "—Components of
executive compensation" below explains the principles and how they apply to remuneration for members of ABB's Executive Committee.
The GNCC acts on behalf of the Board in regularly reviewing the remuneration philosophy and structure, and in reviewing and approving
specific proposals on executive compensation to ensure that they are consistent with the Group's compensation principles.
The Board reviews the performance and compensation of the CEO annually, while the CEO reviews the other members of the Executive
Committee and makes recommendations to the GNCC on the individual remuneration of the Executive Committee members. The CEO also
recommends the Group performance targets that determine the short-term variable compensation paid to members of the Executive Committee
and most other senior managers throughout the company. Short-term variable compensation for some managers with regional or country-level
responsibilities is based on related targets adapted to ABB's goals in these markets.
The GNCC reviews the CEO's recommendations and may make or request amendments before it submits a proposal to the Board, which is
responsible for taking the final decision.
Components of compensation to Board of Directors
In order to attract directors with the necessary experience and competence, ABB targets a level of compensation for Board members that is
comparable to that of non-executive Board members in other publicly traded companies in Switzerland that are part of the Swiss Market Index.
Members of the Board of Directors are paid for their service over a 12-month period that starts with their election at the annual general
meeting. Payment to members of the Board is made in two installments, one following the first six months of their term and one at the end.
Board members do not receive pension benefits and are not eligible to participate in any of ABB's employee incentive programs.
To align the interests of Board members with those of ABB's shareholders, half of their compensation is paid in the form of ABB shares,
though Board members can also choose to receive all their compensation in shares, and the shares are kept in a blocked account for three years.
Departing Board members are entitled to the shares when they leave the company unless agreed otherwise.
The number of shares awarded is calculated prior to each semi-annual payment by dividing the sum to which they are entitled by the
average closing price of the ABB share over a predefined 30-day period.
Board of Directors compensation in 2010
Compensation for Board members is outlined in the table below and has been unchanged since the 2007/2008 term of office. Consistent
with past practice, no loans or guarantees were granted to Board members in 2010.
Board term
2010/2011 2009/2010
CHF CHF
Chairman of the Board 1,200,000 1,200,000
Member of the Board and Committee
chairman 400,000 400,000
Member of the Board 300,000 300,000
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The compensation amounts per individual are listed in the table below:
Name Function
Components of executive compensation
November
Board term 2010/2011
Settled in
shares—
number of
Settled in shares
Paid in 2010
May
Board term 2009/2010
Settled in
shares—
number of
Settled in shares
Total
compensation
cash (1) received (2) cash (1) received (2) paid 2010 (3)
CHF CHF CHF
Hubertus von
Grünberg
Chairman of
the Board — 20,105 300,000 9,092 1,200,000
Roger Agnelli (4) Member of
the Board 75,000 2,492 75,000 2,259 300,000
Louis R. Hughes (5) Member of
Hans Ulrich Märki
the Board
Member of
75,000 2,492 75,000 2,259 300,000
the Board and
Chairman of
the
Governance,
Nomination
and
Compensation
Committee — 9,124 — 8,264 400,000
Michel de Rosen (4) Member of
Michael Treschow
the Board
Member of
75,000 2,492 — 4,519 300,000
Bernd W. Voss
the Board
Member of
75,000 2,522 75,000 2,278 300,000
the Board and
Chairman of
the Finance,
Audit and
Compliance
Committee 100,000 3,358 100,000 3,035 400,000
Jacob Wallenberg (5) Member of
the Board 75,000 2,492 75,000 2,259 300,000
Total 475,000 45,077 700,000 33,965 3,500,000
(1)
Represents gross amounts paid, prior to deductions for social security, withholding tax etc.
(2) Number of shares per Board member is calculated based on net amount due after deductions for social security, withholding tax etc.
(3) In addition to the Board remuneration stated in the above table, ABB paid in 2010 CHF 219,102 in employee social security payments. For the 2010-2011 Board
term, all members elected to receive 50% of their gross compensation in the form of ABB shares, except for Hubertus von Grünberg and Hans Ulrich Märki who
elected to receive 100%.
(4) Member of the Governance, Nomination and Compensation Committee.
(5) Member of the Finance, Audit and Compliance Committee.
All senior positions in ABB have been evaluated using a consistent methodology developed by the Hay Group, whose job evaluation
system is used by more than 10,000 companies around the world. The Hay methodology goes beyond job titles and company size in assessing
positions. It considers the know-how required to do the job, the problem solving complexities involved, as well as the accountability for results
and the freedom to act to achieve results.
This approach provides a meaningful, transparent and consistent basis for comparing remuneration levels at ABB with those of equivalent
jobs at other companies that have been evaluated using the same criteria. The Board of Directors uses Hay's data from the European market for
positions based in Switzerland and from the North American market for jobs based in the U.S. Compensation for Executive Committee members
at ABB is around or slightly above the median values for the market in each region, reflecting ABB's success in outperforming its peers in recent
years.

In addition to being aligned with the market in this way, the compensation of Executive Committee members is also designed to support
three principles:
• performance against specific measurable Group targets;
• shareholder value measured as the performance of ABB's shares against those of its peers; and
• retention of executives and their expertise.
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The compensation of Executive Committee members currently consists of the following elements which, taken together, reflect these
principles: a base salary and benefits, a short-term variable component dependent on Group performance criteria, and a long-term variable
component designed to reward the creation of shareholder value and an executive's commitment to ABB. These are described in detail below.
The base salary and benefits are fixed elements of the annual compensation packages, while the other components vary with performance.
In 2010, fixed compensation represented 32 percent of the CEO's remuneration and about 50 percent for most of the other members of the EC.
The ratio of fixed to variable components in any given year will depend on the performance of the individuals and of ABB against predefined
criteria.
The main components of executive compensation in 2010 are summarized in the following chart and explained in more detail below:
Base salary Cash • Paid monthly
Short-term variable compensation
In addition, members of the Executive Committee are required to build up a holding of ABB shares that is equivalent to a multiple of their
base salary, to ensure that their interests are aligned with those of shareholders. The requirement, as of 2010, is five times base salary for the
CEO and four times base salary for the other members of the Executive Committee. New members of the Executive Committee should aim to
reach these multiples within four years of their appointment. These required shareholding amounts are reassessed annually based on salary and
share price developments.
Annual base salary and benefits
Cash
The base salary for members of the Executive Committee is set with reference to positions with equivalent responsibilities outside ABB as
determined using the Hay methodology described above. It is reviewed annually on the basis of Hay's annual Top Executive Compensation in
Europe survey for executives based in Europe, and of the Top Executive Compensation in the U.S. for positions based in
•
•
•
90
•
Competitive in respective
labor market
Annual increases, if any,
partly based on
performance
Conditional annual
payment
Payout depends on
performance in previous
year against predefined
targets
Long-term variable
compensation (Long-Term
Cash and shares
Performance component:
• Conditional grant
Retention component:
• Conditional grant
Incentive Plan) made annually made annually
•
Payout is in cash and •
depends on performance of
ABB shares against those
of peers over a three-year
period
Payout is in shares and
requires executive to
remain at ABB for full
three-year period
(30 percent may be drawn in cash
principally to help meet tax obligations)

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the U.S. In addition, the executive's performance during the preceding year against individual targets is taken into account when considering
increases.
Members of the Executive Committee receive pension benefits, payable into the Swiss ABB Pension Fund and ABB Supplementary
Insurance Plan (the regulations are available at www.abbvorsorge.ch), except for Veli-Matti Reinikkala who is insured under comparable plans
in the U.S., where he is based. ABB targets a level of pension benefits that is among the top 25 percent of Swiss companies. The current level of
pension benefits was set following a survey of Swiss companies that ABB commissioned from Towers Watson, a consultant, in 2007.
Executive Committee members also receive social security contributions and other benefits, as outlined in the compensation table in "—
Executive Committee compensation in 2010" below.
Short-term variable compensation
Payment of the short-term variable component is conditional on the fulfillment of predefined annual targets that are specific, quantifiable
and challenging. In any given year, this element of an Executive Committee member's compensation therefore reflects the company's
performance against targets for the preceding year.
In 2010, the targets were Group-wide objectives that were aligned with financial measures communicated to shareholders: orders received,
revenues, earnings before interest and taxes, operating cash flow, and cost savings. The first two measures had a weighting of 12.5 percent each,
while the other three each accounted for 25 percent.
The payment for fully achieving the targets is equivalent to 150 percent of the base salary for the CEO and 100 percent of the base salary
for other members of the Executive Committee. Underachieving the targets results in a lower payout, or none at all if performance is below a
certain threshold. The Board may approve a higher payout if the targets are exceeded.
Long-term variable compensation
An important principle of executive compensation at ABB is that it should encourage the creation of value for the company's shareholders
and enable Executive Committee members to participate in the company's success. Value creation is measured in terms of total shareholder
return (TSR), which is the percentage change in the value of the ABB share plus dividends over a three-year period.
ABB's LTIP is the principal mechanism through which members of the Executive Committee and certain other executives are encouraged
to create value for shareholders. Awarded annually, LTIPs comprise a performance component and a retention component.
(i) Performance component
The first element is designed to reward participants for achieving a TSR that is superior to that of a group of reference companies in related
businesses. The peer group is selected by the GNCC on recommendations from an independent third party (a global investment bank), and is
reviewed annually. The group currently consists of Alfa Laval, Alstom, Aspen, Atlas Copco, Cooper, Emerson, GE, Honeywell, Invensys,
Legrand, MAN, Rockwell, Sandvik, Schneider, SKF, Siemens, Smiths Group, Yaskawa and Yokogawa.
Under each three-year plan, members of the Executive Committee are conditionally granted a number of shares whose value at the launch
of the plan is equal to a certain percentage of their base salary. In 2010, the percentages were 67 percent for the CEO, 50 percent for the CFO
and head of Global Markets, and 42 percent for the other members of the EC.
The award will be made after three years if ABB's total shareholder return meets certain criteria. For example, no payout will be made if
ABB's performance is weaker than half of its peers. The
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payout is 33 percent if ABB's performance over the evaluation period is positive and equal to the median of the peer group, and rises on a
proportional scale to 100 percent if ABB's performance is positive and at least equal to three-quarters of its peers.
If ABB's performance is negative but better than half of its peers, the number of shares awarded under the Long-Term Incentive Plan
launched in 2010 will be reduced.
In addition, there is no payout if ABB is unprofitable in the calendar year preceding the end of a three-year LTIP. The measure of
profitability used for this purpose is operating net income, which is ABB's net income adjusted for the financial impact of items considered by
the Board to be exceptional (such as divestments, acquisitions etc.).
The assessment of ABB's performance against its peers for each three-year period is carried out by an independent third party. As of the
2010 LTIP, the payout will be made in cash.
(ii) Retention component
The second component of the Long-Term Incentive Plan is designed to retain executives at ABB and forms a larger part of the plan
launched in 2010 than of those launched in previous years. Plans launched prior to 2010 include a co-investment component under which each
participant, at the start of the three-year cycle, could set aside shares from their personal holding equivalent in value to 33 percent of the shortterm
variable compensation received that year. If the shares are held for the entire three-year period, ABB will award the participant the same
number of shares.
Starting with the 2010 LTIP, members of the Executive Committee are conditionally granted shares which, at the start of each three-year
plan, are equal to a certain percentage of their base salary. In 2010, the percentages were 100 percent for the CEO, 75 percent for the CFO and
head of Global Markets, and 65 percent for the other members of the Executive Committee. The award may be lower if an executive does not
reach the personal targets they were set for the previous calendar year.
The shares are awarded after three years to executives who are still working for the company. Executives can choose to receive 30 percent
of the payout in cash, principally to help them meet their income tax obligations. Under the terms and conditions of the plan, executives forfeit
the shares if they leave ABB voluntarily, while those who retire or are asked to leave the company are awarded shares on a pro rata basis.
Severance provisions
Employment contracts for Executive Committee members contain notice periods of up to 12 months, during which they are entitled to
salaries and short-term variable compensation. In addition, if the company terminates the employment of a member of the Executive Committee
and that member does not find alternative employment within the notice period that pays at least 70 percent of the member's annual
compensation, then the company will continue to pay compensation for up to 12 additional months.
Executive Committee compensation in 2010
ABB discloses the compensation elements for each member of the Executive Committee, going beyond the requirements of the Swiss Code
of Obligations.
The performance-related component of the Long-Term Incentive Plans is valued using the Monte Carlo modeling technique, an accepted
simulation technique under U.S. GAAP (the accounting standard used by ABB). By assessing the probability of various levels of payout, it
provides a realistic estimate of their value.
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The following table provides an overview of the total compensation of members of the Executive Committee in 2010, comprising cash
compensation and the estimated value of the conditional grants awarded under the LTIP launched in 2010 that runs until 2013. Cash
compensation includes the base salary, the short-term variable compensation for 2009, pension benefits, as well as other benefits comprising
mainly social security contributions. The compensation is shown gross (i.e., before deduction of employee's social security and pension
contributions).
Short-term
variable
93
Estimated
value of share-
based awards
granted in
Name Base salary compensation (1)
Other
Pension
benefits benefits (2) 2010 (3)
CHF CHF CHF CHF
Joe Hogan 1,900,003 3,420,000 270,325 407,461
Michel Demaré 1,200,006 1,440,000 257,251 749,790
Gary Steel 770,005 924,000 272,136 499,581
Ulrich Spiesshofer 780,001 876,000 220,234 339,459
Diane de Saint Victor 730,003 876,000 257,634 356,857
Bernhard Jucker 919,999 1,104,000 266,002 393,193
Peter Leupp 770,005 924,000 276,280 333,196
Veli-Matti Reinikkala
2010 Total
CHF CHF
2,012,883 8,010,672
952,800 4,599,847
527,565 2,993,287
534,405 2,750,099
500,160 2,720,654
630,324 3,313,518
527,565 2,831,046
(4)
647,903 710,640 207,512 169,151 457,458 2,192,664
Brice Koch (joined on
January 1, 2010)
Tarak Mehta (joined on
700,000 — 217,434 204,114 479,598 1,601,146
October 1, 2010) (5) Total current
Executive
162,500 — 51,758 53,712 — 267,970
Committee
members 8,580,425 10,274,640 2,296,566 3,506,514 6,622,758 31,280,903
Tom Sjoekvist (retired
from the EC on
September 30, 2010)
(6)(7) 770,005 924,000 282,498 397,205 — 2,373,708
Anders Jonsson (retired
from the EC on
July 31, 2010) (7) Total former
Executive
619,998 744,000 263,559 375,349 — 2,002,906
Committee
members 1,390,003 1,668,000 546,057 772,554 — 4,376,614
Total 9,970,428 11,942,640 2,842,623 4,279,068 6,622,758 35,657,517
(1)
The table above shows short-term variable compensation relating to 2009, paid in 2010. Therefore for individuals who joined the Executive Committee in 2010, no
short-term variable compensation amounts in respect of 2009 are presented, as such amounts did not relate to their remuneration as Executive Committee
members. Short-tem variable compensation is linked to the ABB Group scorecard and defined target points therein. Upon full achievement of the defined targets,
the short-term variable compensation of the CEO corresponds to 150 percent of his base salary and for all other Executive Committee members to 100 percent of
their respective base salary. The Board has the discretion to approve a higher payout than 100 percent, if the targets are exceeded. The expected short-term variable
compensation outcome for the year 2010 amounts to CHF 11,951,170. Short-term variable compensation payments will be made in March 2011, after the financial
results are published.
(2) Other benefits comprise payments related to social security, health insurance, children's education, transportation, tax advice and one-off items.
(3) The estimated value of the share based awards is subject to performance and other parameters (e.g. the share price development) and may therefore vary in value
from the above numbers at the date of vesting, March 15, 2013. The above amounts have been calculated using the market value of the ABB share on the day of
grant adjusted, in the case of the performance component, according to the parameters considered in the Monte Carlo Simulation Model.
(4) Veli-Matti Reinikkala received 50 percent of his base salary in USD and 50 percent in EUR at a fixed USD/EUR exchange rate. All USD payments were
converted into Swiss francs using a rate of 0.94 per U.S. dollar.
(5) Prior to joining the Executive Committee, Tarak Mehta participated in the LTIP and consequently, in 2010, received a share-based award in the amount of
CHF 290,726 which was unrelated to his subsequent appointment to the Executive Committee.
(6) Tom Sjoekvist received CHF 85,426 cash compensation for foregone pension benefits as a result of him continuing to work for ABB after the age of 60, included
in other benefits above.
(7) The above compensation figures related to Tom Sjoekvist and Anders Jonsson represent contractually guaranteed payments for the period January to
December 2010.

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Details of the share-based compensation granted to members of the Executive Committee during 2010 are provided in a table of their
shareholdings in "—Group Executive Committee ownership of ABB shares and options" below. Consistent with past practice, no loans or
guarantees were granted to members of the Executive Committee in 2010.
Members of the Executive Committee are eligible to participate in the ESAP, an employee stock-option plan with annual launches, which is
open to employees around the world. In addition to the above awards, seven members of the Executive Committee participated in the seventh
launch of the plan. ESAP is described in "—Employee Participation Programs" above.
Members of the Executive Committee cannot participate in the MIP, also described in "—Employee Participation Programs" above. Any
warrants, options or warrant appreciation rights held by Executive Committee members (and disclosed in "—Group Executive Committee
ownership of ABB shares and options" below) were awarded to them as part of the compensation they received in earlier roles that they held
in ABB.
Additional fees and remuneration
In 2010, ABB did not pay any fees or remuneration to the members of the Board or the Executive Committee for services rendered to ABB
other than those disclosed above. Also, in 2010 ABB did not pay any additional fees or remuneration, other than on market terms, to persons
closely linked to a member of the Board or the Executive Committee for services rendered to ABB.
Compensation to former members of the Board and the Executive Committee
Except as disclosed above, ABB did not make any payments to a former member of the Board or the Executive Committee in 2010.
Tom Sjoekvist and Anders Jonsson, who both left ABB's Executive Committee in 2010, have agreed not to carry out any work that could
compete with activities of ABB during the 12 months following their formal retirement from the company.
Tom Sjoekvist left the Executive Committee on September 30, 2010 and formally retired from ABB on February 28, 2011. He will receive
total compensation for the non-competition obligation of 770,000 Swiss francs. Anders Jonsson left the Executive Committee on July 31, 2010,
and formally retired from ABB on December 31, 2010. He will receive a total of 671,667 Swiss francs under a similar agreement.
The terms of compensation for any consultancy work that ABB may offer them in the 12 months following their formal retirement are also
part of the agreements with Tom Sjoekvist and Anders Jonsson.
Change of control provisions
Following the spirit of ABB's remuneration philosophy, none of ABB's Board members, Executive Committee members or members of
senior management receive "golden parachutes" or other special benefits in the event of a change of control.
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ABB shareholdings of members of the Board and the Executive Committee
Board ownership of ABB shares and options
The table below shows the number of ABB shares held by each Board member:
Total number of shares held (1)
Name December 31, 2010 December 31, 2009
Hubertus von Grünberg 82,167 52,970
Roger Agnelli 149,408 144,657
Louis R. Hughes 49,677 69,926
Hans Ulrich Märki 368,676 351,288
Michel de Rosen 111,328 104,317
Michael Treschow 86,071 81,271
Bernd W. Voss 157,890 151,497
Jacob Wallenberg (2) 163,618 158,867
Total 1,168,835 1,114,793
(1)
Except as described in this section, no member of the Board and no person closely linked to a member of the Board held any shares of ABB
or options in ABB shares.
Group Executive Committee ownership of ABB shares and options
Includes as of December 31, 2010 and 2009, respectively, a total of 1,041,025 and 961,983 shares paid as compensation to Board members in
current and prior years.
(2) Share amounts provided in this section do not include the shares beneficially owned by Investor AB, of which Mr. Wallenberg is chairman.
As of December 31, 2010, the members of the Executive Committee held the following numbers of shares (or ADSs representing such
shares), the conditional rights to receive ABB shares under the LTIP, options (either vested or unvested as indicated) under the MIP and
unvested shares in respect of other incentive arrangements.
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Name
Total
number
of shares
held (1)
Number of
options
held
under the
MIP (2)
Maximum
number of
conditionally
granted
shares
under the
2008 launch
of the
LTI Plan (4)
(vesting 2011)
Number of
matching
shares
deliverable
under
the 2008
coinvestment
portion of
LTI Plan (4)
(vesting
2011)
Unvested at December 31, 2010
Maximum
number of
conditionally
granted
shares
under
the 2009
launch of
the LTI Plan
(4)
(vesting 2012)
Number of
matching
shares
deliverable
under
the 2009
coinvestment
portion of
LTI plan (4)
(vesting
2012)
Retention
shares
deliverable
under
the 2010
retention
component
of the
LTI Plan (4)
(vesting
2013)
Number of
shares
granted in
respect of
sign-on
bonus (3)(4)
(vesting
2011
and 2013)
Joe Hogan
Michel
Demaré
71,923 — 145,039 26,923 268,362 45,000 87,841 379,364
(5)
Gary Steel
Ulrich
363,445
200,858
—
—
71,880
29,390
10,490
8,634
127,119
67,974
34,054
16,919
41,609
23,140
—
—
Spiesshofer
144,580 — 27,863 8,309 64,443 16,147 23,440 —
Diane de
Saint
Victor 159,008 — 27,863 8,178 64,443 16,262 21,938 —
Bernhard
Jucker 102,468 — 35,115 9,739 81,215 18,590 27,647 —
Peter
Leupp
Veli-Matti
116,516 — 29,390 8,597 67,974 13,917 23,140 —
Reinikkala
101,716 — 23,902 6,866 63,320 16,174 20,065 —
Brice Koch 27,224 — 22,252 3,200 42,408 — 21,036 —
Tarak
Mehta
Total
current
executive
9,082 190,850 19,853 2,786 37,467 5,576 12,714 —
committee
members 1,296,820 190,850 432,547 93,722 884,725 182,639 302,570 379,364
(1)
Includes shares deposited as match for the co-investment portion of the LTI Plan. These shares may be sold/transferred but then the corresponding number of coinvestment
shares would be forfeited.
(2) Options may be sold or exercised/converted into shares at the ratio of 5 options for 1 share.
(3) 189,682 shares vest in each of 2011 and 2013.
(4) The participants have the possibility to elect to receive 30 percent of the value of the vested shares in cash.
(5) Total number of shares held includes 4,500 shares held jointly with spouse.
Furthermore, as of December 31, 2010, members of the Executive Committee had been conditionally granted ABB shares under the
performance component of the LTI Plan 2010, which at the time of vesting will be fully settled in cash. The conditional grants are shown in the
table below and the plan is described in detail in "—Components of executive compensation" above. In addition certain members of the
Executive Committee held warrant appreciation rights (WARs) that entitle the holder to receive in cash the market value of the equivalent listed
warrant at the time of exercise. No unvested WARs were held under the MIP by any Executive Committee member.
Maximum number of
conditionally
granted shares under
the performance
component of the 2010
launch of LTI Plan
(vesting 2013)
Number of fully
vested WARs held
under the MIP
Joe Hogan 58,854 —
Michel Demaré 27,740 —
Gary Steel 14,952 —
Ulrich Spiesshofer 15,146 —
Diane de Saint Victor 14,175 —
Bernhard Jucker 17,865 185,000
Peter Leupp 14,952 375,000
Veli-Matti Reinikkala 12,965 —
Brice Koch 13,593 —
Tarak Mehta 8,392 —
Total current
executive committee
members 198,634 560,000

Table of Contents
Except as described in this section, as at December 31, 2010, no member of the Executive Committee and no person closely linked to a
member of the Executive Committee held any shares of ABB or options in ABB shares.
Total shareholdings of ABB shares and options
As of December 31, 2010, the members of our Board and Executive Committee owned less than 1 percent of ABB's total shares
outstanding.
A breakdown of our employees by geographic region is as follows:
EMPLOYEES
December 31,
2010 2009 2008
Europe 58,800 60,600 62,100
The Americas 17,700 17,100 20,000
Asia 30,900 29,900 29,100
Middle East and Africa 9,100 8,500 8,200
Total 116,500 116,100 119,400
The proportion of our employees that are represented by labor unions or are the subject of collective bargaining agreements varies based on
the labor practices of each country in which we operate.
Item 7. Major Shareholders and Related Party Transactions
MAJOR SHAREHOLDERS
Investor AB, Sweden, held 166,330,142 ABB shares as of December 31, 2010. This holding remained unchanged during 2010 and
represents approximately 7.2 percent of ABB's total share capital and voting rights as registered in the Commercial Register on that date. The
number of shares held by Investor AB does not include shares held by Jacob Wallenberg, the chairman of Investor AB, in his individual
capacity.
BlackRock, Inc., New York, U.S., announced that as per April 6, 2010, it, together with its direct and indirect subsidiaries, held 70,267,934
ABB shares corresponding to 3.0 percent of ABB's total share capital and voting rights as registered in the Commercial Register on that date. For
a full review of the disclosure report pursuant to which BlackRock reported its ABB shareholdings, please refer to the search facility of the SIX
Disclosure Office at www.six-swiss-exchange.com/shares/companies/major_shareholders_en.html?fromDate=19980101&issuer=10881
To the best of ABB's knowledge, no other shareholder held 3 percent or more of ABB's total share capital and voting rights as registered in
the Commercial Register on February 28, 2011.
Under ABB's Articles of Incorporation, each registered share represents one vote. Significant shareholders do not have different voting
rights.
To our knowledge, we are not directly or indirectly owned or controlled by any government or by any other corporation or person.
At December 31, 2010, we had approximately 462,000 shareholders. Approximately 168,000 were U.S. holders, of which approximately
740 were record holders. Based on the share register, U.S. holders (including holders of ADSs) held approximately 13 percent of the total
number of shares issued, including treasury shares, at that date.
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Affiliates and associates
RELATED PARTY TRANSACTIONS
In the normal course of our business, we purchase products from, sell products to and engage in other transactions with entities in which we
hold an equity interest. The amounts involved in these transactions are not material to ABB Ltd. Also, in the normal course of our business, we
engage in transactions with businesses that we have divested. We believe that the terms of the transactions we conduct with these companies are
negotiated on an arm's length basis.
Key management personnel
This section describes important business relationships between ABB and its Board members, or companies and organizations represented
by them. This determination has been made based on ABB Ltd's Related Party Transaction Policy.
Vale S.A. and its subsidiaries (Vale) and ABB have entered into a framework agreement establishing general terms and conditions for the
supply of products, systems and services among their respective group subsidiaries. ABB supplies Vale primarily with process automation
products for mineral systems. The total revenues recorded by ABB in 2010 relating to its contracts with Vale were approximately $200 million.
Roger Agnelli is president and CEO of Vale.
On November 16, 2010, ABB entered into an amendment to its unsecured syndicated $2-billion, revolving credit facility originally entered
into effective as of October 7, 2009. As of December 31, 2010, SEB Skandinaviska Enskilda Banken AB (publ) (SEB) has committed to
$71 million out of the $2-billion total. Jacob Wallenberg is the vice chairman of SEB.
In 2003, ABB entered into a 10-year agreement with IBM, pursuant to which IBM took over the operation and support of ABB's
information systems infrastructure. In 2009, this agreement was amended and extended to 2016. The total value of the infrastructure and related
operational services to be provided under the extended portion of this agreement is expected to approach $1.4 billion. Hans Ulrich Märki is the
retired chairman of IBM Europe, Middle East and Africa.
After comparing the revenues generated from ABB's business with Vale, and after reviewing the infrastructure and operational services
arrangement with IBM and the banking commitments of SEB, the Board has determined that ABB's business relationships with those companies
do not constitute material business relationships and that all members of the Board are considered to be independent directors. This
determination was made in accordance with ABB Ltd's Related Party Transaction Policy which was prepared based on the Swiss Code of Best
Practice for Corporate Governance and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange.
In addition, ABB maintains important banking relationships with UBS AG (UBS), including one UBS affiliate that as of December 31,
2010, committed to lend $71 million out of the $2-billion total commitment under the above-referenced revolving credit facility. Michel Demaré,
the CFO of ABB, is also a director of UBS. ABB has also retained Ortec Finance B.V. (Ortec) to provide pension modelling services. Michel
Demaré's spouse is the managing director and owns 49 percent of Ortec's Swiss subsidiary. The Board has determined that ABB's business
relationships with UBS and Ortec are not material to ABB or UBS or Ortec or unusual in their nature or conditions.
Item 8. Financial Information
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
See "Item 18. Financial Statements" for a list of financial statements contained in this Annual Report.
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Antitrust
Gas Insulated Switchgear business
LEGAL PROCEEDINGS
In May 2004, we announced that we had undertaken an internal investigation which uncovered that certain of our employees together with
employees of other companies active in the Gas Insulated Switchgear business were involved in anti-competitive practices. We reported such
practices upon identification to the appropriate antitrust authorities, including the European Commission. The European Commission announced
its decision in January 2007 and granted ABB full immunity from fines assessed to ABB of euro 215 million under the European Commission's
leniency program.
We continue to cooperate with other antitrust authorities in several locations globally, including Brazil, which are investigating anticompetitive
practices related to Gas Insulated Switchgear. At this stage of the proceedings, no reliable estimate of the amount of potential fines,
if any, can be made.
Power Transformers business
In October 2009, the European Commission announced its decision regarding its investigation into alleged anti-competitive practices of
certain manufacturers of power transformers. The European Commission fined ABB euro 33.75 million (equivalent to $49 million on date of
payment).
The German Antitrust Authority (Bundeskartellamt) and other antitrust authorities are also reviewing those alleged practices which relate to
the German market and other markets. Management is cooperating fully with the authorities in their investigations. ABB anticipates that the
German Antitrust Authority's review will result in an unfavorable outcome with respect to the alleged anti-competitive practices and expects that
a fine will be imposed. At this stage of the proceedings with the other antitrust authorities, no reliable estimate of the amount of potential fines, if
any, can be made.
Cables business
Our cables business is under investigation for alleged anti-competitive practices. Management is cooperating fully with the antitrust
authorities in their investigations. An informed judgment about the outcome of these investigations or the amount of potential loss for ABB, if
any, relating to these investigations cannot be made at this stage.
FACTS business
In January 2010, the European Commission conducted raids at the premises of ABB's flexible alternating current transmission systems
(FACTS) business in Sweden as part of its investigation into alleged anti-competitive practices of certain FACTS manufacturers. In the United
States, the Department of Justice (DoJ) also conducted an investigation into this business. We have been informed that the European
Commission and the DoJ have closed their investigations. No fines have been imposed on ABB.
ABB's FACTS business remains under investigation in one other jurisdiction for anti-competitive practices. Management is cooperating
fully with the antitrust authorities in its investigation. An informed judgment about the outcome of that investigation or the amount of potential
loss for ABB, if any, relating to that investigation cannot be made at this stage.
Suspect payments
In April 2005, we voluntarily disclosed to the DoJ and the United States Securities and Exchange Commission (SEC) certain suspect
payments in our network management unit in the United States.
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Subsequently, we made additional voluntary disclosures to the DoJ and the SEC regarding suspect payments made by other ABB subsidiaries in
a number of countries in the Middle East, Asia, South America and Europe (including to an employee of an Italian power generation company)
as well as by its former Lummus business. These payments were discovered by ABB as a result of our internal audit program and compliance
reviews.
In September 2010, we reached settlements with the DoJ and the SEC regarding their investigations into these matters and into suspect
payments involving certain of ABB's subsidiaries in the United Nations Oil-for-Food Program. In connection with these settlements, we agreed
to make payments to the DoJ and SEC totaling $58 million, which were settled in the fourth quarter of 2010. One subsidiary of ABB pled guilty
to one count of conspiracy to violate the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act and one count of violating those
provisions. ABB entered into a deferred prosecution agreement and settled civil charges brought by the SEC. These settlements resolved the
foregoing investigations. In lieu of an external compliance monitor, the DoJ and SEC have agreed to allow ABB to report on its continuing
compliance efforts and the results of the review of its internal processes through September 2013.
General
In addition, we are aware of proceedings, or the threat of proceedings, against us and others in respect of private claims by customers and
other third parties alleging harm with regard to various actual or alleged cartel cases. Also, ABB is subject to other various legal proceedings,
investigations, and claims that have not yet been resolved. With respect to the abovementioned regulatory matters and commercial litigation
contingencies, ABB will bear the costs of the continuing investigations and any related legal proceedings.
Liabilities recognized
At December 31, 2010 and 2009, we recognized aggregate liabilities of $220 million and $300 million, respectively, included in
"Provisions and other current liabilities" and in "Other non-current liabilities", for the above regulatory, compliance and legal contingencies. As
it is not possible to make an informed judgment on the outcome of certain matters and as it is not possible, based on information currently
available to management, to estimate the maximum potential liability on other matters, there could be material adverse outcomes beyond the
amounts accrued.
See "Item 3. Key Information—Dividends and Dividend Policy."
DIVIDENDS AND DIVIDEND POLICY
SIGNIFICANT CHANGES
Except as otherwise described in this Annual Report, there has been no significant change in our financial position since December 31,
2010.
Item 9. The Offer and Listing
MARKETS
The shares of ABB Ltd are principally traded on the SIX Swiss Exchange (under the symbol "ABBN") and on the NASDAQ OMX
Stockholm Exchange (under the symbol "ABB"). ADSs of ABB Ltd have been traded on the New York Stock Exchange under the symbol
"ABB" since April 6, 2001. ABB Ltd's ADSs are issued under the Amended and Restated Deposit Agreement, dated May 7, 2001, with
Citibank, N.A. as depositary. Each ADS represents one share.
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TRADING HISTORY
No suspension in the trading of our shares occurred in the years ended December 31, 2010, 2009 and 2008.
The table below sets forth, for the periods indicated, the reported high and low closing prices for the shares on SIX Swiss Exchange and the
NASDAQ OMX Stockholm Exchange and for the ADSs on the New York Stock Exchange.
Item 10. Additional Information
DESCRIPTION OF SHARE CAPITAL AND ARTICLES OF INCORPORATION
This section summarizes the material provisions of ABB Ltd's Articles of Incorporation and the Swiss Code of Obligations relating to the
shares of ABB Ltd. The description is only a summary and is qualified in its entirety by ABB Ltd's Articles of Incorporation, a copy of which
has been filed as Exhibit 1.1 to this Annual Report, ABB Ltd's filings with the commercial registry of the Canton of Zurich (Switzerland) and
Swiss statutory law.
101
NASDAQ OMX
Stockholm
Exchange
SIX Swiss
New York
Exchange
Stock Exchange
High Low
(CHF)
High Low
(SEK)
High Low
($)
Annual highs and lows
2006 21.85 12.75 122.75 77.00 17.98 9.72
2007 36.52 19.65 202.00 113.75 31.81 15.96
2008 35.04 11.92 198.50 80.75 32.95 9.12
2009 22.20 13.16 151.50 98.50 21.90 10.97
2010 23.86 18.43 161.30 129.00 22.69 16.05
Quarterly highs and lows
2009
First quarter 16.95 13.16 118.50 98.50 15.25 10.97
Second quarter 18.30 16.04 130.75 114.25 17.37 14.06
Third quarter 21.50 15.97 146.25 116.50 21.02 14.69
Fourth quarter 22.20 18.33 151.50 126.70 21.90 17.83
2010
First quarter 23.19 18.79 157.90 129.00 21.84 17.30
Second quarter 23.86 18.84 161.30 130.00 22.56 16.05
Third quarter 21.68 18.43 149.40 133.00 21.28 17.43
Fourth quarter 22.10 19.45 153.40 136.70 22.69 19.36
Monthly highs and lows
2010
September 21.05 20.27 149.40 143.20 21.28 19.84
October 22.10 20.38 151.90 138.90 22.69 20.69
November 20.81 19.45 143.90 136.70 21.75 19.36
December 21.22 19.72 153.40 138.00 22.45 19.73
2011
January 22.89 21.00 157.90 149.00 24.28 21.78
February 23.18 21.92 154.80 149.90 24.51 23.23

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Registration and Business Purpose
ABB Ltd was registered as a corporation ( Aktiengesellschaft ) in the commercial register of the Canton of Zurich (Switzerland) on
March 5, 1999, under the name of "New ABB Ltd" and its name was subsequently changed to "ABB Ltd". Its commercial registry number is
CH-020.3.021.615-2.
ABB Ltd's purpose, as set forth in Article 2 of its Articles of Incorporation, is to hold interests in business enterprises, particularly in
enterprises active in the areas of industry, trade and services. It may acquire, encumber, exploit or sell real estate and intellectual property rights
in Switzerland and abroad and may also finance other companies. It may engage in all types of transactions and may take all measures that
appear appropriate to promote, or that are related to, its purpose.
Our Shares
ABB Ltd's shares are registered shares ( Namenaktien ) with a par value of CHF 1.03 each following the dividend distribution in 2010 of
CHF 0.51 per share by way of a reduction in the par value of the shares, from CHF 1.54 to 1.03. The shares are fully paid and non-assessable.
The shares rank pari passu in all respects with each other, including in respect of entitlements to dividends, to a share of the liquidation proceeds
in the case of a liquidation of ABB Ltd, to advance subscription rights and to pre-emptive rights.
Each share carries one vote in ABB Ltd's general shareholders' meeting. Voting rights may be exercised only after a shareholder has been
recorded in ABB Ltd's share register ( Aktienbuch ) as a shareholder with voting rights, or with Euroclear Sweden AB in Sweden, which
maintains a subregister of ABB Ltd's share register. Euroclear Sweden AB is an authorized central securities depository under the Swedish Act
on Registration of Financial Instruments and carries out, among other things, the duties of registrar for Swedish companies listed on the
NASDAQ OMX Stockholm Exchange. Registration with voting rights is subject to the restrictions described in "Transfer of Shares."
The shares are not issued in certificated form and are held in collective custody at SIX SIS AG. Shareholders do not have the right to
request printing and delivery of share certificates ( aufgehobener Titeldruck ), but may at any time request ABB Ltd to issue a confirmation of
the number of registered shares held.
Capital Structure
Issued Shares
On December 31, 2010, and February 28, 2011, ABB's ordinary share capital (including treasury shares) amounted to
CHF 2,378,045,525.91 divided into 2,308,782,064 fully paid registered shares with a par value of CHF 1.03 per share.
In February 2011, the Board of Directors announced that a proposal will be put to the 2011 Annual General Meeting to distribute a dividend
in the amount of CHF 0.60 per share.
Contingent Share Capital
As at December 31, 2010, ABB's share capital may be increased by an amount not to exceed CHF 206,000,000 through the issuance of up
to 200,000,000 fully paid registered shares with a par value of CHF 1.03 per share through the exercise of conversion rights and/or warrants
granted in connection with the issuance on national or international capital markets of newly or already issued bonds or other financial market
instruments.
As at December 31, 2010, ABB's share capital may be increased by an amount not to exceed CHF 10,300,000 through the issuance of up to
10,000,000 fully paid registered shares with a par value
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of CHF 1.03 per share through the exercise of warrant rights granted to its shareholders. The Board may grant warrant rights not taken up by
shareholders for other purposes in the interest of ABB.
The pre-emptive rights of the shareholders are excluded in connection with the issuance of convertible or warrant bearing bonds or other
financial market instruments or the grant of warrant rights. The then-current owners of conversion rights and/or warrants will be entitled to
subscribe for new shares. The conditions of the warrants will be determined by the Board.
The acquisition of shares through the exercise of warrants and each subsequent transfer of the shares will be subject to the restrictions of
ABB's Articles of Incorporation.
In connection with the issuance of convertible or warrant-bearing bonds or other financial market instruments, the Board is authorized to
restrict or deny the advance subscription rights of shareholders if such bonds or other financial market instruments are for the purpose of
financing or refinancing the acquisition of an enterprise, parts of an enterprise, participations or new investments or an issuance on national or
international capital markets. If the Board denies advance subscription rights, the convertible or warrant-bearing bonds or other financial market
instruments will be issued at the relevant market conditions and the new shares will be issued pursuant to the relevant market conditions taking
into account the share price and/or other comparable instruments having a market price. Conversion rights may be exercised during a maximum
ten year period, and warrants may be exercised during a maximum seven-year period, in each case from the date of the respective issuance. The
advance subscription rights of the shareholders may be granted indirectly.
In addition as at December 31, 2010, ABB's share capital may be increased by an amount not to exceed CHF 29,723,421.73 through the
issuance of up to 28,857,691 fully paid shares with a par value of CHF 1.03 per share to employees. The pre-emptive and advance subscription
rights of ABB's shareholders are excluded. The shares or rights to subscribe for shares will be issued to employees pursuant to one or more
regulations to be issued by the Board, taking into account performance, functions, level of responsibility and profitability criteria. ABB may
issue shares or subscription rights to employees at a price lower than that quoted on the stock exchange. The acquisition of shares within the
context of employee share ownership and each subsequent transfer of the shares will be subject to the restrictions of ABB's Articles of
Incorporation.
Authorized Share Capital
As at December 31, 2010, ABB's share capital may be increased by an amount not to exceed CHF 206,000,000 through the issuance of up
to 200,000,000 fully paid shares with a par value of CHF 1.03 per share out of authorized share capital. The authorized shares are valid until
May 5, 2011. The Board is authorized to determine the date of issue of new shares, the issue price, the type of payment, the condition for the
exercise of the pre-emptive rights, and the beginning date for dividend entitlement. The Board may permit pre-emptive rights that have not been
exercised by shareholders to expire or it may place these rights and/or shares as to which pre-emptive rights have been granted but not exercised
at market conditions or use them for other purposes in the interest of ABB. Furthermore, the Board is authorized to restrict or deny the preemptive
rights of shareholders and allocate such rights to third parties if the shares are used (i) for the acquisition of an enterprise, parts of an
enterprise, or participations, or for new investments, or in case of a share placement, for the financing or refinancing of such transactions; or
(ii) for the purpose of broadening the shareholder constituency in connection with a listing of shares on domestic or foreign stock exchanges.
The subscription and the acquisition of the new shares, as well as each subsequent transfer of the shares, will be subject to the restrictions of
ABB's Articles of Incorporation.
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Transfer of Shares
The transfer of shares is effected by corresponding entry in the books of a bank or depository institution. An acquirer of shares must file a
share registration form in order to be registered in ABB Ltd's share register ( Aktienbuch ) as a shareholder with voting rights. Failing such
registration, the acquirer will not be able to participate in or vote at shareholders' meetings, but will be entitled to dividends, pre-emptive and
advanced subscription rights, and liquidation proceeds.
An acquirer of shares will be recorded in ABB Ltd's share register with voting rights upon disclosure of its name and address. However,
ABB Ltd may decline a registration with voting rights if the shareholder does not declare that it has acquired the shares in its own name and for
its own account. If the shareholder refuses to make such declaration, it will be registered as a shareholder without voting rights. If persons fail to
expressly declare in their registration application that they hold the shares for their own accounts (nominees), the board of directors may still
enter such persons in the share register with the right to vote, provided that the nominee has entered into an agreement with the board of directors
concerning his status, and further provided the nominee is subject to recognized bank or financial market supervision.
After having given the registered shareholder or nominee the right to be heard, the board of directors may cancel registrations in the share
register retroactive to the date of registration if such registrations were made on the basis of incorrect information. The relevant shareholder or
nominee will be informed promptly as to the cancellation. The board of directors will oversee the details and issue the instructions necessary for
compliance with the preceding regulations. In special cases, it may grant exemptions from the rule concerning nominees.
Acquirers of registered shares who have chosen to have their shares registered in the share register with Euroclear Sweden AB are not
requested to file a share registration form or declare that they have acquired the shares in their own name and for their own account in order to be
registered as a shareholder with voting rights. However, in order to be entitled to vote at a shareholders' meeting those acquirers need to be
entered in the Euroclear Sweden AB share register in their own name no later than ten calendar days prior to the shareholders' meeting.
Uncertificated shares registered with Euroclear Sweden AB may be pledged in accordance with Swedish law.
Except as described in this subsection, neither the Swiss Code of Obligations nor ABB Ltd's Articles of Incorporation limit any right to own
ABB Ltd's shares, or any rights of non-resident or foreign shareholders to exercise voting rights of ABB Ltd's shares.
Shareholders' Meetings
Under Swiss law, the annual general meeting of shareholders must be held within six months after the end of ABB Ltd's fiscal year. Annual
general meetings of shareholders are convened by the board of directors, liquidators or representatives of bondholders or, if necessary, by the
statutory auditors. The board of directors is further required to convene an extraordinary general meeting of shareholders if so resolved by the
shareholders in a general meeting of shareholders or if so requested by one or more shareholders holding in aggregate at least 10 percent of
ABB Ltd's share capital. A general meeting of shareholders is convened by publishing a notice in the Swiss Official Gazette of Commerce
( Schweizerisches Handelsamtsblatt ) at least 20 days prior to the meeting date. Holders of Euroclear Sweden AB-registered shares are able to
attend shareholders' meetings in respect of such shares. Notices of shareholders' meetings are published in at least three national Swedish daily
newspapers, as well as on ABB's Web site. Such notices contain information as to procedures to be followed by shareholders in order to
participate and exercise voting rights at the shareholders' meetings.
One or more shareholders whose combined holdings represent an aggregate par value of at least CHF 412,000 may request in writing 40
calendar days prior to a general meeting of shareholders that
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specific items and proposals be included on the agenda and voted on at the next general meeting of shareholders.
The following powers are vested exclusively in the general meeting of the shareholders:
• adoption and amendment of the articles of incorporation,
• election of members of the board of directors and the auditors,
• approval of the annual report and the consolidated financial statements,
• approval of the annual financial statements and decision on the allocation of profits shown on the balance sheet, in particular with
regard to dividends,
• granting discharge to the members of the board of directors and the persons entrusted with management, and
• passing resolutions as to all matters reserved to the authority of the shareholders' meeting by law or under the articles of
incorporation or that are submitted to the shareholders' meeting by the board of directors to the extent permitted by law.
There is no provision in ABB Ltd's Articles of Incorporation requiring a quorum for the holding of shareholders' meetings.
Resolutions and elections usually require the approval of an "absolute majority" of the shares represented at a shareholders' meeting (i.e., a
majority of the shares represented at the shareholders' meeting with abstentions having the effect of votes against the resolution). If the first
ballot fails to result in an election and more than one candidate is standing for election, the presiding officer will order a second ballot in which a
relative majority (i.e. a majority of the votes) shall be decisive.
A resolution passed with a qualified majority (at least two-thirds) of the shares represented at a shareholders' meeting is required for:
• a modification of the purpose of ABB Ltd,
• the creation of shares with increased voting powers,
• restrictions on the transfer of registered shares and the removal of those restrictions,
• restrictions on the exercise of the right to vote and the removal of those restrictions,
• an authorized or conditional increase in share capital,
• an increase in share capital through the conversion of capital surplus, through an in-kind contribution or in exchange for an
acquisition of property, and the grant of special benefits,
• the restriction or denial of pre-emptive rights,
• a transfer of ABB Ltd's place of incorporation, and
• ABB Ltd's dissolution.
In addition, the introduction of any provision in the articles of incorporation providing for a qualified majority must be resolved in
accordance with such qualified majority voting requirements.
Pursuant to the Swiss Federal Merger Act, special quorum rules apply by law to a merger ( Fusion ) (including a possible squeeze-out
merger), de-merger ( Spaltung ), or conversion ( Umwandlung ) of ABB Ltd.
At shareholders' meetings, shareholders can be represented by proxy, but only by their legal representative, another shareholder with the
right to vote, a proxy nominated by ABB Ltd ( Organvertreter ), an independent proxy designated by ABB Ltd ( unabhängiger
Stimmrechtsvertreter ) or a
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depository institution ( Depotvertreter ). All shares held by one shareholder may be represented by only one representative. Votes are taken on a
show of hands unless a secret ballot is required by the general meeting of shareholders or the presiding officer. The presiding officer may
arrange for resolutions and elections to be carried out by electronic means. As a result, resolutions and elections carried out by electronic means
will be deemed to have the same effect as secret ballots. The presiding officer may at any time order that a resolution or election decided by a
show of hands be repeated through a secret ballot if, in his view, the results of the vote are in doubt. In this case, the preceding decision by a
show of hands shall be deemed to have not occurred.
Only shareholders registered in ABB Ltd's share register with the right to vote are entitled to participate at shareholders' meetings. See "—
Transfer of Shares." For practical reasons, shareholders must be registered in the share register with the right to vote no later than ten calendar
days prior to a shareholders' meeting in order to be entitled to participate and vote at such shareholders' meeting.
Holders of Euroclear Sweden AB-registered shares are provided with financial and other information on ABB Ltd in the Swedish language
in accordance with regulatory requirements and market practice. For shares that are registered in the system of Euroclear Sweden AB in the
name of a nominee, such information is to be provided by the nominee.
Net Profits and Dividends
Swiss law requires that ABB Ltd retain at least 5 percent of its annual net profits as legal reserves for so long as these reserves amount to
less than 20 percent of ABB Ltd's share capital. Any net profits remaining in excess of those reserves are at the disposal of the shareholders'
meeting.
Under Swiss law, ABB Ltd may pay dividends only if it has sufficient distributable profits from previous fiscal years, or if its reserves are
sufficient to allow distribution of a dividend. In either event, dividends may be paid out only after approval at the shareholders' meeting. The
board of directors may propose that a dividend be paid out, but cannot itself set the dividend. The auditors must confirm that the dividend
proposal of the board of directors conforms with statutory law. In practice, the shareholders' meeting usually approves the dividend proposal of
the board of directors.
Dividends are usually due and payable after the shareholders' resolution relating to the allocation of profits has been passed by the
shareholders' meeting. Under Swiss law, the statute of limitations to claim payment of an approved dividend is five years. Dividends not
collected within five years after their due date accrue to ABB Ltd and will be allocated to ABB Ltd's other reserves.
Payment of dividends on Euroclear Sweden AB-registered shares is administered by Euroclear Sweden AB and paid out to the holder that is
registered with Euroclear Sweden AB on the record date. Through the dividend access facility, shareholders with tax residence in Sweden will be
entitled to receive, through the Euroclear Sweden AB system, a dividend in Swedish kronor equivalent to the dividend paid in Swiss francs
without deduction of Swiss withholding tax. For further information, see "—Taxation."
Pre-emptive Rights
Shareholders of a Swiss corporation have certain pre-emptive rights to subscribe for new shares issued in connection with capital increases
in proportion to the nominal amount of their shares held. A resolution adopted at a shareholders' meeting with a supermajority of two-thirds of
the shares represented may, however, repeal, limit or suspend (or authorize the board of directors to repeal, limit or suspend) pre-emptive rights
for cause. Cause includes an acquisition of a business or a part thereof, an acquisition of a participation in a company or the grant of shares to
employees. In addition, based on Article 4bis para. 1 and para. 4 of the Articles of Incorporation of ABB Ltd, pre-emptive rights of the
shareholders are excluded in connection with the issuance of convertible or warrant-bearing bonds
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or other financial market instruments, shares to employees of ABB issued out of ABB Ltd's contingent share capital or the grant of warrant rights
to shareholders, or may be restricted or denied by the board of directors of ABB Ltd under certain circumstances as set forth in Article 4ter of
ABB Ltd's Articles of Incorporation. See "—Capital Structure."
Advance Subscription Rights
Shareholders of a Swiss corporation may have an advance subscription right with respect to bonds and other instruments issued in
connection with options or conversion rights for shares if such option or conversion rights are based on the corporation's conditional capital.
However, the shareholders' meeting can, with a supermajority of two-thirds of the shares represented at the meeting, exclude or restrict (or
authorize the board of directors to exclude or restrict) such advance subscription rights for cause. See "—Capital Structure—Contingent Share
Capital."
Borrowing Power
Neither Swiss law nor ABB Ltd's Articles of Incorporation restrict in any way ABB Ltd's power to borrow and raise funds. The decision to
borrow funds is taken by or under the direction of the board of directors or the executive committee, and no shareholders' resolution is required.
The Articles of Incorporation of ABB Ltd do not contain provisions concerning borrowing powers exercisable by its directors or how such
borrowings could be varied.
Repurchase of Shares
Swiss law limits a corporation's ability to repurchase or hold its own shares. ABB Ltd and its subsidiaries may only repurchase shares if
ABB Ltd has sufficient freely distributable reserves to pay the purchase price, and the aggregate nominal value of such shares does not exceed
10 percent of ABB Ltd's total share capital. Furthermore, ABB Ltd must create a special reserve on its balance sheet in the amount of the
purchase price of the acquired shares. Such shares held by ABB Ltd or its subsidiaries do not carry any rights to vote at shareholders' meetings,
but are entitled to the economic benefits applicable to the shares generally and are considered to be "outstanding" under Swiss law.
Notices
Written communication by ABB Ltd to its shareholders will be sent by ordinary mail to the last address of the shareholder or authorized
recipient entered in the share register. To the extent that personal notification is not mandated by law, all communications to the shareholders are
validly made by publication in the Swiss Official Gazette of Commerce ( Schweizerisches Handelsamtsblatt ).
Notices required under the Listing Rules of the SIX Swiss Exchange will be published in two Swiss newspapers in German and French.
ABB Ltd or the SIX Swiss Exchange may also disseminate the relevant information on the online exchange information systems. Notices
required under the listing rules of the NASDAQ OMX Stockholm will be published in three national daily Swedish newspapers, as well as on
ABB's Web site.
Duration, Liquidation and Merger
The duration of ABB Ltd as a legal entity is unlimited. It may be dissolved at any time by a shareholders' resolution which must be
approved by a supermajority of two-thirds of the shares represented at the general meeting of shareholders (this supermajority requirement
applies in the event of a dissolution by way of liquidation or a merger where ABB Ltd is not the surviving entity). Dissolution by court order is
possible if it becomes bankrupt or if holders of at least 10 percent of its share capital registered in the commercial register can establish cause for
dissolution.
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Under Swiss law, any surplus arising out of a liquidation of a corporation (after the settlement of all claims of all creditors) is distributed to
the shareholders in proportion to the paid-up par value of shares held, but this surplus is subject to Swiss withholding tax of 35 percent (see "—
Taxation).
Disclosure of Major Shareholders
Under the Swiss Stock Exchange Act, shareholders and groups of shareholders acting in concert who directly or indirectly acquire or sell
shares of a listed Swiss corporation or rights based thereon and thereby reach, exceed or fall below the thresholds of 3 percent, 5 percent,
10 percent, 15 percent, 20 percent, 25 percent, 33 1 / 3 percent, 50 percent or 66 2 / 3 percent of the voting rights of the corporation must notify
the corporation and the exchange(s) in Switzerland on which such shares are listed of such holdings in writing within four trading days, whether
or not the voting rights can be exercised. Following receipt of such a notification, the corporation must inform the public within two trading
days.
An additional disclosure requirement exists under the Swiss Code of Obligations, according to which ABB Ltd must disclose individual
shareholders and groups of shareholders acting in concert and their shareholdings if they hold more than 5 percent of all voting rights and
ABB Ltd knows or has reason to know of such major shareholders. Such disclosures must be made once a year in the notes to the financial
statements as published in its annual report. For a list of our major shareholders, see "Item 7. Major Shareholders and Related Party
Transactions—Major Shareholders."
Mandatory Offering Rules
Under the Swiss Stock Exchange Act, shareholders and groups of shareholders acting in concert who acquire more than 33 1 / 3 percent of
the voting rights (whether exercisable or not) of a listed Swiss company have to submit a takeover bid to all remaining shareholders unless the
articles of incorporation of the company provide for an alteration of this obligation. ABB Ltd's Articles of Incorporation do not provide for any
alterations of the bidder's obligations under the Swiss Stock Exchange Act. The mandatory offer obligation may be waived under certain
circumstances, for example if another shareholder owns a higher percentage of voting rights than the acquiror. A waiver from the mandatory bid
rules may be granted by the Swiss Takeover Board or the Swiss Federal Banking Commission. If no waiver is granted, the mandatory takeover
bid must be made pursuant to the procedural rules set forth in the Swiss Stock Exchange Act and the implementing ordinances.
Other than the rules discussed in this section and in the section above entitled "—Duration, Liquidation and Merger" and "—Shareholder's
Meetings" (which reflect mandatory provisions of Swiss law), no provision of ABB Ltd's Articles of Incorporation would operate only with
respect to a merger, acquisition or corporate restructuring of ABB (or any of our subsidiaries) and have the effect of delaying, deferring or
preventing a change in control of ABB.
Cancellation of Remaining Equity Securities
Under Swiss law, any offeror who has made a tender offer for the shares of a Swiss target company and who, as a result of such offer, holds
more than 98 percent of the voting rights of the target company, may petition the court to cancel the remaining equity securities. The
corresponding petition must be filed against the target company within three months after the lapse of the offer period. The remaining
shareholders may join in the proceedings. If the court orders cancellation of the remaining equity securities, the target company will reissue the
equity securities and deliver such securities to the offeror against performance of the offer for the benefit of the holders of the cancelled equity
securities.
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Directors and Officers
For further information regarding the material provisions of ABB Ltd's Articles of Incorporation and the Swiss Code of Obligations
regarding directors and officers, see "Item 6. Directors, Senior Management and Employees—Corporate Governance—Duties of directors and
officers."
Auditors
The auditors are subject to confirmation by the shareholders at the Annual General Meeting on an annual basis. Ernst & Young AG, with its
registered head office at Bleicherweg 21, CH-8002 Zurich, Switzerland, has been the independent auditor of ABB Ltd and the ABB Group for
the years ended December 31, 2010, 2009 and 2008.
Ernst & Young AG assumed the auditing mandate of the ABB Group in 1994. The head auditor responsible for the mandate, Nigel Jones,
began serving in this function in respect of the financial year ended December 31, 2008. Pursuant to the Articles of Incorporation, the term of
office of ABB's auditors is one year.
Ernst & Young AG periodically reads the approved minutes of meetings of our board of directors. Ernst & Young AG is present for parts of
the FACC meetings where audit planning is discussed and the results of our internal audit department's audit procedures are presented. Ernst &
Young AG also periodically meets with the FACC to discuss the results of its audit procedures.
See "Item 16C. Principal Accountant Fees and Services" for information regarding the fees paid to Ernst & Young AG.
MATERIAL CONTRACTS
The following descriptions of the material provisions of the referenced agreements do not purport to be complete and are subject to, and
qualified in their entirety by reference to, the agreements which have been filed as exhibits to this Annual Report.
Revolving Credit Facility
On November 16, 2010, ABB entered into an amendment to its unsecured syndicated $2-billion three-year revolving credit facility that was
originally entered into on October 7, 2009. For a description of the facility, see "Item 5. Operating and Financial Review and Prospects—
Liquidity and Capital Resources—Credit Facilities" and "Note 12 Debt" to our Consolidated Financial Statements. See Exhibit 4.1 to this Annual
Report.
Medium Term Note Program
One of our subsidiaries, ABB Capital B.V. is an issuer under a medium term note program (MTN Program) under which it is authorized to
issue up to $5,250 million in certain debt instruments. The terms of the MTN Program do not obligate any third party to extend credit to us, and
the terms and availability of financings under the MTN Program are determined with respect to, and at the date of issuance of, each debt
instrument. As a result, we may be unable to access capital through the MTN Program on terms favorable to us, if at all. As at December 31,
2010, the aggregate amount outstanding under the MTN Program was approximately $1.8 billion from separate issuances of debt instruments.
See Exhibits 2.3, 2.4, and 2.5 to this Annual Report.
Baldor Electric Merger Agreement
On November 29, 2010, ABB Ltd, Baldor Electric Company, and Brock Acquisition Corporation, one of our subsidiaries, entered into an
Agreement and Plan of Merger dated as of November 29, 2010
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pursuant to which Brock Acquisition Corporation agreed to make a tender offer for the outstanding shares of Baldor Electric Corporation
(incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Baldor Electric Company with the Securities and Exchange Commission on
November 30, 2010). The tender offer was completed in January 2011. See Exhibit 4.2 to this Annual Report.
EXCHANGE CONTROLS
Other than in connection with government sanctions imposed on Belarus, Cote d'Ivoire, the Democratic Republic of the Congo, Eritrea,
Guinea, Iran, Iraq, Lebanon, Liberia, Myanmar, North Korea, Somalia, Sudan, Zimbabwe, certain persons from the former Federal Republic of
Yugoslavia and persons and organizations with connection to Osama bin Laden, the "al Qaeda" group or the Taliban and certain persons
connected with the assassination of Rafik Hariri, there are currently no laws, decrees or regulations in Switzerland that restrict the export or
import of capital, including, but not limited to, Swiss foreign exchange controls on payment of dividends, interest or liquidation proceeds, if any,
to non-Swiss resident holders of shares. In addition, there are no limitations imposed by Swiss law or ABB Ltd's Articles of Incorporation on the
rights of non-Swiss residents or non-Swiss citizens as shareholders to hold shares or to vote.
Swiss Taxation
Withholding Tax on Dividends and Distributions
TAXATION
Dividends paid and similar cash or in-kind distributions that we make to a holder of shares or ADSs (including dividends on liquidation
proceeds and stock dividends and taxable income resulting from partial liquidation) are subject to a Swiss federal withholding tax at a rate of
35 percent. A repurchase of shares by us for the purpose of a capital reduction is defined as a partial liquidation of the Company. In this case, the
difference between the nominal value of the shares and their repurchase price is qualified as taxable income. The same would be true upon a
repurchase of shares if we were not to dispose of the repurchased shares within six years after the repurchase, or if 10 percent of outstanding
shares were exceeded. We must withhold the tax from the gross distribution and pay it to the Swiss Federal Tax Administration. A reduction of
the shares' nominal value by means of a capital reduction does not represent a dividend or similar distribution for purposes of Swiss withholding
tax. As a result of the Swiss corporate tax reform II entered into force on January 1, 2011, also qualifying contributions from the shareholders
exceeding the nominal share capital can be distributed without deduction of Swiss withholding tax.
Obtaining a Refund of Swiss Withholding Tax for U.S. Residents
The Convention between the Swiss Confederation and the United States of America for the Avoidance of Double Taxation with Respect to
Taxes on Income, which entered into force on December 19, 1997 and which we will refer to in the following discussion as the Treaty, allows
U.S. resident individuals or U.S. corporations to seek a refund of the Swiss withholding tax paid on dividends in respect of our shares or ADSs if
they qualify for benefits under the Treaty. U.S. resident individuals and U.S. corporations holding less than 10 percent of the voting rights in
respect of our shares or ADSs are entitled to seek a refund of withholding tax to the extent the tax withheld exceeds 15 percent of the gross
dividend. U.S. corporations holding 10 percent or more of the voting rights of our shares or ADSs are entitled to seek a refund of withholding tax
to the extent the tax withheld exceeds 5 percent of the gross dividend. Qualifying U.S. pension or other retirement arrangements that do not
control the Company are entitled to seek a full refund of withholding tax.
Claims for refunds must be filed with the Swiss Federal Tax Administration, Eigerstrasse 65, 3003 Bern, Switzerland, no later than
December 31 of the third year following the calendar year in which
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the dividend or similar distribution became payable. The form used for obtaining a refund is Swiss Tax Form 82 (82C for companies; 82E for
other entities; 82I for individuals; 82R for regulated investment companies (RICs)). This form may be obtained from any Swiss Consulate
General in the United States or from the Swiss Federal Tax Administration at the address above. The form must be filled out in triplicate with
each copy duly completed and signed before a notary public in the United States. The form must be accompanied by evidence of the deduction
of withholding tax withheld at the source (including tax voucher issued by the custodian bank).
Stamp Duties upon Transfer of Securities
The sale of shares or ADSs, whether by Swiss resident or non-resident holders, may be subject to a Swiss securities transfer stamp duty of
up to 0.15 percent calculated on the sale proceeds if it occurs through or with a Swiss bank or other Swiss securities dealer as defined in the
Swiss Federal Stamp Tax Act. In addition to the stamp duty, the sale of shares or ADSs by or through a member of the SIX Swiss Exchange may
be subject to a stock exchange levy.
United States Taxes
The following is a summary of the material U.S. federal income tax consequences of the ownership by U.S. holders (defined below) of
shares or ADSs. This summary does not purport to address all of the tax considerations that may be relevant to a decision to purchase, own or
dispose of shares or ADSs. This summary assumes that U.S. holders hold shares or ADSs as capital assets for U.S. federal income tax purposes.
This summary does not address tax considerations applicable to holders that may be subject to special tax rules, such as U.S. expatriates, dealers
or traders in securities or currencies, partnerships owning shares or ADSs, tax-exempt entities, banks and other financial institutions, regulated
investment companies, traders in securities that elect to apply a mark to market method of accounting, insurance companies, holders that own (or
are deemed to own) at least 10 percent or more (by voting power or value) of the stock of ABB, investors whose functional currency is not the
U.S. dollar, persons subject to the alternative minimum tax, persons that will hold shares or ADSs as part of a position in a straddle or as part of
a hedging or conversion transaction for U.S. tax purposes and persons who are not U.S. holders. This discussion does not address aspects of U.S.
taxation other than U.S. federal income taxation, nor does it address state, local or foreign tax consequences of an investment in shares or ADSs.
This summary is based (1) on the Internal Revenue Code of 1986, as amended, U.S. Treasury Regulations and judicial and administrative
interpretations thereof, in each case as in effect and available on the date of this registration statement and (2) in part, on representations of the
depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its
terms. The U.S. tax laws and the interpretation thereof are subject to change, which change could apply retroactively and could affect the tax
consequences described below.
For purposes of this summary, a U.S. holder is a beneficial owner of shares or ADSs that, for U.S. federal income tax purposes, is:
• a citizen or resident of the United States,
• a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the
laws of the United States or any state, including the District of Columbia,
• an estate if its income is subject to U.S. federal income taxation regardless of its source, or
• a trust if such trust validly has elected to be treated as a U.S. person for U.S. federal income tax purposes or if (1) a U.S. court can
exercise primary supervision over its administration and (2) one or more U.S. persons have the authority to control all of its
substantial decisions.
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If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares or ADSs,
the treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. If you are a
partner in a partnership that holds shares or ADSs you should consult your tax advisor.
Each prospective purchaser should consult the purchaser's tax advisor with respect to the U.S. federal, state, local and foreign tax
consequences of acquiring, owning or disposing of shares or ADSs.
Ownership of ADSs in General
For U.S. federal income tax purposes, a holder of ADSs generally will be treated as the owner of the shares represented by the ADSs.
The U.S. Treasury Department has expressed concern that depositaries for American depositary receipts, or other intermediaries between
the holders of shares of an issuer and the issuer, may be taking actions that are inconsistent with the claiming of U.S. foreign tax credits by U.S.
holders of those receipts or shares. Accordingly, the analysis regarding the availability of a U.S. foreign tax credit for Swiss taxes and sourcing
rules described below could be affected by future actions that may be taken by the U.S. Treasury Department.
Distributions
In general, for U.S. federal income tax purposes, the gross amount of any distribution (other than certain distributions, if any, of shares
distributed to all shareholders of ABB, including holders of ADSs) made to you with respect to shares or ADSs, including the amount of any
Swiss taxes withheld from the distribution, will constitute dividends to the extent of ABB's current and accumulated earnings and profits (as
determined under U.S. federal income tax principles).
Non-corporate U.S. holders generally will be taxed on such distributions at the lower rates applicable to long-term capital gains (i.e., gains
from the sale of capital assets held for more than one year) with respect to distributions received before January 1, 2013, provided that the U.S.
holder meets certain holding period and other requirements and provided that such distributions constitute "qualified dividends" for U.S. federal
income tax purposes. Distributions treated as dividends will not be treated as "qualified dividends" if we were to be treated as a "passive foreign
investment company" (a "PFIC") for U.S. federal income tax purposes in the year that the dividend is paid or in the year prior to the year that the
dividend is paid. Based on certain estimates of its gross income and gross assets and the nature of its business, ABB believes that it will not be
classified as a PFIC for the taxable year ending December 31, 2010. ABB's status in future years will depend on its assets and activities in those
years. ABB has no reason to believe that its assets or activities will change in a manner that would cause it to be classified as a PFIC. However,
as PFIC status is a factual matter that must be determined annually at the close of each taxable year, there can be no certainty regarding ABB's
PFIC status in any particular year until the end of that year. U.S. holders are urged to consult their own tax advisors regarding the availability to
them of the reduced dividend rate in light of their own particular circumstances and the consequences to them if ABB were to be treated as a
PFIC with respect to any taxable year.
Dividends paid to U.S. corporate holders will not be eligible for the dividends received deduction generally allowed to corporate U.S.
holders.
If you are a U.S. holder and distributions with respect to shares or ADSs exceed ABB's current and accumulated earnings and profits as
determined under U.S. federal income tax principles, then the excess generally would be treated first as a tax-free return of capital to the extent
of your adjusted tax basis in the shares or ADSs. Any amount in excess of the amount of the dividend and the return of
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capital generally would be treated as capital gain. ABB does not maintain calculations of its earnings and profits under U.S. federal income tax
principles.
If you are a U.S. holder, then dividends paid in Swiss francs, including the amount of any Swiss taxes withheld from the dividends, will be
included in your gross income in an amount equal to the U.S. dollar value of the Swiss francs calculated by reference to the spot exchange rate in
effect on the day the dividends are includible in income. In the case of ADSs, dividends generally are includible in income on the date they are
received by the depositary, regardless of whether the payment is in fact converted into U.S. dollars at that time. If dividends paid in Swiss francs
are converted into U.S. dollars on the day they are includible in income, then you generally should not be required to recognize foreign currency
gain or loss with respect to the conversion. However, any gains or losses resulting from the conversion of Swiss francs between the time of the
receipt of dividends paid in Swiss francs and the time the Swiss francs are converted into U.S. dollars will be treated as ordinary income or loss
to you, as the case may be. The amount of any distribution of property other than cash will be the fair market value of the property on the date of
distribution.
If you are a U.S. holder, then you will have a basis in any Swiss francs received as a refund of Swiss withholding taxes equal to a U.S.
dollar amount calculated by reference to the exchange rate in effect on the date of receipt of the dividend on which the tax was withheld. See "—
Swiss Taxation—Obtaining a Refund of Swiss Withholding Tax for U.S. Residents" above.
If you are a U.S. holder, then dividends received by you with respect to shares or ADSs will be treated as foreign source income, which may
be relevant in calculating your foreign tax credit limitation. Subject to certain conditions and limitations, Swiss tax withheld on dividends may be
deducted from your taxable income or credited against your U.S. federal income tax liability. However, to the extent that you would be entitled
to a refund of Swiss withholding taxes pursuant to the U.S.—Switzerland tax treaty, you may not be eligible for a U.S. foreign tax credit with
respect to the amount of such withholding taxes which may be refunded, even if you fail to claim the refund. See "—Swiss Taxation—Obtaining
a Refund of Swiss Withholding Tax for U.S. Residents." The limitation on foreign taxes eligible for credit is calculated separately with respect to
specific classes of income. For this purpose, dividends distributed by ABB generally will constitute passive income, or, in the case of certain
U.S. holders, financial services income. The rules relating to the determination of the U.S. foreign tax credit are complex, and you should consult
your tax advisor to determine whether and to what extent you would be entitled to this credit.
Sale or Exchange of Shares or ADSs
If you are a U.S. holder that holds shares or ADSs as capital assets, then you generally will recognize capital gain or loss for U.S. federal
income tax purposes upon a sale or exchange of your shares or ADSs in an amount equal to the difference between your adjusted tax basis in the
shares or ADSs and the amount realized on their disposition. If you are a non-corporate U.S. holder, the maximum marginal U.S. federal income
tax rate applicable to the gain is generally lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income (other
than certain dividends) if your holding period for the shares or ADSs exceeds one year (i.e., long-term capital gains). If you are a U.S. holder,
then the gain or loss, if any, recognized by you generally will be treated as U.S. source income or loss, as the case may be, for U.S. foreign tax
credit purposes.
If you are a U.S. holder and you receive any foreign currency on the sale of shares or ADSs, then you may recognize U.S. source ordinary
income or loss as a result of currency fluctuations between the date of the sale of the shares or ADSs, as the case may be, and the date the sales
proceeds are converted into U.S. dollars.
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Backup Withholding and Information Reporting
U.S. backup withholding tax and information reporting requirements generally apply to certain payments to certain non-corporate holders of
stock. Information reporting generally will apply to payments of dividends on, and to proceeds from the sale or redemption of, shares or ADSs
made within the United States to a holder of shares or ADSs (other than an exempt recipient, including a corporation, a payee that is not a U.S.
holder that provides an appropriate certification, and certain other persons).
A payor will be required to withhold backup withholding tax from any payments of dividends on, or the proceeds from the sale or
redemption of, shares or ADSs within the United States to you, unless you are an exempt recipient, if you fail to furnish your correct taxpayer
identification number or otherwise fail to establish an exception from backup withholding tax requirements or otherwise fail to establish an
exception from backup withholding. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to you
will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information
is furnished timely to the U.S. Internal Revenue Service. The current backup withholding tax rate is 28 percent.
THE ABOVE SUMMARIES ARE NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX
CONSEQUENCES RELATING TO THE OWNERSHIP OF SHARES OR ADSs. PROSPECTIVE PURCHASERS OF SHARES OR
ADSs SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR
SITUATIONS.
DOCUMENTS ON DISPLAY
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these
requirements, we file reports and other information with the SEC. These materials, including this Annual Report and the exhibits thereto, may be
inspected and copied at prescribed rates at the Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Further
information on the operation of the public reference room may be obtained by calling the Commission at 1-800-SEC-0330. The Commission
also maintains a Web site at www.sec.gov that contains reports and other information regarding registrants that file electronically with the
Commission. Our annual reports and some of the other information we submit to the Commission may be accessed through this Web site. In
addition, material that we file can be inspected at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Disclosure
The continuously evolving financial markets and the dynamic business environment expose us to changes in foreign exchange, interest rate
and other market price risks. We have developed and implemented comprehensive policies, procedures, and controls to identify, mitigate, and
monitor financial risk on a firm-wide basis. To efficiently aggregate and manage financial risk that could impact our financial performance, we
operate a Group Treasury function. Our Group Treasury function provides an efficient source of liquidity, financing, risk management and other
global financial services to the ABB Group companies. We do not permit proprietary trading activities. The market risk management activities
are focused on mitigating material financial risks resulting from our global operating and financing activities.
The Group Treasury function maintains risk management control systems to monitor foreign exchange and interest rate risks and exposures
arising from our underlying business, as well as the associated hedge positions. Such exposures are governed by written policies. Financial risks
are
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monitored using a number of analytical techniques including market value and sensitivity analysis. The following quantitative analyses are based
on sensitivity analysis tests, which assume parallel shifts of interest rate yield curves, and foreign exchange rates and equity prices.
Currency Fluctuations and Foreign Exchange Risk
It is our policy to identify and manage all transactional foreign exchange exposures to minimize risk. With the exception of certain
financing subsidiaries and to the extent certain operating subsidiaries are domiciled in high inflation environments, the functional currency of
each of our companies is considered to be its local currency. Our policies require our subsidiaries to hedge all contracted foreign exchange
exposures, as well as a portion of their forecast exposures, against their local currency. These transactions are undertaken mainly with our Group
Treasury function.
We have foreign exchange transaction exposures related to our global operating and financing activities in currencies other than the
functional currency in which our entities operate. Specifically, we are exposed to foreign exchange risk related to future earnings, assets or
liabilities denominated in foreign currencies. The most significant currency exposures relate to operations in Germany, Sweden and Switzerland.
In addition, we are exposed to currency risk associated with translating our functional currency financial statements into our reporting currency,
which is the U.S. dollar.
Our operating companies are responsible for identifying their foreign currency exposures and entering into intercompany hedge contracts
with the Group Treasury function, where legally possible, or external transactions to hedge this risk. The intercompany transactions have the
effect of transferring the operating companies' currency risk to the Group Treasury function, but create no additional market risk to our
consolidated results. The Group Treasury function then manages this risk by entering into offsetting transactions with third-party financial
institutions. According to our policy, material net currency exposures are hedged. Exposures are primarily hedged with forward foreign
exchange contracts. The majority of the foreign exchange hedge instruments have, on average, a maturity of less than twelve months. The Group
Treasury function also hedges currency risks associated with their financing of other ABB companies. For certain third-party non-U.S. dollar
denominated debt, we use cross currency swaps to hedge the currency risk and effectively convert the debt into U.S. dollar obligations. These
swap contracts have maturity dates that exactly match the associated debt.
As of December 31, 2010 and 2009, the net fair value of financial instruments with exposure to foreign currency rate movements was
$2,383 million and $2,232 million, respectively. The potential loss in fair value of such financial instruments from a hypothetical 10 percent
move in foreign exchange rates against our position would be approximately $566 million and $599 million for December 31, 2010 and 2009,
respectively. The analysis reflects the aggregate adverse foreign exchange impact associated with transaction exposures, as well as translation
exposures where appropriate. Our sensitivity analysis assumes a simultaneous shift in exchange rates against our positions exposed to foreign
exchange risk and as such assumes an unlikely adverse case scenario. Exchange rates rarely move in the same direction. Therefore, the
assumption of a simultaneous shift may overstate the impact of changing rates on assets and liabilities denominated in foreign currencies. The
underlying trade-related transaction exposures of the industrial companies are not included in the quantitative analysis. If these underlying
transaction exposures were included, they would tend to have an offsetting effect on the potential loss in fair value detailed above.
Interest Rate Risk
We are exposed to interest rate risk due to our financing, investing, and liquidity management activities. Our operating companies primarily
invest excess cash with, and receive funding from, our Group Treasury function on an arm's length basis. It is our policy that the primary thirdparty
funding and investing activities, as well as the monitoring and management of the resulting interest rate risk, are the responsibility of the
Group Treasury function. The Group Treasury function adjusts the duration of the overall funding portfolio through derivative instruments in
order to better match underlying assets and liabilities, as well as minimize the cost of capital.
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As of December 31, 2010 and 2009, the potential reduction in earnings from a 100 basis points downward shift in interest rates on an
interest bearing net asset position of $6,573 million and $7,389 million, respectively, was $66 million and $74 million, respectively.
Leases are not included as part of the sensitivity analysis. This represents a limitation of the analysis. While sensitivity analysis includes the
interest rate sensitivity of the funding of the lease portfolio, a corresponding change in the lease portfolio was not considered in the sensitivity
model.
Equity Risk
Certain of our entities have equity investments that expose us to equity price risk. As of December 31, 2010 and 2009, the net fair value of
equity risk sensitive instruments was $65 million and $150 million, respectively. The potential loss in fair value of such financial instruments
from a hypothetical 10 percent move in equity prices against our position would be approximately $14 million and $22 million, for
December 31, 2010 and 2009, respectively. Included in the net fair value and potential loss in fair value figures for equity risk are derivative
instruments designated as hedges of warrant appreciation rights granted to employees under our management incentive plans (see "Note 18
Share-based payment arrangements" to our Consolidated Financial Statements). As of December 31, 2010 and 2009, the amount of such
instruments included in the total net fair value of equity risk sensitive instruments was $45 million and $64 million, respectively, and the
corresponding amount of potential loss in fair value was $12 million and $14 million, respectively. The liabilities relating to the warrant
appreciation rights are not included as part of the sensitivity analysis. If such liabilities being hedged were included, they would tend to have an
offsetting effect on the potential loss in fair value.
Commodity Risk
We enter into commodity derivatives to hedge certain of our raw material exposures. As of December 31, 2010 and 2009, the net fair value
of commodity derivatives was $44 million and $26 million, respectively. The potential loss in fair value for such commodity hedging derivatives
from a hypothetical adverse 10 percent move against our position in commodity prices would be approximately $25 million and $18 million for
December 31, 2010 and 2009, respectively. A significant proportion of our commodity derivatives are denominated in euro. The foreign
exchange risk arising on such contracts has been excluded from the calculation of the potential loss in fair value from a hypothetical 10 percent
move in commodity prices as disclosed above.
Item 12. Description of Securities Other Than Equity Securities
American Depositary Shares
Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of
their clients) receiving the newly-issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the
depositary bank for cancellation. The brokers in turn may charge these transaction fees to their clients.
Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by
the depositary bank to the holders of record of ADSs as of the applicable ADS record date. The Depositary fees payable for cash distributions are
generally deducted from the cash being distributed. In the case of distributions other than cash (i.e., stock dividends, rights offerings), the
depositary bank charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the
name of the investor (whether certificated or un-certificated in direct registration), the depositary bank sends invoices to the applicable record
date ADS holders. In the case of ADSs held in brokerage and custodian accounts via the central clearing and settlement system, The Depository
Trust Company (DTC), the depositary bank generally collects its fees through the systems provided by DTC (whose nominee is the registered
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holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold
their clients' ADSs in DTC accounts in turn charge their clients' accounts the amount of the fees paid to the depositary banks.
In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested
service until payment is received or may set-off the amount of the depositary fees from any distribution to be made to the ADS holder.
Depositary Payments
In 2010, we received reimbursements from Citibank N.A., the Depositary Bank of our ADS program, of approximately $4 million to help
cover costs related to our ADS program. Those costs, in addition to costs associated with compliance with U.S. securities laws, included
principally the specific costs set forth below:
Item 13. Defaults, Dividend Arrearages and Delinquencies
Not applicable.
PART II
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable.
Item 15. Controls and Procedures
2010
($ in thousands)
Listing fees (NYSE) 250
Proxy process expenses (printing, postage and
distribution) 250
Investor relations efforts including non-deal
roadshows/investor conferences, IR agency
fees, etc. 575
(a) Disclosure controls and procedures.
We maintain controls and procedures designed to provide reasonable assurance that the information required to be disclosed in our filings
under the Securities Exchange Act of 1934 (the Exchange Act, Rule 13a-15(e)) is recorded, processed, summarized and reported on a timely
basis. Our Chief Executive Officer, Joe Hogan, and Chief Financial Officer, Michel Demaré, with the participation of key corporate senior
management and management of key corporate functions, performed an evaluation of our disclosure controls and procedures as of December 31,
2010. Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, has concluded that, as of
December 31, 2010, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be
disclosed in reports that we file or submit under the Exchange Act has been recorded, processed, summarized and reported within the time period
specified in the rules and forms of the SEC and that such information has been accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
(b) Management's annual report on internal control over financial reporting.
The Board of Directors and management of the ABB Group are responsible for establishing and maintaining adequate internal control over
financial reporting. The ABB Group's internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial
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reporting and the preparation and fair presentation of the published Consolidated Financial Statements in accordance with accounting principles
generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies and procedures may deteriorate.
Management conducted an assessment of the effectiveness of internal control over financial reporting based on the criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO). Based on
this assessment, management has concluded that internal control over financial reporting was effective as of December 31, 2010.
Ernst & Young AG, an independent registered public accounting firm, has issued an opinion on the effectiveness of the ABB Group's
internal control over financial reporting as of December 31, 2010 which is included in Item 18: Financial Statements.
(c) Changes in internal control
Since 2008, the ABB Group has been standardizing and consolidating its financial accounting and reporting processes through the
integration of its various ERP systems into country-wide ERP's in a number of specific countries. A significant portion of these system
integrations were completed in 2008 and 2009, and a small number of remaining system integrations were completed during 2010. As a followup
initiative, the ABB Group has started in 2010, a new initiative to standardize the internal control over financial reporting across its Shared
Accounting Services Centers. This initiative is expected to be completed by the end of 2012. These activities strengthen the overall design and
operational effectiveness of the ABB Group's internal control over financial reporting and are part of the ABB Group's continuous improvement
of its internal control environment.
Item 15T. Controls and Procedures
Not applicable.
Item 16A. Audit Committee Financial Expert
Our board of directors has determined that Bernd W. Voss, who serves on our audit committee, is independent, as that term is defined in the
listing standards promulgated by the New York Stock Exchange, and is an audit committee financial expert.
Item 16B. Code of Ethics
Our chief executive officer, chief financial officer, principal accounting officer and persons performing similar functions are bound to
adhere to our Code of Conduct, which applies to all employees of all companies in the ABB Group. Our Code of Conduct is available on our
Web site in the section "Corporate governance" at www.abb.com/investorrelations .
Item 16C. Principal Accountant Fees and Services
Audit Fees
Fees for audit services provided by Ernst & Young totaled approximately $27 million in each of 2010 and 2009. Audit fees include the
standard audit work performed each fiscal year necessary to allow the auditor to issue an opinion on our Consolidated Financial Statements and
to issue an opinion on the local statutory financial statements of ABB Ltd and its subsidiaries. Audit fees also include services that can be
provided only by the ABB Group auditor such as assistance with the application of
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new accounting policies, pre-issuance reviews of quarterly financial results and comfort letters delivered to underwriters in connection with debt
and equity offerings.
Audit-Related Fees
Fees for audit-related services provided by Ernst & Young totaled approximately $5 million and $2 million in 2010 and 2009, respectively,
consisting primarily of accounting consultations and audits in connection with divestments, audits of pension and benefit plans and accounting
advisory services.
Tax Fees
Fees for tax services provided by Ernst & Young totaled approximately $2 million in each of 2010 and 2009, representing tax compliance
fees as well as tax advice and planning fees.
All Other Fees
Fees for other services provided not included in the above three categories by Ernst & Young totaled approximately $0.1 million and
$0.1 million in 2010 and 2009, respectively.
Pre-Approval Procedures and Policies
In accordance with the requirements of the U.S. Sarbanes-Oxley Act of 2002 and rules issued by the SEC, we utilize a procedure for the
review and pre-approval of any services performed by Ernst & Young. The procedure requires that all proposed engagements of Ernst & Young
for audit and permitted non-audit services are submitted to the FACC for approval prior to the beginning of any such services. In accordance
with this policy, all services performed by and fees paid to Ernst & Young in 2010 and 2009, as discussed above in this Item 16C, were approved
by the FACC.
Item 16D. Exemptions from the Listing Standards for Audit Committees
None.
Item 16E. Purchase of Equity Securities by Issuer & Affiliated Purchases
On February 13, 2008, we announced a share buyback program up to a maximum value of CHF 2.2 billion (equivalent to approximately
USD 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. The 22,675,000 shares repurchased under this program during 2008 were cancelled in July 2010, after shareholders
approved their cancellation at the Annual General Meeting in April 2010. The program was thereby closed.
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During 2010, the following purchases were made by ABB on the open market to be used in share-based payment arrangements:
Period
Item 16F. Change in Registrant's Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
According to the New York Stock Exchange's corporate governance standards (the Standards), ABB is required to disclose significant ways
in which its corporate governance practices differ from the Standards. ABB has reviewed the Standards and concluded that its corporate
governance practices are generally consistent with the Standards, with the following significant exceptions:
• Swiss law requires that our external auditors be elected by our shareholders at our Annual General Meeting rather than by the
finance and audit committee or the board of directors.
• The Standards require that all equity compensation plans and material revisions thereto be approved by the shareholders.
Consistent with Swiss law such matters are decided by our Board. However, the shareholders decide about the creation of new
share capital that can be used in connection with equity compensation plans.
Item 17. Financial Statements
PART III
We have elected to provide financial statements and the related information pursuant to Item 18.
Item 18. Financial Statements
Total number of
shares purchased
Average price paid
per share (1)
See pages F-1 to F-87, which are incorporated herein by reference. All schedules are omitted as the required information is inapplicable or
the information is presented in the Consolidated Financial Statements or notes thereto.
120
Total number of
shares purchased
as part of publicly
announced plans
or programs
Approximate
value of shares
that may yet be
purchased under
the plans or
programs
May 18–May 25, 2010 5,600,000 $ 16.68 n.a. n.a.
June 7, 2010 500,000 $ 16.76 n.a. n.a.
August 24, 2010 1,000,000 $ 19.05 n.a. n.a.
December 15–
December 21, 2010 5,000,000 $ 20.80 n.a. n.a.
12,100,000
(1) Represents the prices in Swiss francs translated into USD using weighted-average rates

Table of Contents
Item 19. Exhibits
1.1 Articles of Incorporation of ABB Ltd as amended to date. Incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-8 filed by ABB Ltd on January 31, 2011.
2.1
2.2
2.3
2.4
2.5
4.1
4.2
8.1
12.1
12.2
13.1
13.2
15.1
Form of Amended and Restated Deposit Agreement, by and among ABB Ltd, Citibank, N.A.,
as Depositary, and the holders and beneficial owners from time to time of the American
Depositary Shares issued thereunder (including as an exhibit the form of American Depositary
Receipt). Incorporated by reference to Exhibit (a) to Form F-6EF (File No. 333-147488) filed
by ABB Ltd on November 19, 2007.
Form of American Depositary Receipt (included in Exhibit 2.1).
EMTN Fiscal Agency Agreement, dated December 17, 2008, between ABB Capital B.V.,
Fortis Banque Luxembourg S.A. and Fortis Banque (Suisse) S.A. Incorporated by reference to
Exhibit 2.3 to the Annual Report on Form 20-F filed by ABB Ltd on March 10, 2009.
EMTN Dealership Agreement, dated December 17, 2008, between ABB Capital B.V., ABB Ltd
and Morgan Stanley & Co. International Limited. Incorporated by reference to Exhibit 2.4 to
the Annual Report on Form 20-F filed by ABB Ltd on March 10, 2009.
EMTN Deed of Covenant, dated December 17, 2008, by ABB Capital B.V. The total amount of
long-term debt securities of ABB Ltd authorized under any other instrument does not exceed
10 percent of the total assets of the ABB Group on a consolidated basis. ABB Ltd hereby agrees
to furnish to the Commission, upon its request, a copy of any instrument defining the rights of
holders of long-term debt of ABB Ltd or of its subsidiaries for which consolidated or
unconsolidated financial statements are required to be filed. Incorporated by reference to
Exhibit 2.5 to the Annual Report on Form 20-F filed by ABB Ltd on March 10, 2009.
$2,000,000,000 Multicurrency Revolving Credit Agreement amendment, dated as of
November 16, 2010, amending the facility originally entered into, between ABB Ltd, certain
subsidiaries of ABB Ltd as borrowers, approximately 30 banks as mandated lead arrangers,
Credit Suisse, as facility agent, dollar swingline agent and euro swingline agent, and Nordea
Bank AB (publ), as SEK swingline agent.
Agreement and Plan of Merger dated as of November 29, 2010 entered into by and amung
ABB Ltd, Baldor Electric Company, and Brock Acquisition Corporation, one of ABB Ltd's
subsidiaries, pursuant to which Brock Acquisition Corporation agreed to make a tender offer for
the outstanding shares of Baldor Electric Corporation. Incorporated by reference to Exhibit 2.1
to the Form 8-K filed by Baldor Electric Company with the Securities and Exchange
Commission on November 30, 2010.
Subsidiaries of ABB Ltd as of February 28, 2011.
Certification of the chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
Certification of the chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification by the chief executive officer of ABB Ltd pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
Certification by the chief financial officer of ABB Ltd pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
Consent of Independent Registered Public Accounting Firm
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101 The following financial information from this Annual Report formatted in XBRL (Extensible
Business Reporting Language) includes (i) Consolidated Balance Sheets, (ii) Consolidated
Statements of Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated
Statements of Stockholders' Equity, and (v) Notes to Consolidated Financial Statements, tagged
as blocks of text. Furnished electronically herewith.
* This document is being furnished in accordance with SEC Release Nos. 33-8212 and 34-74551.
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this Annual Report on its behalf.
Date: March 17, 2011.
ABB LTD
By:
By:
Name:
123
/s/ MICHEL DEMARÉ
Michel Demaré
Title: Executive Vice President and Chief
Financial Officer
Name:
/s/ RICHARD A. BROWN
Richard A. Brown
Title: Group Senior Vice President and Chief
Counsel Corporate & Finance

Table of Contents
Consolidated Financial Statements:
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Report of management on internal control over financial reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Income Statements for the years ended December 31, 2010, 2009 and 2008
Consolidated Balance Sheets as of December 31, 2010 and 2009
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2010, 2009 and 2008
Notes to the Consolidated Financial Statements
F-1
F-2
F-3
F-5
F-6
F-7
F-8
F-9

Table of Contents
Report of management on internal control over financial reporting
The Board of Directors and management of ABB Ltd and its consolidated subsidiaries ("ABB") are responsible for establishing and
maintaining adequate internal control over financial reporting. ABB's internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation and fair presentation of the published Consolidated Financial
Statements in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with ABB's policies and procedures may deteriorate.
Management conducted an assessment of the effectiveness of internal control over financial reporting based on the criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based
on this assessment, management has concluded that ABB's internal control over financial reporting was effective as of December 31, 2010.
Ernst & Young AG, an independent registered public accounting firm, has issued an opinion on the effectiveness of ABB's internal control
over financial reporting as of December 31, 2010, which is included on page F-4 of this Annual Report.
/s/ JOE HOGAN
Chief Executive Officer
/s/ MICHEL DEMARÉ
Chief Financial Officer
Zurich, March 17, 2011
F-2

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To the Board of Directors and Stockholders of ABB Ltd:
Report of Independent Registered Public Accounting Firm
We have audited the accompanying consolidated balance sheets of ABB Ltd as of December 31, 2010 and 2009, and the related
consolidated statements of income, cash flows, and changes in stockholders' equity for each of the three years in the period ended December 31,
2010. These financial statements are the responsibility of the Company's Board of Directors and management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of
ABB Ltd at December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the
period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ABB Ltd's
internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 17, 2011, expressed an
unqualified opinion thereon.
/s/ Ernst & Young AG
Zürich, Switzerland
March 17, 2011
F-3

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To the Board of Directors and Stockholders of ABB Ltd:
Report of Independent Registered Public Accounting Firm
We have audited ABB Ltd's internal control over financial reporting as of December 31, 2010, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).
ABB Ltd's Board of Directors and management are responsible for maintaining effective internal control over financial reporting, and
management is responsible for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Report of Management on internal control over financial reporting. Our responsibility is to express an opinion on the company's internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, ABB Ltd maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2010
consolidated financial statements of ABB Ltd and our report dated March 17, 2011 expressed an unqualified opinion thereon.
/s/ Ernst & Young AG
Zürich, Switzerland
March 17, 2011
F-4

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ABB Ltd
Consolidated Income Statements
Year ended December 31 ($ in millions, except per share data in $)
2010 2009 2008
Sales of products 26,291 26,820 29,705
Sales of services 5,298 4,975 5,207
Total revenues 31,589 31,795 34,912
Cost of products (18,607 ) (19,057 ) (20,506 )
Cost of services (3,453 ) (3,413 ) (3,466 )
Total cost of sales (22,060 ) (22,470 ) (23,972 )
Gross profit 9,529 9,325 10,940
Selling, general and administrative expenses (4,615 ) (4,491 ) (4,795 )
Non-order related research and development expenses (1,082 ) (1,037 ) (1,027 )
Other income (expense), net (14 ) 329 (566 )
Earnings before interest and taxes 3,818 4,126 4,552
Interest and dividend income 95 121 315
Interest and other finance expense (173 ) (127 ) (349 )
Income from continuing operations before taxes 3,740 4,120 4,518
Provision for taxes (1,018 ) (1,001 ) (1,119 )
Income from continuing operations, net of tax 2,722 3,119 3,399
Income (loss) from discontinued operations, net of tax 10 17 (21 )
Net income 2,732 3,136 3,378
Net income attributable to noncontrolling interests (171 ) (235 ) (260 )
Net income attributable to ABB 2,561 2,901 3,118
Amounts attributable to ABB shareholders:
Income from continuing operations, net of tax 2,551 2,884 3,142
Net income 2,561 2,901 3,118
Basic earnings per share attributable to ABB shareholders :
Income from continuing operations, net of tax 1.12 1.26 1.37
Net income 1.12 1.27 1.36
Diluted earnings per share attributable to ABB shareholders:
Income from continuing operations, net of tax 1.11 1.26 1.37
Net income 1.12 1.27 1.36
Weighted-average number of shares outstanding (in millions)
used to compute:
Basic earnings per share attributable to ABB shareholders 2,287 2,284 2,287
Diluted earnings per share attributable to ABB shareholders 2,291 2,288 2,296
See accompanying Notes to the Consolidated Financial Statements
F-5

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ABB Ltd
Consolidated Balance Sheets
December 31 ($ in millions, except share data)
2010 2009
Cash and equivalents 5,897 7,119
Marketable securities and short-term investments 2,713 2,433
Receivables, net 9,970 9,451
Inventories, net 4,878 4,550
Prepaid expenses 193 236
Deferred taxes 896 900
Other current assets 801 540
Total current assets 25,348 25,229
Financing receivables, net 420 452
Property, plant and equipment, net 4,356 4,072
Goodwill 4,085 3,026
Other intangible assets, net 701 443
Prepaid pension and other employee benefits 173 112
Investments in equity method companies 19 49
Deferred taxes 846 1,052
Other non-current assets 347 293
Total assets 36,295 34,728
Accounts payable, trade 4,555 3,853
Billings in excess of sales 1,730 1,623
Employee and other payables 1,526 1,326
Short-term debt and current maturities of long-term debt 1,043 161
Advances from customers 1,764 1,806
Deferred taxes 357 327
Provisions for warranties 1,393 1,280
Provisions and other current liabilities 2,726 2,603
Accrued expenses 1,644 1,600
Total current liabilities 16,738 14,579
Long-term debt 1,139 2,172
Pension and other employee benefits 831 1,179
Deferred taxes 411 328
Other non-current liabilities 1,718 1,997
Total liabilities 20,837 20,255
Commitments and contingencies
Stockholders' equity:
Capital stock and additional paid-in capital (2,308,782,064 and 2,329,324,797
issued shares at December 31, 2010 and 2009, respectively) 1,454 3,943
Retained earnings 15,389 12,828
Accumulated other comprehensive loss (1,517 ) (2,084 )
Treasury stock, at cost (25,317,453 and 39,901,593 shares at December 31,
2010 and 2009, respectively) (441 ) (897 )
Total ABB stockholders' equity 14,885 13,790
Noncontrolling interests 573 683
Total stockholders' equity 15,458 14,473
Total liabilities and stockholders' equity 36,295 34,728
See accompanying Notes to the Consolidated Financial Statements
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Table of Contents
ABB Ltd
Consolidated Statements of Cash Flows
Year ended December 31 ($ in millions)
2010 2009 2008
Operating activities:
Net income 2,732 3,136 3,378
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 702 655 661
Pension and other employee benefits (51 ) (28 ) 43
Deferred taxes 151 (56 ) (199 )
Net gain from sale of property, plant and equipment (39 ) (15 ) (49 )
Loss (income) from equity-accounted companies (3 ) 2 (15 )
Other 106 (6 ) 233
Changes in operating assets and liabilities:
Trade receivables, net (407 ) 256 (1,266 )
Inventories, net (264 ) 1,130 (800 )
Trade payables 678 (718 ) 522
Billings in excess of sales 89 295 539
Provisions, net (69 ) (241 ) 677
Advances from customers (25 ) (316 ) 130
Other assets and liabilities, net 597 (67 ) 104
Net cash provided by operating activities 4,197 4,027 3,958
Investing activities:
Changes in financing receivables, net (7 ) (7 ) 7
Purchases of marketable securities (available-for-sale) (3,391 ) (243 ) (1,081 )
Purchases of marketable securities (held-to-maturity) (65 ) (918 ) —
Purchases of short-term investments (2,165 ) (3,824 ) (2,512 )
Purchases of property, plant and equipment and intangible assets (840 ) (967 ) (1,171 )
Acquisition of businesses (net of cash acquired) and changes in cost and equity investments (1,313 ) (161 ) (653 )
Proceeds from sales of marketable securities (available-for-sale) 807 79 110
Proceeds from maturity of marketable securities (available-for-sale) 531 855 —
Proceeds from maturity of marketable securities (held-to-maturity) 290 730 —
Proceeds from short-term investments 3,276 2,253 5,305
Proceeds from sales of property, plant and equipment 47 36 94
Proceeds from sales of businesses and equity-accounted companies (net of cash disposed) 83 16 46
Other — (21 ) (31 )
Net cash provided by (used in) investing activities (2,747 ) (2,172 ) 114
Financing activities:
Net changes in debt with maturities of 90 days or less 52 (59 ) (10 )
Increase in debt 277 586 458
Repayment of debt (497 ) (705 ) (786 )
Issuance of shares 16 89 49
Transactions in treasury shares (166 ) — (621 )
Dividends paid in the form of nominal value reduction (1,112 ) (1,027 ) (1,060 )
Acquisition of noncontrolling interests (956 ) (48 ) —
Dividends paid to noncontrolling shareholders (193 ) (193 ) (152 )
Other 49 8 3
Net cash used in financing activities (2,530 ) (1,349 ) (2,119 )
Effects of exchange rate changes on cash and equivalents (142 ) 214 (230 )
Adjustment for the net change in cash and equivalents in assets held for sale and in
discontinued operations
Net change in cash and equivalents—continuing operations
Cash and equivalents beginning of period
Cash and equivalents end of period
—
(1,222 )
7,119
5,897
—
720
6,399
7,119
26
1,749
4,650
6,399
Supplementary disclosure of cash flow information:
Interest paid 94 156 244
Taxes paid 884 1,090 1,065
See accompanying Notes to the Consolidated Financial Statements
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Table of Contents
ABB Ltd
Consolidated Statements of Changes in Stockholders' Equity
Years ended December 31, 2010, 2009 and 2008 ($ in millions)
Accumulated other comprehensive loss
Capital
Unrealized
Unrealized
stock and
Pension
Total
Foreign gain (loss) and other gain (loss) accumulated
additional currency on post on cash other
Total ABB
Total
Retained translation available- retirement flow hedge comprehensive Treasury stockholders' Noncontrolling stockholders'
paid-in
for-sale plan
capital earnings adjustment securities adjustments derivatives loss stock equity interests equity
Balance at
January 1,
2008 5,780 6,809 (906 ) 7 (486 ) 55 (1,330 ) (302 ) 10,957 592 11,549
Comprehensive
income:
Net income
Foreign
currency
3,118 3,118 260 3,378
translation
adjustments
Foreign
currency
translation
adjustments
related to
(754 ) (754 ) (754 ) (41 ) (795 )
divestments
of businesses
Effect of
change in fair
value of
available-forsale
securities
6 6 6 6
(net of tax of
$(26))
Unrecognized
income
(expense)
related to
pensions and
other
postretirement
76 76 76 (1 ) 75
plans (net of
tax of $212)
Change in
derivatives
qualifying as
cash flow
hedges (net
(492 ) (492 ) (492 ) 1 (491 )
of tax of $53)
Total
(216 ) (216 ) (216 ) (216 )
comprehensive
income
Changes in
1,738 219 1,957
noncontrolling
interests
Dividends paid
to
— (45 ) (45 )
noncontrolling
shareholders
Dividends paid
in the form of
— (154 ) (154 )
nominal value
reduction
Shares
repurchased
under
(1,060 ) (1,060 ) (1,060 )
buyback
program
Share-based
(619 ) (619 ) (619 )
payment
arrangements 63 63 63
Issuance of
shares
Call options
Balance at
28
30
21 49
30
49
30
December 31,
2008
Comprehensive
income:
4,841 9,927 (1,654 ) 83 (978 ) (161 ) (2,710 ) (900 ) 11,158 612 11,770

Net income 2,901 2,901 235 3,136
Foreign
currency
translation
adjustments 598 598 598 12 610
Effect of
change in fair
value of
available-forsale
securities
(net of tax of
$26) (63 ) (63 ) (63 ) (63 )
Unrecognized
expense
related to
pensions and
other
postretirement
plans (net of
tax of $3) (90 ) (90 ) (90 ) (2 ) (92 )
Change in
derivatives
qualifying as
cash flow
hedges (net
of tax of
$(54)) 181 181 181 181
Total
comprehensive
income 3,527 245 3,772
Changes in
noncontrolling
interests (49 ) (49 ) 20 (29 )
Dividends paid
to
noncontrolling
shareholders — (194 ) (194 )
Dividends paid
in the form of
nominal value
reduction (1,024 ) (1,024 ) (1,024 )
Treasury stock
transactions (3 ) 3 — —
Share-based
payment
arrangements 66 66 66
Issuance of
shares 90 90 90
Call options 22 22 22
Balance at
December 31,
2009 3,943 12,828 (1,056 ) 20 (1,068 ) 20 (2,084 ) (897 ) 13,790 683 14,473
Comprehensive
income:
Net income 2,561 2,561 171 2,732
Foreign
currency
translation
adjustments 349 349 349 21 370
Effect of
change in fair
value of
available-forsale
securities
(net of tax of
$(2)) (2 ) (2 ) (2 ) (2 )
Unrecognized
income
(expense)
related to
pensions and
other
postretirement
plans (net of
tax of $(25)) 148 148 148 (3 ) 145
Change in
derivatives
qualifying as
cash flow
hedges (net
of tax of
$(19)) 72 72 72 72
Total
comprehensive
income 3,128 189 3,317
Changes in
noncontrolling
interests (836 ) (836 ) (110 ) (946 )
Dividends paid
to

noncontrolling
shareholders — (189 ) (189 )
Dividends paid
in the form of
nominal value
reduction (1,112 ) (1,112 ) (1,112 )
Cancellation of
shares
repurchased
under
buyback
program (619 ) 619 — —
Treasury stock
transactions (228 ) (228 ) (228 )
Share-based
payment
arrangements 66 66 66
Issuance of
shares 13 65 78 78
Call options (1 ) (1 ) (1 )
Balance at
December 31,
2010 1,454 15,389 (707 ) 18 (920 ) 92 (1,517 ) (441 ) 14,885 573 15,458
See accompanying Notes to the Consolidated Financial Statements
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Table of Contents
Note 1—The Company
ABB Ltd
Notes to the Consolidated Financial Statements
ABB Ltd and its subsidiaries (collectively, the Company) together form a leading global company in power and automation technologies
that enable utility and industry customers to improve their performance while lowering environmental impact. The Company works with
customers to engineer and install networks, facilities and plants with particular emphasis on enhancing efficiency, reliability and productivity for
customers who generate, convert, transmit, distribute and consume energy.
The Company has a global integrated risk management process. Once a year, the board of directors of ABB Ltd performs a risk assessment
in accordance with the Company's risk management processes and discusses appropriate actions, if necessary.
Note 2—Significant accounting policies
The following is a summary of significant accounting policies followed in the preparation of these Consolidated Financial Statements.
Basis of presentation
The Consolidated Financial Statements are prepared in accordance with United States of America (United States or U.S.) generally
accepted accounting principles (U.S. GAAP) and are presented in United States dollars ($ or USD) unless otherwise stated. The par value of
capital stock is denominated in Swiss francs.
Scope of consolidation
The Consolidated Financial Statements include the accounts of ABB Ltd and companies which are directly or indirectly controlled by
ABB Ltd. Additionally, the Company consolidates variable interest entities if it has determined that it is the primary beneficiary. Intercompany
accounts and transactions are eliminated. Investments in joint ventures and affiliated companies in which the Company has the ability to exercise
significant influence over operating and financial policies (generally through direct or indirect ownership of 20 percent to 50 percent of the
voting rights), are recorded in the Consolidated Financial Statements using the equity method of accounting.
Reclassifications
Certain amounts reported for prior years in the Consolidated Financial Statements and Notes have been reclassified to conform to the
current year's presentation. These changes primarily relate to the realignment of the automation segments as of January 1, 2010, the presentation
of non-order related research and development expenses as a separate line in the Consolidated Income Statements and the reclassification from
investing activities to financing activities in the Consolidated Statements of Cash Flows of cash paid for the acquisition of noncontrolling
interests.
Operating cycle
A portion of the Company's activities (primarily long-term construction activities) has an operating cycle that exceeds one year. For
classification of current assets and liabilities related to such activities, the Company elected to use the duration of the individual contracts as its
operating cycle. Accordingly, there are accounts receivable, inventories and provisions related to these contracts which will not be realized
within one year that have been classified as current.
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Table of Contents
Note 2—Significant accounting policies (Continued)
Use of estimates
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The preparation of financial statements in conformity with U.S. GAAP requires management to make assumptions and estimates that
directly affect the amounts reported in the Consolidated Financial Statements and the accompanying Notes. The most significant, difficult and
subjective of such accounting assumptions and estimates include:
• assumptions and projections, principally related to future material, labor and project-related overhead costs, used in determining
the percentage-of-completion on projects,
• estimates of loss contingencies associated with litigation or threatened litigation and other claims and inquiries, environmental
damages, product warranties, regulatory and other proceedings,
• assumptions used in the calculation of pension and postretirement benefits and the fair value of pension plan assets,
• recognition and measurement of current and deferred income tax assets and liabilities (including the measurement of uncertain tax
positions),
• growth rates, discount rates and other assumptions used in the Company's goodwill impairment test,
• assumptions used in determining inventory obsolescence and net realizable value,
• estimates and assumptions used in determining the fair values of assets and liabilities assumed in business combinations,
• growth rates, discount rates and other assumptions used to determine impairments of long-lived assets, and
• assessment of the allowance for doubtful accounts.
The actual results and outcomes may differ from the Company's estimates and assumptions.
Cash and equivalents
Cash and equivalents include highly liquid investments with maturities of three months or less at the date of acquisition.
Currency and other local regulatory limitations related to the transfer of funds exist in a number of countries where the Company operates.
Funds, other than regular dividends, fees or loan repayments, cannot be readily transferred offshore from these countries and are therefore
deposited and used for working capital needs locally. These funds are included in cash and equivalents as they are not considered restricted.
Marketable securities and short-term investments
Management determines the appropriate classification of held-to-maturity and available-for-sale securities at the time of purchase. Debt
securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-tomaturity
securities are stated at amortized cost, adjusted for accretion of discounts or amortization of premiums to maturity computed under the
effective interest method. Such accretion or amortization is included in "Interest
F-10

Table of Contents
Note 2—Significant accounting policies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
and dividend income". Marketable debt and equity securities not classified as held-to-maturity are classified as available-for-sale.
Marketable debt and equity securities classified as available-for-sale at the time of purchase are reported at fair value. Unrealized gains and
losses on available-for-sale securities are excluded from the determination of earnings and are instead recognized in the "Accumulated other
comprehensive loss" component of stockholders' equity, net of tax, until realized. Realized gains and losses on available-for-sale securities are
computed based upon the historical cost of these securities using the specific identification method.
The Company performs a periodic review of its debt and equity securities to determine whether an other-than-temporary impairment has
occurred. Generally, when an individual security has been in an unrealized loss position for an extended period of time, the Company evaluates
whether an impairment has occurred. The evaluation is based on specific facts and circumstances at the time of assessment, which include
general market conditions, the duration and extent to which the fair value is below cost and, through 2008, the Company's intent and ability to
hold the security for a sufficient period of time to allow for recovery in value. In addition, for equity securities, the Company assesses whether
the cost value will recover within the near-term. If an other-than-temporary impairment is identified, the security is written down to its fair value.
In 2009, the Company adopted new accounting standards for the recognition and measurement of other-than-temporary impairments of debt
securities. The previous criterion of the Company's intent and ability to hold the security for a sufficient period of time to allow for recovery in
value of the debt security was replaced and, under the new standards, if the fair value of a debt security is less than its amortized cost, then an
other-than-temporary impairment is recognized if (i) the Company has the intent to sell the security, (ii) it is more likely than not that the
Company will be required to sell the security before recovery of its amortized cost base or (iii) a credit loss exists in so far as the Company does
not expect to recover the entire recognized amortized cost of the security. Impairment charges relating to such credit losses are recognized in
"Interest and other finance expense" while impairments related to all other factors are recognized in "Accumulated other comprehensive loss".
Marketable debt securities are classified as either "Cash and equivalents" or "Marketable securities and short-term investments" according
to their maturity at the time of acquisition.
Accounts receivable and allowance for doubtful accounts
Accounts receivable are recorded at the invoiced amount. The allowance for doubtful accounts is the Company's best estimate of the
amount of probable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off
experience and customer economic data. If an amount has not been settled within its contractual payment term then it is considered past due. The
Company reviews the allowance for doubtful accounts regularly and past due balances are reviewed for collectability. Information on the credit
quality of trade receivables with an original maturity greater than one year and financing receivables is presented in Notes 7 and 9.
Account balances are charged off against the allowance when the Company believes that the amount will not be recovered.
F-11

Table of Contents
Note 2—Significant accounting policies (Continued)
Concentrations of credit risk
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company sells a broad range of products, systems and services to a wide range of industrial, commercial and utility customers as well
as various government agencies and quasi-governmental agencies throughout the world. Concentrations of credit risk with respect to accounts
receivable are limited, as the Company's customer base is comprised of a large number of individual customers. Ongoing credit evaluations of
customers' financial positions are performed to determine whether the use of credit support instruments such as guarantees, letters of credit or
credit insurance are necessary; collateral is not generally required. The Company maintains reserves for potential credit losses as discussed
above in Accounts receivable and allowance for doubtful accounts. Such losses, in the aggregate, are in line with the Company's expectations.
It is the Company's policy to invest cash in deposits with banks throughout the world with certain minimum credit ratings and in high
quality, low risk, liquid investments. The Company actively manages its credit risk by routinely reviewing the creditworthiness of the banks and
the investments held, as well as maintaining such investments in time deposits or other liquid investments. The Company has not incurred
significant credit losses related to such investments.
The Company's exposure to credit risk on derivative financial instruments is the risk that the counterparty will fail to meet its obligations.
To reduce this risk, the Company has credit policies that require the establishment and periodic review of credit limits for individual
counterparties. In addition, the Company has entered into close-out netting agreements with most counterparties. Close-out netting agreements
provide for the termination, valuation and net settlement of some or all outstanding transactions between two counterparties on the occurrence of
one or more pre-defined trigger events. In the Consolidated Financial Statements derivative transactions are presented on a gross basis.
Revenue recognition
The Company generally recognizes revenues for the sale of goods when persuasive evidence of an arrangement exists, delivery has
occurred, the price is fixed or determinable and collectability is reasonably assured. Delivery is considered to occur upon transfer of title and the
risks and rewards of ownership.
Revenues under long-term construction-type contracts are generally recognized using the percentage-of-completion method of accounting.
The Company principally uses the cost-to-cost method to measure progress towards completion on contracts. Under this method, progress of
contracts is measured by actual costs incurred in relation to the Company's best estimate of total estimated costs, which are reviewed and updated
routinely for contracts in progress. The cumulative effects of such adjustments are reported in the current period.
Short-term construction-type contracts, or long-term construction-type contracts for which reasonably dependable estimates cannot be made
or for which inherent hazards make estimates difficult, are accounted for under the completed-contract method. Revenues under the completedcontract
method are recognized upon substantial completion—that is: acceptance by the customer, compliance with performance specifications
demonstrated in a factory acceptance test or similar event.
For non construction-type contracts that contain customer acceptance provisions, revenue is deferred until customer acceptance occurs or
the Company has demonstrated the customer-specified objective criteria have been met or the contractual acceptance period has lapsed.
F-12

Table of Contents
Note 2—Significant accounting policies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Revenues from service transactions are recognized as services are performed. For long-term service contracts, revenues are recognized on a
straight-line basis over the term of the contract or, if the performance pattern is other than straight-line, as the services are provided. Service
revenues reflect revenues earned from the Company's activities in providing services to customers primarily subsequent to the sale and delivery
of a product or complete system. Such revenues consist of maintenance-type contracts, field service activities that include personnel and
accompanying spare parts, and installation and commissioning of products as a standalone service or as part of a service contract.
The Company offers multiple solutions to meet its customers' needs. These solutions may involve the delivery of multiple products and/or
performance of services and the delivery and/or performance may occur at different points in time or over different periods of time. In such
circumstances, if certain criteria are met, the Company allocates revenues to each delivery of product or performance of service based on the
individual elements' relative fair value. If there is no evidence for the fair value of the delivered item, the revenue is allocated based on the
residual method, provided that the elements meet the criteria for treatment as a separate unit of accounting.
Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between the Company and its
customers, such as sales, use, value-added and some excise taxes are presented on a net basis (excluded from revenues).
Contract loss provisions
Losses on contracts are recognized in the period when they are identified and are based upon the anticipated excess of contract costs over
the related contract revenues.
Shipping and handling costs
Shipping and handling costs are recorded as a component of cost of sales.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method, the weighted-average cost
method, or in certain circumstances (for example, where the completed-contract method of revenue recognition is used) the specific
identification method. Inventoried costs are stated at acquisition cost or actual production cost, including direct material and labor and applicable
manufacturing overheads, reduced by amounts recognized in cost of sales. Adjustments to reduce the cost of inventory to its net market value are
made, if required for decreases in sales prices, obsolescence or similar impairments.
Accounting for discontinued operations
Assets and liabilities that meet certain criteria with respect to the Company's plans for their sale or abandonment are included in assets and
liabilities held for sale and in discontinued operations. Depreciation and amortization cease when the assets meet the criteria to be classified as
held for sale. Results from discontinued operations are recognized in the period in which they occur. Assets and liabilities classified as held for
sale are measured at the lower of carrying amount or fair value, less cost to sell. Assets and liabilities related to discontinued operations that are
retained are not classified into assets or liabilities held for sale and in discontinued operations in our Consolidated Balance Sheets;
F-13

Table of Contents
Note 2—Significant accounting policies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
future adjustments of such balances are recorded through income (loss) from discontinued operations, net of tax, in the Consolidated Income
Statements. In the Consolidated Statements of Cash Flows, the amounts related to businesses with assets and liabilities held for sale and in
discontinued operations are not segregated.
Impairment of long-lived assets
Long-lived assets that are held and used are assessed for impairment when events or circumstances indicate that the carrying amount of the
asset may not be recoverable. If the asset's net carrying value exceeds the asset's net undiscounted cash flows expected to be generated over its
remaining useful life including net proceeds expected from disposition of the asset, if any, the carrying amount of the asset is reduced to its
estimated fair value. The estimated fair value is determined using a market, income and/or cost approach.
Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation and is depreciated using the straight-line method. The
estimated useful lives of the assets are generally as follows:
• factories and office buildings: 30 to 40 years,
• other facilities: 15 years,
• machinery and equipment: 3 to 15 years,
• furniture and office equipment: 3 to 8 years,
• leasehold improvements are depreciated over their estimated useful life or, for operating leases, over the lease term, if shorter.
Goodwill and other intangible assets
Goodwill is tested for impairment annually as of October 1 or more frequently if events or circumstances indicate that the carrying value
may not be recoverable. The Company performs a two-step impairment test. In the first step, the Company compares the fair value of each
reporting unit to its carrying value. A reporting unit is an operating segment or one level below an operating segment. For the annual impairment
review, the reporting units were the same as the operating segments for Power Systems, Discrete Automation and Motion, and Low Voltage
Products, while for the Power Products and Process Automation operating segments, the reporting units were determined to be one level below
the operating segment. The Company determines the fair value of its reporting units based on the income approach whereby the fair value of
each reporting unit is calculated based on the present value of future cash flows. If the carrying value of the net assets of a reporting unit exceeds
the fair value of the reporting unit then the Company performs the second step of the impairment test to determine the implied fair value of the
reporting unit's goodwill. If the carrying value of the reporting unit's goodwill exceeds its implied fair value, the Company records an
impairment charge equal to the difference.
The cost of acquired intangible assets with a finite life is amortized using a method of amortization that reflects the pattern in which the
economic benefits of the intangible assets are consumed or otherwise used up. If that pattern cannot be reliably determined, the straight-line
method is used. The
F-14

Table of Contents
Note 2—Significant accounting policies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
amortization periods typically range from 1 to 10 years. Intangible assets with a finite life are tested for impairment upon the occurrence of
certain triggering events.
Capitalized software costs
Software for internal use
Costs incurred in the application development stage until the software is substantially complete are capitalized and are amortized on a
straight-line basis over the estimated useful life of the software, typically ranging from 3 to 5 years.
Software product to be sold
Costs incurred after the software has demonstrated its technological feasibility until the product is available for general release to the
customers are capitalized and amortized on a straight-line basis over the estimated life of the product. The Company periodically performs an
evaluation to determine that the unamortized cost of software to be sold does not exceed the net realizable value.
Derivative financial instruments and hedging activities
The Company uses derivative financial instruments to manage currency, commodity, interest rate and equity exposures, arising from its
global operating, financing and investing activities (see Note 5).
The Company recognizes all derivatives, other than certain derivatives indexed to the Company's own stock, at fair value in the
Consolidated Balance Sheets. Derivatives that are not designated as hedging instruments are reported at fair value with derivative gains and
losses reported through earnings and classified consistent with the nature of the underlying transaction. If the derivatives are designated as a
hedge, depending on the nature of the hedge, changes in the fair value of the derivatives will either be offset against the change in fair value of
the hedged item attributable to the risk being hedged through earnings (in the case of a fair value hedge) or recognized in "Accumulated other
comprehensive loss" until the hedged item is recognized in earnings (in the case of a cash flow hedge). The ineffective portion of a derivative's
change in fair value is immediately recognized in earnings consistent with the classification of the hedged item.
Gains or losses from derivatives designated as hedging instruments in a fair value hedge are reported through earnings and classified
consistent with the nature of the underlying hedged transaction. Where derivative financial instruments have been designated as cash flow
hedges of forecasted transactions and such forecasted transactions are no longer probable of occurring, hedge accounting is discontinued and any
derivative gain or loss previously included in "Accumulated other comprehensive loss" is reclassified into earnings consistent with the nature of
the original forecasted transaction.
Certain commercial contracts may grant rights to the Company or the counterparties, or contain other provisions that are considered to be
derivatives. Such embedded derivatives are assessed at inception of the contract and depending on their characteristics, accounted for as separate
derivative instruments and shown at their fair value in the balance sheet with changes in their fair value reported in earnings consistent with the
nature of the commercial contract to which they relate.
F-15

Table of Contents
Note 2—Significant accounting policies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Derivatives are classified in the Consolidated Statements of Cash Flows in the same section as the underlying item, primarily within "Net
cash provided by operating activities".
Leases
The Company leases primarily real estate and office equipment. Rental expense for operating leases is recorded on a straight-line basis over
the life of the lease term. Lease transactions where substantially all risks and rewards incident to ownership are transferred from the lessor to the
lessee are accounted for as capital leases. All other leases are accounted for as operating leases. Amounts due under capital leases are recorded as
a liability. The interest in assets acquired under capital leases is recorded as property, plant and equipment. Depreciation and amortization of
assets recorded under capital leases is included in depreciation and amortization expense.
Sale-leasebacks
The Company occasionally enters into transactions accounted for as sale-leasebacks, in which fixed assets, generally real estate and/or
equipment, are sold to a third party and then leased for use by the Company. Under certain circumstances, the necessary criteria to recognize a
sale of these assets may not occur and then the transaction is reflected as a financing transaction, with the proceeds received from the transaction
reflected as a borrowing or deposit liability. When the necessary criteria have been met to recognize a sale, gains or losses on the sale of the
assets are generally deferred and amortized over the term of the transaction, except in certain limited instances when a portion of the gain or loss
may be recognized upon inception. The lease of the asset is accounted for as either an operating lease or a capital lease, depending upon its
specific terms.
Translation of foreign currencies and foreign exchange transactions
The functional currency for most of the Company's subsidiaries is the applicable local currency. The translation from the applicable
functional currencies into the Company's reporting currency is performed for balance sheet accounts using exchange rates in effect at the balance
sheet date and for income statement accounts using average exchange rates prevailing during the year. The resulting translation adjustments are
excluded from the determination of earnings and are recognized in "Accumulated other comprehensive loss" until the subsidiary is sold,
substantially liquidated or evaluated for impairment in anticipation of disposal.
Foreign currency exchange gains and losses, such as those resulting from foreign currency denominated receivables or payables, are
included in the determination of earnings, except as they relate to intercompany loans that are equity-like in nature with no reasonable
expectation of repayment, which are recognized in "Accumulated other comprehensive loss". Exchange gains and losses recognized in earnings
are included in "Total revenues", "Total cost of sales", "Selling, general and administrative expenses" or "Interest and other finance expense"
consistent with the nature of the underlying item.
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Table of Contents
Note 2—Significant accounting policies (Continued)
Income taxes
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company uses the asset and liability method to account for deferred taxes. Under this method, deferred tax assets and liabilities are
determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. For
financial statement purposes, the Company records a deferred tax asset when it determines that it is more likely than not that the deduction will
be sustained based upon the deduction's technical merit. A valuation allowance is recorded to reduce deferred tax assets to the amount that is
more likely than not to be realized.
Deferred taxes are provided on unredeemed retained earnings of the Company's subsidiaries. However, deferred taxes are not provided on
such unredeemed retained earnings to the extent it is expected that the earnings are permanently reinvested. Such earnings may become taxable
upon the sale or liquidation of these subsidiaries or upon the remittance of dividends.
The Company operates in numerous tax jurisdictions and, as a result, is regularly subject to audit by tax authorities. The Company provides
for tax contingencies on the basis of their technical merits, including relative tax law and Organisation for Economic Co-operation and
Development (OECD) guidelines, as well as on items relating to potential audits by tax authorities based upon its evaluations of the facts and
circumstances as of each reporting period. Changes in the facts and circumstances could result in a material change to the tax accruals. The
Company provides for tax contingencies whenever it is deemed more likely than not that a tax asset has been impaired or a tax liability has been
incurred for events such as tax claims or changes in tax laws.
The Company applies a two-step approach to recognize and measure uncertainty in income taxes. The first step is to evaluate the tax
position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be
sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the
largest amount which is more than 50 percent likely of being realized upon ultimate settlement.
Expense related to tax penalties is classified in the Consolidated Income Statements as "Provision for taxes", while interest thereon is
classified as "Interest and other finance expense".
Research and development
Research and development costs not related to specific customer orders are generally expensed as incurred.
Earnings per share
Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year. Diluted
earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year, assuming that all
potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call options, outstanding
options and shares granted subject to certain conditions under the Company's share-based payment arrangements. See further discussion related
to earnings per share in Note 20 and further discussion of the potentially dilutive securities in Note 18.
F-17

Table of Contents
Note 2—Significant accounting policies (Continued)
Share-based payment arrangements
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company has various share-based payment arrangements for its employees, which are described more fully in Note 18. Such
arrangements are accounted for under the fair value method. For awards that are equity-settled, total compensation is measured at grant date,
based on the fair value of the award at that date, and recorded in income over the period the employees are required to render service. For awards
that are cash-settled, compensation is initially measured at grant date and subsequently remeasured at each reporting period, based on the fair
value and vesting percentage of the award at each of those dates, with changes in the liability recorded in earnings.
Fair value measures
The Company uses fair value measurement principles to record certain financial assets and liabilities on a recurring basis and, when
necessary, to record certain non-financial assets at fair value on a non-recurring basis, as well as to determine fair value disclosures for certain
financial instruments carried at amortized cost in the financial statements. Financial assets and liabilities recorded at fair value on a recurring
basis include foreign currency, commodity, interest rate and equity derivatives and available-for-sale securities. Non-financial assets recorded at
fair value on a non-recurring basis include long-lived assets that are reduced to their estimated fair value due to impairments.
Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. In determining fair value, the Company uses various valuation techniques including the market approach
(using observable market data for identical or similar assets and liabilities), the income approach (discounted cash flow models) and the cost
approach (using costs a market participant would incur to develop a comparable asset). Inputs used to determine the fair value of assets and
liabilities are defined by a three-level hierarchy, depending on the reliability of those inputs. The Company has categorized its financial assets
and liabilities and non-financial assets measured at fair value within this hierarchy based on whether the inputs to the valuation technique are
observable or unobservable. An observable input is based on market data obtained from independent sources, while an unobservable input
reflects the Company's assumptions about market data.
The levels of the fair value hierarchy are as follows:
Level 1: Valuation inputs consist of quoted prices in an active market for identical assets or liabilities (observable quoted prices). Assets and
liabilities valued using Level 1 inputs include exchange-traded equity securities, listed derivatives which are actively traded such as
foreign exchange futures and specific government securities.
Level 2:
Valuation inputs consist of observable inputs (other than Level 1 inputs) such as actively quoted prices for similar assets, quoted
prices in inactive markets and inputs other than quoted prices such as interest rate yield curves, credit spreads, or inputs derived from
other observable data by interpolation, correlation, regression or other means. The adjustments applied to quoted prices or the inputs
used in valuation models may be both observable and unobservable. In these cases, the fair value measurement is classified as Level 2
unless the unobservable portion of the adjustment or the unobservable input to the valuation model is significant, in which case the
fair value measurement would be classified as Level 3. Assets and liabilities valued using Level 2 inputs include investments in
certain funds, interest rate swaps, cross-currency swaps, commodity swaps, cash-settled call options, as well as foreign exchange
forward contracts and foreign exchange swaps.
F-18

Table of Contents
Note 2—Significant accounting policies (Continued)
Level 3:
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Valuation inputs are based on the Company's assumptions of relevant market data (unobservable input). Assets valued at Level 3
include certain pension assets (see Note 17). The impairment in 2009 of certain long-lived assets primarily included in "Property,
plant and equipment, net" was calculated using Level 3 inputs.
Whenever quoted prices involve bid-ask spreads, the Company ordinarily determines fair values based on mid-market quotes. However, for
the purposes of determining the fair value of cash-settled call options serving as hedges of the Company's management incentive plan (MIP), bid
prices are used.
When determining fair values based on quoted prices in an active market, the Company considers if the level of transaction activity for the
financial instrument has significantly decreased, or would not be considered orderly. In such cases, the resulting changes in valuation techniques
would be disclosed. If the market is considered disorderly or if quoted prices are not available, the Company is required to use another valuation
technique, such as an income approach.
Disclosures about the Company's fair value measurements of assets and liabilities are included in Note 6.
Contingencies and asset retirement obligations
The Company is subject to proceedings, litigation or threatened litigation and other claims and inquiries, related to taxes other than income
tax, environmental, labor, product, regulatory and other matters and is required to assess the likelihood of any adverse judgments or outcomes to
these matters, as well as potential ranges of probable losses. A determination of the provision required, if any, for these contingencies is made
after analysis of each individual issue, often with assistance from both internal and external legal counsel and technical experts. The required
amount of a provision for a contingency of any type may change in the future due to new developments in the particular matter, including
changes in the approach to its resolution.
The Company records a provision for its contingent obligations when it is probable that a loss will be incurred and the amount can be
reasonably estimated. Any such provision is generally recognized on an undiscounted basis using the Company's best estimate of the amount of
loss incurred or at the lower end of an estimated range when a single best estimate is not determinable. In some cases, the Company may be able
to recover a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts
only when it is probable that they will be collected.
The Company provides for anticipated costs for warranties when it recognizes revenues on the related products or contracts. Warranty costs
include calculated costs arising from imperfections in design, material and workmanship in the Company's products. The Company makes
individual assessments on contracts with risks resulting from order-specific conditions or guarantees and assessments on an overall, statistical
basis for similar products sold in larger quantities.
F-19

Table of Contents
Note 2—Significant accounting policies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company may have a legal obligation to perform environmental clean-up activities as a result of the normal operation of its business or
have other asset retirement obligations. In some cases, the timing or the method of settlement, or both are conditional upon a future event that
may or may not be within the control of the Company, but the underlying obligation itself is unconditional and certain. The Company recognizes
a provision for these and other asset retirement obligations when a liability for the retirement or clean-up activity has been incurred and a
reasonable estimate of its fair value can be made. Asset retirements provisions are initially recognized at fair value, and subsequently adjusted
for accrued interest and changes in estimates. Provisions for environmental obligations are not discounted to their present value when the timing
of payments cannot be reasonably estimated.
Pensions and other postretirement benefits
The Company has a number of defined benefit pension and other postretirement plans. The Company recognizes an asset for such a plan's
overfunded status or a liability for such a plan's underfunded status in its Consolidated Balance Sheets. Additionally, the Company measures
such a plan's assets and obligations that determine its funded status as of the end of the year and recognizes the changes in the funded status in
the year in which the changes occur. Those changes are reported in "Accumulated other comprehensive loss" and as a separate component of
stockholders' equity.
The Company uses actuarial valuations to determine its pension and postretirement benefit costs and credits. The amounts calculated
depend on a variety of key assumptions, including discount rates and expected return on plan assets. Current market conditions are considered in
selecting these assumptions. See Note 17 for further discussion of the Company's employee benefit plans.
Business combinations
Assets acquired and liabilities assumed in business combinations are accounted for using the acquisition method and recorded at their
respective fair values. Contingent consideration is recorded at fair value as an element of purchase price with subsequent adjustments recognized
in income. Identifiable intangibles consist of intellectual property such as patents and trademarks, customer relationships, in-process research
and development and capitalized software; these are amortized over their estimated useful lives. Such intangibles are subsequently subject to
evaluation for potential impairment if events or circumstances indicate the carrying amount may not be recoverable. See "Goodwill and other
intangible assets". Acquisition-related costs are recognized separately from the acquisition and expensed as incurred. Restructuring costs are
generally expensed in periods subsequent to the acquisition date. Changes in valuation allowances on acquired deferred tax assets that occur after
the measurement period (a period of up to 12 months after the acquisition date during which the acquirer may adjust the provisional acquisition
amounts) are recognized in income. Upon gaining control of an entity in which an equity method or cost basis investment was held by the
Company, the carrying value of that investment is adjusted to fair value with the related gain or loss recorded in income.
F-20

Table of Contents
Note 2—Significant accounting policies (Continued)
New accounting pronouncements
Applicable in current period
Fair value measurements
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
As of January 1, 2010, the Company adopted an accounting standard update that requires additional disclosure for fair value measurements.
The update requires that significant transfers in and out of fair value Level 1 (observable quoted prices) and Level 2 (observable inputs other
than Level 1 inputs) be disclosed together with a description of the reasons for the transfers. Adoption of this update did not result in additional
disclosure in 2010, as there were no significant transfers between Level 1 and Level 2.
Disclosures about the credit quality of financing receivables and the allowance for credit losses
As of December 2010, the Company adopted an accounting standard update that requires additional disclosures about the credit quality of
financing receivables and the allowance for credit losses. The required disclosures include a description of (i) the nature of credit risk inherent in
the Company's portfolio of financing receivables and (ii) how that risk is analyzed and assessed in arriving at the allowance for credit losses. The
new disclosure requirements did not have a material impact on the Consolidated Financial Statements.
Applicable for future periods
Fair value measurements
In January 2010, an accounting standard update was issued that requires additional disclosure for fair value measurements. The update
requires disclosure, on a gross basis, about purchases, sales, issuances, and settlements of level 3 (significant unobservable inputs) instruments
when reconciling the fair value measurements. This disclosure requirement is effective for the Company for periods beginning January 1, 2011.
The Company does not believe that this new disclosure requirement will have a material impact on its Consolidated Financial Statements.
Disclosures about the credit quality of financing receivables and the allowance for credit losses
In July 2010, an accounting standard update was issued that requires additional disclosures regarding the changes and reasons for those
changes in the allowance for credit losses. This update is effective for the Company for periods beginning January 1, 2011. The new disclosure
requirements will not have a material impact on the Consolidated Financial Statements.
Revenue recognition with multiple deliverable arrangements
In October 2009, an accounting standard update on revenue recognition with multiple deliverable arrangements was issued which amends
the criteria for allocating consideration in multiple-deliverable revenue arrangements. It establishes a hierarchy of selling prices to determine the
selling price of each specific deliverable that includes vendor-specific objective evidence (if available), third-party evidence
F-21

Table of Contents
Note 2—Significant accounting policies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
(if vendor-specific evidence is not available), or estimated selling price if neither of the first two are available. This update also:
• eliminates the residual method for allocating revenue between the elements of an arrangement and requires that arrangement
consideration be allocated at the inception of the arrangement, and
• expands the disclosure requirements regarding a vendor's multiple-deliverable revenue arrangements.
This update is effective for arrangements entered into by the Company or materially modified on or after January 1, 2011. The Company
does not believe that this update will have a material impact on its Consolidated Financial Statements.
Revenue arrangements that include software elements
In October 2009, an accounting standard update for the accounting of certain revenue arrangements that include software elements was
issued. This update amends the existing guidance on revenue arrangements that contain both hardware and software elements. This update
modifies the existing rules to exclude from the software revenue guidance (i) non-software components of tangible products and (ii) software
components of tangible products that are sold, licensed, or leased with tangible products when the software components and non-software
components of the tangible product function together to deliver the tangible product's essential functionality. Undelivered elements in the
arrangement related to the non-software components also are excluded from this guidance. This update is effective for arrangements entered into
by the Company or materially modified on or after January 1, 2011. The Company does not believe that this update will have a material impact
on its Consolidated Financial Statements.
Goodwill impairment test for reporting units with zero or negative carrying amounts
In December 2010, an accounting standard update was issued that clarifies that the Company is required to perform the second step of the
goodwill impairment test (determining whether goodwill has been impaired and calculating the amount of the impairment) also for reporting
units with zero or negative carrying amounts, if it is more likely than not that a goodwill impairment exists. In determining whether a goodwill
impairment exists, the Company considers whether there are any adverse qualitative factors indicating such an impairment. A reporting unit is an
operating segment or one level below an operating segment. This requirement is effective for the Company for periods beginning January 1,
2011. The Company does not believe that this update will have a material impact on its Consolidated Financial Statements.
Disclosure of supplementary pro forma information for business combinations
In December 2010, an accounting standard update was issued that clarifies the requirement regarding the disclosure of pro forma
information for business combinations. Under the update, the Company is required to disclose pro forma revenues and earnings of the combined
entity as though the business combination(s) had occurred as of the beginning of the comparable prior annual reporting period only. This update
also expands the disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly
attributable to the business combination
F-22

Table of Contents
Note 2—Significant accounting policies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
included in the reported pro forma revenue and earnings. This new disclosure requirement will apply to business combinations entered into by
the Company after January 1, 2011, that are material on an individual or aggregate basis.
Note 3—Acquisitions, divestments and discontinued operations
Acquisitions
Acquisitions in (excluding the increase in controlling interest in India described separately below) were as follows:
($ in millions, except number of acquired businesses) 2010 2009 2008
Acquisitions (net of cash acquired) (1) 1,275 159 651
Aggregate excess of purchase price over fair value of net assets acquired (2) 1,091 147 456
Number of acquired businesses 9 8 7
(1)
Excluding changes in cost and equity investments
(2) Recorded as goodwill (see Note 11)
In the table above, the "Acquisitions" and "Aggregate excess of purchase price over fair value of net assets acquired" amounts for 2010,
relate primarily to the acquisition of Ventyx, as described below.
Acquisitions of controlling interests have been accounted for under the acquisition method and have been included in the Company's
Consolidated Financial Statements since the date of acquisition. The Company has not presented pro forma results of operations of the acquired
businesses as the results are not significant to the Consolidated Financial Statements.
On June 1, 2010, the Company acquired all of the shares of Ventyx Inc., Ventyx Software Inc. and Ventyx Dutch Holding B.V.,
representing substantially all of the revenues, assets and liabilities of the Ventyx group. Ventyx provides software solutions to global energy,
utility, communications and other asset-intensive businesses and was integrated into the network management business within the Power
Systems segment to form a single unit for energy management software solutions.
While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value assets acquired and
liabilities assumed at the acquisition date, the purchase price allocation for the acquisition is preliminary for up to 12 months after the acquisition
date and is subject to refinement as more detailed analyses are completed and additional information about the fair values of the assets and
liabilities becomes available.
F-23

Table of Contents
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Note 3—Acquisitions, divestments and discontinued operations (Continued)
The aggregate preliminary purchase price of business acquisitions in 2010, settled in cash, has been allocated as follows:
In 2009 and 2008, acquisitions were not significant, either individually or in aggregate. In 2008, the Company completed the acquisition of
the U.S. transformer company Kuhlman Electric Corporation (Kuhlman). Kuhlman manufactures a wide range of transformers for the industrial
and electric utility sectors and was integrated into the Company's Power Products segment. The final purchase price, including assumed debt,
amounted to $513 million (net of $5 million cash acquired).
Increase in controlling interests in India
In 2010, the Company increased its ownership interest in ABB Limited, India (its publicly-listed subsidiary in India) from approximately
52 percent to 75 percent. Cash paid up to December 31, 2010, including transaction costs, amounted to $956 million. The offer of 900 rupees per
share resulted in a charge to "Capital stock and additional paid-in capital" of $838 million, including expenses related to the transaction.
Acquisition of Baldor Electric Company
In January 2011, the Company completed the acquisition of Baldor Electric Company (Baldor) for $63.50 per share in cash. Baldor
markets, designs and manufactures industrial electric motors, mechanical power transmission products, drives and generators. The resulting cash
outflows for the Company in the first quarter of 2011 amount to approximately $4.2 billion, representing approximately $3 billion for the
purchase of the shares and approximately $1.2 billion for the repayment of debt assumed upon acquisition.
Divestments
($ in millions)
The Company has divested businesses and investments not considered by management to be aligned with its focus on power and
automation technologies, as described in Note 1. Since these divestments did not meet the requirements for classification as discontinued
operations, the results of operations of these divested businesses are included in the Company's Consolidated Income Statements
F-24
Allocated
amount
Weighted-average
useful life
Intangible assets (1) 356 8 years
Deferred tax liabilities (147 )
Other assets and liabilities, net (2) (25 )
Goodwill (3) 1,091
Total 1,275
(1)
Includes mainly capitalized software for sale and customer relationships
(2) Including debt assumed upon acquisition
(3) The Company does not expect the majority of goodwill recognized to be deductible for income tax purposes

Table of Contents
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Note 3—Acquisitions, divestments and discontinued operations (Continued)
in the respective line items of income from continuing operations, through the date of divestment. The proceeds from sale and the corresponding
net gains (losses) from such divestments were as follows:
Revenues and income from these businesses and investments were not significant in 2010, 2009 and 2008.
Discontinued operations
($ in millions) 2010 2009 2008
Proceeds from sale of businesses and
equity-accounted companies 83 16 27
Net gains (losses) recognized on
disposals, included in "Other income
(expense), net" 12 (1 ) 24
In 2010, 2009 and 2008, the Company's Consolidated Financial Statements were impacted by activities related to the divestment of a
number of businesses held for sale and/or in discontinued operations. In the discussion below, the revenue and operating results of the divested
businesses in the year of disposition reflect the results of those businesses through the date of disposition.
During 2010 and 2009, no individual discontinued operation was significant. In 2008, the Company sold its 50 percent stake in the shares of
ABB Powertech Transformers to Powertech, a wholly-owned subsidiary of the Altron Group at a gain of $11 million. This business was part of
the Company's Power Products segment prior to being reclassified to discontinued operations. In 2008, the transformer business in South Africa
had revenues of $29 million and income of $2 million, recorded in "Income (loss) from discontinued operations, net of tax".
In 2010, "Income (loss) from discontinued operations, net of tax", included income of $29 million from the release of an accrual for
environmental contingencies related to the former Nuclear Technology business and in 2008, costs of approximately $31 million related to the
Company's asbestos obligations (see Note 15). In 2009, such costs were not significant.
Operating results of the Company's discontinued operations are summarized as follows:
($ in millions) 2010 2009 2008
Revenues — 2 32
Costs and expenses, finance loss 9 (11 ) (82 )
Operating income (loss) before taxes 9 (9 ) (50 )
Tax benefit 3 8 20
Operating income (loss) from
discontinued operations 12 (1 ) (30 )
Gain (loss) from dispositions, net of tax (2 ) 18 9
Income (loss) from discontinued
operations, net of tax 10 17 (21 )
At December 31, 2010 and 2009, there were no amounts included in assets and liabilities held for sale and in discontinued operations.
F-25

Table of Contents
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Note 4—Cash and equivalents and marketable securities and short-term investments
Cash and equivalents and marketable securities and short-term investments consisted of the following:
($ in millions) Cost basis
Gross
unrealized
gains
December 31, 2010
Gross
unrealized
losses Fair value
Cash and
equivalents
Marketable
securities
and
short-term
investments
Cash 1,851 1,851 1,851 —
Time deposits 4,044 4,044 3,665 379
Securities held-tomaturity:
—Corporate
commercial
papers — — — — — —
—Other — — — — — —
Debt securities
available-for-sale:
—U.S.
government
obligations 147 5 (1 ) 151 — 151
—European
government
obligations — — — — — —
—Other
government
obligations 4 — (1 ) 3 — 3
—Corporate 708 8 — 716 381 335
Equity securities
available-for-sale 1,836 11 (2 ) 1,845 — 1,845
Total 8,590 24 (4 ) 8,610 5,897 2,713
($ in millions) Cost basis
Gross
unrealized
gains
December 31, 2009
Gross
unrealized
losses Fair value
Cash and
equivalents
Marketable
securities
and
short-term
investments
Cash 1,381 1,381 1,381 —
Time deposits 6,170 6,170 4,474 1,696
Securities held-tomaturity:
—Corporate
commercial
papers 413 — — 413 223 190
—Other 43 — — 43 — 43
Debt securities
available-for-sale:
—U.S.
government
obligations 110 4 (1 ) 113 — 113
—European
government
obligations 717 — — 717 717 —
—Other
government
obligations 4 — (1 ) 3 — 3

—Corporate 603 5 — 608 324 284
Equity securities
available-for-sale 91 15 (2 ) 104 — 104
Total 9,532 24 (4 ) 9,552 7,119 2,433
The net unrealized holding gains on available-for-sale securities were $20 million, $20 million and $107 million in 2010, 2009 and 2008,
respectively. Gross realized gains (reclassified from accumulated other comprehensive loss to income) on available-for-sale securities were
$16 million and $8 million in 2010 and 2009, respectively. In 2008, the gross realized gains were not significant. Gross realized losses
(reclassified from accumulated other comprehensive loss to income) on available-for-sale securities
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Table of Contents
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Note 4—Cash and equivalents and marketable securities and short-term investments (Continued)
were $35 million in 2009 and not significant in 2010 and 2008. Such gains and losses were included in "Interest and other finance expense".
There were no held-to-maturity debt securities at December 31, 2010. Contractual maturities of available-for-sale debt securities consisted
of the following:
There were no other-than-temporary impairments in 2010 and 2009. At December 31, 2008, the Company recognized in "Interest and other
finance expense" an other-than-temporary impairment of $20 million on its available-for-sale equity securities and adjusted the cost base of these
securities accordingly.
At December 31, 2010 and 2009, gross unrealized losses on available-for-sale securities that have been in a continuous unrealized loss
position were not significant and the Company does not intend and does not expect to be required to sell these securities before the recovery of
their amortized cost.
During 2008, the Company changed its intent and sold an individual security (with an amortized cost of $50 million at the time of sale) that
had been classified upon purchase as held-to-maturity. The sale took place based on evidence of a significant deterioration in the issuer's
creditworthiness. The gain on sale recorded by the Company was not significant. There were no sales of held-to-maturity securities in 2010 and
2009.
At December 31, 2010 and 2009, the Company pledged $68 million and $62 million, respectively, of marketable securities as collateral for
issued letters of credit and other security arrangements.
In January 2011, the Company sold $1,789 million of its available-for-sale equity securities and realized an insignificant gain.
Note 5—Financial instruments
The Company is exposed to certain currency, commodity, interest rate and equity risks arising from its global operating, financing and
investing activities. The Company uses derivative instruments to reduce and manage the economic impact of these exposures.
Currency risk
December 31, 2010
Available-for-sale
($ in millions) Cost basis Fair value
Less than one year 595 595
One to five years 183 191
Six to ten years 81 84
Total 859 870
Due to the global nature of the Company's operations, many of its subsidiaries are exposed to currency risk in their operating activities from
entering into transactions in currencies other than their functional currency. To manage such currency risks, the Company's policies require the
subsidiaries to hedge their foreign currency exposures from binding sales and purchase contracts denominated in foreign currencies. For
forecasted foreign currency denominated sales of standard products and the
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Table of Contents
Note 5—Financial instruments (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
related foreign currency denominated purchases, the Company's policy is to hedge up to a maximum of 100 percent of the forecasted foreign
currency denominated exposure, depending on the length of the forecasted exposures. Forecasted exposures greater than 12 months are not
hedged. Forward foreign exchange contracts are the main instrument used to protect the Company against the volatility of future cash flows
(caused by changes in exchange rates) of contracted and forecasted sales and purchases denominated in foreign currencies.
Commodity risk
Various commodity products are used in the Company's manufacturing activities. Consequently it is exposed to volatility in future cash
flows arising from changes in commodity prices. To manage the price risk of commodities other than electricity, the Company's policies require
that the subsidiaries hedge the commodity price risk exposures from binding purchase contracts, as well as at least 50 percent of the forecasted
commodity purchases over the next eighteen months. In certain locations where the price of electricity is hedged, up to a maximum of 90 percent
of the forecasted electricity needs, depending on the length of the forecasted exposures, are hedged. Swap and futures contracts are used to
manage the associated price risks of commodities.
Interest rate risk
The Company has issued bonds at fixed rates and in currencies other than the issuing entity's functional currency. Interest rate swaps are
used to manage the interest rate risk associated with such debt. In addition, from time to time, the Company uses instruments such as interest rate
swaps, bond futures or forward rate agreements to manage interest rate risk arising from the Company's balance sheet structure but does not
designate such instruments as hedges.
Equity risk
The Company is exposed to fluctuations in the fair value of its warrant appreciation rights (WARs) issued under its management incentive
plan. A WAR gives its holder the right to receive cash equal to the market price of an equivalent listed warrant on the date of exercise. To
eliminate such risk, the Company has purchased cash-settled call options which entitle the Company to receive amounts equivalent to its
obligations under the outstanding WARs.
In general, while the Company's primary objective in its use of derivatives is to minimize exposures arising from its business, certain
derivatives are designated and qualify for hedge accounting treatment while others either are not designated or do not qualify for hedge
accounting.
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Table of Contents
Note 5—Financial instruments (Continued)
Volume of derivative activity
Foreign exchange and interest rate derivatives:
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The gross notional amounts of outstanding foreign exchange and interest rate derivatives (whether designated as hedges or not) were as
follows:
Derivative commodity contracts:
The following table shows the notional amounts of outstanding commodity derivatives (whether designated as hedges or not), on a net
basis, to reflect the Company's requirements in the various commodities:
Equity derivatives:
At December 31, 2010 and 2009, the Company held 58 million and 64 million cash-settled call options on ABB Ltd shares with a total fair
value of $45 million and $64 million, respectively.
Cash flow hedges
Type of derivative
($ in millions)
As noted above, the Company mainly uses forward foreign exchange contracts to manage the foreign exchange risk of its operations,
commodity swaps to manage its commodity risks and cash-settled call options to hedge its WAR liabilities. Where such instruments are
designated and qualify as cash flow hedges, the effective portion of the changes in their fair value is recorded in "Accumulated other
comprehensive loss" and subsequently reclassified into earnings in the same line item and in the same period as the underlying hedged
transaction affects earnings. Any ineffectiveness in the hedge relationship, or hedge component excluded from the assessment of effectiveness, is
recognized in earnings during the current period.
At December 31, 2010 and 2009, "Accumulated other comprehensive loss" included net unrealized gains of $92 million and $20 million,
respectively, net of tax, on derivatives designated as cash flow hedges. Of the amount at December 31, 2010, net gains of $65 million are
expected to be reclassified to earnings in 2011. At December 31, 2010, the longest maturity of a derivative classified as a cash flow hedge was
62 months.
F-29
Total notional amounts
at December 31,
2010 2009
Foreign exchange contracts 16,971 14,446
Embedded foreign exchange derivatives 2,891 3,951
Interest rate contracts 2,357 2,860
Total notional amounts
at December 31,
Type of derivative Unit 2010 2009
Copper swaps metric tonnes 20,977 22,002
Aluminum swaps metric tonnes 3,050 2,193
Nickel swaps metric tonnes 36 24
Lead swaps metric tonnes 9,525 —
Electricity futures megawatt hours 363,340 367,748
Crude oil swaps barrels 121,979 154,632

Table of Contents
Note 5—Financial instruments (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The amounts of gains or losses, net of tax, reclassified into earnings due to the discontinuance of cash flow hedge accounting and
recognized in earnings due to ineffectiveness in cash flow hedge relationships were as follows:
($ in millions) 2010 2009 2008
Gains (losses), net of tax, due to:
Discontinuance of cash flow hedge
accounting 2 3 6
Ineffectiveness in cash flow hedge
relationships 2 4 (4 )
Total 4 7 2
The pre-tax effects of derivative instruments, designated and qualifying as cash flow hedges, on "Accumulated other comprehensive loss"
and the Consolidated Income Statements were as follows:
2010
Type of derivative designated
Gains (losses)
recognized in OCI
(1)
on derivatives
Gains (losses) reclassified
from OCI
as a cash flow hedge
(effective portion)
(1) into income
Gains (losses) recognized in
income (ineffective portion and
amount excluded from
(effective portion)
effectiveness testing)
($ in
($ in
($ in millions) Location
millions) Location millions)
Foreign exchange contracts 107 Total revenues 36 Total revenues 2
Total cost of sales (4 ) Total cost of sales —
Commodity contracts 9 Total cost of sales 8 Total cost of sales 1
Cash-settled call options (4 ) SG&A expenses (2)
(11 ) SG&A expenses (2)
—
Total 112 29 3
Type of derivative designated
as a cash flow hedge
Gains
(losses)
recognized
in OCI (1)
on
derivatives
(effective
portion)
($ in
2009
Gains (losses) reclassified
from OCI (1) into income
(effective portion)
millions) Location ($ in millions) Location
Derivative gains of $19 million and $49 million, both net of tax, were reclassified from "Accumulated other comprehensive loss" to
earnings during 2010 and 2008, respectively. During 2009, derivative losses of $105 million, net of tax, were reclassified to earnings.
F-30
Gains (losses) recognized in income
(ineffective portion and amount
excluded from effectiveness testing)
($ in
millions)
Foreign exchange contracts 84 Total revenues (91 ) Total revenues 4
Total cost of sales 4 Total cost of sales —
Commodity contracts 31 Total cost of sales (40 ) Total cost of sales 2
Cash-settled call options 8 SG&A expenses (2)
(16 ) SG&A expenses (2)
—
Total 123 (143 ) 6
(1)
OCI represents "Accumulated other comprehensive loss"
(2) SG&A expenses represent "Selling, general and administrative expenses"

Table of Contents
Note 5—Financial instruments (Continued)
Fair value hedges
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
To reduce its interest rate exposure arising primarily from its debt issuance activities, the Company uses interest rate swaps. Where such
instruments are designated as fair value hedges, the changes in fair value of these instruments, as well as the changes in fair value of the risk
component of the underlying debt being hedged, are recorded as offsetting gains and losses in "Interest and other finance expense". Hedge
ineffectiveness of instruments designated as fair value hedges in 2010, 2009 and 2008, was not significant.
The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements was as follows:
Type of derivative designated as a
2010
Gains (losses) recognized in income on
derivatives designated as fair value
Gains (losses) recognized in
fair value hedge
hedges
($ in
income on hedged item
Location
millions) Location ($ in millions)
Interest rate contracts
Interest and other finance
expense
Interest and other finance
(12 ) expense 12
Cross-currency swaps
Total
Interest and other finance
expense
Interest and other finance
— expense
(12 )
—
12
Type of derivative designated as a
2009
Gains (losses) recognized in income on Gains (losses) recognized in income on
fair value hedge
derivatives designated as fair value hedges
hedged item
($ in
Location ($ in millions) Location
millions)
Interest rate contracts
Interest and other finance
expense 41
Interest and other finance
expense (41 )
Cross-currency swaps
Total
Interest and other finance
expense
Interest and other finance
3 expense
44
(3 )
(44 )
Derivatives not designated in hedge relationships
Derivative instruments that are not designated as hedges or do not qualify as either cash flow or fair value hedges are economic hedges used
for risk management purposes. Gains and losses from changes in the fair values of such derivatives are recognized in the same line in the income
statement as the economically hedged transaction.
Furthermore, under certain circumstances, the Company is required to split and account separately for foreign currency derivatives that are
embedded within certain binding sales or purchase contracts denominated in a currency other than the functional currency of the subsidiary and
the counterparty.
F-31

Table of Contents
Note 5—Financial instruments (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The gains (losses) recognized in the Consolidated Income Statements on derivatives not designated in hedging relationships are included in
the table below:
($ in millions)
Type of derivative not designated as a hedge
Gains (losses) recognized in income
Location 2010 2009
Foreign exchange contracts: Total revenues 436 389
Total cost of sales (263 ) (264 )
Interest and other finance expense 563 70
Embedded foreign exchange contracts: Total revenues (279 ) (234 )
Total cost of sales 17 51
Commodity contracts: Total cost of sales 38 96
Cross-currency swaps: Interest and other finance expense — 2
Interest rate swaps: Interest and other finance expense — 2
Cash-settled call options: Interest and other finance expense (1 ) 1
Total 511 113
The fair values of derivatives included in the Consolidated Balance Sheets were as follows:
($ in millions)
December 31, 2010
Derivative assets Derivative liabilities
Non-current Current in Non-current
in "Other "Provisions and in "Other
non-current other current non-current
assets"
liabilities" liabilities"
Current in
"Other current
assets"
Derivatives designated as hedging
instruments:
Foreign exchange contracts 106 39 23 12
Commodity contracts 8 — — —
Interest rate contracts 14 50 — —
Cash-settled call options 18 25 — —
Total 146 114 23 12
Derivatives not designated as
hedging instruments:
Foreign exchange contracts 435 62 140 14
Commodity contracts 42 2 7 —
Interest rate contracts — — — 1
Cash-settled call options — 2 — —
Embedded foreign exchange
derivatives 23 4 134 50
Total 500 70 281 65
Total fair value 646 184 304 77
F-32

Table of Contents
Note 5—Financial instruments (Continued)
($ in millions)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
December 31, 2009
Derivative assets Derivative liabilities
Non-current Current in Non-current
in "Other "Provisions and in "Other
non-current other current non-current
assets"
liabilities" liabilities"
Current in
"Other current
assets"
Derivatives designated as hedging
instruments:
Foreign exchange contracts 45 34 17 9
Commodity contracts 8 — — —
Interest rate contracts — 75 — —
Cash-settled call options 38 24 — —
Total 91 133 17 9
Derivatives not designated as
hedging instruments:
Foreign exchange contracts 207 50 125 30
Commodity contracts 29 1 7 —
Interest rate contracts 2 — 2 1
Cash-settled call options — 2 — —
Embedded foreign exchange
derivatives 78 13 98 27
Total 316 66 232 58
Total fair value 407 199 249 67
Although the Company is party to close-out netting agreements with most derivative counterparties, the fair values in the tables above and
in the Consolidated Balance Sheets at December 31, 2010 and 2009, have been presented on a gross basis.
F-33

Table of Contents
Note 6—Fair values
Recurring fair value measures
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The following tables show the fair value of financial assets and liabilities measured at fair value on a recurring basis:
F-34
December 31, 2010
($ in millions) Level 1 Level 2 Level 3
Total fair
value
Assets
Available-for-sale securities in "Cash and equivalents"
Debt securities—European government obligations — — — —
Debt securities—Corporate — 381 — 381
Available-for-sale securities in "Marketable securities and
short-term investments"
Equity securities 3 1,842 — 1,845
Debt securities—U.S. government obligations 151 — — 151
Debt securities—Other government obligations 3 — — 3
Debt securities—Corporate — 335 — 335
Derivative assets—current in "Other current assets" 12 634 — 646
Derivative assets—non-current in "Other non-current
assets" — 184 — 184
Total 169 3,376 — 3,545
Liabilities
Derivative liabilities—current in "Provisions and other
current liabilities" 7 297 — 304
Derivative liabilities—non-current in "Other non-current
liabilities" — 77 — 77
Total 7 374 — 381

Table of Contents
Note 6—Fair values (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company uses the following methods and assumptions in estimating fair values of financial assets and liabilities measured at fair value
on a recurring basis:
• Available-for-sale securities in "Cash and equivalents" and in "Marketable securities and short-term investments": If quoted
market prices in active markets for identical assets are available, these are considered Level 1 inputs. If such quoted market prices
are not available, fair value is determined using market prices for similar assets or present value techniques, applying an
appropriate risk-free interest rate adjusted for nonperformance risk. The inputs used in present value techniques are observable
and fall into the Level 2 category. Where the Company has invested in shares of funds, which do not have readily determinable
fair values, Net Asset Value (NAV) is used as a practical expedient of fair value (without any adjustment) as these funds invest in
high-quality, short-term fixed income securities which are accounted for at fair value. As the Company has the ability to redeem
its shares in such funds at NAV without any restrictions, notice period or further funding commitments, NAV is considered
Level 2.
• Derivatives: the fair values of derivative instruments are determined using quoted prices of identical instruments from an active
market, if available (Level 1). If quoted prices are not available, price quotes for similar instruments, appropriately adjusted, or
present value techniques, based on available market data, or option pricing models are used. Cash-settled call options hedging the
Company's WAR liability are valued based on bid prices of the equivalent listed warrant. The fair values obtained using price
quotes for similar instruments or valuation techniques represent a Level 2 input unless significant unobservable inputs are used.
F-35
December 31, 2009
($ in millions) Level 1 Level 2 Level 3
Total fair
value
Assets
Available-for-sale securities in "Cash and equivalents"
Debt securities—European government obligations 717 — — 717
Debt securities—Corporate — 324 — 324
Available-for-sale securities in "Marketable securities and
short-term investments"
Equity securities 49 55 — 104
Debt securities—U.S. government obligations 113 — — 113
Debt securities—Other government obligations 3 — — 3
Debt securities—Corporate — 284 — 284
Derivative assets—current in "Other current assets" 6 401 — 407
Derivative assets—non-current in "Other non-current
assets" — 199 — 199
Total 888 1,263 — 2,151
Liabilities
Derivative liabilities—current in "Provisions and other
current liabilities" 7 242 — 249
Derivative liabilities—non-current in "Other non-current
liabilities" — 67 — 67
Total 7 309 — 316

Table of Contents
Note 6—Fair values (Continued)
Non-recurring fair value measures
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
There were no significant non-recurring fair value measurements during 2010.
During 2009, certain long-lived non-financial assets (primarily assets included in "Property, plant and equipment, net") were measured at
fair value due to impairments resulting from restructuring and changes in the use of the assets. Impairment charges of $46 million were
recognized in "Other income (expense), net" in 2009 and mainly related to the Power Products segment ($20 million) and the Corporate and
Other segment ($13 million). The fair value amounts (measured at the time of the adjustment) of such long-lived assets still held at
December 31, 2009, identified as Level 2 and Level 3, amounted to $7 million and $17 million, respectively.
For non-recurring fair value measures determined using unobservable inputs (Level 3), the Company calculated fair values using estimated
cash flows adjusted for market participants' best use assumptions and, when applicable, rental rates offered in the market for similar assets.
These cash flows were discounted using an appropriate risk-free interest rate adjusted for nonperformance risk. For construction-in-progress,
costs were derived from current vendors' pricing for materials.
Disclosure about financial instruments carried on a cost basis
• Cash and equivalents, receivables, accounts payable, short-term debt and current maturities of long-term debt: The carrying
amounts approximate the fair values as the items are short-term in nature.
• Marketable securities and short-term investments: Includes time deposits and held-to-maturity securities, whose carrying
amounts approximate their fair values (see Note 4).
• Financing receivables (non-current portion ): Financing receivables (including loans granted) are carried at amortized cost, less
an allowance for credit losses, if required. Fair values are determined using a discounted cash flow methodology based upon loan
rates of similar instruments and reflecting appropriate adjustments for non-performance risk. The carrying values and estimated
fair values of long-term loans granted and outstanding at December 31, 2010, were $56 million and $58 million, respectively, and
at December 31, 2009, were $96 million and $95 million, respectively.
• Long-term debt (non-current portion): Fair values of public bond issues are based on quoted market prices. The fair values of
other debt are based on the present value of future cash flows, discounted at estimated borrowing rates for similar debt
instruments, or in the case of private placement bond or note issuances, using the relevant borrowing rates derived from interest
rate swap curves. The carrying values and estimated fair values of long-term debt at December 31, 2010, were $1,139 million and
$1,201 million, respectively, and at December 31, 2009, were $2,172 million and $2,273 million, respectively.
F-36

Table of Contents
Note 7—Receivables, net
"Receivables, net" consisted of the following:
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
December 31,
($ in millions) 2010 2009
Trade receivables 7,155 6,961
Other receivables 776 691
Allowance (215 ) (312 )
7,716 7,340
Unbilled receivables, net:
Costs and estimated profits in excess of billings 3,151 2,957
Advance payments consumed (897 ) (846 )
2,254 2,111
Total 9,970 9,451
"Trade receivables" in the table above includes contractual retention amounts billed to customers of $411 million and $325 million at
December 31, 2010 and 2009, respectively. Management expects that the substantial majority of related contracts will be completed and the
substantial majority of the billed amounts retained by the customer will be collected. Of the retention amounts outstanding at December 31,
2010, 67 percent and 24 percent are expected to be collected in 2011 and 2012, respectively. "Other receivables" in the table above consists of
value added tax, claims, rental deposits and other non-trade receivables.
"Costs and estimated profits in excess of billings" in the table above represent revenues earned and recognized for contracts under the
percentage-of-completion or completed-contract method of accounting. Management expects that the majority of the amounts will be collected
within one year of the respective balance sheet date.
The reconciliation of changes in the allowance for doubtful accounts is as follows:
($ in millions) 2010 2009 2008
Balance at January 1, 312 232 224
Additions 119 195 126
Deductions (216 ) (119 ) (106 )
Exchange rate differences — 4 (12 )
Balance at December 31, 215 312 232
F-37

Table of Contents
Note 7—Receivables, net (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
At December 31, 2010, the gross amounts of, and doubtful debt allowance for, trade receivables with a contractual maturity of more than
one year and other receivables (excluding tax and other receivables which are not considered to be of a financing nature), were as follows:
($ in millions)
December 31, 2010
Trade receivables with
original contractual
maturity > 1 year Other receivables Total
Recorded gross
amount:
—Individually
evaluated for
impairment 154 67 221
—Collectively
evaluated for
impairment 391 43 434
Total 545 110 655
Doubtful debt
allowance:
—From
individual
impairment
evaluation (27 ) — (27 )
—From
collective
impairment
evaluation (10 ) — (10 )
Total (37 ) — (37 )
Recorded net
amount 508 110 618
The Company has a group-wide policy on the management of credit risk. The policy includes a credit assessment methodology to assess the
creditworthiness of customers and assign to those customers a risk category on a scale from "A" (lowest likelihood of loss) to "E" (highest
likelihood of loss), as shown in the following table:
Equivalent Standard & Poor's rating
Risk category:
A AAA to AA-
B A+ to BBB-
C BB+ to BB-
D B+ to CCC-
E CC+ to D
Third-party agencies' ratings are considered, if available. For customers where agency ratings are not available, the customer's most recent
financial statements, payment history and other relevant information is considered in the assignment to a risk category. Customers are assessed at
least annually and more frequently when information on significant changes in the customers' financial position becomes known. In addition to
the assignment to a risk category, a credit limit per customer is set.
The following table shows the credit risk profile, on a gross basis, of trade receivables with an original contractual maturity of more than
one year and other receivables (excluding tax and other
F-38

Table of Contents
Note 7—Receivables, net (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
receivables which are not considered to be of a financing nature) based on the internal credit risk categories which are used as a credit quality
indicator:
The following table shows an aging analysis, on a gross basis, of trade receivables with an original contractual maturity of more than one
year and other receivables (excluding tax and other receivables which are not considered to be of a financing nature):
($ in millions)
Note 8—Inventories, net
($ in millions)
"Inventories, net", consisted of the following:
December 31, 2010
Trade receivables with
original contractual
maturity > 1 year Other receivables Total
Risk category:
A 219 91 310
B 199 5 204
C 87 12 99
D 37 2 39
E 3 — 3
Total gross
amount 545 110 655
0 - 30
days
30 - 60
days
December 31, 2010
Past Due
> 90 days > 90 days
and not and
60 - 90 accruing accruing
days interest interest
F-39
Not due at
December 31,
2010 Total
Trade receivables with
original contractual
maturity greater than
1 year 49 7 6 40 9 434 545
Other receivables — — — 10 — 100 110
Total gross amount 49 7 6 50 9 534 655
December 31,
($ in millions) 2010 2009
Raw materials 1,988 1,771
Work in process 1,744 1,795
Finished goods 1,226 1,174
Advances to suppliers 219 227
5,177 4,967
Advance payments consumed (299 ) (417 )
Total 4,878 4,550

Table of Contents
Note 8—Inventories, net (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
"Work in process" in the table above contains inventoried costs relating to long-term contracts of $290 million and $361 million at
December 31, 2010 and 2009, respectively. "Advance payments consumed" in the table above relate to contractual advances received from
customers on work in process.
Note 9—Financing receivables, net
"Financing receivables, net" consisted of the following:
December 31,
($ in millions) 2010 2009
Loans granted (Note 6) 56 96
Pledged financial assets 293 296
Other 71 60
Total 420 452
"Loans granted" in the table above primarily represent financing arrangements provided to customers (relating to products manufactured by
the Company) and are reported in the balance sheet at outstanding principal amount less any write-offs or allowance for uncollectible loans. The
Company determines the loan losses based on historical experience and ongoing credit evaluation of the borrower's financial position.
The Company entered into tax-advantaged leasing transactions with U.S. investors prior to 1999. The prepaid rents relating to these
transactions are reflected as "Pledged financial assets" in the table above, with an offsetting non-current deposit liability, which is included in
"Other non-current liabilities" (see Note 13). Net gains on these transactions are being recognized over the lease terms, which expire by 2021.
At December 31, 2010, the gross amounts of, and related doubtful debt allowance for, loans granted and pledged financial assets, were as
follows:
($ in millions) Loans granted
F-40
December 31, 2010
Pledged
financial assets Other Total
Recorded gross amount:
—Individually evaluated for impairment 55 293 71 419
—Collectively evaluated for impairment 9 — — 9
Total 64 293 71 428
Doubtful debt allowance:
—From individual impairment evaluation (8 ) — — (8 )
—From collective impairment evaluation — — — —
Total (8 ) — — (8 )
Recorded net amount 56 293 71 420

Table of Contents
Note 9—Financing receivables, net (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The following table shows the credit risk profile of financing receivables based on the internal credit categories which are used as a credit
quality indicator (see Note 7 for a description of the credit risk categories):
($ in millions) Loans granted
"Loans granted" and "Other" in the table above include $10 million and $12 million, respectively, which are over 90 days past due and
accruing interest. The remaining $406 million was not due at December 31, 2010.
Note 10—Property, plant and equipment, net
Property, plant and equipment, net, consisted of the following:
December 31, 2010
Pledged
financial assets Other Total
Risk category:
A 47 293 71 411
B 2 — — 2
C 15 — — 15
D — — — —
E — — — —
Total gross
amount 64 293 71 428
December 31,
($ in millions) 2010 2009
Land and buildings 3,440 3,113
Machinery and equipment 6,371 6,047
Construction in progress 447 564
10,258 9,724
Accumulated depreciation (5,902 ) (5,652 )
Total 4,356 4,072
Assets under capital leases included in property, plant and equipment, net were as follows:
December 31,
($ in millions) 2010 2009
Land and buildings 105 101
Machinery and equipment 76 72
181 173
Accumulated depreciation (92 ) (80 )
Total 89 93
In 2010, 2009 and 2008, depreciation expense, including depreciation of assets under capital leases, was $545 million, $501 million and
$506 million, respectively.
F-41

Table of Contents
Note 11—Goodwill and other intangible assets
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Effective January 1, 2010, the Company reorganized its automation segments to align their activities more closely with those of its
customers. The former Automation Products segment was reorganized into two new segments, Discrete Automation and Motion and Low
Voltage Products. The former Robotics segment was incorporated into the new Discrete Automation and Motion segment, while the Process
Automation segment remained unchanged except for the addition of the instrumentation business from the Automation Products segment. The
Power Products and Power Systems segments remained unchanged. The table below has been reclassified to reflect this reorganization.
Changes in "Goodwill" were as follows:
Discrete
Automation
and Motion
In 2010, the goodwill acquired primarily related to Ventyx (recorded in the Power Systems segment), K-TEK Corp. (recorded in the
Process Automation segment), and a number of smaller acquisitions and purchase accounting adjustments.
In 2009, the goodwill acquired primarily related to Ensto Busch-Jaeger Oy in Finland (recorded in the Low Voltage Products segment), the
Comem Group in several countries (recorded in the Power Products segment), and a number of smaller acquisitions and purchase accounting
adjustments.
Intangible assets other than goodwill consisted of the following:
F-42
Low
Voltage
Products
Power Power
($ in millions)
Products Systems
Cost at January 1, 2009 554 420 549
Process Corporate
Automation and Other Total
298 972 42 2,835
Accumulated impairment
charges — — — — — (18 ) (18 )
Balance at January 1,
2009 554 420 549 298 972 24 2,817
Goodwill acquired
during the year 58 7 — 66 16 — 147
Exchange rate
differences
Other
7
—
2
—
16
(1 )
15
—
20
3
(1 )
1
59
3
Balance at December 31,
2009 619 429 564 379 1,011 24 3,026
Goodwill acquired
during the year 6 973 — 37 75 — 1,091
Exchange rate
differences
Other
(3 )
(8 )
8
1
(17 )
—
(17 )
—
5
(1 )
—
—
(24 )
(8 )
Balance at December 31,
2010 614 1,411 547 399 1,090 24 4,085
($ in millions)
Gross
carrying
amount
December 31, 2010 December 31, 2009
Accumulated
amortization
Net
carrying
amount
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
Capitalized software for
internal use 613 (441 ) 172 641 (441 ) 200
Capitalized software for sale 419 (285 ) 134 378 (334 ) 44
Intangibles other than
software:
—Customer-related 315 (73 ) 242 155 (45 ) 110
—Technology-related 140 (52 ) 88 71 (38 ) 33
—Marketing-related 68 (15 ) 53 37 (6 ) 31
—Other 52 (40 ) 12 67 (42 ) 25
Total 1,607 (906 ) 701 1,349 (906 ) 443

Table of Contents
Note 11—Goodwill and other intangible assets (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Additions to intangible assets other than goodwill consisted of the following:
($ in millions) 2010 2009
Capitalized software for internal use 41 59
Capitalized software for sale 128 —
Intangibles other than software 249 84
Total 418 143
Included in the additions of $418 million and $143 million were the following intangible assets other than goodwill related to business
combinations:
($ in millions)
Amount
acquired
2010 2009
Weighted-average
useful life
Amount
acquired
Amortization expense of intangible assets other than goodwill consisted of the following:
In 2010, 2009 and 2008, impairment charges on intangible assets other than goodwill were not significant. These charges are included in
"Other income (expense), net", in the Consolidated Income Statements.
At December 31, 2010, future amortization expense of intangible assets other than goodwill is estimated to be:
F-43
Weighted-average
useful life
Capitalized
software
for sale 128 5 years — —
Intangibles
other
than
software 228 9 years 66 9 years
Total 356 66
($ in millions) 2010 2009 2008
Capitalized software for internal use 75 76 54
Capitalized software for sale 32 25 40
Intangibles other than software 50 53 61
Total 157 154 155
($ in millions)
2011 185
2012 147
2013 117
2014 82
2015 45
Thereafter 125
Total 701

Table of Contents
Note 12—Debt
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company's total debt at December 31, 2010 and 2009 amounted to $2,182 million and $2,333 million, respectively.
Short-term debt and current maturities of long-term debt
The Company's "Short-term debt and current maturities of long-term debt" consisted of the following:
Short-term debt primarily represented short-term loans from various banks, including at December 31, 2009, approximately $50 million
related to the financing of specific projects.
At December 31, 2010 and 2009, the Company had in place three commercial paper programs: a $1 billion commercial paper program for
the private placement of U.S. dollar-denominated commercial paper in the United States; a $1 billion Euro-commercial paper program for the
issuance of commercial paper in a variety of currencies and a 5 billion Swedish krona commercial paper program for the issuance of Swedish
krona- and euro-denominated commercial paper. No amounts were outstanding under any of these programs at December 31, 2010 and 2009.
In addition, during 2010, the Company amended its $2 billion multicurrency revolving credit facility, extending its maturity to 2015 and
reducing the costs and fees related to it. The facility is for general corporate purposes, including as a back-stop for the above-mentioned
commercial paper programs. Interest costs on drawings under the amended facility are LIBOR, STIBOR or EURIBOR (depending on the
currency of the drawings) plus a margin of between 0.425 percent and 0.625 percent (depending on the Company's credit rating), while
commitment fees (payable on the unused portion of the facility) amount to 35 percent of the margin, which, given the Company's credit ratings at
December 31, 2010, represents commitment fees of 0.175 percent per annum. Utilization fees, payable on drawings, amount to 0.15 percent per
annum on drawings over one-third but less than or equal to two-thirds of the total facility, or 0.3 percent per annum on drawings over two-thirds
of the total facility. No utilization fees are payable on drawings less than one-third of the total facility. No amount was drawn at December 31,
2010 and 2009. The facility contains cross-default clauses whereby an event of default would occur if the Company were to default on
indebtedness as defined in the facility, at or above a specified threshold.
Long-term debt
December 31,
($ in millions) 2010 2009
Short-term debt (weighted-average interest rate
of 6.2% and 4.4%) 124 128
Current maturities of long-term debt (weightedaverage
nominal interest rate of 6.4% and
4.7%) 919 33
Total 1,043 161
The Company utilizes derivative instruments to modify the characteristics of its long-term debt. In particular, the Company uses interest
rate swaps to effectively convert certain fixed-rate long-term debt into floating rate obligations. The carrying value of debt, designated as being
hedged by fair value hedges, is adjusted for changes in the fair value of the risk component of the debt being hedged.
F-44

Table of Contents
Note 12—Debt (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The following table summarizes the Company's long-term debt considering the effect of interest rate swaps. Consequently, a fixed-rate debt
subject to a fixed-to-floating interest rate swap is included as a floating rate debt in the table below:
(1)
($ in millions, except % data) Balance
At December 31, 2010, maturities of long-term debt were as follows:
Details of the Company's outstanding bonds were as follows:
2010
December 31,
2009
Nominal Effective
Nominal
rate
rate Balance rate
USD carrying value is net of bond discounts and includes adjustments for fair value hedge accounting, where appropriate.
F-45
Effective
rate
Floating rate 1,919 5.7% 3.2% 2,072 5.7% 3.0%
Fixed rate 139 5.6% 5.6% 133 5.0% 5.0%
2,058 2,205
Current portion of long-term
debt (919 ) 6.4% 4.3% (33 ) 4.7% 4.7%
Total 1,139 2,172
($ in millions)
Due in 2011 919
Due in 2012 70
Due in 2013 953
Due in 2014 23
Due in 2015 4
Thereafter 89
Total 2,058
2010
December 31,
2009
Nominal
outstanding
Carrying
value (1)
(in millions)
Nominal
outstanding
(in millions)
Carrying
value (1)
Public bonds:
6.5% EUR Instruments, due
2011 EUR 650 $ 882 EUR 650 $ 959
4.625% EUR Instruments, due
2013 EUR 700 $ 946 EUR 700 $ 1,002
Total outstanding bonds $ 1,828 $ 1,961

Table of Contents
Note 12—Debt (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The 6.5% EUR Instruments, due 2011, pay interest semi-annually in arrears at a fixed annual rate of 6.5 percent. In the event of a change of
control of the Company, the terms of these bonds require the Company to offer to repurchase the bonds at 101 percent of the principal amount
thereof, plus any accrued interest. The Company entered into interest rate swaps to hedge its interest obligations on these bonds. After
considering the impact of such swaps, these bonds effectively became a floating rate euro obligation and consequently have been shown as
floating rate debt in the table of long-term debt above.
The 4.625% EUR Instruments, due 2013, pay interest annually in arrears at a fixed annual rate of 4.625 percent. The Company has the
option to redeem the bonds early at any time from June 6, 2010, in accordance with the terms of the bonds. In the event of a change of control, a
bondholder can require the Company to repurchase or redeem the bonds, in accordance with the terms of the bonds. The Company entered into
interest rate swaps to hedge its interest obligations on these bonds. After considering the impact of such swaps, these bonds effectively became a
floating rate euro obligation and consequently have been shown as floating rate debt in the table of long-term debt above.
The Company's public bonds contain cross-default clauses which would allow the bondholders to demand repayment if the Company were
to default on any borrowing at or above a specified threshold. Furthermore, all such bonds constitute unsecured obligations of the Company and
rank pari passu with other debt obligations.
In addition to the bonds described above, included in long-term debt at December 31, 2010 and 2009, are lease obligations, bank
borrowings of subsidiaries and other long-term debt, none of which is individually significant.
Note 13—Provisions and other current liabilities and other non-current liabilities
"Provisions and other current liabilities" consisted of the following:
December 31,
($ in millions) 2010 2009
Contract-related provisions 655 522
Taxes payable 430 437
Restructuring and other related provisions 344 464
Current derivative liabilities (see Note 5) 304 249
Provisions for contractual penalties and
compliance and litigation matters 251 354
Provision for insurance related reserves 187 171
Environmental provisions (see Note 15) 161 29
Income tax related liabilities 72 12
Pension and other employee benefits (see
Note 17) 68 68
Other 254 297
Total 2,726 2,603
F-46

Table of Contents
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Note 13—Provisions and other current liabilities and other non-current liabilities (Continued)
"Other non-current liabilities" consisted of the following:
Note 14—Leases
December 31,
($ in millions) 2010 2009
Income tax related liabilities 798 854
Non-current deposit liabilities (see Note 9) 293 296
Environmental provisions (see Note 15) 85 268
Non-current derivative liabilities (see Note 5) 77 67
Deferred income 59 78
Other 406 434
Total 1,718 1,997
The Company's lease obligations primarily relate to real estate and office equipment. Rent expense was $510 million, $509 million and
$458 million in 2010, 2009 and 2008, respectively. Sublease income received by the Company on leased assets was $44 million, $52 million and
$42 million in 2010, 2009 and 2008, respectively.
At December 31, 2010, future net minimum lease payments for operating leases, having initial or remaining non-cancelable lease terms in
excess of one year, consisted of the following:
($ in millions)
2011 463
2012 395
2013 357
2014 302
2015 269
Thereafter 415
2,201
Sublease income (119 )
Total 2,082
F-47

Table of Contents
Note 14—Leases (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
At December 31, 2010, the future net minimum lease payments for capital leases and the present value of the net minimum lease payments
consisted of the following:
Minimum lease payments have not been reduced by minimum sublease rentals due in the future under non-cancelable subleases. Such
minimum sublease rentals were not significant. The present value of minimum lease payments is presented in short-term debt and current
maturities of long-term debt or long-term debt in the Consolidated Balance Sheets.
Note 15—Commitments and contingencies
Contingencies—Environmental
($ in millions)
2011 33
2012 28
2013 24
2014 19
2015 17
Thereafter 136
Total minimum lease payments 257
Less amount representing estimated executory
costs included in total minimum lease payments (6 )
Net minimum lease payments 251
Less amount representing interest (127 )
Present value of minimum lease payments 124
The Company is engaged in environmental clean-up activities at certain sites arising under various United States and other environmental
protection laws and under certain agreements with third parties. In some cases, these environmental remediation actions are subject to legal
proceedings, investigations or claims, and it is uncertain to what extent the Company is actually obligated to perform. Provisions for these
unresolved matters have been set up if it is probable that the Company has incurred a liability and the amount of loss can be reasonably
estimated. If a provision has been recognized for any of these matters the Company records an asset when it is probable that it will recover a
portion of the costs expected to be incurred to settle them. Management is of the opinion, based upon information presently available, that the
resolution of any such obligation and non-collection of recoverable costs would not have a further material adverse effect on the Company's
Consolidated Financial Statements.
Contingencies related to former Nuclear Technology business
The Company retained liabilities for certain specific environmental remediation costs at two sites in the United States that were operated by
its former subsidiary, ABB CE-Nuclear Power Inc., which the Company sold to British Nuclear Fuels PLC (BNFL) in 2000. Pursuant to the sale
agreement with BNFL, the Company has retained the environmental liabilities associated with its Combustion Engineering Inc. subsidiary's
Windsor, Connecticut, facility and agreed to reimburse BNFL for a share of the costs that BNFL incurs for environmental liabilities associated
with its former Hematite,
F-48

Table of Contents
Note 15—Commitments and contingencies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Missouri, facility. The primary environmental liabilities associated with these sites relate to the costs of remediating radiological and chemical
contamination. Such costs are not incurred until a facility is taken out of use and generally are then incurred over a number of years. Although it
is difficult to predict with accuracy the amount of time it may take to remediate this contamination, based on available information, the Company
believes that it may take at least until 2012 at the Windsor site and at least until 2015 at the Hematite site.
Under the terms of the sale agreement, BNFL is responsible to have the remediation of the Hematite site performed in a cost efficient
manner and pursue recovery of remediation costs from other potentially responsible parties as conditions for obtaining cost sharing contributions
from the Company. Westinghouse Electric Company LLC (Westinghouse), BNFL's former subsidiary, now oversees remediation activities at the
Hematite site. Westinghouse was acquired during 2006 by a consortium led by Toshiba Corporation, Japan. Since then, Westinghouse's efforts
focused on modifying, finalizing and obtaining regulatory approval of its draft decommissioning plan for the Hematite site. In February 2011,
the Company and Westinghouse agreed to settle and release the Company from its continuing environmental obligations under the sale
agreement. Consequently, at December 31, 2010, these obligations have been reclassified to current liabilities and reduced to reflect the amount
of the agreed settlement; the amount was paid by the Company in February 2011.
During 2007, the Company reached an agreement with U.S. government agencies to transfer oversight of the remediation of the portion of
the Windsor site under the U.S. Government's Formerly Utilized Sites Remedial Action Program from the U.S. Army Corps of Engineers to the
Nuclear Regulatory Commission which has oversight responsibility for the remaining radiological areas of that site and the Company's
radiological license for the site.
Contingencies related to other present and former facilities primarily in North America
The Company is involved in the remediation of environmental contamination at present or former facilities, primarily in the United States.
The clean up of these sites involves primarily soil and groundwater contamination. A significant portion of the provisions in respect of these
contingencies reflects the provisions of an acquired company. Substantially all of the acquired entity's remediation liability is indemnified by a
prior owner. Accordingly, an asset equal to this remediation liability is included in "Other non-current assets".
The impact of the above Nuclear Technology and other environmental obligations on "Income from continuing operations before taxes"
was not significant in 2010, 2009 and 2008. The impact on "Income (loss) from discontinued operations, net of tax" was an income of
$29 million in 2010 and was not significant in 2009 and 2008.
The effect of the above Nuclear Technology and other environmental obligations on the Company's Consolidated Statements of Cash Flows
was as follows:
($ in millions) 2010 2009 2008
Cash expenditures:
Nuclear Technology business 20 11 4
Various businesses 6 18 8
26 29 12
F-49

Table of Contents
Note 15—Commitments and contingencies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company has estimated cash expenditures of $158 million for 2011, including the settlement with Westinghouse. These expenditures
are covered by provisions included in "Provisions and other current liabilities".
The total effect of the above Nuclear Technology and other environmental obligations on the Company's Consolidated Balance Sheets was
as follows:
Provisions for the above estimated losses have not been discounted as the timing of payments cannot be reasonably estimated.
Asbestos obligations
December 31,
($ in millions) 2010 2009
Provision balance relating to:
Nuclear Technology business 181 230
Various businesses 65 67
246 297
Environmental provisions included in:
Provisions and other current liabilities 161 29
Other non-current liabilities 85 268
246 297
The Company's Combustion Engineering Inc. subsidiary (CE) was a co-defendant in a large number of lawsuits claiming damage for
personal injury resulting from exposure to asbestos. A smaller number of claims were also brought against the Company's former Lummus
subsidiary as well as against other entities of the Company. Separate plans of reorganization for CE and Lummus, as amended, were filed under
Chapter 11 of the U.S. Bankruptcy Code. The CE plan of reorganization and the Lummus plan of reorganization (collectively, the Plans) became
effective on April 21, 2006 and August 31, 2006, respectively.
Under the Plans, separate personal injury trusts were created and funded to settle future asbestos-related claims against CE and Lummus
and on the respective Plan effective dates, channeling injunctions were issued pursuant to Section 524(g) of the U.S. Bankruptcy Code under
which all present and future asbestos-related personal injury claims filed against the Company and its affiliates and certain other entities that
relate to the operations of CE and Lummus are channeled to the CE Asbestos PI Trust or the Lummus Asbestos PI Trust, respectively.
The effect of asbestos obligations on the Company's Consolidated Income Statements was not significant in 2010 and 2009. In 2008, a
charge of $31 million was recognized in "Income (loss) from discontinued operations, net of tax".
F-50

Table of Contents
Note 15—Commitments and contingencies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The effect of asbestos obligations on the Company's Consolidated Statements of Cash Flows was as follows:
The effect of asbestos obligations on the Company's Consolidated Balance Sheets was as follows:
In December 2010, the Company made a payment of $25 million (included in the $51 million cash expenditures above) to the CE Asbestos
PI Trust and thereby discharged its remaining payment obligations to the CE Asbestos PI Trust.
Contingencies—Regulatory, Compliance and Legal
Gas Insulated Switchgear business
In May 2004, the Company announced that it had undertaken an internal investigation which uncovered that certain of its employees
together with employees of other companies active in the Gas Insulated Switchgear business were involved in anti-competitive practices. The
Company has reported such practices upon identification to the appropriate antitrust authorities, including the European Commission. The
European Commission announced its decision in January 2007 and granted the Company full immunity from fines assessed to the Company of
euro 215 million under the European Commission's leniency program.
The Company continues to cooperate with other antitrust authorities in several locations globally, including Brazil, which are investigating
anti-competitive practices related to Gas Insulated Switchgear. At this stage of the proceedings, no reliable estimate of the amount of potential
fines, if any, can be made.
Power Transformers business
($ in millions) 2010 2009 2008
Cash expenditures 51 1 100
December 31,
($ in millions) 2010 2009
Asbestos provisions included in:
Provisions and other current liabilities 2 28
Other non-current liabilities — 25
2 53
In October 2009, the European Commission announced its decision regarding its investigation into alleged anti-competitive practices of
certain manufacturers of power transformers. The European Commission fined the Company euro 33.75 million (equivalent to $49 million on
date of payment).
The German Antitrust Authority (Bundeskartellamt) and other antitrust authorities are also reviewing those alleged practices which relate to
the German market and other markets. Management is cooperating fully with the authorities in their investigations. The Company anticipates
that the German Antitrust Authority's review will result in an unfavorable outcome with respect to the alleged anti-competitive practices and
expects that a fine will be imposed. At this stage of the proceedings with
F-51

Table of Contents
Note 15—Commitments and contingencies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
the other antitrust authorities, no reliable estimate of the amount of potential fines, if any, can be made.
Cables business
The Company's cables business is under investigation for alleged anti-competitive practices. Management is cooperating fully with the
antitrust authorities in their investigations. An informed judgment about the outcome of these investigations or the amount of potential loss for
the Company, if any, relating to these investigations cannot be made at this stage.
FACTS business
In January 2010, the European Commission conducted raids at the premises of the Company's flexible alternating current transmission
systems (FACTS) business in Sweden as part of its investigation into alleged anti-competitive practices of certain FACTS manufacturers. In the
United States, the Department of Justice (DoJ) also conducted an investigation into this business. The Company has been informed that the
European Commission and the DoJ have closed their investigations. No fines have been imposed on the Company.
The Company's FACTS business remains under investigation in one other jurisdiction for anti-competitive practices. Management is
cooperating fully with the antitrust authority in its investigation. An informed judgment about the outcome of that investigation or the amount of
potential loss for the Company, if any, relating to that investigation cannot be made at this stage.
Suspect payments
In April 2005, the Company voluntarily disclosed to the DoJ and the United States Securities and Exchange Commission (SEC) certain
suspect payments in its network management unit in the United States. Subsequently, the Company made additional voluntary disclosures to the
DoJ and the SEC regarding suspect payments made by other Company subsidiaries in a number of countries in the Middle East, Asia, South
America and Europe (including to an employee of an Italian power generation company) as well as by its former Lummus business. These
payments were discovered by the Company as a result of the Company's internal audit program and compliance reviews.
In September 2010, the Company reached settlements with the DoJ and the SEC regarding their investigations into these matters and into
suspect payments involving certain of the Company's subsidiaries in the United Nations Oil-for-Food Program. In connection with these
settlements, the Company agreed to make payments to the DoJ and SEC totaling $58 million, which were settled in the fourth quarter of 2010.
One subsidiary of the Company pled guilty to one count of conspiracy to violate the anti-bribery provisions of the U.S. Foreign Corrupt Practices
Act and one count of violating those provisions. The Company entered into a deferred prosecution agreement and settled civil charges brought
by the SEC. These settlements resolved the foregoing investigations. In lieu of an external compliance monitor, the DoJ and SEC have agreed to
allow the Company to report on its continuing compliance efforts and the results of the review of its internal processes through September 2013.
F-52

Table of Contents
Note 15—Commitments and contingencies (Continued)
General
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
In addition, the Company is aware of proceedings, or the threat of proceedings, against it and others in respect of private claims by
customers and other third parties alleging harm with regard to various actual or alleged cartel cases. Also, the Company is subject to other
various legal proceedings, investigations, and claims that have not yet been resolved. With respect to the abovementioned regulatory matters and
commercial litigation contingencies, the Company will bear the costs of the continuing investigations and any related legal proceedings.
Liabilities recognized
At December 31, 2010 and 2009, the Company recognized aggregate liabilities of $220 million and $300 million, respectively, included in
"Provisions and other current liabilities" and in "Other non-current liabilities", for the above regulatory, compliance and legal contingencies. As
it is not possible to make an informed judgment on the outcome of certain matters and as it is not possible, based on information currently
available to management, to estimate the maximum potential liability on other matters, there could be material adverse outcomes beyond the
amounts accrued.
Guarantees
General
The following table provides quantitative data regarding the Company's third-party guarantees. The maximum potential payments represent
a "worst-case scenario", and do not reflect management's expected results. The carrying amount of liabilities recorded in the Consolidated
Balance Sheets reflects the Company's best estimate of future payments, which it may incur as part of fulfilling its guarantee obligations.
In respect of the above guarantees, the carrying amounts of liabilities at December 31, 2010 and 2009, were insignificant.
Performance guarantees
December 31,
($ in millions) 2010 2009
Maximum potential payments
Performance guarantees 125 214
Financial guarantees 84 91
Indemnification guarantees 203 282
Total 412 587
Performance guarantees represent obligations where the Company guarantees the performance of a third party's product or service
according to the terms of a contract. Such guarantees may include guarantees that a project will be completed within a specified time. If the third
party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. Performance guarantees include
surety bonds, advance payment guarantees and standby letters of credit. The significant performance guarantees are described below.
F-53

Table of Contents
Note 15—Commitments and contingencies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company retained obligations for guarantees related to the Power Generation business contributed in mid-1999 to the former ABB
Alstom Power NV joint venture (Alstom Power NV). The guarantees primarily consist of performance guarantees and other miscellaneous
guarantees under certain contracts such as indemnification for personal injuries and property damages, taxes and compliance with labor laws,
environmental laws and patents. The guarantees are related to projects which are expected to be completed by 2013 but in some cases have no
definite expiration date. In May 2000, the Company sold its interest in Alstom Power NV to Alstom SA (Alstom). As a result, Alstom and its
subsidiaries have primary responsibility for performing the obligations that are the subject of the guarantees. Further, Alstom, the parent
company and Alstom Power NV, have undertaken jointly and severally to fully indemnify and hold harmless the Company against any claims
arising under such guarantees. Management's best estimate of the total maximum potential exposure of quantifiable guarantees issued by the
Company on behalf of its former Power Generation business was approximately $87 million and $99 million at December 31, 2010 and 2009,
respectively. The Company has not experienced any losses related to guarantees issued on behalf of the former Power Generation business.
The Company retained obligations for guarantees related to the Upstream Oil and Gas business sold in 2004. The guarantees primarily
consist of performance guarantees and have original maturity dates ranging from one to seven years. The maximum amount payable under the
guarantees was approximately $13 million and $98 million at December 31, 2010 and 2009, respectively. The Company has the ability to
recover potential payments under these guarantees through certain backstop guarantees. The maximum potential recovery under these backstop
guarantees at both December 31, 2010 and 2009, was approximately $6 million.
The Company retained obligations for guarantees related to the Building Systems business in Germany sold in 2007. The guarantees
primarily consist of performance guarantees and have original maturity dates ranging from one to thirteen years. The maximum amount payable
under the guarantees was approximately $10 million and $15 million at December 31, 2010 and 2009, respectively.
The Company is engaged in executing a number of projects as a member of a consortium that includes third parties. In certain of these
cases, the Company guarantees not only its own performance but also the work of third parties. The original maturity dates of these guarantees
range from one to three years. At December 31, 2010, the maximum payable amount under these guarantees as a result of third party nonperformance
was $15 million.
Financial guarantees
Financial guarantees represent irrevocable assurances that the Company will make payment to a beneficiary in the event that a third party
fails to fulfill its financial obligations and the beneficiary under the guarantee incurs a loss due to that failure.
At December 31, 2010 and 2009, the Company had $84 million and $91 million, respectively, of financial guarantees outstanding. Of each
of those amounts, $16 million and $22 million, respectively, was issued on behalf of companies in which the Company currently has or formerly
had an equity interest. The guarantees outstanding have various maturity dates. The majority of the durations run to 2013, with the longest
expiring in 2021.
F-54

Table of Contents
Note 15—Commitments and contingencies (Continued)
Indemnification guarantees
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company has indemnified certain purchasers of divested businesses for potential claims arising from the operations of the divested
businesses. To the extent the maximum loss related to such indemnifications could not be calculated, no amounts have been included under
maximum potential payments in the table above. Indemnifications for which maximum losses could not be calculated include indemnifications
for legal claims. The significant indemnification guarantees are described below.
The Company delivered to the purchasers of Lummus guarantees related to assets and liabilities divested in 2007. The maximum liability
relating to this business, pursuant to the sales agreement, at each of December 31, 2010 and 2009, was $50 million.
The Company delivered to the purchasers of its interest in Jorf Lasfar guarantees related to assets and liabilities divested in 2007. The
maximum liability at December 31, 2010 and 2009, of $147 million and $145 million, respectively, relating to this business, is subject to foreign
exchange fluctuations.
The Company delivered to the purchaser of the Reinsurance business guarantees related to assets and liabilities divested in 2004. The
maximum liability at December 31, 2009, related to this business, was $87 million. During 2010, a settlement agreement was reached and
consequently, at December 31, 2010, the Company had no further liability with respect to these guarantees.
Product and order-related contingencies
The Company calculates its provision for product warranties based on historical claims experience and specific review of certain contracts.
The reconciliation of the "Provision for warranties", including guarantees of product performance, was as follows:
IBM Outsourcing Agreement
($ in millions) 2010 2009
Balance at January 1, 1,280 1,105
Claims paid in cash or in kind (183 ) (234 )
Net increase in provision for changes in
estimates, warranties issued and warranties
expired 280 365
Exchange rate differences 16 44
Balance at December 31, 1,393 1,280
In December 2009, the Company and International Business Machines Corporation (IBM) extended an existing global framework
agreement, outsourcing the Company's information systems infrastructure services to IBM, for the period up to 2016. The agreement covers the
Company's information systems infrastructure across 17 countries in Europe, North America and Asia Pacific. IBM provides server and network
management, as well as end-user and help-desk services for the majority of the Company's information systems infrastructure operations.
F-55

Table of Contents
Note 15—Commitments and contingencies (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Pursuant to the global framework agreement, IBM receives monthly payments from the Company's subsidiaries in the respective countries
related to information systems infrastructure services. Costs for these services in 2010, 2009 and 2008 were $262 million, $269 million and
$296 million, respectively.
Related party transactions
The Company conducts business with certain companies where members of the Company's board of directors or executive committee act as
directors or senior executives. The Company's board of directors has determined that the Company's business relationships with those companies
do not constitute material business relationships. This determination was made in accordance with the Company's related party transaction policy
which was prepared based on the Swiss Code of Best Practice and the independence criteria set forth in the corporate governance rules of the
New York Stock Exchange.
Note 16—Taxes
Provision for taxes consisted of the following:
($ in millions) 2010 2009 2008
Current taxes on income 867 1,057 1,282
Deferred taxes 151 (56 ) (163 )
Tax expense from continuing
operations 1,018 1,001 1,119
Tax benefit from discontinued
operations (3 ) (7 ) (36 )
The weighted-average tax rate results from applying each subsidiary's statutory income tax rate to the "Income from continuing operations
before taxes". The Company operates in countries that have differing tax laws and rates. Consequently, the consolidated weighted-average
effective rate will vary from year to year according to the source of earnings or losses by country and the change in applicable tax rates.
($ in millions, except % data) 2010 2009 2008
Reconciliation of taxes:
Income from continuing
operations before taxes 3,740 4,120 4,518
Weighted-average tax rate 25.3 % 23.9 % 28.1 %
Taxes at weighted-average tax
rate 945 983 1,270
Items taxed at rates other than the
weighted-average tax rate (21 ) (13 ) 3
Changes in valuation allowance,
net 60 (46 ) (414 )
Changes in tax laws and enacted
tax rates 6 5 (19 )
Other, net 28 72 279
Tax expense from continuing
operations 1,018 1,001 1,119
Effective tax rate for the year 27.2 % 24.3 % 24.8 %
F-56

Table of Contents
Note 16—Taxes (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Certain provisions recorded as an expense in 2008 and the release of certain of these provisions in 2009 primarily related to alleged anticompetitive
practices, originated in jurisdictions with a tax rate other than the weighted- average tax rate.
The reconciliation of taxes for 2010, 2009 and 2008 included changes in the valuation allowance recorded in certain jurisdictions in respect
of deferred tax assets that were recognized for net operating losses and timing differences incurred in those jurisdictions. The change in valuation
allowance was required as the Company determined that it was more likely than not that such deferred tax assets would be realized. In 2010, the
net increase in valuation allowance included an expense of $44 million related to certain of the Company's operations in Central Europe. In
2009, the change in valuation allowance included a benefit of approximately $60 million related to certain of the Company's operations in
Central Europe, while in 2008, the change in valuation allowance was predominantly related to the Company's operations in North America,
with approximately $330 million.
In 2010, "Other, net" of $28 million in the table above included:
• an expense of $45 million relating to items that were deducted for financial accounting purposes, but were not tax deductible such
as interest expense, state and local taxes on productive activities, disallowed meals and entertainment expenses and other similar
items.
In 2009, "Other, net" of $72 million in the table above included:
• a benefit of approximately $74 million relating to the release of provision for costs of previously disclosed investigations by
European authorities into suspect payments and alleged anti-competitive practices that were credited for financial accounting
purposes, but were not taxable,
• an expense of approximately $40 million relating to items that were deducted for financial accounting purposes, but were not tax
deductible such as interest expense, state and local taxes on productive activities, disallowed meals and entertainment expenses
and other similar items, and
• an expense of approximately $100 million relating to a net increase in tax accruals.
In 2008, "Other, net" of $279 million in the table above included:
• an expense of approximately $140 million related to a pending tax dispute in Northern Europe,
• an expense of approximately $100 million relating to costs of previously disclosed investigations by U.S. and European
authorities into suspect payments and alleged anti-competitive practices, respectively, that were deducted for financial accounting
purposes, but were not tax deductible,
• the release of a provision of approximately $53 million related to the court decision in Northern Europe concerning certain sale
and leaseback transactions as well as to the favorable outcome related to the interpretation of tax law and double tax treaty
agreements by competent tax authorities in the Mediterranean region,
• an expense of approximately $50 million relating to items that were deducted for financial accounting purposes, but were not tax
deductible such as interest expense, state and local taxes on productive activities, disallowed meals and entertainment expenses
and other similar items, and
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Table of Contents
Note 16—Taxes (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
• an expense of approximately $40 million relating to a net increase in tax accruals.
Deferred income tax assets and liabilities consisted of the following:
December 31,
($ in millions) 2010 2009
Deferred tax assets:
Unused tax losses and credits 1,102 1,100
Pension and other accrued liabilities 1,005 1,094
Inventories 241 255
Property, plant and equipment 90 91
Other 134 135
Total gross deferred tax asset 2,572 2,675
Valuation allowance (450 ) (473 )
Total gross deferred tax asset, net of
valuation allowance 2,122 2,202
Deferred tax liabilities:
Property, plant and equipment (441 ) (242 )
Pension and other accrued liabilities (191 ) (172 )
Inventories (159 ) (168 )
Other current assets (137 ) (155 )
Unremitted earnings (171 ) (142 )
Other (49 ) (26 )
Total gross deferred tax liability (1,148 ) (905 )
Net deferred tax asset 974 1,297
Included in:
"Deferred taxes"—current assets 896 900
"Deferred taxes"—non-current assets 846 1,052
"Deferred taxes"—current liabilities (357 ) (327 )
"Deferred taxes"—non-current liabilities (411 ) (328 )
Net deferred tax asset 974 1,297
At December 31, 2010, net deferred tax assets included an increase in deferred tax liabilities of $100 million arising upon business
combinations.
Certain entities have deferred tax assets related to net operating loss carry-forwards and other items. As recognition of these assets did not
meet the more likely than not criterion, valuation allowances of $450 million and $473 million were established at December 31, 2010 and 2009,
respectively. At December 31, 2010, and 2009, the item unused tax losses and credits included $226 million and $240 million, respectively, for
which the Company has established a full valuation allowance as, due to limitations imposed by the relevant tax law, the Company determined
that, more likely than not, such deferred tax assets would not be realized.
F-58

Table of Contents
Note 16—Taxes (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
At December 31, 2010, net operating loss carry-forwards of $2,901 million and tax credits of $129 million were available to reduce future
taxes of certain subsidiaries. Of these amounts, $1,928 million loss carry-forwards and $126 million tax credits will expire in varying amounts
through 2030. These carry-forwards were predominantly related to the Company's U.S. operations.
Unrecognized tax benefits consisted of the following:
($ in millions)
Unrecognized
tax benefits
In 2010, the "Increase relating to current year tax positions" in the table above included an expense of $88 million related to the
interpretation of tax law and double tax treaty agreements by competent tax authorities.
F-59
Penalties and
interest related to
unrecognized tax benefits Total
Classification as unrecognized tax items on
January 1, 2008 518 129 647
Net change due to acquisitions and divestments 6 1 7
Increase relating to prior year tax positions 189 75 264
Decrease relating to prior year tax positions (20 ) (1 ) (21 )
Increase relating to current year tax positions 93 1 94
Decrease related to current year tax positions (17 ) (1 ) (18 )
Decrease due to settlements with tax authorities (127 ) (55 ) (182 )
Decrease as a result of the applicable statute of
limitations (25 ) (5 ) (30 )
Exchange rate differences (19 ) (5 ) (24 )
Balance at December 31, 2008 which would, if
recognized, affect the effective tax rate 598 139 737
Net change due to acquisitions and divestments (2 ) — (2 )
Increase relating to prior year tax positions 133 62 195
Decrease relating to prior year tax positions (9 ) (8 ) (17 )
Increase relating to current year tax positions 93 6 99
Decrease due to settlements with tax authorities (41 ) (3 ) (44 )
Decrease as a result of the applicable statute of
limitations (69 ) (22 ) (91 )
Exchange rate differences 9 2 11
Balance at December 31, 2009 which would, if
recognized, affect the effective tax rate 712 176 888
Net change due to acquisitions and divestments 5 — 5
Increase relating to prior year tax positions 56 38 94
Decrease relating to prior year tax positions (32 ) (6 ) (38 )
Increase relating to current year tax positions 114 5 119
Decrease relating to current year tax positions (15 ) (4 ) (19 )
Decrease due to settlements with tax authorities (40 ) (9 ) (49 )
Decrease as a result of the applicable statute of
limitations (72 ) (21 ) (93 )
Exchange rate differences (14 ) (1 ) (15 )
Balance at December 31, 2010 which would, if
recognized, affect the effective tax rate 714 178 892

Table of Contents
Note 16—Taxes (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
In 2009, the "Increase relating to prior year tax positions" included an expense of approximately $27 million in taxes and approximately
$27 million in penalties and interest relating to a pending tax dispute in Northern Europe. Further, it included an increase of provision of
approximately $34 million in taxes relating to a pending assessment by competent tax authorities in Central Europe.
In 2008, the "Increase relating to prior year tax positions" included an expense of approximately $85 million in taxes and approximately
$50 million in penalties and interest relating to a pending tax dispute in Northern Europe. Further, it included an increase of provision of
approximately $33 million in taxes relating to a pending assessment by competent tax authorities in Central Europe.
In 2008, the "Decrease due to settlements with tax authorities" included the release of provisions of approximately $53 million in taxes and
approximately $48 million in penalties and interest relating to court cases in Northern Europe concerning certain sale and leaseback transactions,
as well as to the favorable outcome in the Mediterranean region relating to the interpretation of tax law and double tax treaty agreements by
competent tax authorities. Further, it included the release of provision of approximately $33 million in taxes relating to the favorable outcome of
an assessment by competent tax authorities in Central Europe.
At December 31, 2010, the Company expected the resolution, within the next twelve months, of uncertain tax positions related to pending
court cases amounting to $205 million for taxes, penalties and interest. Otherwise, the Company had not identified any other significant changes
which were considered reasonably possible to occur within the next twelve months.
At December 31, 2010, the earliest significant open tax years that remained subject to examination were the following:
Note 17—Employee benefits
Region Year
Europe 2002
The Americas 2008
Asia 2001
Middle East & Africa 2004
The Company operates pension plans, including defined benefit, defined contribution and termination indemnity plans in accordance with
local regulations and practices. These plans cover a large portion of the Company's employees and provide benefits to employees in the event of
death, disability, retirement, or termination of employment. Certain of these plans are multi-employer plans. The Company also operates other
postretirement benefit plans in certain countries.
Some of these plans require employees to make contributions and enable employees to earn matching or other contributions from the
Company. The funding policies of the Company's plans are consistent with the local government and tax requirements. The Company has
several pension plans that are not required to be funded pursuant to local government and tax requirements. The Company uses a December 31
measurement date for its plans.
F-60

Table of Contents
Note 17—Employee benefits (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Company recognizes in its Consolidated Balance Sheets the funded status of its defined benefit pension and postretirement plans,
measured as the difference between the fair value of the plan assets and the benefit obligation.
Obligations and funded status of the plans
The following tables set forth the changes in benefit obligations, the change in plan assets and the funded status recognized in the
Consolidated Balance Sheets for the Company's benefit plans:
($ in millions)
F-61
2010 2009 2010 2009
Defined pension
benefits
Other postretirement
benefits
Benefit obligation at January 1, 8,914 7,761 219 207
Service cost 210 154 2 2
Interest cost 389 432 12 13
Contributions by plan participants 58 56 — —
Benefit payments (571 ) (558 ) (13 ) (13 )
Benefit obligations of businesses disposed and
acquired — 24 — —
Actuarial (gain) loss 168 634 (6 ) 6
Plan amendments and other 16 21 (1 ) 2
Exchange rate differences 153 390 1 2
Benefit obligation at December 31, 9,337 8,914 214 219
Fair value of plan assets at January 1, 8,149 7,051 — —
Actual return on plan assets 636 935 — —
Contributions by employer 567 307 13 13
Contributions by plan participants 58 56 — —
Benefit payments (571 ) (558 ) (13 ) (13 )
Plan assets of businesses disposed and acquired — — — —
Plan amendments and other (12 ) 2 — —
Exchange rate differences 183 356 — —
Fair value of plan assets at December 31, 9,010 8,149 — —
Funded status—underfunded 327 765 214 219

Table of Contents
Note 17—Employee benefits (Continued)
(1)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The amounts recognized in "Accumulated other comprehensive loss" and "Noncontrolling interests" were:
($ in millions) Defined pension benefits
OCI represents "Accumulated other comprehensive loss"
(2) NCI represents "Noncontrolling interests"
December 31,
2010 2009 2008 2010 2009
Other
2008
postretirement
benefits
Transition liability — — — (1 ) (2 ) (3 )
Net actuarial loss (1,135 ) (1,313 ) (1,239 ) (65 ) (77 ) (76 )
Prior service cost (43 ) (40 ) (40 ) 51 61 79
Amount recognized in OCI (1) and NCI (2) (1,178 ) (1,353 ) (1,279 ) (15 ) (18 ) —
Taxes associated with amount recognized in
OCI (1) and NCI (2) 270 301 301 — — —
Total amount recognized in OCI (1) and
NCI (2) , net of tax (3) (908 ) (1,052 ) (978 ) (15 ) (18 ) —
(3) NCI, net of tax, amounted to $3 million, $2 million and $0 million at December 31, 2010, 2009 and 2008, respectively
In addition, the following amounts were recognized in the Company's Consolidated Balance Sheets:
($ in millions)
December 31,
2010 2009 2010 2009
Defined
Other
pension
postretirement
benefits
benefits
Overfunded plans (172 ) (112 ) — —
Underfunded plans—
current 26 28 16 18
Underfunded plans—noncurrent
473 849 198 201
Funded status 327 765 214 219
December 31,
($ in millions) 2010 2009
Non-current assets
Overfunded pension plans (172 ) (112 )
Other employee-related benefits (1 ) —
Prepaid pension and other employee benefits (173 ) (112 )
F-62

Table of Contents
Note 17—Employee benefits (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
December 31,
($ in millions) 2010 2009
Current liabilities
Underfunded pension plans 26 28
Underfunded other benefit plans 16 18
Other employee-related benefits 26 22
Pension and other employee benefits (Note 13) 68 68
December 31,
($ in millions) 2010 2009
Non-current liabilities
Underfunded pension plans 473 849
Underfunded other benefit plans 198 201
Other employee-related benefits 160 129
Pension and other employee benefits 831 1,179
The funded status, calculated by the projected benefit obligation (PBO) and fair value of plan assets, for pension plans with a PBO in excess
of fair value of plan assets (underfunded) or fair value of plan assets in excess of PBO (overfunded), respectively, was:
December 31,
2010 2009
($ in millions) PBO Assets Difference PBO Assets Difference
PBO exceeds assets 3,901 3,402 499 7,651 6,774 877
Assets exceed PBO 5,436 5,608 (172 ) 1,263 1,375 (112 )
Total 9,337 9,010 327 8,914 8,149 765
The accumulated benefit obligation (ABO) for all defined benefit pension plans was $9,024 million and $8,627 million at December 31,
2010 and 2009, respectively. The funded status, calculated by the ABO and fair value of plan assets for pension plans with ABO in excess of fair
value of plan assets (underfunded) or fair value of plan assets in excess of ABO (overfunded), respectively was:
December 31,
2010 2009
($ in millions) ABO Assets Difference ABO Assets Difference
ABO exceeds assets 2,080 1,725 355 6,285 5,627 658
Assets exceed ABO 6,944 7,285 (341 ) 2,342 2,522 (180 )
Total 9,024 9,010 14 8,627 8,149 478
All of the Company's other postretirement benefit plans are unfunded.
F-63

Table of Contents
Note 17—Employee benefits (Continued)
Components of net periodic benefit cost
Net periodic benefit cost consisted of the following:
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The net actuarial loss and prior service cost for defined pension benefits estimated to be amortized from "Accumulated other comprehensive
loss" into net periodic benefit cost in 2011 is $57 million and $42 million, respectively.
The net actuarial loss, transition cost and prior service cost for other postretirement benefits estimated to be amortized from "Accumulated
other comprehensive loss" into net periodic benefit cost in 2011 is $4 million, $1 million and $(9) million, respectively.
Assumptions
($ in millions) Defined pension benefits
2010 2009 2008 2010 2009 2008
The following weighted-average assumptions were used to determine benefit obligations:
The discount rate assumptions reflect the rates at which the benefit obligations could effectively be settled. The principal assumption was
that the relevant fixed income securities are AA rated corporate bonds. In those countries with sufficient liquidity in corporate bonds, the
Company used the current market long-term corporate bond rates and matched the bond duration with the average duration of the pension
liabilities. In those countries where the liquidity of the AA corporate bonds was deemed to be insufficient, the Company determined the discount
rate by adding the credit spread derived from an AA corporate bond index in another relevant liquid market, as adjusted for interest rate
differentials, to the domestic government bond curve or interest rate swap curve.
F-64
Other postretirement
benefits
Service cost 210 154 177 2 2 2
Interest cost 389 432 438 12 13 13
Expected return on plan assets (422 ) (384 ) (471 ) — — —
Amortization transition liability — — — 1 1 1
Amortization prior service cost 26 13 14 (9 ) (11 ) (11 )
Amortization of net actuarial loss 71 71 13 5 6 5
Curtailments, settlements and special termination
benefits 8 2 38 — (8 ) —
Net periodic benefit cost 282 288 209 11 3 10
(in %)
December 31,
2010 2009 2010 2009
Defined
Other
pension
postretirement
benefits
benefits
Discount rate 4.29 4.66 5.03 5.54
Rate of compensation increase 2.05 2.13 — —
Pension increase assumption 1.06 1.22 — —

Table of Contents
Note 17—Employee benefits (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The following weighted-average assumptions were used to determine the "Net periodic benefit cost":
The "Expected long-term rate of return on plan assets" is derived from the current and projected asset allocation, the current and projected
types of investments in each asset category and the long-term historical returns for each investment type.
The Company maintains other postretirement benefit plans, which are generally contributory with participants' contributions adjusted
annually. The assumptions used were:
A one-percentage-point change in assumed health care cost trend rates would have the following effects at December 31, 2010:
Plan assets
2010 2009 2008 2010 2009 2008
(in %) Defined pension benefits Other postretirement benefits
Discount rate 4.66 5.63 5.16 5.54 6.30 6.17
Expected long-term rate of return on plan assets 5.44 5.47 5.55 — — —
Rate of compensation increase 2.13 2.22 2.35 — — —
The Company has pension plans in various countries with the majority of the Company's pension liabilities deriving from a limited number
of countries. The pension plans' structures reflect local regulatory environments and market practices.
The pension plans are typically funded by regular contributions from employees and the Company. These plans are administered by boards
of trustees (which include Company representatives) whose primary responsibility is to ensure that the plans meet their liabilities through
contributions and investment returns. Consequently, the boards of trustees have the responsibility for key investment strategy decisions.
The accumulated contributions are invested in a diversified range of assets that are managed by third-party asset managers, in accordance
with local statutory regulations, pension plan rules and the respective plans' investment guidelines, as approved by the boards of trustees.
F-65
December 31,
2010 2009
Health care cost trend rate assumed for
next year 7.93 % 8.89 %
Rate to which the cost trend rate is
assumed to decline (the ultimate trend
rate) 5.00 % 5.00 %
Year that the rate reaches the ultimate
trend rate 2017 2017
1-percentage-point
($ in millions) increase decrease
Effect on total of service and interest cost 1 (1 )
Effect on postretirement benefit obligation 15 (13 )

Table of Contents
Note 17—Employee benefits (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Plan assets are generally segregated from those of the Company and invested with the aim of meeting the respective plans' projected future
pension liabilities. Plan assets are measured at fair value at the balance sheet date.
The boards of trustees manage the assets of the pension plans in a risk-controlled manner and assess the risks embedded in the pension
plans through asset/liability modeling. The projected future development of pension liabilities is assessed relative to various alternative asset
allocations in order to determine a strategic asset allocation for each plan, based on a given risk budget. Asset/liability management studies
typically take place every three years. However, the risks of the plans are monitored on an ongoing basis. The assets of the major plans are
reviewed at least quarterly, while the plans' liabilities are reviewed in detail at least annually.
The board of trustees' investment goal is to maximize the long-term returns of plan assets within the risk budget, while considering the
future liabilities and liquidity needs of the individual plans. Risk parameters taken into account include:
• the funding ratio of the plan,
• the likelihood of extraordinary cash contributions being required,
• the risk embedded in each individual asset class, and
• the correlations between each of the above.
The Company's investment policy is to achieve an optimal balance between risk and return on the plans' investments through the
diversification of asset classes, the use of various external asset managers and the use of differing investment styles. This has resulted in a
diversified portfolio with a mix of actively and passively managed investments.
The plans are mainly invested in equity securities and bonds, with smaller allocations to real estate, private equity and hedge funds.
The Company's global pension asset allocation is the result of the asset allocations of the individual plans. The target asset allocation of the
Company's plans on a weighted-average basis is as follows:
F-66
Target
percentage
Asset Class
Global fixed income securities 49
Emerging markets fixed income securities 3
Global equity securities 26
Emerging markets equity securities 4
Real estate 9
Cash and equivalents 5
Private equity 2
Hedge funds 2
100

Table of Contents
Note 17—Employee benefits (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The actual asset allocations of the plans are in line with the target asset allocations, which are set on an individual plan basis by the boards
of trustees. They are the result of individual plans' risk assessments.
Global and emerging markets fixed income securities include corporate bonds of companies from diversified industries and government
bonds mainly from mature market issuers. Global and emerging markets equity securities primarily include investments in large-cap and mid-cap
listed companies. Global equity securities represent equities listed in mature markets (mainly in the United States, Europe and Japan). Real
Estate investments consist largely of domestic real estate in Switzerland held in the Swiss plans. The investments in Private equity and Hedge
funds reflect a variety of investment strategies.
Based on the above global asset allocation, the expected long-term return on assets is 5.44 percent. The Company and the local boards of
trustees regularly review the investment performance of the asset classes and individual asset managers. Due to the diversified nature of the
investments, the Company is of the opinion that no significant concentration of risks exists in its pension fund assets.
The Company does not expect any plan assets to be returned to the employer during 2011.
At December 31, 2010 and 2009, plan assets included approximately 0.8 million shares and 0.7 million shares of the Company's capital
stock with a total value of $17 million and $14 million, respectively.
The fair values of the Company's pension plan assets by asset class are presented below. For further information on the fair value hierarchy
and an overview of the Company's valuation techniques applied see Note 2.
December 31, 2010
($ in millions) Level 1 Level 2 Level 3
F-67
Total
fair value
Asset Class:
Cash and equivalents 39 372 — 411
Global equities 2,301 77 — 2,378
Emerging markets
equities 350 — — 350
Global fixed income 1,790 2,643 — 4,433
Emerging markets fixed
income — 290 — 290
Insurance contracts — 23 — 23
Private equity 1 26 156 183
Hedge funds 2 — 136 138
Real estate 79 — 696 775
Commodities 29 — — 29
Total 4,591 3,431 988 9,010

Table of Contents
Note 17—Employee benefits (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
December 31, 2009
($ in millions) Level 1 Level 2 Level 3
The following table represents the movements of those asset categories whose fair value use significant unobservable inputs (Level 3):
Real estate properties are valued under the income approach using the discounted cash flow method, by which the market value of a
property is determined as the total of all projected future earnings discounted to the valuation date. The discount rates are determined for each
property individually according to the property's location and specific use, and by considering initial yields of comparable market transactions.
Private equity investments include investments in partnerships and related funds. Such investments consist of both publicly-traded and privatelyheld
securities. Publicly-traded securities that are not quoted in active markets are valued using available quotes and adjusted
F-68
Total
fair value
Asset Class:
Cash and equivalents 102 193 — 295
Global equities 2,077 45 — 2,122
Emerging markets
equities 271 — — 271
Global fixed income 1,831 2,389 — 4,220
Emerging markets fixed
income — 212 — 212
Insurance contracts — 34 — 34
Private equity 5 22 149 176
Hedge funds — — 127 127
Real estate 71 — 621 692
Commodities — — — —
Total 4,357 2,895 897 8,149
($ in millions)
Private
equity
Hedge
funds
Real
estate
Total
Level 3
Balance at January 1,
2009 152 137 603 892
Return on plan assets:
Assets still held at
December 31, 2009 (8 ) (2 ) 2 (8 )
Assets sold during the
year (1 ) (22 ) (1 ) (24 )
Purchases (sales) 5 6 (4 ) 7
Transfers into Level 3 — 18 — 18
Exchange rate differences 1 (10 ) 21 12
Balance at December 31,
2009 149 127 621 897
Return on plan assets:
Assets still held at
December 31, 2010 21 4 9 34
Assets sold during the
year (5 ) (4 ) — (9 )
Purchases (sales) (12 ) — 5 (7 )
Transfers into Level 3 — — — —
Exchange rate differences 3 9 61 73
Balance at December 31,
2010 156 136 696 988

Table of Contents
Note 17—Employee benefits (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
for liquidity restrictions. Privately-held securities are valued taking into account various factors, such as the most recent financing involving
unrelated new investors, earnings multiple analyses using comparable companies and discounted cash flow analyses. Hedge funds are normally
not exchange-traded and the shares of the funds are not redeemed daily. Depending on the fund structure, the fair values are derived through
modeling techniques based on the values of the underlying assets adjusted to reflect liquidity and transferability restrictions.
Contributions
Employer contributions were as follows:
($ in millions)
In 2010, the discretionary contributions included a non-cash contribution of $213 million of available-for-sale securities to one of the
Company's pension plans in Germany.
The Company expects to contribute approximately $294 million to its defined benefit pension plans and $17 million to its other
postretirement benefit plans in 2011.
The Company also maintains several defined contribution plans. The expense for these plans was $97 million, $91 million and $92 million
in 2010, 2009 and 2008, respectively. The Company also contributed $30 million, $18 million and $22 million to multi-employer plans in 2010,
2009 and 2008, respectively. In the United States, a withdrawal from a multi-employer plan in 2009 resulted in an $11 million provision.
Estimated future benefit payments
The expected future cash flows to be paid by the Company's plans in respect of pension and other postretirement benefit plans at
December 31, 2010 are as follows:
F-69
2010 2009 2010 2009
Defined
pension benefits
Other
postretirement
benefits
Total contributions to defined benefit pension and other
postretirement benefit plans 567 307 13 13
Of which, discretionary contributions to defined benefit
pension plans 331 49 — —
($ in millions)
Pension
benefits Other postretirement benefits
Benefit
Medicare
payments
subsidies
2011 594 18 (1 )
2012 584 18 (1 )
2013 579 18 (1 )
2014 569 18 (1 )
2015 565 18 (1 )
Years 2016–2020 2,844 92 (7 )

Table of Contents
Note 17—Employee benefits (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The Medicare subsidies column represents payments estimated to be received from the United States government as part of the Medicare
Prescription Drug, Improvement and Modernization Act of 2003. The United States government began making the subsidy payments for
employers in 2006.
Note 18—Share-based payment arrangements
The Company has three share-based payment plans, as more fully described in the respective sections below. Compensation cost for equitysettled
awards is recorded in "Total cost of sales" and in "Selling, general and administrative expenses" and totaled $66 million, $66 million and
$63 million in 2010, 2009 and 2008, respectively. Compensation cost for cash-settled awards is recorded in "Selling, general and administrative
expenses" and is disclosed in the WAR, LTIP and Other share-based payments sections of this note. The total tax benefit recognized in 2010,
2009 and 2008, was not significant.
At December 31, 2010, the Company had the ability to issue up to 29 million new shares out of contingent capital in connection with sharebased
payment arrangements. In addition, 25 million shares held by the Company in treasury stock at December 31, 2010, could be used to settle
share-based payment arrangements.
As the primary trading market for the shares of ABB Ltd is the SIX Swiss Exchange, on which the shares are traded in Swiss francs, certain
data disclosed below related to the instruments granted under share-based payment arrangements are presented in Swiss francs.
MIP
Under the MIP, the Company offers physically-settled warrants, cash-settled warrant appreciations rights (WARs) and options to key
employees for no consideration.
The warrants and options granted under the MIP allow participants to purchase shares of ABB Ltd at predetermined prices. Participants
may sell the warrants and options rather than exercise the right to purchase shares. Equivalent warrants are listed by a third-party bank on the
SIX Swiss Exchange, which facilitates pricing and transferability of warrants granted under this plan. The options entitle the holder to request
that a third-party bank purchase such options at the market price of equivalent listed warrants related to that MIP launch. If the participant elects
to sell the warrants or options, the instruments will thereafter be held by a third party and, consequently, the Company's obligation to deliver
shares will be toward this third party. Each WAR gives the participant the right to receive, in cash, the market price of an equivalent listed
warrant on the date of exercise of the WAR. The WARs are non-transferable.
Participants may exercise or sell warrants and options and exercise WARs after the vesting period, which is three years from the date of
grant. Vesting restrictions can be waived in certain circumstances such as death or disability. All warrants, options and WARs expire six years
from the date of grant.
Warrants and options
The fair value of each warrant and option is estimated on the date of grant using a lattice model that uses the assumptions noted in the table
below. Expected volatilities are based on implied volatilities from equivalent listed warrants on ABB Ltd shares. The expected term of the
warrants and options granted has been assumed to be the contractual six-year life of each warrant and option, based
F-70

Table of Contents
Note 18—Share-based payment arrangements (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
on the fact that after the vesting period, a participant can elect to sell the warrant or option rather than exercise the right to purchase shares,
thereby realizing the time value of the warrants and options. The risk-free rate is based on a six-year Swiss franc interest rate, reflecting the sixyear
contractual life of the warrants and options. In estimating forfeitures, the Company has used the data from previous comparable MIP
launches.
(1)
2010 grant 2009 grant 2008 grant
Expected volatility 30% 41% 36%
Dividend yield 2.35% 2.34% 1.42%
Expected term 6 years 6 years 6 years
Risk-free interest rate 1.20% 1.93% 3.36%
Presented below is a summary of the activity related to warrants and options:
Number of
instruments
Information presented reflects the number of shares of ABB Ltd that can be received upon exercise, as warrants and options have a conversion ratio of 5:1.
(2) Information presented reflects the exercise price per share of ABB Ltd.
Number of
shares (1)
(3) Computed using the closing price, in Swiss francs, of ABB Ltd shares on the SIX Swiss Exchange and the exercise price per share of ABB Ltd.
(4) The cash received upon exercise amounted to $5 million. The shares were issued out of contingent capital.
Of the outstanding instruments at December 31, 2010, 2009 and 2008, 17.6 million, 8.8 million and 3.0 million, respectively, have been
sold to a third-party by participants, representing 3.5 million, 1.8 million and 0.6 million shares, respectively.
At December 31, 2010, there was $42 million of total unrecognized compensation cost related to non-vested warrants and options granted
under the MIP. That cost is expected to be recognized over a weighted-average period of 1.8 years. The weighted-average grant-date fair value
of warrants and options granted during 2010, 2009 and 2008 was 0.81 Swiss francs, 1.15 Swiss francs and 2.32 Swiss francs, respectively. In
2010, 2009 and 2008, the aggregate intrinsic value (on the dates of exercise) of instruments exercised was 9 million Swiss francs, 5 million
Swiss francs and 57 million Swiss francs, respectively.
F-71
Weighted-
average
exercise
price
(in Swiss
francs) (2)
Weighted-
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value (in
millions of
Swiss
francs) (3)
Outstanding at January 1, 2010 93,891,775 18,778,355 25.42
Granted 38,861,000 7,772,200 22.50
Exercised (4) (3,439,165 ) (687,833 ) 7.50
Forfeited (1,199,460 ) (239,892 ) 27.17
Outstanding at December 31,
2010 128,114,150 25,622,830 25.00 3.8 21
Vested and expected to vest
at December 31, 2010 118,728,575 23,745,715 24.92 3.7 20
Exercisable at December 31,
2010 44,660,530 8,932,106 23.72 2.3 13

Table of Contents
Note 18—Share-based payment arrangements (Continued)
(1)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Presented below is a summary, by launch, related to instruments outstanding at December 31, 2010:
Information presented reflects the exercise price per share of ABB Ltd.
(2) Information presented reflects the number of shares of ABB Ltd that can be received upon exercise.
WARs
Exercise price (in Swiss francs) (1)
Number of
instruments Number of shares (2)
As each WAR gives the holder the right to receive cash equal to the market price of an equivalent listed warrant on date of exercise, the
Company records a liability based upon the fair value of outstanding WARs at each period end, accreted on a straight-line basis over the threeyear
vesting period. In "Selling, general and administrative expenses", the Company recorded expense of $8 million, expense of $17 million and
income of $83 million for 2010, 2009 and 2008, respectively, as a result of changes in both the fair value and vested portion of the outstanding
WARs. To hedge its exposure to fluctuations in the fair value of outstanding WARs, the Company purchased cash-settled call options, which
entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs. The cash-settled call options are recorded as
derivatives measured at fair value (see Note 5), with subsequent changes in fair value recorded through earnings to the extent that they offset the
change in fair value of the liability for the WARs. In 2010, 2009 and 2008, the Company recorded expense of $10 million, $1 million and
$98 million, respectively, in "Selling, general and administrative expenses" related to the cash-settled call options.
The aggregate fair value of outstanding WARs was $45 million and $64 million at December 31, 2010 and 2009, respectively. The fair
value of WARs was determined based upon the trading price of equivalent warrants listed on the SIX Swiss Exchange.
F-72
Weighted-average
remaining
contractual term
(in years)
15.30 11,367,500 2,273,500 1.1
26.00 26,500,740 5,300,148 2.4
36.40 28,119,410 5,623,882 3.4
19.00 23,415,500 4,683,100 4.4
22.50 38,711,000 7,742,200 5.4
Total number of instruments and shares 128,114,150 25,622,830 3.8

Table of Contents
Note 18—Share-based payment arrangements (Continued)
Presented below is a summary of the activity related to WARs:
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The aggregate fair value at date of grant of WARs granted in 2010, 2009 and 2008 was $7 million, $22 million and $33 million,
respectively. In 2010, 2009 and 2008, share-based liabilities of $25 million, $20 million and $53 million, respectively, were paid upon exercise
of WARs by participants.
ESAP
Number of WARs
Outstanding at January 1, 2010 63,799,435
Granted 9,355,250
Exercised (13,522,415 )
Forfeited (1,230,875 )
Outstanding at December 31, 2010 58,401,395
Exercisable at December 31, 2010 16,578,125
The employee share acquisition plan (ESAP) is an employee stock-option plan with a savings feature. Employees save over a twelve-month
period, by way of monthly salary deductions. At the end of the savings period, employees choose whether to exercise their stock options using
their savings plus interest to buy ABB Ltd shares (American Depositary Shares (ADS) in the case of employees in the United States—each ADS
representing one registered share of the Company) at the exercise price set at the grant date, or have their savings returned with interest. The
savings are accumulated in a bank account held by a third-party trustee on behalf of the participants and earn interest. Employees can withdraw
from the ESAP at any time during the savings period and will be entitled to a refund of their accumulated savings.
The fair value of each option is estimated on the date of grant using the same option valuation model as described under the MIP, using the
assumptions noted in the table below. The expected term of the option granted has been determined to be the contractual one-year life of each
option, at the end of which the options vest and the participants are required to decide whether to exercise their options or have their savings
returned with interest. The risk-free rate is based on one-year Swiss franc interest rates, reflecting the one year contractual life of the options. In
estimating forfeitures, the Company has used the data from previous ESAP launches.
2010 grant 2009 grant 2008 grant
Expected volatility 27 % 35 % 57 %
Dividend yield 2.49 % 2.07 % 2.61 %
Expected term 1 year 1 year 1 year
Risk-free interest rate 0.26 % 0.37 % 1.44 %
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Table of Contents
Note 18—Share-based payment arrangements (Continued)
Presented below is a summary of activity under the ESAP:
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
The exercise prices per ABB Ltd share and per ADS of 20.46 Swiss francs and $20.55, respectively, for the 2010 grant, 19.36 Swiss francs
and $18.75, respectively, for the 2009 grant, and 15.30 Swiss francs and $12.98, respectively, for the 2008 grant were determined using the
closing price of the ABB Ltd share on SIX Swiss Exchange and ADS on the New York Stock Exchange on the respective grant dates.
At December 31, 2010, there was $7 million of total unrecognized compensation cost related to non-vested options granted under the
ESAP. That cost is expected to be recognized over the first ten months of 2011 in "Total cost of sales" and in "Selling, general and
administrative expenses". The weighted-average grant-date fair value of options granted during 2010, 2009 and 2008, was 1.96 Swiss francs,
2.55 Swiss francs and 3.34 Swiss francs, respectively. The total intrinsic value (on the dates of exercise) of options exercised in 2010 and 2009
was 3.5 million Swiss francs and 22 million Swiss francs, respectively. No options were exercised in 2008.
LTIP
Number of
shares (1)
The Company has a long-term incentive plan (LTIP) for members of its Executive Committee and selected other executives (Eligible
Participants), as defined in the terms of the LTIP and determined by the Company's Governance, Nomination and Compensation Committee.
The LTIP involves annual conditional grants of the Company's stock to such Eligible Participants that are subject to certain conditions. The 2010
launch under the LTIP is composed of two components—a share-price performance component and a retention component. The 2009 and 2008
LTIP launches are each composed of two components—a share-price performance component and a co-investment component.
F-74
Weighted-
average
exercise
price (in
Swiss
francs) (2)
Weighted-
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
(in millions
of Swiss
francs) (2)(3)
Outstanding at January 1, 2010 4,862,440 19.36
Granted 4,140,440 20.46
Forfeited (209,140 ) 19.36
Exercised (4) (3,201,979 ) 19.36
Not exercised (savings returned plus interest) (1,451,321 ) 19.36
Outstanding at December 31, 2010 4,140,440 20.46 0.8 1.5
Vested and expected to vest at
December 31, 2010 3,966,542 20.46 0.8 1.5
Exercisable at December 31, 2010 — — — —
(1)
Includes shares represented by ADS.
(2) Information presented for ADS is based on equivalent Swiss franc denominated awards.
(3) Computed using the closing price, in Swiss francs, of ABB Ltd shares on the SIX Swiss Exchange and the exercise price of each option in Swiss francs.
(4) The cash received upon exercise amounted to $62 million and the corresponding tax benefit was not significant. The shares were issued out of treasury shares.

Table of Contents
Note 18—Share-based payment arrangements (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Under the share-price performance component, the number of shares granted is dependent upon the base salary of the Eligible Participant.
The actual number of shares that will vest at a future date is dependent on (i) the performance of ABB Ltd shares during a defined period
(Evaluation Period) compared to those of a selected peer group of publicly-listed multinational companies and (ii) the term of service of the
respective Eligible Participant in their capacity as an Eligible Participant during the Evaluation Period. The actual number of shares that vest
after the Evaluation Period cannot exceed 100 percent of the conditional grant.
The performance of the Company compared to its peers over the Evaluation Period will be measured as the sum, in percentage terms, of the
average percentage price development of the ABB Ltd share price over the Evaluation Period and an average annual dividend yield percentage
(the Company's Performance). In order for shares to vest, the Company's Performance over the Evaluation Period must be positive and equal to
or better than half of the defined peers. The actual number of shares to be delivered by the Company, after the end of the Evaluation Period, will
be dependent on the Company's ranking in comparison with the defined peers. The full amount of the grant will vest if the Company's
Performance is positive and better than three-quarters of the defined peers. For the 2010 and 2009 LTIP launches, if the Company's Performance
is negative but other conditions are met, a reduced number of shares will vest. In addition, for the 2010 and 2009 LTIP launches, if the
Company's net income (adjusted for the financial impact of items that are, in the opinion of the Company's Board, non-operating, non-recurring
or unforeseen—such as divestments and acquisitions) is negative for the year preceding the year in which the Evaluation Period ends, no shares
will vest, irrespective of the outcome of the Company's Performance.
Under the co-investment component of the 2009 and 2008 LTIP launches, each Eligible Participant was invited to invest in the Company's
shares, up to an individually defined maximum number of shares. If the Eligible Participant remains the owner of such shares until the end of the
Evaluation Period, the Company will deliver free-of-charge to the Eligible Participant a matching number of shares.
Under the retention component of the 2010 LTIP launch, each Eligible Participant was conditionally granted an individually defined
maximum number of shares which fully vest at the end of the Evaluation Period (if the participant remains an Eligible Participant till the end of
such period).
The method of settlement of vested shares varies for each LTIP launch. For the 2010 LTIP launch, under the share-price performance
component, an Eligible Participant receives, in cash, 100 percent of the value of the shares that have vested. Under the retention component, an
Eligible Participant can elect to receive 30 percent of the value of the shares that have vested in cash (the remaining 70 percent can only be
received in the form of shares). For the 2009 LTIP launch, under both components, an Eligible Participant can elect to receive 30 percent of the
value of the shares that have vested in cash (the remaining 70 percent, under both components, can only be received in the form of shares). In
December 2009, the 2008 and 2007 LTIP launches were modified to also allow the Eligible Participants in those launches to receive 30 percent
of the value of the vested shares in cash (the remaining 70 percent continued to be receivable only in the form of shares). The additional
compensation cost as a result of such modification was not significant.
For the purposes of the disclosures below, the portion of awards that can only be received in the form of shares are termed Equity-Settled
Awards while awards that can be only received in cash, as
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Table of Contents
Note 18—Share-based payment arrangements (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
well as the portion of the awards that the Eligible Participant can elect to receive in cash, are termed Cash-Settled Awards.
Presented below is a summary of launches of the LTIP outstanding at December 31, 2010:
Launch year Evaluation Period
Presented below is a summary of activity under the LTIP:
Equity-Settled Awards are recorded in the "Capital stock and additional paid-in capital" component of stockholders' equity, with
compensation cost recorded in "Selling, general and administrative expenses" over the vesting period (which is from grant date to the end of the
Evaluation Period) based on the grant-date fair value of the shares. The Cash-Settled Awards are recorded as a liability remeasured at fair value
at each reporting date for the percentage vested, with changes in the liability recorded in "Selling, general and administrative expenses".
At December 31, 2010, there was $10 million of total unrecognized compensation cost related to Equity-Settled Awards under the LTIP.
That cost is expected to be recognized over a weighted-average period of 1.5 years. The compensation cost recorded in 2010 and 2009 for Cash-
Settled Awards was not significant. There were no Cash-Settled Awards in 2008 under LTIP.
The aggregate fair value, at the dates of grant, of shares granted in 2010, 2009 and 2008, was approximately $7 million, $13 million and
$21 million, respectively. The total grant-date fair value of shares that vested during 2010, 2009 and 2008 was $10 million, $2 million and
$13 million, respectively. The weighted-average grant-date fair value of shares granted during 2010, 2009 and 2008, was 13.79 Swiss francs,
9.83 Swiss francs and 31.47 Swiss francs, respectively.
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Reference price
(Swiss francs) (1)
2008 March 15, 2008, to March 15, 2011 26.20
2009 March 15, 2009, to March 15, 2012 14.16
2010 March 15, 2010, to March 15, 2013 21.63
(1)
For the purpose of comparison with the peers, the reference price is calculated as the average of the closing prices of the ABB Ltd share on the SIX Swiss
Exchange over the 20 trading days preceding March 15 of the respective launch year.
Choice of Equity
or Equity/Cash
Settlement (1)
Number of shares
Only Cash
Settlement (2)
Total
Weighted-average
grant-date fair
value per share
(Swiss francs)
Nonvested at January 1, 2010 2,492,234 — 2,492,234 18.41
Granted 348,446 228,913 577,359 13.79
Vested (471,491 ) — (471,491 ) 24.50
Expired (3) (32,168 ) — (32,168 ) 24.50
Nonvested at December 31, 2010 2,337,021 228,913 2,565,934 16.17
(1)
Shares that, subject to vesting, the Eligible Participant can elect to receive either i) 100 percent in the form of shares or ii) 30 percent of the value in cash (the
remaining 70 percent can only be received in the form of shares).
(2) Shares that, subject to vesting, the Eligible Participant can only receive in cash.
(3) Expired as the criteria for the Company's Performance condition were not satisfied.

Table of Contents
Note 18—Share-based payment arrangements (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
For the share-price performance component of the 2010 and 2009 LTIP launches, the fair value of the shares relating to the Equity-Settled
Awards is based on the market price of the ABB Ltd share on grant date, adjusted for the probability of vesting as computed using a Monte Carlo
simulation model at grant date. The main inputs to the Monte Carlo simulation model for the grant-date fair value of the Equity-Settled Awards
for the Company and each peer company are as follows:
The fair value of the shares relating to the Cash-Settled Awards is based on the market price of the ABB Ltd share at each reporting date
adjusted for the probability of vesting as computed using a Monte Carlo simulation model at each reporting date. The main inputs to the Monte
Carlo simulation model for the December 31, 2010 and 2009, fair values of the Cash-Settled Awards for the Company and each peer company
are as follows:
For the share-price performance component of launches up to and including the 2008 LTIP launch, the fair value of the granted shares was
the market price of the ABB Ltd share on grant date for the Equity-Settled Awards and the market price of the ABB Ltd share at each reporting
date for the Cash-Settled Awards.
For the retention component under the 2010 LTIP launch and the co-investment component under all other LTIP launches, the fair value of
the shares is the market price of the ABB Ltd share on grant date for the Equity-Settled Awards and on each reporting date for the Cash-Settled
Awards.
Other share-based payments
Equity-Settled Awards at
grant dates of
LTIP 2010
Launch
The Company has other minor share-based payment arrangements with certain individual employees. In December 2009, such
arrangements were modified to give the participants the right to receive, upon vesting, 30 percent of the value of the vested shares in cash. The
additional compensation cost as a result of such modification was not significant. The compensation cost recorded in "Selling, general and
administrative expenses" in 2010 and 2009 for the cash-settled arrangements was not significant. There were no such cash-settled arrangements
in 2008.
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LTIP 2009
Launch
From To From To
Input ranges for:
—Option implied volatilities
(%) 19.5 53.5 5.6 51.5
—Risk-free rates (%) 1.9 4.3 2.2 4.1
—Equity betas 0.83 1.31 0.81 1.29
—Equity risk premiums (%) 6.0 8.0 6.0 8.0
Cash-Settled Awards at
December 31,
2010 2009
Input ranges for:
—Option implied
From To From To
volatilities (%)
—Risk-free rates (%)
—Equity betas
—Equity risk premiums (%)
12.5 46.4 16.0 51.1
1.8 4.4 2.3 4.6
0.84 1.30 0.83 1.31
6.0 8.0 6.0 8.0

Table of Contents
Note 19—Stockholders' equity
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
At December 31, 2010, the Company had 2,747,639,755 authorized shares, of which 2,308,782,064 were registered and issued. At
December 31, 2009, the Company had 2,770,314,755 authorized shares, of which 2,329,324,797 were registered and issued.
In February 2008, the Company announced a share-buyback program of up to a maximum value of 2.2 billion Swiss francs (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. Up to December 31, 2008, a total of 22.675 million shares
were repurchased under the program at a total cost of 652 million Swiss francs ($619 million, using exchange rates effective at the respective
repurchase dates) and were included in "Treasury stock". No repurchases took place under the program in 2009 and 2010. At the Annual General
Meeting in April 2010, shareholders approved a proposal to cancel the 22.675 million repurchased shares and these were cancelled in July 2010,
reducing the number of total issued shares.
Also at the Annual General Meeting in April 2010, shareholders approved the payment of a dividend in the form of a nominal value
reduction of 0.51 Swiss francs per share, reducing the nominal value of ABB Ltd's shares from 1.54 Swiss francs per share to 1.03 Swiss francs
per share. The distribution, paid in July 2010 and equivalent to $1,112 million, resulted in a reduction in capital stock and additional paid-in
capital.
In May 2009, at the Annual General Meeting, shareholders approved a proposal to reduce the nominal value of ABB Ltd's shares from 2.02
Swiss francs per share to 1.54 Swiss francs per share and to distribute the 0.48 Swiss francs per share to shareholders. The distribution,
equivalent to $1,024 million, resulted in a reduction in capital stock and additional paid-in capital.
At the Annual General Meetings in May 2008, shareholders approved a proposal to reduce the nominal value of ABB Ltd's shares from
2.50 Swiss francs per share to 2.02 Swiss francs per share and to distribute the 0.48 Swiss francs per share to shareholders. The distribution,
equivalent to $1,060 million, resulted in a reduction in capital stock and additional paid-in capital.
Separately, during 2010, the Company purchased on the open market an aggregate of 12.1 million of its own shares for use in connection
with its employee incentive plans. These transactions resulted in an increase in "Treasury stock" of $228 million.
Upon and in connection with each launch of the Company's MIP, the Company sold call options to a bank at fair value, giving the bank the
right to acquire shares equivalent to the number of shares represented by the MIP warrant and WAR awards to participants. Under the terms of
the agreement with the bank, the call options can only be exercised by the bank to the extent that MIP participants have either sold or exercised
their warrants or exercised their WARs.
In 2010, 2009 and 2008, the bank exercised a portion of the call options held that had been issued at fair value. As a result, in 2010, 2009
and 2008, approximately 2.1 million, 1.0 million and 6.8 million shares, respectively, were issued by the Company resulting in a net increase in
capital stock and additional paid-in capital of $16 million, $7 million and $49 million, respectively.
At December 31, 2010, call options representing 20 million shares and with strike prices ranging from 15.30 to 36.40 Swiss francs were
held by the bank. These call options expire in periods ranging from February 2012 to May 2016. However, at December 31, 2010, only 3 million
of these instruments, with strike prices ranging from 15.30 to 36.40 Swiss francs, could be exercised under the terms of the agreement with the
bank.
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Table of Contents
Note 19—Stockholders' equity (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
In addition to the above, at December 31, 2010, the Company had further outstanding obligations to deliver:
• up to 2.8 million shares, at a strike price of 26.00 Swiss francs, relating to the options granted under the 2007 launch of the MIP,
vesting in May 2010 and expiring in May 2013,
• up to 3.0 million shares, at a strike price of 36.40 Swiss francs, relating to the options granted under the 2008 launch of the MIP,
vesting in May 2011 and expiring in May 2014,
• up to 4.6 million shares, at a strike price of 19.00 Swiss francs, relating to the options granted under the 2009 launch of the MIP,
vesting in May 2012 and expiring in May 2015,
• up to 7.7 million shares, at a strike price of 22.50 Swiss francs, relating to the options granted under the 2010 launch of the MIP,
vesting in May 2013 and expiring in May 2016,
• up to 4.1 million shares, at a strike price of 20.46 Swiss francs, to employees under the ESAP, vesting and expiring in November
2011,
• up to 2.3 million shares free-of-charge to Eligible Participants under the 2010, 2009 and 2008 launches of the LTIP, vesting and
expiring in March 2013, 2012 and 2011, respectively, and
• less than half a million shares in connection with certain other share-based payment arrangements with employees.
See Note 18 for a description of the above share-based payment arrangements.
In November 2010, the Company delivered 3.2 million shares, from treasury stock, for the purposes of fulfilling the Company's obligations
under the ESAP. This resulted in a net increase in capital stock and additional paid-in capital of $10 million and a reduction in treasury stock of
$52 million. In November 2009, the Company issued 5.5 million shares, from contingent capital stock, for the purposes of fulfilling the
Company's obligations under the ESAP. This share issuance resulted in an increase in capital stock and additional paid-in capital of $83 million.
No shares were issued under the ESAP in 2008.
Dividends are payable to the Company's stockholders based on the requirements of Swiss law, ABB Ltd's Articles of Incorporation and
stockholders' equity as reflected in the unconsolidated financial statements of ABB Ltd, Zurich, prepared in compliance with Swiss law. At
December 31, 2010, of the 12,493 million Swiss francs total stockholders' equity reflected in such unconsolidated financial statements,
2,378 million Swiss francs represents share capital and 10,115 million Swiss francs represent reserves. Of these reserves, 532 million Swiss
francs (representing legal reserves for own shares) and 476 million Swiss francs (representing 20 percent of the share capital) are restricted.
In February 2011, the Company announced that a proposal will be put to the 2011 Annual General Meeting to distribute 0.60 Swiss francs
per share to shareholders.
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Table of Contents
Note 20—Earnings per share
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year. Diluted
earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year, assuming that all
potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise outstanding written call options and outstanding
options and shares granted subject to certain conditions under the Company's share-based payment arrangements. In 2010, 2009 and 2008,
outstanding securities representing a maximum of 26 million, 41 million and 24 million shares, respectively, were excluded from the calculation
of diluted earnings per share as their inclusion would have been anti-dilutive.
Basic earnings per share:
Diluted earnings per share:
($ in millions, except per share data in $) 2010 2009 2008
Amounts attributable to ABB
shareholders:
Income from continuing operations 2,551 2,884 3,142
Income (loss) from discontinued
operations, net of tax 10 17 (24 )
Net income 2,561 2,901 3,118
Weighted-average number of shares
outstanding (in millions) 2,287 2,284 2,287
Basic earnings (loss) per share
attributable to ABB shareholders:
Income from continuing operations 1.12 1.26 1.37
Income (loss) from discontinued
operations, net of tax — 0.01 (0.01 )
Net income 1.12 1.27 1.36
($ in millions, except per share data in $) 2010 2009 2008
Amounts attributable to ABB
shareholders:
Income from continuing operations 2,551 2,884 3,142
Income (loss) from discontinued
operations, net of tax 10 17 (24 )
Net income 2,561 2,901 3,118
Weighted-average number of shares
outstanding (in millions) 2,287 2,284 2,287
Effect of dilutive securities:
Call options and shares 4 4 9
Dilutive weighted-average number
of shares outstanding 2,291 2,288 2,296
Diluted earnings (loss) per share
attributable to ABB shareholders:
Income from continuing operations 1.11 1.26 1.37
Income (loss) from discontinued
operations, net of tax 0.01 0.01 (0.01 )
Net income 1.12 1.27 1.36
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Table of Contents
Note 21—Restructuring and related expenses
Cost take-out program
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
In December 2008, the Company announced a two-year cost take-out program that aimed to sustainably reduce the Company's cost of sales
and general and administrative expenses. The savings have been derived from initiatives such as internal process improvements, low-cost
sourcing, and further measures to adjust the Company's global manufacturing and engineering footprint to shifts in customer demand. In the
course of this program, the Company has implemented and will continue to execute various restructuring initiatives across all operating
segments and regions. As of December 31, 2010, the Company has substantially completed the two-year cost take-out program.
Costs incurred under the program, per operating segment, were as follows:
($ in millions)
The Company recorded the following expenses under this program:
These expenses consisted of the following:
Costs incurred
in 2010
The most significant individual exit plans within this program related to the Robotics reorganization, the downsizing of the former
Automation Products business in France and Germany, as well as the Power Systems business in Germany.
F-81
Cumulative costs
incurred up to
December 31, 2010
Power Products 44 122
Power Systems 48 139
Discrete Automation and
Motion 35 256
Low Voltage Products 36 114
Process Automation 44 183
Corporate and Other 6 22
Total 213 836
($ in millions) 2010 2009 2008
Total cost of sales 110 293 72
Selling, general and administrative
expenses 36 75 32
Other income (expense), net 67 148 3
Total 213 516 107
($ in millions) 2010 2009 2008
Employee severance costs 95 342 99
Estimated contract settlement, loss order
and other costs 98 129 3
Inventory and long-lived asset
impairments 20 45 5
Total 213 516 107

Table of Contents
Note 21—Restructuring and related expenses (Continued)
Robotics reorganization
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
In 2008, the Company initiated its plan to adjust its engineering, manufacturing and service capacities in the former Robotics segment,
primarily in Western Europe and the U.S. as a result of the economic downturn in some of the segment's key markets and to increase the
presence in emerging markets. This plan included closing certain production lines as well as employment reductions. Effective January 1, 2010,
the former Robotics operating segment became part of the Discrete Automation and Motion operating segment.
Liabilities associated with the Robotics reorganization consisted of the following:
($ in millions)
Downsizing the former Automation Products business in France and Germany
In 2008, the Company started to formulate its plan to downsize the production capacities in the former Automation Products business in
France and Germany as a result of the economic downturn in some of this business' key markets. This plan included closing certain production
lines in both countries as well as employment reductions.
F-82
Employee
severance costs
Contract
settlement, loss
order and other
costs Total
Liability at January 1, 2009 62 — 62
Expenses 76 48 124
Cash payments (19 ) (7 ) (26 )
Exchange rate differences 1 — 1
Change in estimates (3 ) — (3 )
Liability at December 31, 2009 117 41 158
Expenses 8 14 22
Cash payments (59 ) (21 ) (80 )
Exchange rate differences (7 ) — (7 )
Change in estimates (14 ) (3 ) (17 )
Liability at December 31, 2010 45 31 76

Table of Contents
Note 21—Restructuring and related expenses (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Liabilities associated with the downsizing of the former Automation Products business in France and Germany consisted of the following:
($ in millions)
Effective January 1, 2010, the former Automation Products segment was reorganized into two new segments, the Discrete Automation and
Motion segment and the Low Voltage Products segment, while the instrumentation business was added to the Process Automation segment.
Consequently, the liabilities and expenses associated with the downsizing of the former Automation Products business in France and Germany
are now primarily reported in the Low Voltage Products and Process Automation segments. In addition, the Company executed other,
individually insignificant restructuring initiatives in its automation segments across many countries.
Downsizing the Power Systems business in Germany
In 2009, the Company initiated its plan to adjust its engineering and service capacities in the Power Systems business in Germany as a
result of the economic downturn in some of the segment's key markets and to increase the presence in emerging markets. This plan mainly
included employment reductions.
F-83
Employee
severance costs
Contract
settlement, loss
order and other
costs Total
Liability at January 1, 2009 6 — 6
Expenses 61 15 76
Cash payments (3 ) (3 ) (6 )
Liability at December 31, 2009 64 12 76
Expenses 29 6 35
Cash payments (25 ) (11 ) (36 )
Exchange rate differences (3 ) (2 ) (5 )
Change in estimates — (2 ) (2 )
Liability at December 31, 2010 65 3 68

Table of Contents
Note 21—Restructuring and related expenses (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Liabilities associated with the downsizing of the Power Systems business in Germany consisted of the following:
($ in millions)
In addition, the Company executed other individually insignificant restructuring initiatives in its Power Systems business across many
countries.
At December 31, 2010, the balance of restructuring and related liabilities is primarily included in "Provisions and other current liabilities".
Note 22—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 Power Products,
Power Systems, Discrete Automation and Motion, Low Voltage Products and Process Automation. The remaining operations of the Company
are included in Corporate and Other.
Effective January 1, 2010, the Company reorganized its automation segments to align their activities more closely with those of its
customers. The former Automation Products segment was reorganized into two new segments, the Discrete Automation and Motion segment and
the Low Voltage Products segment. The former Robotics segment was incorporated into the new Discrete Automation and Motion segment,
while the Process Automation segment remained unchanged except for the addition of the instrumentation business from the former Automation
Products segment. The Power Products and Power Systems segments remained unchanged. Segment information for 2009 and 2008 and at
December 31, 2009 and 2008, has been reclassified to reflect these organizational changes.
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 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
F-84
Employee
severance costs
Contract
settlement, loss
order and other
costs Total
Liability at January 1, 2009 — — —
Expenses 37 6 43
Liability at December 31, 2009 37 6 43
Expenses 4 — 4
Cash payments (5 ) (3 ) (8 )
Exchange rate differences (5 ) — (5 )
Change in estimates (9 ) — (9 )
Liability at December 31, 2010 22 3 25

Table of Contents
Note 22—Operating segment and geographic data (Continued)
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
control products and services and incorporating components manufactured by both the Company and by third parties.
• Discrete Automation and Motion: manufactures and sells motors, generators, variable speed drives, programmable logic
controllers, rectifiers, excitation systems, robotics, and related services for a wide range of applications in factory automation,
process industries, and utilities.
• Low Voltage Products: manufactures products and systems that provide protection, control and measurement for electrical
installations, enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related
service. The segment also makes intelligent building control systems 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, and utility automation 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 performance of its segments based on earnings before interest and taxes, which excludes interest and dividend
income, interest and other finance expense, provision for taxes, and income (loss) from discontinued operations, net of tax. The Company
presents segment revenues, depreciation and amortization, earnings before interest and taxes, capital expenditures and total assets. The Company
accounts for intersegment sales and transfers as if the sales and transfers were to third parties, at current market prices.
F-85

Table of Contents
Note 22—Operating segment and geographic data (Continued)
The following tables summarize information for each segment:
($ in millions)
Third party
revenues
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Intersegment
revenues
Total
revenues
2010
Depreciation
and
amortization
Earnings
before
interest
and taxes (1)
Capital
December 31,
2010
expenditures (1) Total assets (1)
Power
Products 8,486 1,713 10,199 177 1,622 200 7,238
Power
Systems 6,590 196 6,786 84 111 119 6,053
Discrete
Automation
and Motion 4,978 639 5,617 78 926 98 3,715
Low Voltage
Products 4,263 291 4,554 105 806 100 2,904
Process
Automation
Corporate
7,209 223 7,432 76 755 76 4,741
and Other
Intersegment
63 1,468 1,531 182 (402 ) 247 11,644
elimination — (4,530 ) (4,530 ) — — — —
Consolidated 31,589 — 31,589 702 3,818 840 36,295
($ in millions)
Third party
revenues
Intersegment
revenues
Total
revenues
2009
Depreciation
and
amortization
Earnings
before
interest
and taxes (1)
Capital
December 31,
2009
expenditures (1) Total assets (1)
Power
Products 9,370 1,869 11,239 185 1,969 272 6,918
Power
Systems 6,356 193 6,549 46 388 131 4,617
Discrete
Automation
and Motion 4,601 804 5,405 74 557 119 3,370
Low Voltage
Products 3,799 272 4,071 100 519 150 2,731
Process
Automation
Corporate
7,606 233 7,839 80 643 99 4,571
and Other
Intersegment
63 1,504 1,567 170 50 196 12,521
elimination — (4,875 ) (4,875 ) — — — —
Consolidated 31,795 — 31,795 655 4,126 967 34,728
($ in millions)
Power
Third party
revenues
Intersegment
revenues
Total
revenues
2008
Depreciation
and
amortization
Earnings
before
interest
and taxes (1)
Capital
December 31,
2008
expenditures (1) Total assets (1)

Products
Power
9,866 2,024 11,890 161 2,100 305 7,136
Systems
Discrete
Automation
6,673 239 6,912 54 592 89 4,402
and Motion
Low Voltage
5,695 893 6,588 71 1,066 148 3,802
Products
Process
4,466 281 4,747 102 819 174 2,610
Automation
8,125 272 8,397 109 958 90 4,664
Corporate
and Other 87 1,606 1,693 164 (983 ) 365 10,397
Intersegment
elimination — (5,315 ) (5,315 ) — — — —
Consolidated 34,912 — 34,912 661 4,552 1,171 33,011
(1)
Earnings before interest and taxes, Capital expenditures and Total assets are after intersegment eliminations and therefore refer to third party activities only.
F-86

Table of Contents
Note 22—Operating segment and geographic data (Continued)
Geographic information
ABB Ltd
Notes to the Consolidated Financial Statements (Continued)
Revenues by geography reflect the location of the customer. Approximately 14 percent of the Company's total revenues in 2010, compared
to 13 and 11 percent in 2009 and 2008, respectively, were generated from customers in China. Approximately 10 percent of the Company's total
revenues in 2010, 2009 and 2008, came from customers in the United States. Approximately 7 percent of the Company's total revenues in 2010
and approximately 8 percent in both 2009 and 2008, were generated from customers in Germany. In 2010, 2009 and 2008, 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, 2010,
approximately 21 percent and 12 percent of the Company's long-lived assets were located in Switzerland and Sweden, respectively. At
December 31, 2009, approximately 20 percent and 12 percent of the Company's long-lived assets were located in Switzerland and Germany.
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.
At December 31, 2010, approximately 64 percent of the Company's employees are subject to collective bargaining agreements in various
countries. Approximately one-third of these agreements will expire in 2011. Collective bargaining agreements are subject to various regulatory
requirements and are renegotiated on a regular basis in the normal course of business.
F-87
Revenues
Long-lived assets
at December 31,
($ in millions) 2010 2009 2008 2010 2009
Europe 12,378 13,093 15,815 2,995 2,776
The Americas 6,213 6,049 6,428 345 327
Asia 8,872 8,684 8,967 849 808
Middle East and Africa 4,126 3,969 3,702 167 161
31,589 31,795 34,912 4,356 4,072

16 NOVEMBER 2010
ABB LTD
as the Guarantor
CERTAIN SUBSIDIARIES OF ABB LTD
as the Borrowers
CREDIT SUISSE AG, LONDON BRANCH
as Facility Agent
AMENDMENT AND RESTATEMENT AGREEMENT
in respect of a
MULTICURRENCY REVOLVING CREDIT AGREEMENT DATED 7 OCTOBER 2009
Exhibit 4.1
CONFORMED COPY

CONTENTS
Clause Page
1. INTERPRETATION
2. RESTATEMENT
3. REPRESENTATIONS & WARRANTIES
4. CONTINUITY
5. FURTHER ASSURANCE
6. FEES, COSTS AND EXPENSES
7. FINANCE DOCUMENT
8. COUNTERPARTS
9. THIRD PARTY RIGHTS
10. MISCELLANEOUS
11. GOVERNING LAW AND JURISDICTION
SCHEDULE 1 CONDITIONS PRECEDENT
Part A Corporate Documents
Part B Legal Opinions
Part C Other Documents And Evidence
SCHEDULE 2 AMENDED AND RESTATED CREDIT AGREEMENT
3
3
4
4
4
4
4
4
5
5
5
6
6
7
8
9

THIS AMENDMENT AND RESTATEMENT AGREEMENT is dated 16 November 2010 and made between:
(1) ABB LTD , a company incorporated in Switzerland whose registered office is at Affolternstrasse 44, CH-8050 Zurich, Switzerland
( ABB or the Guarantor );
(2) THE SUBSIDIARIES OF ABB listed as borrowers in Part V of Schedule 1 ( The Original Obligors ) to the Amended and Restated
Credit Agreement (the Borrowers ); and
(3) CREDIT SUISSE AG, LONDON BRANCH in its capacity as facility agent and for and on behalf of the Finance Parties (the Facility
Agent ).
IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement:
Amended and Restated Credit Agreement means the multicurrency revolving credit agreement set out in Schedule 2 ( Amended and Restated
Credit Agreement ) between, among others, ABB, the Borrowers, the Facility Agent, and the financial institutions listed in Parts I to IV of
Schedule 1 ( The Original Lenders ) to that agreement.
Amendment Fee Letter means the fee letter dated the date hereof from the Facility Agent to ABB relating to the fees referred to in paragraph
(b) of Clause 6 ( Fees, Costs and Expenses ) of this Agreement.
Credit Agreement means the Original Credit Agreement or, with effect from the occurrence of the Effective Date, the Amended and Restated
Credit Agreement.
Effective Date means the date on which the Facility Agent confirms to ABB and the Lenders in writing that it has received each of the
documents and other evidence listed in Schedule 1 ( Conditions Precedent ) to this Agreement in form and substance satisfactory to the Facility
Agent.
Original Credit Agreement means the multicurrency revolving credit agreement dated 7 October 2009 between, among others, ABB, the
Borrowers, the Facility Agent, and the financial institutions named therein as Lenders.
Unless otherwise defined herein, words and expressions defined in the Credit Agreement shall have the same meanings in this Agreement and
the principles of construction set out in the Credit Agreement shall be deemed incorporated in this Agreement as if set out in full herein (save
that references to the Credit Agreement shall be construed as references to this Agreement).
2. RESTATEMENT
(a) The Facility Agent shall confirm to ABB and the Lenders in writing that it has received each of the documents and other evidence
listed in Schedule 1 ( Conditions Precedent ) to this Agreement in form and substance satisfactory to it and that the Effective Date has
occurred promptly upon receipt of such documents and other evidence.

(b) With effect from the Effective Date, the Original Credit Agreement shall be amended and restated so that it shall be read and construed
for all purposes as the Amended and Restated Credit Agreement.
(c) If a bank that is a Lender immediately prior to the occurrence of the Effective Date is not specified in the Amended and Restated Credit
Agreement as having a Commitment or a Swingline Commitment, the Commitment and Swingline Commitment of such Lender shall
be (and shall be deemed to be) cancelled in full with effect from the occurrence of the Effective Date and that bank shall cease to be a
Lender with effect from such time.
3. REPRESENTATIONS & WARRANTIES
ABB (in respect of itself and, where specified, each Group Company or each Material Subsidiary) and each Borrower (in respect of itself) makes
the repeating representations and warranties set out in Clause 19.14 ( Repetition ) and the representations set out in Clause 19.5 ( Validity and
admissibility in evidence ), Clause 19.7 ( No Default ) and Clause 19.11 ( Pari passu ranking ) of the Credit Agreement on:
(a) the date of this Agreement; and
(b) the Effective Date.
For the avoidance of doubt, for this purpose, references in Clause 19 (Representations) of the Credit Agreement to the Finance Documents shall
be construed so as to include a reference to this Agreement and the Amendment Fee Letter.
4. CONTINUITY
The Guarantor confirms its obligations under Clause 18 ( Guarantee and Indemnity ) of the Amended and Restated Credit Agreement.
5. FURTHER ASSURANCE
ABB shall, at the request of the Facility Agent and at its own expense, do all such acts and things necessary to give effect to the amendments
effected or to be effected pursuant to this Agreement.
6. FEES, COSTS AND EXPENSES
(a) ABB shall promptly on demand pay to the Facility Agent, upon presentation of duly documented evidence thereof and whether or not
the Effective Date occurs, the amount of all costs and expenses (including but not limited to legal fees) reasonably and directly incurred
by the Facility Agent in connection with the negotiation, preparation and execution of this Agreement and any other document or matter
referred to in this Agreement.
(b) ABB shall pay to the Facility Agent the fees in the amounts specified in the Amendment Fee Letter on the dates specified therein.
7. FINANCE DOCUMENT
Each of this Agreement and the Amendment Fee Letter is a Finance Document.

8. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and by each party on separate counterparts. Each counterpart is an original, but
all counterparts shall together constitute one and the same instrument. Delivery of a counterpart of this Agreement by e-mail attachment or
telecopy shall be an effective mode of delivery.
9. THIRD PARTY RIGHTS
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit
of any term of this Agreement.
10. MISCELLANEOUS
The provisions of Clause 30 ( Notices ), Clause 32 ( Partial Invalidity ), Clause 33 ( Remedies and Waivers ) and Clause 37 ( Enforcement ) of
the Credit Agreement shall be incorporated into this Agreement as if set out in full in this Agreement and as if references in those clauses to “this
Agreement” or “the Finance Documents” were references to this Agreement.
11. GOVERNING LAW AND JURISDICTION
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

1. A copy of the constitutional documents of each Obligor.
SCHEDULE 1
CONDITIONS PRECEDENT
Part A
Corporate Documents
2. A copy of a resolution of the board of directors (if applicable) of each Borrower or, in the case of ABB Capital B.V., a copy of a
resolution of the board of managing directors ( directie ):
(a) approving the terms of, and the transactions contemplated by, this Agreement and the Amended and Restated Credit Agreement and
resolving that it execute this Agreement;
(b) authorising a specified person or persons to execute this Agreement on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices to be signed and/or
despatched by it under or in connection with this Agreement.
3. A copy of an excerpt of the minutes of, or a circular resolution of, a meeting of the board of directors of ABB approving the terms of,
and the transactions contemplated by, this Agreement, the Amended and Restated Credit Agreement and the Amendment Fee Letter,
and resolving that it execute this Agreement and the Amendment Fee Letter.
4. A copy of a shareholders resolution of ABB Capital B.V.
5. A specimen of the signature of each person authorised by the resolution referred to in paragraph 2 above.
6. A specimen of the signature of each person authorised by ABB to:
(a) execute this Agreement and the Amendment Fee Letter on its behalf; and
(b) sign and/or despatch all documents and notices to be signed and/or despatched by it under or in connection with this Agreement and
the Amendment Fee Letter.
7. A copy of a good standing certificate (including verification of tax status) with respect to ABB Treasury Center (USA), Inc., issued as
of a recent date by the Secretary of State or other appropriate official of its jurisdiction of incorporation.
8. A certificate of an authorised signatory of the relevant Obligor, certifying without personal liability that each copy document relating to
it specified in paragraphs 1 – 6 of this Schedule 1 is correct, complete and in full force and effect as at a date no earlier than the date of this
Agreement and confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing
or similar limit binding on each Obligor to be exceeded.

Part B
Legal Opinions
1. A legal opinion of Clifford Chance LLP, legal advisers to the Facility Agent in England in the form approved by the Facility Agent.
2. A legal opinion of Clifford Chance LLP, Amsterdam, legal advisers to the Facility Agent in the Netherlands in the form approved by
the Facility Agent.
3. A legal opinion of Freshfields Bruckhaus Deringer US LLP, United States, legal advisers to ABB Treasury Center (USA), Inc. in the
form approved by the Facility Agent.
4. A legal opinion of Lalive, legal advisers to the Facility Agent in Switzerland in the form approved by the Facility Agent.
5. A legal opinion of Advokatfirman Vinge, legal advisers to the Facility Agent in Sweden in the form approved by the Facility Agent.

Part C
Other Documents And Evidence
1. The Amendment Fee Letter duly signed by ABB and the Facility Agent.
2. Evidence that the participation of any bank referred to in paragraph (c) of Clause 2 ( Restatement ) of this Agreement in any Advances
outstanding immediately prior to the occurrence of the Effective Date has been prepaid in full, together with any other outstanding amount due to
such bank, on the Effective Date.
SCHEDULE 2
AMENDED AND RESTATED CREDIT AGREEMENT
ABB LTD
CERTAIN SUBSIDIARIES OF ABB LTD
AS BORROWERS
WITH
THE MANDATED LEAD ARRANGERS
WITH
CREDIT SUISSE AG, LONDON BRANCH
AS FACILITY AGENT
AND EURO SWINGLINE AGENT
WITH
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
AS DOLLAR SWINGLINE AGENT
AND
NORDEA BANK AB (PUBL)
AS SEK SWINGLINE AGENT
$2,000,000,000
MULTICURRENCY REVOLVING CREDIT AGREEMENT
LIMITED LIABILITY PARTNERSHIP
DATED 7 OCTOBER 2009
AS AMENDED AND RESTATED PURSUANT TO
AN AMENDMENT AND RESTATEMENT AGREEMENT DATED 16 NOVEMBER 2010

CONTENTS
Clause Page
1. Definitions and Interpretation
2. The Facility
3. Purpose
4. Conditions of Utilisation
5. Utilisation
6. Optional Currencies
7. Repayment
8. Prepayment and Cancellation
9. Interest
10. Interest Periods
11. Changes to the Calculation of Interest
12. Fees
13. Tax Gross Up and Indemnities
14. Increased Costs
15. Other Indemnities
16. Mitigation by the Lenders
17. Costs and Expenses
18. Guarantee and Indemnity
19. Representations
20. Information Undertakings
21. General Undertakings
22. Events of Default
23. Changes to the Lenders
24. Changes to the Obligors
25. Role of the Agents and the Mandated Lead Arrangers
26. Conduct of Business by the Finance Parties
27. Sharing among the Lenders
28. Payment Mechanics
29. Set-Off
30. Notices
1
4
24
28
28
30
33
34
35
40
41
41
43
45
49
50
51
52
52
56
58
62
65
68
73
75
81
82
84
88
88

31. Calculation and Certificates
32. Partial Invalidity
33. Remedies and Waivers
34. Amendments and Waivers
35. Counterparts
36. Governing Law
37. Enforcement
Schedule 1
Part I The Original Lenders
Part II The Dollar Swingline Lenders
Part III The Euro Swingline Lenders
Part IV The SEK Swingline Lenders
Part V The Original Obligors
Schedule 2 Conditions Precedent
Part I Conditions Precedent
Part II Additional Borrower Conditions Precedent
Schedule 3 Utilisation Request
Schedule 4 Form Of Transfer Certificate
Schedule 5 Timetables
Schedule 6 Form Of Borrower Accession Letter
Schedule 7 Form Of Resignation Letter
Schedule 8 Mandatory Cost
Schedule 9 Material Subsidiaries
Schedule 10 Form of Increase Confirmation
2
91
91
91
92
94
95
95
96
96
98
99
100
101
102
102
103
105
107
109
111
112
113
116
117

THIS AGREEMENT is dated 7 October 2009 as amended and restated on 16 November 2010 and made between:
(1) ABB LTD , a company incorporated in Switzerland whose registered office is at Affolternstrasse 44, CH-8050 Zurich, Switzerland (“
ABB ” or the “ Guarantor ”);
(2) THE SUBSIDIARIES OF ABB listed in Part V of Schedule 1 ( The Original Obligors ) as original borrowers (the “ Original
Borrowers ”);
(3) BANCO BILBAO VIZCAYA ARGENTARIA, S.A.; BANC OF AMERICA SECURITIES LIMITED; BANCO SANTANDER,
S.A.; BANK OF CHINA LIMITED, LONDON BRANCH; BARCLAYS CAPITAL; BNP PARIBAS; CITIGROUP GLOBAL
MARKETS LIMITED; COMMERZBANK AKTIENGESELLSCHAFT; CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK; CREDIT SUISSE AG, LONDON BRANCH; DEUTSCHE BANK AG; DNB NOR BANK ASA;
GOLDMAN SACHS INTERNATIONAL; HANDELSBANKEN CAPITAL MARKETS, SVENSKA HANDELSBANKEN AB
(PUBL); HSBC BANK PLC; INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED, THROUGH ICBC
(LONDON) LIMITED; ING BANK N.V.; INTESA SANPAOLO SPA; J.P.MORGAN PLC; MERCHANT BANKING,
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL); MORGAN STANLEY BANK, N.A.; NORDEA BANK AB (PUBL);
SOCIETE GENERALE; STANDARD CHARTERED BANK; THE ROYAL BANK OF SCOTLAND PLC; UBS LIMITED;
UNICREDIT BANK AG AND ZÜRCHER KANTONALBANK in their respective capacities as mandated lead arrangers (the “
Mandated Lead Arrangers ”);
(4) THE FINANCIAL INSTITUTIONS listed in Part I to Part IV of Schedule 1 ( The Original Lenders ) in their respective capacities as
original lenders (the “ Original Lenders ”);
(5) CREDIT SUISSE AG, LONDON BRANCH in its capacity as facility agent (the “ Facility Agent ”);
(6) CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH in its capacity as dollar swingline agent (the “ Dollar Swingline Agent ”);
(7) CREDIT SUISSE AG, LONDON BRANCH in its capacity as euro swingline agent (the “ Euro Swingline Agent ”); and
(8) NORDEA BANK AB (PUBL) in its capacity as SEK swingline agent (the “ SEK Swingline Agent ”).
3

IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
SECTION 1
INTERPRETATION
“ Additional Borrower ” means any wholly owned Subsidiary of ABB that has become an Additional Borrower in accordance with
Clause 24.2 ( Additional Borrowers ).
“ Advance ” means an advance made or to be made under the Facility (including, unless the context otherwise requires, a Swingline
Advance) or the principal amount outstanding for the time being of that advance.
“ Affiliate ” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of
that Holding Company, except that in relation to The Royal Bank of Scotland plc, this term shall include The Royal Bank of Scotland
N.V. and each of its subsidiaries or subsidiary undertakings, but shall not include (i) the UK government or any member or
instrumentality thereof, including Her Majesty’s Treasury and UK Financial Investments Limited (or any directors, officers, employees
or entities thereof) or (ii) any persons or entities controlled by or under common control with the UK government or any member or
instrumentality thereof (including Her Majesty’s Treasury and UK Financial Investments Limited) and which are not part of The Royal
Bank of Scotland Group plc and its subsidiaries or subsidiary undertakings.
“ Agents ” means the Dollar Swingline Agent, the Euro Swingline Agent, the SEK Swingline Agent and the Facility Agent, and “ Agent
” means, as the context may require, any of them.
“ Agreed Jurisdiction ” means any of the United States of America, Switzerland, Guernsey, any country that is, at the date of this
Agreement, a member of the European Union (other than Cyprus, Estonia, Latvia, Lithuania, Slovakia and Slovenia) and any other
country approved by all the Lenders.
“ Amendment and Restatement Agreement ” means the amendment and restatement agreement dated 16 November 2010 relating to
this Agreement and made between, amongst others, ABB and the Facility Agent.
“ Amendment Fee Letter ” means the fee letter dated the date of the Amendment and Restatement Agreement from the Facility Agent
to ABB.
“ Authorisation ” means an authorisation, consent, approval, resolution, licence, exemption, filing or registration.
“ Availability Period ” means the period from the date of this Agreement up to and including the date falling one week before the
Termination Date.
“ Available Commitment ” means a Lender’s Commitment minus:
(a) the Base Currency Amount of its participation in any outstanding Advances (including any Separate Advances); and
4

(b) in relation to any proposed Utilisation, the Base Currency Amount of its participation in any Advances that are due to be made
on or before the proposed Utilisation Date,
other than, in either case, that Lender’s participation in any Advances that are due to be repaid or prepaid on or before the proposed
Utilisation Date.
“ Available Dollar Swingline Commitment ” means a Dollar Swingline Lender’s Dollar Swingline Commitment minus:
(a) the Base Currency Amount of its participation in any outstanding Dollar Swingline Advances; and
(b) in relation to any proposed Utilisation by way of a Dollar Swingline Advance, the Base Currency Amount of its participation in
any Dollar Swingline Advances that are due to be made on or before the proposed Utilisation Date,
other than, in either case, that Dollar Swingline Lender’s participation in any Dollar Swingline Advances that are due to be repaid or
prepaid on or before the proposed Utilisation Date.
“ Available Dollar Swingline Facility ” means the aggregate for the time being of each Dollar Swingline Lender’s Available Dollar
Swingline Commitment.
“ Available Euro Swingline Commitment ” means a Euro Swingline Lender’s Euro Swingline Commitment minus:
(a) the Base Currency Amount of its participation in any outstanding Euro Swingline Advances; and
(b) in relation to any proposed Utilisation by way of a Euro Swingline Advance, the Base Currency Amount of its participation in
any Euro Swingline Advances that are due to be made on or before the proposed Utilisation Date,
other than, in either case, that Euro Swingline Lender’s participation in any Euro Swingline Advances that are due to be repaid or prepaid
on or before the proposed Utilisation Date.
“ Available Euro Swingline Facility ” means the aggregate for the time being of each Euro Swingline Lender’s Available Euro
Swingline Commitment.
“ Available Facility ” means the aggregate for the time being of each Lender’s Available Commitment.
“ Available SEK Swingline Commitment ” means a SEK Swingline Lender’s SEK Swingline Commitment minus:
(a) the Base Currency Amount of its participation in any outstanding SEK Swingline Advances; and
(b) in relation to any proposed Utilisation by way of a SEK Swingline Advance, the Base Currency Amount of its participation in
any SEK Swingline Advances that are due to be made on or before the proposed Utilisation Date,
other than, in either case, that SEK Swingline Lender’s participation in any SEK Swingline Advances that are due to be repaid or prepaid
on or before the proposed Utilisation Date.
5

“ Available SEK Swingline Facility ” means the aggregate for the time being of each SEK Swingline Lender’s Available SEK
Swingline Commitment.
“ Base Currency ” means Dollars.
“ Base Currency Amount ” means, in relation to an Advance, the amount specified in the Utilisation Request delivered by the relevant
Borrower for that Advance (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base
Currency at the Facility Agent’s Spot Rate of Exchange on the date which is 3 Business Days before the Utilisation Date or, if later, on
the date the Facility Agent receives the Utilisation Request) adjusted to reflect any repayment or prepayment of the Advance.
“ Borrower Accession Letter ” means a letter substantially in the form set out in Schedule 6 ( Form of Borrower Accession Letter ).
“ Borrowers ” means each Original Borrower and each Additional Borrower, provided that it has not been released from its rights and
obligations under this Agreement in accordance with Clause 24.3 ( Resignation of a Borrower ).
“ Break Costs ” means the amount (if any) by which:
(a) the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any
part of its participation in an Advance or Unpaid Sum to the last day of the current Interest Period in respect of that Advance or
Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;
exceeds:
(b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum
received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day
following receipt or recovery and ending on the last day of the current Interest Period.
“ Business Day ” means:
(a) in relation to a Dollar Swingline Advance a day (other than a Saturday or a Sunday) on which banks are open for general
business in New York;
(b) in relation to a SEK Swingline Advance a day (other than a Saturday or a Sunday) on which banks are open for general
business in Stockholm;
(c) in relation to any Advance (not being a Dollar Swingline Advance or a SEK Swingline Advance) a day (other than a Saturday
or Sunday) on which banks are open for general business in London, and:
(i) (in relation to any date for payment or purchase of a currency other than Euro) the principal financial centre of the
country of that currency; or
(ii) (in relation to any date for payment or purchase of Euro) any TARGET Day; and
(d) for all other purposes, a day (other than a Saturday or Sunday) on which banks are open for general business in London.
6

“ Commitment ” means:
(a) in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “ Commitment ” in
Part I of Schedule 1 ( The Original Lenders ) and the amount of any other Commitment transferred to it under this Agreement
or assumed by it in accordance with Clause 2.2 ( Increase ); and
(b) in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement or assumed by it in
accordance with Clause 2.2 ( Increase ),
to the extent not cancelled, reduced or transferred by it under this Agreement.
“ Credit Rating ” means the corporate rating given by S&P or Moody’s in respect of ABB.
“ Default ” means an Event of Default or any event or circumstance specified in Clause 22 ( Events of Default ) which (with the expiry
of a grace period or the giving of any notice specified in Clause 22 ( Events of Default )) would be an Event of Default.
“ Defaulting Lender ” means any Lender:
(a) which has failed to make its participation in an Advance available or has notified the Facility Agent that it will not make its
participation in an Advance available by the Utilisation Date of that Advance in accordance with Clause 5.4 ( Lenders’
participation );
(b) which has otherwise rescinded or repudiated a Finance Document; or
(c) with respect to which an Insolvency Event has occurred and is continuing,
unless, in the case of paragraph (a) above:
(i) its failure to pay is caused by:
(A) administrative or technical error; or
(B) a Disruption Event,
and payment is made within 3 Business Days of its due date; or
(ii) the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.
“ Disruption Event ” means either or both of:
(a) a material disruption to those payment or communications systems or to those financial markets which are, in each case,
required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions
contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any
of the Parties; or
7
(b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or
payments operations of a Party preventing that, or any other Party:
(i) from performing its payment obligations under the Finance Documents; or
(ii) from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
“ Dollar Swingline Advance ” means any advance made or to be made under the Dollar Swingline Facility pursuant to a Utilisation
Request under Clause 5.5 ( Delivery of a Utilisation Request for a Swingline Advance ).
“ Dollar Swingline Commitmen t” means:
(a) in relation to an Original Lender which is a Dollar Swingline Lender, the amount set opposite its name under the heading “
Dollar Swingline Commitment ” in Part II of Schedule 1 ( The Dollar Swingline Lenders ) and the amount of any other Dollar
Swingline Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 ( Increase ); and
(b) in relation to any other Dollar Swingline Lender, the amount of any Dollar Swingline Commitment transferred to it under this

Agreement or assumed by it in accordance with Clause 2.2 ( Increase ),
to the extent not cancelled, reduced or transferred by it under this Agreement.
“ Dollar Swingline Facility ” means the dollar swingline facility forming part of the Facility as described in paragraph (a) of Clause 2.1
( The Facility ).
“ Dollar Swingline Lender ” means:
(a) any Original Lender whose name is set out in Part II of Schedule 1 ( The Dollar Swingline Lenders ); and
(b) any bank which has become a Party as a Lender in accordance with Clause 2.2 ( Increase ) or Clause 23 ( Changes to the
Lenders ) and to whom a Dollar Swingline Commitment has been transferred or by whom a Dollar Swingline Commitment has
been assumed,
which in each case has not ceased to have a Dollar Swingline Commitment.
“ Dollar Swingline Rate ” means, at any time, the higher of:
(a) the Prime Rate; and
(b) the Federal Funds Effective Rate plus 0.50 per cent. per annum.
“ Dutch Borrower ” means ABB Capital B.V. and any Additional Borrower which is incorporated or established in The Netherlands.
“ Effective Date ” has the meaning given to it in the Amendment and Restatement Agreement.
8

“ Environmental Law ” means any applicable law in any jurisdiction in which any Group Company conducts business which relates to
the pollution or protection of the environment or harm to or the protection of human health or the health of animals or plants.
“ ERISA ” means the Employee Retirement Income Security Act of 1974 of the United States of America and the regulations
promulgated and the rulings issued thereunder.
“ EURIBOR ” means, in relation to any Advance (other than a Euro Swingline Advance) in Euro:
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for the period of that Advance) the arithmetic mean of the rates (rounded upwards to four
decimal places) as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the European
interbank market,
as of the Specified Time on the Quotation Day for the offering of deposits in Euro for a period comparable to the Interest Period of the
relevant Advance.
“ Euro Swingline Advance ” means any advance made or to be made under the Euro Swingline Facility pursuant to a Utilisation
Request under Clause 5.5 ( Delivery of a Utilisation Request for a Swingline Advance ).
“ Euro Swingline Commitment ” means:
(a) in relation to an Original Lender which is a Euro Swingline Lender, the amount (in the Base Currency) set opposite its name
under the heading “ Euro Swingline Commitment ” in Part III of Schedule 1 ( The Euro Swingline Lenders ) and the amount
of any other Euro Swingline Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2
( Increase ); and
(b) in relation to any other Euro Swingline Lender, the amount of any Euro Swingline Commitment transferred to it under this
Agreement or assumed by it in accordance with Clause 2.2 ( Increase ),
to the extent not cancelled, reduced or transferred by it under this Agreement.
“ Euro Swingline Facility ” means the euro swingline facility forming part of the Facility as described in paragraph (b) of Clause 2.1
( The Facility ).
“ Euro Swingline Lender ” means:
(a) any Original Lender whose name is set out in Part III of Schedule 1 ( The Euro Swingline Lenders ); and
(b) any bank which has become Party as a Lender in accordance with Clause 2.2 ( Increase ) or Clause 23 ( Changes to the
Lenders ) and to whom a Euro Swingline Commitment has been transferred or by whom a Euro Swingline Commitment has
been assumed,
which in each case has not ceased to have a Euro Swingline Commitment.
9

“ Euro Swingline Rate ” means, at any time, the aggregate of:
(a) the arithmetic mean of the rates per annum (rounded upwards to four decimal places) as supplied to the Euro Swingline Agent
at its request quoted by each Reference Bank to leading banks in the European interbank market as of 11.00 a.m. Brussels time
on the Utilisation Date for that Euro Swingline Advance for the offering of deposits in Euro for a period comparable to the
Interest Period for the relevant Euro Swingline Advance and for settlement on that day;
(b) the Margin; and
(c) the Mandatory Cost (if any).
“ Event of Default ” means any event or circumstance specified as such in Clause 22 ( Events of Default ).
“ Existing Credit Facility ” means the US$2,000,000,000 multicurrency revolving credit facility made available pursuant to a
multicurrency revolving facilities agreement dated 4 July 2005, as amended and restated from time to time (including pursuant to an
amendment and restatement agreement dated 27 June 2007).
“ Existing Lender ” has the meaning given to that term in Clause 23.1 ( Assignments and transfers by the Lenders ).
“ Facility ” means the loan facility made available under this Agreement as described in Clause 2.1 ( The Facility ) incorporating a dollar
swingline facility, a euro swingline facility and an SEK swingline facility.
“ Facility Agent’s Spot Rate of Exchange ” means the Facility Agent’s Spot Rate of Exchange for the purchase of the relevant currency
with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.
“ Facility Office ” means the office or offices notified by a Lender to the Facility Agent on or before the date it becomes a Lender (or,
following that date, by not less than 5 Business Days’ notice) as the office or offices through which it will perform its obligations under
this Agreement.
“ Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with
members of the United States Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for the day for such transactions received by the applicable
Agent from three federal funds brokers of recognised standing selected by it.
“ Fee Letter ” means the fees letter dated on or around the date of this Agreement from the Original Lenders to ABB, the fees letter
dated on or around the date of this Agreement from the Mandated Lead Arrangers to ABB, the agency fees letter from the Facility Agent
to ABB, the swingline agency fees letter dated on or around the date of this Agreement from the SEK Swingline Agent to ABB setting
out the fees referred to in Clause 12 ( Fees ) and the Amendment Fee Letter.
“ Finance Document ” means this Agreement, any Fee Letter, any Borrower Accession Letter, any Resignation Letter and any other
document designated as such in writing by the Facility Agent and ABB.
10

“ Finance Party ” means any of the Agents, the Mandated Lead Arrangers and the Lenders.
“ GAAP ” means, in relation to a company, generally accepted accounting principles in its jurisdiction of incorporation, US GAAP or
IFRS, as applied by ABB in its consolidated financial statements.
“ Group ” means ABB and its Subsidiaries and “ Group Company ” means any one of them.
“ Holding Company ” means, in relation to a company or corporation, any other company or corporation in respect of which it is a
Subsidiary.
“ IBOR ” means, as appropriate, LIBOR, STIBOR, or EURIBOR.
“ IFRS ” means international accounting standards as issued by the International Accounting Standards Board.
“ Impaired Agent ” means an Agent at any time when:
(a) it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance
Documents by the due date for payment;
(b) it otherwise rescinds or repudiates a Finance Document;
(c) (if it is also a Lender) it is a Defaulting Lender under paragraph (a) or (b) of the definition of “Defaulting Lender”; or
(d) an Insolvency Event has occurred and is continuing with respect to it;
unless, in the case of paragraph (a) above:
(i) its failure to pay is caused by:
(A) administrative or technical error; or
(B) a Disruption Event; and
payment is made within 3 Business Days of its due date; or
(ii) the relevant Agent is disputing in good faith whether it is contractually obliged to make the payment in question.
“ Increase Confirmation ” means a confirmation substantially in the form set out in Schedule 10 ( Form of Increase Confirmation ).
“ Increase Lender ” has the meaning given to that term in Clause 2.2 ( Increase ).
“ Indebtedness ” means, in relation to a person, its obligations (whether present or future, actual or contingent, as principal or surety) for
the payment or repayment of money (whether in respect of interest, principal or otherwise) incurred in respect of:
(a) moneys borrowed;
(b) any bond, note, loan stock, debenture or similar instrument;
11

(c) any acceptance credit, bill discounting, note purchase, factoring or documentary credit facility (or dematerialised equivalent);
(d) any lease required under GAAP as at the date hereof to be treated as a finance lease;
(e) receivables sold or discounted (other than any receivables to the extent that they are sold on a non-recourse basis);
(f) any guarantee, bond, stand-by letter of credit or other similar instrument issued in connection with the performance of payment
obligations;
(g) any interest rate or currency swap agreement or any other hedging or derivatives instrument or agreement (and, when
calculating the value of such agreement(s) or instrument(s), only the marked to market value (or, if any actual amount is due as
a result of the termination or close-out of such agreement(s) or instrument(s), that amount) shall be taken into account);
(h) any arrangement entered into primarily as a method of raising finance pursuant to which any asset sold or otherwise disposed
of by that person is or may be leased to or re-acquired by a Group Company (whether following the exercise of an option or
otherwise); or
(i) any guarantee, indemnity or similar insurance against financial loss given in respect of the obligation of any person falling
within any of paragraphs (a) to (h) above.
“ Information Package ” means the following documents concerning the Group prepared by ABB in relation to the Facility and
distributed to selected banks prior to the date of this Agreement:
(a) abbreviated structure chart showing the position of the Obligors within the Group as at 25 August 2009;
(b) the annual reports of ABB and each of the Borrowers in respect of the year ended 31 December 2008;
(c) the half-yearly press releases and financial statements of ABB in respect of the period to 30 June 2009; and
(d) the presentation made on 23 July 2009 in connection with the half-yearly statements referred to at paragraph (c) above.
“ Insolvency Event ” in relation to a Finance Party means that the Finance Party:
(a) is dissolved (other than pursuant to a consolidation, amalgamation or merger);
(b) is insolvent and under an insolvency, bankruptcy or governmental proceeding or process:
(i) that is not directly or indirectly undertaken for the purpose of restructuring, consolidating, amalgamating, merging,
rehabilitating or reorganising that Finance Party to enable that Finance Party to continue its business; and
(ii) that is not dismissed, discharged, stayed or restrained in each case within 30 days of its institution or presentation;
12

(c) ( except where such action is directly or indirectly undertaken for the purpose of restructuring, consolidating, amalgamating,
merging, rehabilitating or reorganising that Finance Party to enable it to continue its business) institutes or has instituted against
it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the
jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’
rights, or a petition is presented for its winding - up or liquidation by it or such regulator, supervisor or similar official and such
proceeding or petition is not dismissed, discharged, stayed or restrained in each case within 30 days of its institution or
presentation;
(d) (except where such action is directly or indirectly undertaken for the purpose of restructuring, consolidating, amalgamating,
merging, rehabilitating or reorganising that Finance Party to enable it to continue its business) has a resolution passed for its
winding - up, official management or liquidation;
(e) (except where such action is directly or indirectly undertaken for the purpose of restructuring, consolidating, amalgamating,
merging, rehabilitating or reorganising that Finance Party to enable it to continue its business) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or
for all or substantially all its assets;
(f) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in paragraphs (a) to (e) above; or
(g) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.
“ Interest Period ” means, in relation to an Advance, each period determined in accordance with Clause 10 ( Interest Periods ) and, in
relation to an Unpaid Sum, each period determined in accordance with Clause 9.3 ( Default interest ).
“ Lender ” means:
(a) any Original Lender; and
(b) any bank which has become a Party as a Lender in accordance with Clause 2.2 ( Increase ) or Clause 23 ( Changes to the
Lenders ),
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
“ LIBOR ” means, in relation to any Advance (other than an Advance in Euro or SEK or a Swingline Advance):
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for the currency or period of that Advance) the arithmetic mean of the rates (rounded upwards to
four decimal places) as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the
London interbank market,
13

as of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Advance and for a period comparable
to the Interest Period for that Advance.
“ Majority Lenders ” means a Lender or Lenders:
(a) whose Commitments aggregate more than 66 / per cent. of the Total Commitments; or
(b) if the Total Commitments have been reduced to zero, whose Commitments aggregate more than 66 2 / 3
per cent. of the Total
Commitments immediately before the reduction.
“ Mandatory Cost ” means the percentage rate per annum calculated by the Facility Agent in accordance with Schedule 8 ( Mandatory
Cost ).
“ Margin ” means, at any time in relation to an Advance (other than a Dollar Swingline Advance) the percentage rate per annum set out
opposite the relevant Credit Rating specified below at the relevant time:
provided that:
(a) during any period in which neither Moody’s nor S&P provides a Credit Rating, the Margin shall be calculated on the basis of a
Credit Rating of BBB+/Baa1 or lower;
(b) if there is a different Credit Rating provided by Moody’s and S&P, the Margin will be the average of the relevant rates per
annum specified in the table above;
(c) during any period in which a Credit Rating is only provided by one of Moody’s and S&P, the Margin will be the rate per
annum specified in the table above in respect of such Credit Rating; and
(d) any reduction or increase in the Margin during an Interest Period shall take effect from the date on which the relevant change in
Credit Rating was first published by either S&P or Moody’s as applicable.
“ Material Adverse Effect ” means a material adverse effect on the ability of the Obligors (taken as a whole) to perform their payment
obligations under the Finance Documents.
“ Material Subsidiary ” shall mean:
2 3
Relevant Credit Rating Margin % pa
A+/A1 or higher 0.425
A/A2 0.475
A-/A3 0.525
BBB+/Baa1 or lower 0.625
(a) as at the date of this Agreement, each Borrower and any Subsidiary of ABB that is listed in Schedule 9 ( Material
Subsidiaries ); and
14

(b) at any time thereafter,
(i) each Borrower; and
(ii) any Subsidiary of ABB, that:
(A) is the holding company of a country (not a region) and that, together with its Subsidiaries, has combined third party
revenues or third party assets in excess of 5 per cent. of the consolidated revenues or consolidated total assets of the
Group;
(B) on a non-consolidated (legal entity) basis has third party revenues or third party assets in excess of 10 per cent. of the
consolidated revenues or consolidated total assets of the Group; or
(C) has any notes, bonds, debenture stock, loan stock or other securities outstanding to non-Group third parties and in
respect of which a guarantee, keep-well agreement or other credit support has been provided by ABB,
provided always that:
(I) the term “revenues” shall exclude any revenues attributable to activities classified as discontinued
operations in the consolidated financial statements of the Group and the term “assets” shall exclude any
assets classified as held-for-sale or as discontinued operations in the consolidated financial statements of the
Group;
(II) all revenue and asset figures shall be prepared in accordance with generally accepted accounting principles
used in preparation of the consolidated financial statements of the Group;
(III) “third party revenues” shall exclude any revenues not included in total revenues in the consolidated income
statement of the Group;
(IV) “third party assets” shall exclude any assets that are not included in total assets in the consolidated balance
sheet of the Group; and
(V) all revenue and asset figures shall be for the most recently completed financial year of ABB.
“ Month ” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar
month, except that:
(a) (subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next
Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately
preceding Business Day;
(b) if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the
last Business Day in that calendar month; and
15

(c) if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day
in the calendar month in which that Interest Period is to end.
The above rules will only apply to the last Month of any period.
“ Moody’s ” means Moody’s Investor Services, Inc., or any successor thereto.
“ New Lender ” has the meaning given to that term in Clause 23.1 ( Assignments and transfers by the Lenders ).
“ Obligors ” means the Borrowers and the Guarantor.
“ Optional Currency ” means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3
( Conditions relating to Optional Currencies ).
“ Original Obligors ” means the Original Borrowers and the Guarantor.
“ Original Financial Statements ” means:
(a) in relation to ABB, the audited consolidated financial statements of the Group for the financial year ended 31 December 2008;
(b) in relation to each Original Borrower, its financial statements for its financial year ended 31 December 2008 (audited if
available); and
(c) in relation to any Additional Borrower, its financial statements delivered pursuant to Part II of Schedule 2 ( Additional
Borrower Conditions Precedent ) (audited if available).
“ Outstandings ” means the aggregate of the Base Currency Amount from time to time of each of the Advances.
“ Participating Member State ” means any member state of the European Communities that adopts or has adopted the Euro as its
lawful currency in accordance with legislation of the European Union relating to European Monetary Union.
“ Party ” means a party to this Agreement and includes its successors in title, permitted assigns and permitted transferees.
“ Prime Rate ” means, in respect of any Dollar Swingline Advance, for any day, the rate of interest per annum determined from time to
time by the Dollar Swingline Agent to be its prime rate in effect at its principal office in New York City and notified to the relevant
Borrower.
“ Project Company ” means any Subsidiary of ABB:
(a) which is a single purpose company whose primary purpose is to invest in, lend to or carry out a specific project or portfolio of
projects; and
(b) none of whose liabilities to repay Project Finance Indebtedness are the subject of security or a guarantee, indemnity or any
similar form of assurance, undertaking or support by any Group Company save to the extent described in the definition of
Project Finance Indebtedness.
“ Project Finance Indebtedness ” means:
16
(a) any Indebtedness of a Project Company incurred to finance the project constituted by the assets and business of such Project
Company or any Indebtedness of such Project Company incurred to refinance any such aforementioned Indebtedness; and
(b) where neither the persons to whom such Indebtedness is owed (whether or not a Group Company) nor any other person shall
have any recourse whatsoever to any Group Company (other than such Project Company) for the repayment or payment of any
sum relating to such Indebtedness other than recourse directly or indirectly to any Group Company under any form of assurance
or undertaking, which recourse (1) is limited to the enforcement of any share pledge granted by a Group Company over its
shares in such Project Company or the enforcement of any security granted over a shareholder loan between a Group Company
and such Project Company and/or (2) is limited to a claim for damages for breach of an obligation (not being a payment
obligation) of the person against whom that recourse is available and/or (3) entitles the creditor for that Indebtedness or the
relevant Project Company, upon default by the Project Company (or in other circumstances specified in the documentation
relating to the project) to require a payment to be made (whether to or for the benefit of that creditor, the Project Company or
another person), provided that , in the case of (3), where that payment is capable of being for an amount which is material
either alone or as a percentage of the Indebtedness financing that project, such recourse is capable of being called on only
during the period on or prior to practical completion of the project or of that portion of that project being financed by that
Indebtedness; or

(c) which the Majority Lenders shall have agreed to treat as Project Finance Indebtedness for the purposes of this Agreement.
“ Qualifying Lender ” has the meaning given to such term in Clause 13.1 ( Definitions ).
“ Quotation Day ” means, in relation to any period for which an interest rate is to be determined (other than in respect of a Swingline
Advance):
(a) (if the currency is Sterling) the first day of that period;
(b) (if the currency is Euro) two TARGET Days before the first day of that period; or
(c) (for any other currency) two Business Days (which for these purposes only shall mean a day on which banks are open for
general business in London) before the first day of that period,
unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be
determined by the Facility Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally
be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
“ Reference Banks ” means, other than in relation to STIBOR, Deutsche Bank Luxembourg S.A. and the principal London offices of
Credit Suisse AG, London Branch, Citibank, N.A., London Branch and HSBC Bank plc and, in relation to STIBOR, the principal
Stockholm offices of Nordea Bank AB (publ), Skandinaviska Enskilda Banken AB (publ) and Svenska Handelsbanken AB (publ) or
such other banks as may be appointed by the Facility Agent in consultation with ABB.
17

“ Relevant Interbank Market ” means in relation to Euro, the European interbank market and, in relation to any other currency, the
London interbank market.
“ Reservations ” means any general principles of law which are set out as qualifications as to matters of law in any legal opinion
delivered to the Facility Agent under Schedule 2 ( Conditions Precedent ).
“ Resignation Letter ” means a letter substantially in the form set out in Schedule 7 ( Form of Resignation Letter ).
“ Revolving Facility Affiliate ” means, in respect of a Lender that is a Swingline Lender, an Affiliate of that Swingline Lender that is
itself a Lender.
“ Rollover Advance ” means one or more Advances (other than Swingline Advances):
(a) made or to be made on the same day that a maturing Advance is due to be repaid;
(b) the aggregate amount of which is equal to or less than the amount of the maturing Advance;
(c) in the same currency as the maturing Advance (unless it arose as a result of the operation of Clause 6.2 ( Unavailability of a
currency )); and
(d) made or to be made to a Borrower for the purpose of refinancing a maturing Advance made to such Borrower.
“ S&P ” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, or any successor thereto.
“ Screen Rate ” means:
(a) in relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period;
(b) in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the
relevant period; and
(c) in relation to STIBOR, the percentage rate per annum for the relevant period,
displayed on the appropriate page of the Thomson Reuters screen. If the agreed page is replaced or service ceases to be available, the
Facility Agent may specify another page or service displaying the appropriate rate after consultation with ABB and the Lenders.
“ Securitisations ” means any local or global securitisation programme from time to time established (including as of the date of this
Agreement) by any Group Company, each as may be modified, supplemented, renewed, substituted, varied or amended.
“ Security ” means any mortgage, charge, assignment by way of security, pledge, hypothecation, lien and any other security interest of
any kind whatsoever.
“ SEK Swingline Advance ” means any advance made or to be made under the SEK Swingline Facility pursuant to a Utilisation
Request under Clause 5.5 ( Delivery of a Utilisation Request for a Swingline Advance ).
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“ SEK Swingline Commitment ” means:
(a) in relation to an Original Lender which is a SEK Swingline Lender, the amount (in the Base Currency) set opposite its name
under the heading “ SEK Swingline Commitment ” in Part IV of Schedule 1 ( The SEK Swingline Lenders ) and the amount of
any other SEK Swingline Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2
( Increase ); and
(b) in relation to any other SEK Swingline Lender, the amount of any SEK Swingline Commitment transferred to it under this
Agreement or assumed by it in accordance with Clause 2.2 ( Increase ),
to the extent not cancelled, reduced or transferred by it under this Agreement.
“ SEK Swingline Facility ” means the SEK swingline facility forming part of the Facility as described in paragraph (c) of Clause 2.1
( The Facility ).
“ SEK Swingline Lender ” means:
(a) any Original Lender whose name is set out in Part IV of Schedule 1 ( The SEK Swingline Lenders ); and
(b) any bank which has become a Party as a Lender in accordance with Clause 2.2 ( Increase ) or Clause 23 ( Changes to the
Lenders ) and to whom a SEK Swingline Commitment has been transferred or by whom a SEK Swingline Commitment has
been assumed,
which in each case has not ceased to have a SEK Swingline Commitment.
“ SEK Swingline Rate ” means, at any time the aggregate of:
(a) the Margin;
(b) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the SEK Swingline Agent at its
request by the Reference Banks to leading banks in the European interbank market as of 11.00 a.m. Stockholm time on the
Utilisation Date for that SEK Swingline Advance for the offering of deposits in SEK for a period comparable to the Interest
Period for the relevant SEK Swingline Advance and for settlement on that day; and
(c) the Mandatory Cost (if any).
“ Separate Advances ” has the meaning given to that term in Clause 7.1 ( Repayment of Advances ).
“ Specified Time ” means a time determined in accordance with Schedule 5 ( Timetables ).
“ STIBOR ” means in relation to any Advance in SEK (other than a SEK Swingline Advance):
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for the relevant currency or the period of that Advance), the arithmetic mean (rounded upward to
four decimal places) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks
in the Stockholm interbank market,
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as of the Specified Time on the Quotation Day for the offering of deposits in Swedish Kronor for a period comparable to the Interest
Period for that Advance.
“ Subsidiary ” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
“ Swingline Advance ” means a Dollar Swingline Advance, a Euro Swingline Advance or a SEK Swingline Advance.
“ Swingline Affiliate ” means, in respect of a Lender, an Affiliate of that Lender that is a Swingline Lender.
“ Swingline Agents ” means the Dollar Swingline Agent, the Euro Swingline Agent and the SEK Swingline Agent, and “ Swingline
Agent ” means any of them.
“ Swingline Commitment ” means, in respect of a Swingline Lender, its Dollar Swingline Commitment, its Euro Swingline
Commitment or its SEK Swingline Commitment.
“ Swingline Lender ” means a Dollar Swingline Lender, a Euro Swingline Lender or a SEK Swingline Lender.
“ TARGET2 ” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises a
single shared platform and which was launched on 19 November 2007.
“ TARGET Day ” means any day on which TARGET2 is open for the settlement of payments in Euro.
“ Tax ” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying any of the same).
“ Termination Date ” means the fifth anniversary of the date of the Amendment and Restatement Agreement.
“ Total Commitments ” means the aggregate Commitments of the Lenders, being $2,000,000,000 at the Effective Date.
“ Total Outstandings ” means the aggregate from time to time of the Outstandings.
“ Total Swingline Facility Amount ” means the higher of (a) the aggregate Dollar Swingline Commitments, (b) the aggregate Euro
Swingline Commitments and (c) the aggregate SEK Swingline Commitments, being $750,000,000 as at the Effective Date.
“ Transfer Certificate ” means a certificate substantially in the form set out in Schedule 4 ( Form of Transfer Certificate ) or any other
form agreed between the Facility Agent and ABB.
“ Transfer Date ” means, in relation to a transfer, the later of:
(a) the proposed Transfer Date specified in the Transfer Certificate; and
(b) the date on which the Facility Agent executes the Transfer Certificate.
“ Unpaid Sum ” means any sum due and payable but unpaid by a Borrower under the Finance Documents.
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“ US GAAP ” means generally accepted accounting principles in the United States of America.
“ Utilisation ” means a utilisation of the Facility.
“ Utilisation Date ” means the date of a Utilisation, being the date on which an Advance is to be made.
“ Utilisation Request ” means a notice substantially in the form set out in Schedule 3 ( Utilisation Request ).
“ VAT ” means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature.
1.2 Construction
(a) Any reference in this Agreement to:
(i) “ assets ” includes, except in the definition of Material Subsidiary, present and future properties, revenues and rights of
every description;
(ii) “ bank ” means a bank entity that is licensed to provide banking services in accordance with applicable regulations in
its jurisdiction of incorporation;
(iii) the “ European interbank market ” means the interbank market for Euro operating in Participating Member States;
(iv) a “ Finance Document ” or any other agreement or instrument is a reference to that Finance Document or other
agreement or instrument as amended, novated, supplemented, extended, replaced or restated;
(v) a “ person ” includes any individual, firm, company, corporation, government, state or agency of a state or any
association, trust, joint venture, consortium or partnership (whether or not having separate legal personality);
(vi) a “ regulation ” includes any regulation, rule, official directive, request or guideline (whether or not having the force of
law but, if not having the force of law, the compliance with which is customary) of any governmental, intergovernmental
or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;
(vii) a “ financial year ” in relation to ABB, means a period in respect of which it is required to produce annual audited
financial statements;
(viii) except where the context otherwise requires, words in the singular include the plural and in the plural include the
singular;
(ix) a provision of law is a reference to that provision as amended or re-enacted; and
(x) unless a contrary indication appears, a time of day is a reference to London time.
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(b) Where there is a reference in this Agreement to any amount, limit or threshold specified in Dollars, in ascertaining whether or
not that amount, limit or threshold has been attained, broken or achieved, as the case may be, a non-Dollar amount shall, unless
the context otherwise requires or the contrary is indicated, be counted on the basis of the equivalent in Dollars of that amount
using the Facility Agent’s Spot Rate of Exchange.
(c) Section, Clause and Schedule headings are for ease of reference only.
(d) Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection
with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
(e) A Default is “ continuing ” if it has not been remedied or waived.
(f) For the avoidance of doubt, where any person is party to this Agreement in more than one capacity, reference to that person in
one capacity shall not (except where the context otherwise requires) include reference to it in any other capacity.
(g) References to a Commitment of Citibank, N.A./Citibank, N.A., London Branch/Citibank International plc (together the “ Citi
Entities ”) in relation to the Facility shall be construed as a reference to the aggregate Commitment of Citibank, N.A.,
Citibank, N.A., London Branch and Citibank International plc in relation to the Facility (as allocated between the Citi Entities
in such proportions and such amounts as each Citi Entity notifies to the Facility Agent from time to time).
(h) Barclays Capital means the investment banking division of Barclays Bank PLC.
1.3 Dutch Terms
In this Agreement, where it relates to a Dutch entity, a reference to:
(a) a necessary action to authorise where applicable, includes without limitation:
(i) any action required to comply with the Dutch Works Councils Act ( Wet op de ondernemingsraden ); and
(ii) obtaining an unconditional positive advice ( advies ) from the competent works council(s);
(b) a winding-up, administration or dissolution includes a Dutch entity being:
(i) declared bankrupt ( failliet verklaard );
(ii) dissolved ( ontbonden );
(c) a moratorium includes surséance van betaling and granted a moratorium includes surséance verleend ;
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(d) a trustee in bankruptcy includes a curator ;
(e) an administrator includes a bewindvoerder ;
(f) a(n) (administrative) receiver does not include a curator or bewindvoerder ; and
(g) an attachment includes a beslag .
1.4 Currency Symbols and Definitions
“ $ ” and “ Dollars ” denote the lawful currency of the United States of America, “ £ ” and “ Sterling ” denote the lawful currency of the
United Kingdom, “ Euro ” denotes the single currency unit of the European Union as constituted by the Treaty of Rome (as amended)
and “ SEK ” denotes the lawful currency of Sweden.
1.5 Third Party Rights
A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.
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2. THE FACILITY
SECTION 2
THE FACILITY
2.1 The Facility
Subject to the terms of this Agreement, the Lenders make available to the Borrowers, a multicurrency revolving credit facility (the “
Facility ”) in a maximum aggregate amount of $2,000,000,000, including within it the following sub-facilities:
(a) a Dollar revolving swingline facility (the “ Dollar Swingline Facility ”) in a maximum aggregate amount equal to the
aggregate Dollar Swingline Commitments;
(b) a Euro revolving swingline facility (the “ Euro Swingline Facility ”) in a maximum Base Currency Amount equal to the
aggregate Euro Swingline Commitments; and
(c) a SEK revolving swingline facility (the “ SEK Swingline Facility ”) in a maximum Base Currency Amount equal to the
aggregate SEK Swingline Commitments.
Each Swingline Commitment of each Lender that is a Swingline Lender forms part of the Commitment of that Lender. Each Swingline
Commitment of each Swingline Lender that is a Swingline Affiliate of another Lender forms part of that other Lender’s Commitment.
For the avoidance of doubt each Lender and its Swingline Affiliate shall be treated as having a single participation in the Facility and a
single vote.
2.2 Increase
(a) ABB may by giving prior notice to the Facility Agent by no later than the date falling 90 Business Days after the effective date
of a cancellation of (i) the Available Commitments and/or any Swingline Commitments of a Defaulting Lender (or its
Revolving Facility Affiliate or Swingline Affiliate) in accordance with paragraph (f) of Clause 8.6 ( Right of replacement or
repayment and cancellation in relation to a single Lender ) or (ii) the Commitments and/or any Swingline Commitments of any
Lender in accordance with Clause 8.1 ( Lender Illegality ) request that the Total Commitments or the relevant Swingline
Commitments be increased (and the Total Commitments or the relevant Swingline Commitments shall be so increased) in an
aggregate amount in the Base Currency of up to the amount of the Available Commitments, the relevant Swingline
Commitments or the Commitments so cancelled as follows:
(i) the increased Commitments and/or the relevant Swingline Commitments will be assumed by one or more Lenders or
other banks (each an “ Increase Lender ”) (none of which may be a member of the Group) selected by ABB and each of
which confirms its willingness to assume
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and does assume all the obligations of a Lender corresponding to that part of the increased Commitments and/or the
relevant Swingline Commitments which it is to assume, as if it had been an Original Lender;
(ii) each of the Obligors and any Increase Lender shall assume obligations towards one another and/or acquire rights against
one another as the Obligors and the Increase Lender would have assumed and/or acquired had the Increase Lender been
an Original Lender;
(iii) each Increase Lender shall become a Party as a “Lender” and any Increase Lender and each of the other Finance Parties
shall assume obligations towards one another and acquire rights against one another as that Increase Lender and those
Finance Parties would have assumed and/or acquired had the Increase Lender been an Original Lender;
(iv) the Commitments and Swingline Commitments of the other Lenders shall continue in full force and effect; and
(v) any increase in the Total Commitments and/or the relevant Swingline Commitments shall take effect on the date
specified by ABB in the notice referred to above or any later date on which the conditions set out in paragraph (b) below
are satisfied.
No Lender shall have any obligation to act as an Increase Lender unless it indicates that it is willing to do so in accordance with
sub-paragraph (i).
(b) An increase in the Total Commitments and/or any Swingline Commitments will only be effective on:
(i) the execution by the Facility Agent of an Increase Confirmation from the relevant Increase Lender; and
(ii) in relation to an Increase Lender which is not a Lender immediately prior to the relevant increase the performance by
the Facility Agent of all necessary “know your customer” or other similar checks under all applicable laws and
regulations in relation to the assumption of the increased Commitments and/or Swingline Commitments by that Increase
Lender, the completion of which the Facility Agent shall promptly notify to ABB and the Increase Lender.
(c) No Swingline Commitment of a Lender may exceed the Commitment of that Lender or its Revolving Facility Affiliate
pursuant to the operation of this Clause 2.2. Accordingly where the Swingline Commitments are to be increased pursuant to
this Clause to replace Swingline Commitments of a Swingline Lender that have been cancelled pursuant to paragraph (f) of
Clause 8.6 ( Right of replacement or repayment and cancellation in relation to a single Lender ) or Clause 8.1 ( Lender
Illegality ) without a commensurate cancellation of the Commitments of that Swingline Lender’s Revolving Facility Affiliate
being
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equired at the time of such cancellation, that Revolving Facility Affiliate shall (to the extent of its Commitments at the time of
the increase in Swingline Commitments) be required to transfer its Commitments to the relevant Increase Lender (or its
Affiliate) on the terms provided for in Clause 34.4 ( Replacement of a Defaulting Lender ) to the extent necessary to ensure that
the Commitments of the Increase Lender (or its Affiliate) are at least equal to each of the Swingline Commitments assumed by
that Increase Lender.
(d) Each Increase Lender, by executing the Increase Confirmation, confirms (for the avoidance of doubt) that the Facility Agent
has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender
or Lenders in accordance with this Agreement on or prior to the date on which the increase becomes effective.
(e) Unless the Facility Agent otherwise agrees or the increased Commitment and/or Swingline Commitment is assumed by an
existing Lender, ABB shall, on the date upon which the increase takes effect, promptly on demand pay the Facility Agent the
amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with any increase in
Commitments and/or Swingline Commitments under this Clause 2.2.
(f) ABB may pay to the Increase Lender a fee in the amount and at the times agreed between ABB and the Increase Lender in a
letter between ABB and the Increase Lender setting out that fee. A reference in this Agreement to a Fee Letter shall include
any letter referred to in this paragraph.
(g) Clause 23.4 ( Limitation of responsibility of Existing Lenders ) shall apply mutatis mutandis in this Clause 2.2 in relation to an
Increase Lender as if references in that Clause to:
(i) an “ Existing Lender ” were references to all the Lenders immediately prior to the relevant increase;
(ii) the “ New Lender ” were references to that “ Increase Lender ”; and
(iii) a “ re - transfer ” and “ re - assignment ” were references to respectively a “ transfer ” and “ assignment ”.
2.3 Lenders’ rights and obligations
(a) The obligations of each Lender under the Finance Documents are several. Failure by a Lender to perform its obligations under
the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is
responsible for the obligations of any other Finance Party under the Finance Documents.
(b) The rights of each Lender under or in connection with the Finance Documents are separate and independent rights and any
debt arising under the Finance Documents to a Lender from any of the Obligors shall be a separate and independent debt.
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(c) A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance
Documents.
2.4 Facility Offices
(a) Subject to paragraph (b) below, a Lender may (i) change its Facility Office for the purpose of this Agreement and/or
(ii) nominate a different Facility Office for the purposes of making a particular Advance or particular type of Advance to any
Borrower, in which event such Facility Office shall for the purposes of this Agreement be its Facility Office for that Advance
or that type of Advance but not otherwise.
(b) If a Lender changes its Facility Office or nominates a different Facility Office, (i) that Lender will notify the Facility Agent
and ABB promptly (and, in any event, within 5 Business Days) of such change or, as the case may be, nomination, and until it
does so, the Facility Agent and ABB will be entitled to assume that no such change has taken place and (ii) if the country of
such Facility Office is not subject to the Financial Action Task Force any such change or, as the case may be, nomination shall
be subject to the prior written consent of the Facility Agent.
2.5 Borrowers’ right and obligations hereunder
(a) Each Borrower by its execution of this Agreement or a Borrower Accession Letter irrevocably appoints ABB to act on its
behalf as its agent in relation to the Finance Documents (in this capacity, the “ Borrowers’ Agent ”) and irrevocably authorises
(i) ABB on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to
give all notices and instructions (including Utilisation Requests), to execute on its behalf any Borrower Accession Letter and to
make such agreements capable of being given or made by any Borrower notwithstanding that they may affect such Borrower,
without further reference to or the consent of such Borrower and (ii) each Finance Party to give any notice, demand or other
communication to such Borrower pursuant to the Finance Documents to ABB on its behalf, and in each case such Borrower
shall be bound thereby as though such Borrower itself had given such notices and instructions (including, without limitation,
any Utilisation Requests) or executed or made such agreements or received any such notice, demand or other communication.
(b) Every act, omission, agreement, undertaking, settlement, waiver, notice or other communication given or made by the
Borrowers’ Agent or given to the Borrowers’ Agent under this Agreement, or in connection with this Agreement (whether or
not known to any other Borrower and whether occurring before or after such a Borrower became a Borrower under this
Agreement) shall be binding for all purposes on all Borrowers as if the Borrowers had expressly made, given or concurred with
the same. In the event of any conflict between any notices or other communications of the Borrowers’ Agent and any
Borrower, those of the Borrowers’ Agent shall prevail.
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(c) The Borrowers’ Agent may resign its appointment hereunder by giving not less than ten Business Days’ prior written notice to
that effect to the Facility Agent, provided that no such resignation shall be effective until a successor consents in writing to
the Facility Agent to be appointed.
3. PURPOSE
3.1 Purpose
Each Borrower shall apply all amounts borrowed by it under the Facility for the general corporate purposes of the Group, including,
without limitation, back-stop financing for commercial paper facilities of the Group, provided that no Swingline Advance shall be used
to refinance another Swingline Advance.
3.2 Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4. CONDITIONS OF UTILISATION
4.1 Initial conditions precedent
(a) No Utilisation Request may be served unless the Facility Agent has received all of the documents and other evidence listed in
Part I of Schedule 2 ( Conditions Precedent ) in form and substance reasonably satisfactory to the Facility Agent.
(b) The Facility Agent shall notify ABB and the Lenders promptly upon the conditions set out in paragraph (a) of this Clause 4.1
being satisfied.
4.2 Further conditions precedent
(a) The Lenders will only be obliged to comply with Clause 5.4 ( Lenders’ participation ) and Clause 5.8 ( Swingline Lenders’
Participation ) if on the date of the Utilisation Request and on the proposed Utilisation Date (in each case other than in the case
of a Rollover Advance):
(i) no Default is continuing or would result from the proposed Advance;
(ii) the representations to be made by ABB pursuant to Clause 19.14 ( Repetition ) are true in all respects; and

(iii) such proposed Utilisation Date is not within 30 days of ABB providing notice to the Facility Agent in accordance with
paragraph (a) of Clause 8.3 ( Mandatory Prepayment on Change of Control ).
(b) An Advance will not be made if it would result in the Base Currency Amount of all Advances exceeding the Total
Commitments.
4.3 Conditions relating to Optional Currencies
A currency will constitute an Optional Currency in relation to an Advance if it is Sterling, SEK or Euro, or it is readily available in the
amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the
Utilisation Date for that Advance provided that there may not at any time be Advances outstanding denominated in more than 5
Optional Currencies.
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4.4 Maximum number of Advances
(a) No Borrower may deliver a Utilisation Request if as a result of the proposed Utilisation more than 10 Advances would be
outstanding.
(b) Any Advance made by a single Lender under Clause 6.2 ( Unavailability of a currency ) shall not be taken into account in this
Clause 4.4.
(c) Any Separate Advance shall not be taken into account in this Clause 4.4.
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5. UTILISATION
SECTION 3
UTILISATION
5.1 Delivery of a Utilisation Request
A Borrower may utilise the Facility (other than for the purpose of drawing Swingline Advances, which may be drawn in accordance with
Clause 5.5 ( Delivery of a Utilisation Request for a Swingline Advance )) by delivery to the Facility Agent of a duly completed
Utilisation Request not later than the Specified Time.
5.2 Completion of a Utilisation Request
(a) Each Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1 ( Delivery of a Utilisation Request ) is
irrevocable and will not be regarded as having been duly completed unless:
(i) the proposed Utilisation Date is a Business Day within the Availability Period;
(ii) the currency and amount of the Utilisation comply with Clause 5.3 ( Currency and amount ); and
(iii) the proposed Interest Period complies with Clause 10 ( Interest Periods ).
(b) Only one Advance may be requested in each Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1
( Delivery of a Utilisation Request ).
5.3 Currency and amount
(a) The currency specified in a Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1 ( Delivery of a
Utilisation Request ) must, in the case of any Advance (not being a Swingline Advance), be the Base Currency or an Optional
Currency.
(b) The amount of the proposed Advance must be:
(i) if the currency selected is the Base Currency, a minimum of $50,000,000 and an integral multiple of $10,000,000; or
(ii) if the currency selected is Euro, a minimum of Euro50,000,000 and an integral multiple of Euro10,000,000; or
(iii) if the currency selected is SEK, a minimum amount of SEK25,000,000 and an integral multiple of SEK5,000,000; or
(iv) if the currency selected is Sterling, a minimum amount of £25,000,000 and an integral multiple of £5,000,000; or
(v) if the currency selected is an Optional Currency (other than SEK, Euro or Sterling), in such minimum amount and
multiple as the Facility Agent and ABB may agree,
or, in any case, the amount of the Available Facility.
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5.4 Lenders’ participation
(a) If the conditions set out in this Agreement have been met, and subject to Clause 7.1 ( Repayment of Advances ), each Lender
shall make its participation in each Advance available by the Utilisation Date through its Facility Office.
(b) Subject to Clause 6.2 ( Unavailability of a currency ), the amount of each Lender’s participation in each Advance (not being a
Swingline Advance) will be equal to the proportion borne by its Available Commitment to the Available Facility immediately
prior to making the Advance.
(c) The Facility Agent shall determine the Base Currency Amount of each Advance which is to be made in an Optional Currency
and shall notify each Lender of the amount, currency and the Base Currency Amount of each Advance, the amount of its
participation in that Advance and (if different) the amount of that participation to be made available in cash, in each case by the
Specified Time.
5.5 Delivery of a Utilisation Request for a Swingline Advance
The Borrowers may utilise the Dollar Swingline Facility, the Euro Swingline Facility or the SEK Swingline Facility by delivery to the
relevant Swingline Agent (with a copy to the Facility Agent) of a duly completed Utilisation Request not later than the Specified Time.
5.6 Completion of a Utilisation Request for a Swingline Advance
(a) Each Utilisation Request delivered pursuant to Clause 5.5 ( Delivery of a Utilisation Request for a Swingline Advance ) is
irrevocable and will not be regarded as having been duly completed unless:
(i) it specifies whether the Swingline Advance is to be a Dollar Swingline Advance, a Euro Swingline Advance or a SEK
Swingline Advance;
(ii) the proposed Utilisation Date is a Business Day within the Availability Period;
(iii) the currency and amount of the Utilisation comply with Clause 5.7 ( Currency and amount ); and
(iv) the proposed Interest Period complies with Clause 10 ( Interest Periods ).
(b) Only one Swingline Advance may be requested in each Utilisation Request delivered pursuant to Clause 5.5 ( Delivery of a
Utilisation Request for a Swingline Advance ).
5.7 Currency and amount
(a) The currency specified in a Utilisation Request delivered pursuant to Clause 5.5 ( Delivery of a Utilisation Request for a
Swingline Advance ) must be Dollars (in the case of a Dollar Swingline Advance) or Euro (in the case of a Euro Swingline
Advance) or SEK (in the case of a SEK Swingline Advance).
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(b) The amount of the proposed Swingline Advance must be:
(i) in the case of a Dollar Swingline Advance, a minimum of $50,000,000 and an integral multiple of $10,000,000 or, if
less, the Available Dollar Swingline Facility;
(ii) in the case of a Euro Swingline Advance, a minimum of Euro 50,000,000 and an integral multiple of Euro 10,000,000
or, if less, the Available Euro Swingline Facility; or
(iii) in the case of a SEK Swingline Advance, a minimum of SEK25,000,000 and an integral multiple of SEK5,000,000 or,
if less, the Available SEK Swingline Facility.
(c) The amount of a proposed Dollar Swingline Advance or, as the case may be, the Base Currency Amount of a proposed Euro
Swingline Advance or, as the case may be, the Base Currency Amount of a proposed SEK Swingline Advance must not, when
aggregated with the Base Currency Amount of all outstanding Swingline Advances outstanding on the proposed Utilisation
Date, exceed the Total Swingline Facility Amount and the Base Currency Amount of a proposed SEK Swingline Advance must
not, when aggregated with the Base Currency Amount of all outstanding SEK Swingline Advances outstanding on the
proposed Utilisation Date, exceed $200,000,000.
5.8 Swingline Lenders’ participation
(a) If the conditions set out in this Agreement have been met, each Dollar Swingline Lender (in the case of a Dollar Swingline
Advance), Euro Swingline Lender (in the case of a Euro Swingline Advance) or SEK Swingline Lender (in the case of a SEK
Swingline Advance) shall, on the relevant Utilisation Date, make its participation in each Dollar Swingline Advance, Euro
Swingline Advance or SEK Swingline Advance (as applicable) available through its Facility Office.
(b) The amount of each Swingline Lender’s participation in each Dollar Swingline Advance, Euro Swingline Advance or SEK
Swingline Advance will be equal to the proportion borne by its Available Dollar Swingline Commitment or, as the case may
be, Available Euro Swingline Commitment or, as the case may be, Available SEK Swingline Commitment to the Available
Dollar Swingline Facility or, as the case may be, Available Euro Swingline Facility or as the case may be, Available SEK
Swingline Facility immediately prior to making the Dollar Swingline Advance, Euro Swingline Advance or SEK Swingline
Advance (as applicable).
(c) The relevant Swingline Agent shall notify each relevant Swingline Lender of the amount, currency and the Base Currency
Amount of each Swingline Advance at the Specified Time.
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5.9 Automatic Advance
(a) In the event that a Borrower does not repay a Swingline Advance made to it in full on the last day of its Interest Period, on the
Business Day falling 3 Business Days prior to such day, that Borrower shall be deemed to have served a Utilisation Request for
an Advance (not being a Swingline Advance) to be made on such day in the amount and currency of such Swingline Advance
and with an Interest Period of 1 week and such Advance shall be made on such day in accordance with Clause 5.4 ( Lenders’
participation ) (ignoring for this purpose the Available Commitment of any Defaulting Lender) and the proceeds thereof
applied in repayment of the said Swingline Advance.
(b) Paragraph (a) of Clause 4.2 ( Further conditions precedent ) shall not apply to any Advance to which this Clause 5.9 refers.
6. OPTIONAL CURRENCIES
6.1 Selection of currency
The relevant Borrower shall select the currency of an Advance in a Utilisation Request.
6.2 Unavailability of a currency
If before the Specified Time on any Quotation Day:
(a) the Facility Agent has received notice from a Lender that the Optional Currency (other than Euro, Sterling or SEK) requested
is not readily available to it in the amount required; or
(b) a Lender notifies the Facility Agent that compliance with its obligation to participate in an Advance in the proposed Optional
Currency (other than Euro, Sterling or SEK) would contravene a law or regulation applicable to it,
the Facility Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. In this event, any Lender
that gives notice pursuant to this Clause 6.2 will be required to participate in the Advance in the Base Currency (in an amount equal to
that Lender’s proportion of the Base Currency Amount or, in respect of a Rollover Advance, an amount equal to that Lender’s proportion
of the Base Currency Amount of the maturing Advance that is due to be repaid) and its participation will be treated as a separate
Advance denominated in the Base Currency during that Interest Period.
6.3 Notification
The Facility Agent shall notify the Lenders and the relevant Borrower of Optional Currency amounts (and the applicable Facility Agent’s
Spot Rate of Exchange) promptly after they are ascertained.
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7. REPAYMENT
SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
7.1 Repayment of Advances
(a) Each Borrower shall repay each Advance made to it on the last day of its Interest Period.
(b) All Advances must be repaid in full on the Termination Date.
(c) At any time when a Lender becomes a Defaulting Lender, the maturity date of each of the participations of that Lender (and, if
that Defaulting Lender is the Revolving Facility Affiliate of a Swingline Lender, of that Swingline Lender) in the Advances
then outstanding will be automatically extended to the Termination Date and will be treated as separate Advances (the “
Separate Advances ”) denominated in the currency in which the relevant participations are outstanding.
(d) A Borrower to whom a Separate Advance is outstanding may prepay that Advance by giving 5 Business Days’ prior notice to
the Facility Agent. The Facility Agent will forward a copy of a prepayment notice received in accordance with this paragraph
(d) to the relevant Lender concerned as soon as practicable on receipt.
(e) Interest in respect of a Separate Advance will accrue for successive Interest Periods selected by the Borrower by the time and
date specified by the Facility Agent (acting reasonably) and will be payable by that Borrower to the relevant Lender on the last
day of each Interest Period in respect of that Advance. Notwithstanding paragraph (b) of Clause 9.1 ( Calculation of interest ),
the rate of interest in respect of any Swingline Advance that becomes a Separate Advance in accordance with this Clause 7.1
shall be calculated in accordance with paragraph (a) of Clause 9.1 ( Calculation of interest ) with effect from the end of the
Interest Period during which such Swingline Advance becomes a Separate Advance.
(f) The terms of this Agreement relating to the Facility generally shall continue to apply to Separate Advances other than to the
extent inconsistent with paragraphs (c) to (e) above, in which case those paragraphs shall prevail in respect of any Separate
Advance.
(g) If one or more Advances are to be made available to a Borrower:
(i) on the same day that a maturing Advance is due to be repaid by that Borrower;
(ii) in the same currency as the maturing Advance (unless the currency of the maturing Advance was determined pursuant
to the operation of Clause 6.2 ( Unavailability of a currency )); and
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(iii) in whole or in part for the purpose of refinancing the maturing Advance;
the aggregate amount of the new Advance shall be treated as if applied in or towards repayment of the maturing Advance so
that:
(A) if the amount of the maturing Advance exceeds the aggregate amount of the new Advance:
(1) the relevant Borrower will only be required to pay an amount in cash in the relevant currency equal to that
excess; and
(2) each Lender’s participation (if any) in the new Advance shall be treated as having been made available and
applied by the Borrower in or towards repayment of that Lender’s participation (if any) in the maturing
Advance and that Lender will not be required to make its participation in the new Advance available in
cash; and
(B) if the amount of the maturing Advance is equal to or less than the aggregate amount of the new Advance:
8. PREPAYMENT AND CANCELLATION
(1) the relevant Borrower will not be required to make any payment in cash; and
(2) each Lender will be required to make its participation in the new Advance available in cash only to the
extent that its participation (if any) in the new Advance exceeds that Lender’s participation (if any) in the
maturing Advance and the remainder of that Lender’s participation in the new Advance shall be treated as
having been made available and applied by the Borrower in or towards repayment of that Lender’s
participation in the maturing Advance.
8.1 Lender Illegality
If it becomes unlawful in any jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund its
participation in any Advance:
(a) that Lender shall promptly notify the Facility Agent upon becoming aware of that event;
(b) unless the repayment referred to in paragraph (c) below avoids such unlawfulness, upon the Facility Agent notifying ABB, the
Commitment and/or the relevant Swingline Commitment of that Lender will be immediately cancelled; and
(c) each Borrower shall, to the extent necessary to avoid such unlawfulness, repay that Lender’s participation in the Advances
made to it on the last day of the Interest Period for each Advance occurring after the Facility Agent has notified ABB or, if
earlier, the date specified by the Lender in the notice delivered to the
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Facility Agent (being no earlier than 5 Business Days after receipt of such notice or, if earlier, the last day of any applicable
grace period permitted by law).
8.2 Borrower Illegality
If it is or becomes unlawful for a Borrower to perform any of its obligations under the Finance Documents, save where such obligations
are not, or could reasonably be considered not to be, material to the interests of the Lenders under the Finance Documents, that Borrower
shall within 15 Business Days of being served with notice by the Facility Agent so to do, repay all Advances owing by it, together with
accrued interest and all other amounts owing by it under the Finance Documents.
8.3 Mandatory Prepayment on Change of Control
If any person (whether alone or together with any associated person) becomes the beneficial owner of shares in the issued share capital of
ABB carrying the right to more than 50% of the votes exercisable at a general meeting of ABB:
(a) ABB shall promptly notify the Facility Agent upon becoming aware of that event; and
(b) if within 15 days following such notification to the Facility Agent any Lender so requests (by delivering a notice to ABB
through the Facility Agent), each Borrower shall, no later than 15 days following such request, prepay that Lender’s portion of
all outstanding Advances, together with accrued interest thereon and all other amounts owing to such Lender hereunder and
cancel that Lender’s Commitments and/or Swingline Commitments.
For the purposes of this Clause 8.3, “ associated person ” means, in relation to any person, a person who is (i) “ acting in concert ” (as
defined in the City Code on Takeovers and Mergers) with that person or (ii) a “ connected person ” (as defined in section 839 of the
Income and Corporation Taxes Act 1988) of that person.
8.4 Voluntary cancellation
ABB may, if it gives the Facility Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior
notice, cancel the whole or any part (being a minimum amount of $25,000,000 and an integral multiple of $10,000,000) of the Available
Facility, the Available Dollar Swingline Facility, the Available Euro Swingline Facility or the Available SEK Swingline Facility. Any
cancellation under this Clause 8.4 shall reduce rateably the Commitments of the Lenders or the relevant Swingline Commitments of the
relevant Swingline Lenders.
8.5 Voluntary Prepayment
A Borrower may, if it gives the Facility Agent not less than 5 Business Days’ (in the case of any Advance other than a Swingline
Advance) or 1 Business Day’s (in the case of any Swingline Advance) (or in either case such shorter period as the Majority Lenders may
agree) prior notice, prepay the whole or any part of an Advance made to it (but if in part, being an amount that reduces the Base
Currency Amount of the Advance by a minimum amount of $25,000,000 and rounded as the Facility Agent may reasonably require).
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8.6 Right of replacement or repayment and cancellation in relation to a single Lender
(a) If:
(i) any sum payable to any Lender by ABB or a Borrower is required to be increased under paragraph (c) of Clause 13.2
( Tax gross-up ); or
(ii) any Lender claims indemnification from ABB or a Borrower under Clause 13.3 ( Tax indemnity ) or Clause 14.1
( Increased costs ),
then ABB may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the
Facility Agent notice of cancellation of the Commitment and/or any Swingline Commitment of that Lender and/or of its
Revolving Facility Affiliate or its Swingline Affiliate and its intention to procure the repayment of the participation in the
Advances of that Lender and/or of its Revolving Facility Affiliate or its Swingline Affiliate or give the Facility Agent notice of
its intention to replace that Lender and/or its Revolving Facility Affiliate or its Swingline Affiliate in accordance with
paragraph (d) below.
(b) On receipt of a notice of cancellation referred to in paragraph (a) above, the Commitment and/or the relevant Swingline
Commitment of the relevant Lender and/or its Revolving Facility Affiliate or its Swingline Affiliate shall immediately be
reduced to zero.
(c) On the last day of each Interest Period in respect of an Advance which ends after ABB has given notice of cancellation under
paragraph (a) above (or, if earlier, the date specified by ABB in that notice), each Borrower to whom an Advance is
outstanding shall repay that Lender’s participation in that Advance.
(d) ABB may, in the circumstances set out in paragraph (a) above, on 5 Business Days’ prior notice to the Facility Agent and that
Lender replace that Lender (and any Revolving Facility Affiliate or Swingline Affiliate of that Lender) by requiring such
Lender and/or its Revolving Facility Affiliate or Swingline Affiliate to (and, to the extent permitted by law, that Lender or
Revolving Facility Affiliate or Swingline Affiliate shall) transfer pursuant to Clause 23 ( Changes to the Lenders ) all (and,
save as provided for in this paragraph, not part only) of its rights and obligations under this Agreement to a Lender or other
bank selected by ABB which confirms its willingness to assume and does assume all the obligations of the transferring Lender
in accordance with Clause 23 ( Changes to the Lenders ) for a purchase price in cash payable at the time of the transfer equal to
the outstanding principal amount of such Lender’s or Revolving Facility Affiliate’s or Swingline Affiliate’s participation in the
outstanding Advances and all accrued interest (to the extent that the Facility Agent has not given a notification under
Clause 23.9 ( Pro rata interest settlement )), Break Costs and other amounts payable in relation thereto under the Finance
Documents. Where a Lender to be replaced pursuant to this paragraph is a Swingline Lender that is the Swingline Affiliate of
another Lender, the rights and obligations required to be transferred pursuant to this
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Clause by that other Lender in its capacity as the Revolving Facility Affiliate of that Swingline Lender may, at the option of
ABB, be limited to those necessary for the Commitments of the replacement Lender (or its Affiliate) to be at least equal to
each of the Swingline Commitments to be transferred to such replacement Lender pursuant to this Clause.
(e) The replacement of any Lender pursuant to paragraph (d) above shall be subject to the following conditions:
(f)
(i) ABB shall have no right to replace an Agent;
(ii) no Agent nor any Lender shall have any obligation to find a replacement Lender; and
(iii) in no event shall any Lender replaced under paragraph (d) above be required to pay or surrender any of the fees
received by such Lender pursuant to the Finance Documents.
(i) If any Lender becomes a Defaulting Lender, ABB may, at any time whilst that Lender continues to be a Defaulting
Lender, give the Facility Agent 5 Business Days’ notice of cancellation of the Available Commitment, Available Dollar
Swingline Commitment, Available Euro Swingline Commitment or Available SEK Swingline Commitment of that
Lender and/or its Revolving Facility Affiliate or Swingline Affiliate.
(ii) On the notice referred to in paragraph (i) above becoming effective, the Available Commitment, Available Dollar
Swingline Commitment, Available Euro Swingline Commitment or Available SEK Swingline Commitment (as
applicable) of the relevant Lender and/or its Revolving Facility Affiliate or Swingline Affiliate shall immediately be
reduced to zero.
(iii) The Facility Agent shall as soon as practicable after receipt of a notice referred to in paragraph (i) above, notify all the
Lenders.
8.7 Restrictions
(a) Any notice of cancellation or prepayment given by any Party under this Clause 8 shall be irrevocable and, unless a contrary
indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to
be made and the amount of that cancellation or prepayment.
(b) Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any
Break Costs, without premium or penalty.
(c) Unless a contrary indication appears in this Agreement, any part of the Facility which is prepaid may be reborrowed in
accordance with the terms of this Agreement. Any part of the Facility that is repaid may be reborrowed.
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(d) No Borrower shall repay or prepay all or any part of the Advances or cancel all or any part of the Commitments or any
Swingline Commitment except at the times and in the manner expressly provided for in this Agreement.
(e) Subject to Clause 2.2 ( Increase ), no amount of the Total Commitments or any Swingline Commitment cancelled under this
Agreement may be subsequently reinstated.
(f) If the Facility Agent receives a notice under this Clause 8 it shall promptly forward a copy of that notice to ABB and the
affected Borrower or the affected Lender, as appropriate.
(g) Any cancellation of a Swingline Commitment of a Swingline Lender shall reduce the relevant Swingline Commitment
accordingly but shall not otherwise cancel or reduce the Commitment of the relevant Lender in respect of the Facility (or of any
Revolving Facility Affiliate of the relevant Swingline Lender) unless and to the extent otherwise provided for in this
Agreement.
(h) Any cancellation of the Commitment of a Lender that is a Swingline Lender or a Revolving Facility Affiliate of a Swingline
Lender shall not cancel or reduce any Swingline Commitment of that Lender or its Swingline Affiliate unless a Swingline
Commitment of that Lender or its Swingline Affiliate would exceed the Commitment of that Lender immediately following
such reduction, in which case the relevant Swingline Commitment of that Lender or its Swingline Affiliate shall be reduced by
such amount as is necessary to ensure that, after the relevant cancellation, each such Swingline Commitment does not exceed
the Commitment of that Lender.
9. INTEREST
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SECTION 5
COSTS OF UTILISATION
9.1 Calculation of interest
(a) The rate of interest on each Advance (other than a Swingline Advance) for each Interest Period is the percentage rate per
annum which is the aggregate of the applicable:
(i) Margin;
(ii) IBOR; and
(iii) Mandatory Cost (if any).
(b) The rate of interest on each Swingline Advance for each Interest Period shall accrue from day to day and is (in the case of any
Dollar Swingline Advance) the Dollar Swingline Rate or (in the case of any Euro Swingline Advance) the Euro Swingline Rate
or (in the case of any SEK Swingline Advance) the SEK Swingline Rate.
9.2 Payment of interest
Each Borrower shall pay accrued interest on each Advance made to it on the last day of each Interest Period (and, if the Interest Period is
longer than six Months, on the dates falling at six monthly intervals after the first day of the Interest Period).
9.3 Default interest
(a) If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the
overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate 1.00 per cent
higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted
an Advance (not being a Swingline Advance) in the currency of the overdue amount for successive Interest Periods, each of a
duration selected by the Facility Agent (acting reasonably). Any interest accruing under this Clause 9.3 shall be immediately
payable by the relevant Obligor on demand by the Facility Agent.
(b) Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each
Interest Period applicable to that overdue amount but will remain immediately due and payable.
9.4 Notification of rates of interest
The applicable Agent shall promptly notify the Lenders, ABB and the relevant Borrowers of the determination of a rate of interest under
this Agreement.
9.5 Minimum Interest
When entering into this Agreement, the Parties have assumed that the interest payable hereunder is not and will not become subject to
Swiss withholding tax. Therefore, if a Tax Deduction is required by law to be made in one of the circumstances set out in
40

paragraph (d) of Clause 13.2 ( Tax gross-up ) and if paragraph (c) of Clause 13.2 ( Tax gross-up ) should be unenforceable in respect of a
Borrower incorporated in Switzerland or, if different, resident in Switzerland for tax purposes, each Borrower acknowledges and agrees
that:
(a) the interest rates set out in and which are calculated in accordance with Clause 9.1 ( Calculation of interest ) shall constitute
minimum interest rates, which, if Swiss withholding tax should apply, shall be adjusted to ensure that any payment of interest
due by a Borrower shall be increased to an amount which (after making any deduction of Swiss withholding tax) results in a
payment to the Lender of an amount equal to the payment which would have been due had no deduction of Swiss withholding
tax been required . For this purpose, the Swiss withholding tax shall be calculated on the full grossed-up interest amount; and
(b) to the extent that paragraph (a) above applies, each Borrower shall provide to the Lenders the documents required by law or
each applicable double taxation treaty for the Lenders to prepare claims for the refund of any Swiss withholding tax so
deducted.
10. INTEREST PERIODS
(a) The relevant Borrower may select an Interest Period for an Advance in the Utilisation Request on 3 Business Days’ written
notice to the Facility Agent from the relevant Borrower.
(b) Subject to this Clause 10, a Borrower may select an Interest Period of:
(i) in relation to any Advance (other than a Swingline Advance), 1, 2, 3 or 6 Months or any other period of less than 1
Month to end on the Termination Date or any other period agreed between the relevant Borrower (or ABB on its behalf)
and the Facility Agent (acting on the instructions of all the Lenders); or
(ii) in relation to any Swingline Advance, a period not exceeding 5 Business Days.
(c) An Interest Period for an Advance shall not extend beyond the Termination Date.
(d) Each Advance has one Interest Period only.
11. CHANGES TO THE CALCULATION OF INTEREST
11.1 Absence of quotations
Subject to Clause 11.2 ( Market disruption ), if the applicable IBOR or if applicable, the Euro Swingline Rate or the SEK Swingline Rate
is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the
Quotation Day, the applicable IBOR or the Euro Swingline Rate or the SEK
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Swingline Rate shall be determined on the basis of the quotations of the remaining Reference Banks.
11.2 Market disruption
(a) If a Market Disruption Event occurs in relation to an Advance (other than a Dollar Swingline Advance) for any Interest Period,
then the rate of interest on each Lender’s share of that Advance for the Interest Period shall be the percentage rate per annum
which is the sum of:
(i) the Margin;
(ii) the rate notified to the Facility Agent, ABB and the relevant Borrower by that Lender in a certificate (which sets out the
details of the computation of the relevant rate and shall be prima facie non-binding evidence of the same) as soon as
practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses
as a percentage rate per annum the cost to that Lender of funding its participation in that Advance from whatever source
it may reasonably select; and
(iii) the Mandatory Cost, if any, applicable to that Lender’s participation in the Advance.
(b) In this Agreement “ Market Disruption Event ” means:
(i) in relation to an Advance (not being a Swingline Advance):
(A) at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none
or only one of the Reference Banks supplies a rate to the Facility Agent to determine the applicable IBOR for the
relevant currency and period; or
(B) before close of business in London on the Quotation Day for the relevant Interest Period, the Facility Agent
receives notifications from a Lender or Lenders (whose participations in an Advance exceed 50 per cent. of that
Advance) that the cost to it or them of obtaining matching deposits in the Relevant Interbank Market would be in
excess of the applicable IBOR; or
(ii) in relation to a Euro Swingline Advance or a SEK Swingline Advance, on the relevant Utilisation Date, none or only
one of the Reference Banks supplies a rate to the Facility Agent to determine the Euro Swingline Rate or the SEK
Swingline Rate, as the case may be.
11.3 Alternative basis of interest or funding
(a) If a Market Disruption Event occurs and the Facility Agent or ABB so requires, the Facility Agent and ABB shall enter into
negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of
interest.
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(b) Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of the Majority Lenders and ABB,
be binding on all Parties.
11.4 Break Costs
(a) The relevant Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break
Costs attributable to all or any part of an Advance or Unpaid Sum being paid by that Borrower on a day other than the last day
of an Interest Period for that Advance or Unpaid Sum.
12. FEES
(b) Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide to ABB and the relevant
Borrower a certificate (which shall constitute prima facie non-binding evidence of the matters to which it refers) addressed to
the Facility Agent, ABB and the relevant Borrower confirming the amount of its Break Costs for any Interest Period in which
they accrue and setting out the manner of computing such Break Costs.
12.1 Commitment Fee
(a) ABB shall pay to the Facility Agent (for the account of each Lender) a commitment fee in the Base Currency computed at 35
per cent. of the applicable Margin from time to time on that Lender’s Available Commitment.
(b) The accrued commitment fee is payable on the last day of each successive period of three Months commencing from the date
of this Agreement and on the last day of the Availability Period and, if a Lender’s Commitment is cancelled in full, on the date
such cancellation becomes effective in respect of the amount accrued in respect of that Lender’s Available Commitment
immediately before such cancellation.
(c) No commitment fee is payable to the Facility Agent (for the account of a Lender) on any Available Commitment of that
Lender for any day on which that Lender is a Defaulting Lender.
12.2 Utilisation Fee
(a) ABB shall pay to the Facility Agent (for the account of the Lenders pro rata to their Commitments) a utilisation fee in respect
of the Total Outstandings computed at the rate of:
(i) 0.15 per cent. per annum for each day that the amount of the Total Outstandings is greater than 33.33 per cent. of the
Total Commitments but less than or equal to 66.66 per cent. of the Total Commitments as at the Effective Date; and
(ii) 0.30 per cent. per annum for each day that the amount of the Total Outstandings is greater than 66.66 per cent. of the
Total Commitments as at the Effective Date.
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For the avoidance of doubt, no utilisation fee is payable while the amount of the Total Outstandings is less than or equal to
33.33 per cent of the Total Commitments as at the Effective Date.
(b) The accrued utilisation fee is payable on the last day of each successive period of three Months commencing from the date of
this Agreement and on the Termination Date.
12.3 Participation Fee
ABB shall pay to the Facility Agent (for the account of the Original Lenders) a participation fee in the amount and at the time agreed in a
Fee Letter.
12.4 Arrangement Fee
ABB shall pay to the Facility Agent (for the account of the Mandated Lead Arrangers) an arrangement fee in the amount and at the time
agreed in a Fee Letter.
12.5 Agency Fee
ABB shall pay to each Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.
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13. TAX GROSS UP AND INDEMNITIES
13.1 Definitions
(a) In this Agreement:
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
“ Initial Borrower Jurisdiction ” means any of The Netherlands, the United States of America, Sweden or Switzerland.
“ Protected Party ” means a Finance Party which is or will be, for or on account of Tax, subject to any liability or required to
make any payment in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or
receivable) under a Finance Document.
“ Qualifying Lender ” means:
(i) in respect of a payment by a Borrower incorporated in Switzerland, a Lender which is a bank;
(ii) in respect of a payment by a Borrower incorporated in the United States of America, a Lender which is:
(A) created or organised under the laws of the United States of America or of any state (including the District of
Columbia) thereof; or
(B) resident in a jurisdiction having and eligible for the benefit of a double taxation agreement with the United States
of America which makes provision for full exemption from tax imposed by the United States of America on
interest and which does not carry on a business in the United States of America through a permanent
establishment with which that Lender’s participation in the Facility is effectively connected; or
(C) entitled to receive payments under the Finance Documents without deduction or withholding of any United States
federal income taxes,
and which has complied with any procedural requirements within its control necessary to receive such payment without
the imposition of United States withholding tax; and
(iii) in respect of a payment by a Borrower incorporated in any jurisdiction except the United States of America or
Switzerland, any Lender.
“ Tax Credit ” means a credit against, relief or remission for, or repayment of any Tax.
“ Tax Deduction ” means a deduction or withholding for or on account of Tax from a payment under a Finance Document.
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“ Tax Payment ” means an increased payment made by ABB or a Borrower to a Finance Party under Clause 9.5 ( Minimum
Interest ), Clause 13.2 ( Tax gross-up ) or a payment made by ABB or a Borrower under Clause 13.3 ( Tax indemnity ).
(b) In this Clause 13 a reference to “ determines ” or “ determined ” means, save where expressly stated to the contrary, a
determination made in the absolute discretion of the person making the determination acting in good faith.
13.2 Tax gross-up
(a) ABB and each Borrower shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is
required by law.
(b) ABB, a Borrower or a Lender shall promptly upon becoming aware that ABB or a Borrower (as the case may be) must make a
Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. If
the Facility Agent receives such notification from a Lender it shall notify ABB and the relevant Borrower.
(c) If a Tax Deduction is required by law to be made by ABB or a Borrower in one of the circumstances set out in paragraph
(d) below, the amount of the payment due from ABB or that Borrower shall be increased to an amount which (after making any
Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d) The circumstances referred to in paragraph (c) above are where a person entitled to the payment:
(i) is the Agent;
(ii) is a Qualifying Lender; or
(iii) was a Qualifying Lender at the time it became a Lender but has ceased to be a Qualifying Lender to the extent that this
altered status results from any change after the date of this Agreement in (or in the interpretation, administration, or
application of) any law or double taxation agreement or any published practice or published concession of any relevant
taxing authority.
(e) If ABB or a Borrower is required to make a Tax Deduction, it shall make that Tax Deduction and any payment required in
connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
(f) Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, ABB or the
relevant Borrower (as the case may be) shall deliver to the Facility Agent for the Finance Party entitled to the payment
evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate
payment paid to the relevant taxing authority.
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(g) Each Finance Party, ABB and the Borrowers shall co-operate in completing any procedural formalities necessary for ABB or a
Borrower to make a payment to which the Finance Party is entitled without a Tax Deduction or with a reduced Tax Deduction.
Each Finance Party shall on the reasonable written request of ABB or a Borrower complete and deliver to ABB or that
Borrower all documentation reasonably required by ABB or that Borrower in order to enable it to make such payments without
a Tax Deduction or with a reduced Tax Deduction (so long as the completion or delivery of such documentation would not
materially prejudice the legal or commercial position of the relevant Finance Party).
13.3 Tax indemnity
(a) ABB shall (within three Business Days of written demand by the Facility Agent) pay to a Protected Party an amount equal to
the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on
account of Tax by that Protected Party.
(b) Paragraph (a) above shall not apply with respect to any Tax assessed on a Finance Party:
(i) under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or
jurisdictions) in which that Finance Party is treated as resident for tax purposes;
(ii) under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received
or receivable in that jurisdiction;
(iii) arising by reason of the making of an Advance to a Borrower in an Initial Borrower Jurisdiction under the law of such
jurisdiction, except to the extent arising by reason of a change in law or in any regulation occurring after the date of this
Agreement, provided that this paragraph (b)(iii) shall not apply to any Tax assessed or imposed on an Agent;
(iv) if that Tax is imposed on or calculated by reference to the net income received or receivable (including any sum deemed
to be received or receivable) by that Finance Party; or
(v) which is compensated for by Clause 9.5 ( Minimum Interest ) or Clause 13.2 ( Tax gross up ) (or would have been so
compensated but for an exception to those Clauses).
(c) A Protected Party making, or intending to make a claim pursuant to paragraph (a) above shall promptly notify the Facility
Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify ABB.
(d) A Protected Party shall, on receiving a payment from ABB under this Clause 13.3, notify the Facility Agent.
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13.4 Tax Credit
If ABB or a Borrower makes a Tax Payment and the relevant Finance Party determines that:
(a) a Tax Credit is attributable to that Tax Payment; and
(b) that Finance Party has obtained, utilised and retained that Tax Credit,
the Finance Party shall pay an amount to ABB (or as the case may be) that Borrower which that Finance Party determines, acting in good
faith, will leave that Finance Party (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not
been made by ABB or that Borrower (as the case may be). The relevant Finance Party shall endeavour, acting in good faith, to obtain,
utilise and retain the Tax Credit save that it shall not be obliged to disclose any information relating to its tax or other affairs or any
computations in respect thereof.
13.5 Lender Status Confirmation
(a) Each New Lender that becomes a Lender after the date of this Agreement shall indicate in the Transfer Certificate or Increase
Confirmation which it executes on becoming a Party, and for the benefit of the Facility Agent and without liability to any
Obligor, whether or not it is a Qualifying Lender.
(b) If a New Lender fails to indicate its status in accordance with this Clause 13.5 then such New Lender shall be treated for the
purposes of this Agreement (including by each Obligor) as if it were not a Qualifying Lender until such time as it notifies the
Facility Agent to the contrary (and the Facility Agent, upon receipt of such notification, shall inform ABB). For the avoidance
of doubt a Transfer Certificate or Increase Confirmation shall not be invalidated by any failure of a Lender to comply with this
Clause 13.5.
13.6 Qualifying Lenders
Any Lender which ceases, for any reason, to be a Qualifying Lender shall promptly notify ABB and the relevant Borrower(s) of its
change of status.
13.7 Stamp taxes
ABB shall pay and, within 3 Business Days of demand, indemnify each Finance Party against any cost, loss or liability such Finance
Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document, but not in
respect of any assignment or transfer pursuant to Clause 23 ( Changes to the Lenders ).
13.8 Value added tax
(a) All consideration payable under a Finance Document by ABB or the Borrowers to a Finance Party shall be deemed to be
exclusive of any VAT. If VAT is chargeable on any supply made by any Finance Party to any Party in connection with a
Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an
amount equal to the amount of the VAT.
(b) Where a Finance Document requires ABB or the Borrowers to reimburse a Finance Party for any costs or expenses, ABB or
the Borrowers (as the case
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14. INCREASED COSTS
may be) shall also at the same time pay and indemnify that Finance Party against all VAT directly incurred by that Finance
Party in respect of the costs or expenses save to the extent that that Finance Party is entitled to repayment or credit in respect of
the VAT.
14.1 Increased costs
(a) Subject to Clause 14.3 ( Exceptions ) ABB shall, within 3 Business Days of a demand by the Facility Agent, pay for the
account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result
of (i) the introduction of or any change in (or in the interpretation or application of) any law or regulation or (ii) compliance
with any law or regulation made after the date of this Agreement.
(b) In this Agreement “ Increased Costs ” means:
(i) a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;
(ii) an additional or increased cost; or
(iii) a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party
having entered into its Commitment or funding or performing its obligations under any Finance Document.
14.2 Increased cost claims
(a) A Finance Party intending to make a claim pursuant to Clause 14.1 ( Increased costs ) shall promptly notify the Facility Agent
of the event giving rise to the claim, following which the Facility Agent shall promptly notify ABB.
(b) Each Finance Party shall, as soon as practicable after a demand by the Facility Agent provide a certificate confirming the
amount of its Increased Costs with (subject to any rights or duties of confidentiality the relevant Finance Party has in respect of
such information) full supporting details (which certificate shall constitute prima facie non-binding evidence of the matters to
which it relates).
14.3 Exceptions
(a) Clause 14.1 ( Increased costs ) does not apply to the extent any Increased Cost is:
(i) attributable to a Tax Deduction required by law to be made by ABB or a Borrower;
(ii) compensated for by Clause 13.3 ( Tax indemnity ) (or would have been compensated for under Clause 13.3 ( Tax
indemnity ) but was not so compensated solely because one of the exclusions in paragraph (b) of Clause 13.3 ( Tax
indemnity ) applied);
(iii) not payable as provided in Clause 23.2 ( Conditions of assignment or transfer );
(iv) compensated for by the payment of the Mandatory Cost;
(v) attributable to the breach by the relevant Finance Party or its Affiliates of any law or regulation;
(vi) not notified to ABB within 3 months of being incurred; or
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(vii) attributable to the implementation or application of or compliance with the “International Convergence of Capital
Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision
in June 2004 in the form existing on the date of this Agreement (“ Basel II ”) or any other law or regulation which
implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance
Party or any of its Affiliates).
(b) In this Clause 14.3, a reference to a “ Tax Deduction ” has the same meaning given to the term in Clause 13.1 ( Definitions ).
15. OTHER INDEMNITIES
15.1 Currency indemnity
(a) If any sum due from ABB or a Borrower under the Finance Documents (a “ Sum ”), or any order, judgment or award given or
made in relation to a Sum, has to be converted from the currency (the “ First Currency ”) in which that Sum is payable into
another currency (the “ Second Currency ”) for the purpose of:

(i) making or filing a claim or proof against ABB or any of the Borrowers;
(ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
ABB or that Borrower (as the case may be) shall as an independent obligation, within 3 Business Days of demand, indemnify
each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion
including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second
Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b) ABB and each Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a
currency or currency unit other than that in which it is expressed to be payable.
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15.2 Other indemnities
ABB shall indemnify each Lender upon presentation of duly documented evidence thereof against any cost, loss or liability directly
incurred by that Lender as a result of:
(a) the occurrence of any Event of Default (but excluding any costs of enforcement save as provided in Clause 17.3 ( Enforcement
costs ));
(b) a failure by ABB or a Borrower to pay any amount due under a Finance Document on its due date, including without
limitation, any cost, loss or liability arising as a result of Clause 27 ( Sharing among the Lenders );
(c) funding, or making arrangements to fund, its participation in an Advance requested by a Borrower in a Utilisation Request but
not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default,
negligence or wilful misconduct by that Lender alone); or
(d) an Advance (or part of an Advance) not being prepaid in accordance with a notice of prepayment given by a Borrower.
15.3 Indemnity to the Facility Agent
ABB shall promptly indemnify the Facility Agent, upon presentation of duly documented evidence thereof, against any reasonable cost,
loss or liability properly and directly incurred by the Facility Agent (acting reasonably) as a result of:
(a) investigating any event which it reasonably believes is a Default; or
(b) entering into or performing any foreign exchange contract for the purposes of Clause 6 ( Optional Currencies ); or
(c) acting or relying on any notice, request or instruction which it reasonably believes (after due enquiry) to be genuine, correct
and appropriately authorised.
16. MITIGATION BY THE LENDERS
16.1 Mitigation
(a) Each Finance Party shall, in consultation with ABB, take all reasonable steps to mitigate any circumstances which arise and
which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 8.1 ( Lender
Illegality ), Clause 13 ( Tax gross up and indemnities ) or Clause 14 ( Increased costs ) or which would result in any increased
amount being payable under this Agreement by reason of a change in the Mandatory Cost or a change in the reserve
requirements imposed by the European Central Bank after the date of this Agreement including (but not limited to) transferring
its rights and obligations under the Finance Documents to another Affiliate or Facility Office (in each case in accordance with
the terms hereof) and, in such circumstances a Lender will, at the request of ABB but subject to ABB indemnifying it for the
costs of so doing, transfer its rights and obligations under the Finance Documents to another Lender.
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(b) Paragraph (a) above does not in any way limit the obligations of the Obligors under the Finance Documents.
16.2 Limitation of liability
(a) ABB shall indemnify each Finance Party, upon presentation of duly documented evidence thereof, for all costs and expenses
reasonably and directly incurred by that Finance Party as a result of steps taken by it under Clause 16.1 ( Mitigation ).
(b) A Finance Party is not obliged to take any steps under Clause 16.1 ( Mitigation ) (other than a transfer of its rights and
obligations to another Lender where ABB indemnifies it for the cost of so doing) if, in the opinion of that Finance Party (acting
reasonably), to do so could reasonably be expected to be prejudicial to it.
17. COSTS AND EXPENSES
17.1 Transaction expenses
ABB shall promptly on demand pay, upon presentation of duly documented evidence thereof, the Agents and the Mandated Lead
Arrangers the amount of all costs and expenses (including legal fees) reasonably and directly incurred by any of them in connection with
the negotiation, preparation, printing, execution and syndication of:
(a) this Agreement and any other documents referred to in this Agreement; and
(b) any other Finance Documents executed after the date of this Agreement.
17.2 Amendment costs
If (a) ABB requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 28.10 ( Change of currency ),
ABB shall, within 3 Business Days of demand, reimburse the Facility Agent, upon presentation of duly documented evidence thereof, for
the amount of all costs and expenses (including legal fees) reasonably and directly incurred by the Facility Agent and which have
previously been agreed with ABB in responding to, evaluating, negotiating or complying with that request or requirement.
17.3 Enforcement costs
ABB shall, within 3 Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees)
directly incurred by that Finance Party at any time after the service of a notice by the Facility Agent under Clause 22.10 ( Acceleration )
in connection with the enforcement of, or the preservation of any rights under, any Finance Document.
18. GUARANTEE AND INDEMNITY
18.1 Guarantee and indemnity
The Guarantor irrevocably and unconditionally:
(a) guarantees to each Finance Party punctual performance by each Borrower of all that Borrower’s obligations under the Finance
Documents;
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(b) undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with
any Finance Document, the Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and
(c) agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as
an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability
it incurs as a result of a Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality,
have been payable by it under any Finance Document on the date when it would have been due. The amount payable by the
Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 18 if the amount
claimed had been recoverable on the basis of a guarantee.
18.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Borrower under the Finance
Documents, regardless of any intermediate payment or discharge in whole or in part.
18.3 Reinstatement
If any discharge, release or arrangement (whether in respect of the obligations of any Borrower or any security for those obligations or
otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or
must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Guarantor under this
Clause 18 will continue or be reinstated as if the discharge, release or arrangement had not occurred.
18.4 Waiver of defences
The obligations of the Guarantor under this Clause 18 will not be affected by any act, omission, matter or thing which, but for this
Clause, would reduce, release or prejudice any of its obligations under this Clause 18 (without limitation and whether or not known to it
or any Finance Party) including:
(a) any time, waiver or consent granted to, or composition with, any Borrower or other person;
(b) the release of any Borrower or any other person under the terms of any composition or arrangement with any creditor of any
member of the Group;
(c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any
rights against, or security over assets of, any Borrower or other person or any non-presentation or non-observance of any
formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(d) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a
Borrower or any other person;
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(e) any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or
replacement of any Finance Document or any other document or security including without limitation any change in the
purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or
other document or security;
(f) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other
document or security; or
(g) any insolvency or similar proceedings.
18.5 Immediate recourse
The Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against
or enforce any other rights or security or claim payment from any person before claiming from the Guarantor under this Clause 18. This
waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
18.6 Appropriations
Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been
irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee
or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit
(whether against those amounts or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and
(b) hold in an interest-bearing suspense account any moneys received from the Guarantor or on account of the Guarantor’s
liability under this Clause.
18.7 Deferral of Guarantor’s rights
Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been
irrevocably paid in full or the Facility Agent otherwise directs, the Guarantor will not exercise any rights which it may have by reason of
performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under
this Clause 18:
(a) to be indemnified by a Borrower;
(b) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties
under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance
Documents by any Finance Party;
(c) to bring legal or other proceedings for an order requiring any Borrower to make any payment, or perform any obligation, in
respect of which it has given a
54

guarantee, undertaking or indemnity under Clause 18.1 ( Guarantee and indemnity );
(d) to exercise any right of set-off against any Borrower; and/or
(e) to claim or prove as a creditor of any Borrower in competition with any Finance Party.
If the Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution
to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Borrowers under or in
connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to
the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 29 ( Payment mechanics ).
18.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any
Finance Party.
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19. REPRESENTATIONS
SECTION 7
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
ABB (in respect of itself and, where specified, each Group Company or each Material Subsidiary) and each Borrower (in respect of
itself) makes the representations and warranties set out in this Clause 19 to each Finance Party on the date of this Agreement.
19.1 Status
(a) It is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation.
(b) It and each Group Company has the power to own its assets and carry on its business as it is being conducted.
19.2 Binding obligations
The obligations expressed to be assumed by it in each Finance Document are, subject to the Reservations, legal, valid, binding and
enforceable obligations.
19.3 Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, the Finance Documents to which it is a party do not
conflict with:
(a) any law or regulation applicable to it;
(b) its constitutional documents; or
(c) any agreement or instrument binding upon it or any Group Company or any of their assets,
and, in the case of paragraph (c) on any repetition after the date of this Agreement, in a manner that could reasonably be expected to have
a Material Adverse Effect.
19.4 Power and authority
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery
of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
19.5 Validity and admissibility in evidence
All Authorisations required by ABB and each Borrower (including, in the case of any Dutch Borrower, and if applicable, any works
council advice):
(a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a
party; and
(b) to make the Finance Documents to which it is a party admissible in evidence in its jurisdiction of incorporation,
have been obtained or effected and are in full force and effect.
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19.6 Insolvency
Neither it nor any Material Subsidiary (excluding to the extent relevant Combustion Engineering Inc.) has taken any action nor (so far it
is aware, having made all due enquiry) have any steps been taken or legal proceedings been started against it for winding-up, dissolution
or re-organisation, the enforcement of any Security over its assets or for the appointment of a receiver, administrative receiver, or
administrator, trustee or similar officer of it or any of its assets.
19.7 No default
(a) No Default is continuing.
(b) No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is
binding on a Group Company or to which their assets are subject which has had or could reasonably be expected to have a
Material Adverse Effect.
19.8 No misleading information
(a) Any factual information contained in any document forming part of the Information Package was true and accurate in all
material respects as at the date of the relevant document.
(b) Nothing has occurred or been omitted from the Information Package and no information has been given or withheld that
results in the information contained in the Information Package being untrue or misleading in any material respect as at the date
of the relevant document.
19.9 Financial statements
(a) The Original Financial Statements were prepared in accordance with GAAP consistently applied.
(b) The Original Financial Statements fairly present in all material respects the consolidated financial condition and operations of
the Group or the financial condition and operations of the relevant Original Obligor in respect of the relevant financial year.
(c) Each of the latest audited consolidated financial statements required to be delivered under paragraph (b) of Clause 20.1
( Financial statements ) fairly presents in all material respects the financial position of the Group as at the date to which they
were prepared and for the period then ended.
(d) Each of the latest set of unaudited consolidated financial statements required to be delivered under paragraph (c) of Clause
20.1 ( Financial statements ) fairly presents in all material respects the financial condition of the Group as at the date to which
they were prepared and for the period then ended.
19.10 No Material Adverse Effect
Since the date of the most recent annual audited accounts of the Group, no event or events have occurred which have had a Material
Adverse Effect.
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19.11 Pari passu ranking
Its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and
unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
19.12 No proceedings pending or threatened
No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which could reasonably be
expected to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against any Group
Company save in relation to asbestos liabilities relating to the business of Combustion Engineering Inc.
19.13 Environmental Compliance
Each Group Company has complied in all respects with all Environmental Law save to the extent that non-compliance could not
reasonably be expected to have a Material Adverse Effect.
19.14 Repetition
(a) The representations and warranties in Clause 19.1 ( Status ) to Clause 19.4 ( Power and authority ) are deemed to be made by
each Obligor by reference to the facts and circumstances then existing on the date of each Utilisation Request and the first day
of each Interest Period.
(b) The representations and warranties in paragraphs (c) and (d) of Clause 19.9 ( Financial statements ) are deemed to be made by
each Obligor in respect of any financial statements delivered by it on the date those financial statements are approved as final
by the management of the relevant Obligor.
20. INFORMATION UNDERTAKINGS
The undertakings in this Clause 20 remain in force from the date of this Agreement for so long as any amount is outstanding under the
Finance Documents or any Commitment is in force.
20.1 Financial statements
(a) ABB and each Borrower shall supply to the Facility Agent in sufficient copies for all the Lenders, as soon as the same become
available, but in any event within 120 days after the end of each of its financial years (in the case of ABB) and within 150 days
(in the case of each Borrower), its statutory audited unconsolidated annual financial statements for that financial year (if
prepared by such Borrower).
(b) ABB shall supply to the Facility Agent in sufficient copies for all the Lenders, as soon as the same become available, but in
any event before the date falling 120 days after the end of each of its financial years, its audited consolidated annual financial
statements.
(c) ABB shall supply to the Facility Agent in sufficient copies for all the Lenders, as soon as the same become available, but in
any event within 45 days after the
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end of each quarter of each of its financial years (except the fourth quarter) its unaudited consolidated financial statements for
that quarter and the year-to-date period then ended.
20.2 Requirements as to financial statements
Each Borrower shall procure that each set of financial statements delivered by it pursuant to Clause 20.1 ( Financial statements ) is
prepared using GAAP.
20.3 Information: miscellaneous
ABB shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests):
(a) all documents dispatched by it to its shareholders (or any class of them) or its creditors generally at the same time as they are
dispatched;
(b) promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are
commenced against one or more Group Companies and which could reasonably be expected to have a Material Adverse Effect;
(c) promptly, such further information regarding the financial condition, business and operations of any Obligor or any other
Material Subsidiary as any Finance Party (acting through the Facility Agent) may reasonably request; and
(d) promptly upon becoming aware of it, details of any change in its Credit Rating.
20.4 Notification of default
ABB and each Borrower shall notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon
becoming aware of its occurrence.
20.5 Material Subsidiaries
ABB shall supply to the Facility Agent, with each set of financial statements delivered by it pursuant to paragraph (b) of Clause 20.1
( Financial statements ), either:
(a) a complete and up to date list of Material Subsidiaries at that time; or
(b) written confirmation that the list of Material Subsidiaries contained in Schedule 9 ( Material Subsidiaries ) is complete and up
to date at that time.
20.6 Use of Websites
(a) Any Obligor may satisfy its obligation under this Agreement to deliver any information in relation to those Lenders (the “
Website Lenders ”) who accept this method of communication by posting this information onto an electronic website
designated by ABB and the Facility Agent (the “ Designated Website ”) if:
(i) the Facility Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of
the information by this method;
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(ii) both ABB and the Facility Agent are aware of the address of and any relevant password specifications for the
Designated Website; and
(iii) the information is in a format previously agreed between ABB and the Facility Agent.
If any Lender (a “ Paper Form Lender ”) does not agree to the delivery of information electronically then the Facility Agent
shall notify ABB accordingly and ABB shall supply the information to the Facility Agent (in sufficient copies for each Paper
Form Lender) in paper form. In any event ABB shall supply the Facility Agent with at least one copy in paper form of any
information required to be provided by it.
(b) The Facility Agent shall supply each Website Lender with the address of and any relevant password specifications for the
Designated Website following designation of that website by ABB and the Facility Agent. The Facility Agent shall notify each
Website Lender when any document is posted to the Designated Website.
(c) ABB shall promptly upon becoming aware of its occurrence notify the Facility Agent if:
(i) the Designated Website cannot be accessed due to technical failure;
(ii) the password specifications for the Designated Website change;
(iii) any new information which is required to be provided under this Agreement is posted onto the Designated Website;

(iv) any existing information which has been provided under this Agreement and posted onto the Designated Website is
amended; or
(v) ABB becomes aware that the Designated Website or any information posted onto the Designated Website is or has been
infected by any electronic virus or similar software.
If ABB notifies the Facility Agent under paragraph (c)(i) or paragraph (c)(v) above, all information to be provided by ABB
under this Agreement after the date of that notice shall be supplied in paper form unless and until the Facility Agent and each
Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
(d) Any Website Lender may request, through the Facility Agent, one paper copy of any information required to be provided
under this Agreement which is posted onto the Designated Website. ABB shall comply with any such request within ten
Business Days.
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20.7 “Know your customer” checks
(a) If:
(i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation
made after the date of this Agreement;
(ii) any change in the status of an Obligor or the composition of the shareholders of an Obligor after the date of this
Agreement; or
(iii) a proposed assignment or transfer by a Lender of any of its rights and/or obligations under this Agreement to a party
that is not a Lender prior to such assignment or transfer,
obliges any Agent or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to comply with “know
your customer” or similar identification procedures in circumstances where the necessary information is not already available
to it, each Obligor shall promptly upon the request of that Agent or any Lender supply, or procure the supply of (to the extent
that the relevant information is not already available to the applicable Agent or Lender), such documentation and other
evidence as is reasonably requested by that Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case
of the event described in paragraph (iii) above, on behalf of any prospective new Lender) in order for the applicable Agent,
such Lender or, in the case of the event described in paragraph (iii) above, any prospective new Lender to carry out and be
satisfied with the results of all necessary “know your customer” or other checks in relation to any relevant person pursuant to
the transactions contemplated in the Finance Documents.
(b) Each Lender shall promptly upon the request of any Agent supply, or procure the supply of, such documentation and other
evidence as is reasonably requested by that Agent (for itself) in order for that Agent to carry out and be satisfied with the
results of all necessary “know your customer” or other checks on Lenders or prospective new Lenders pursuant to the
transactions contemplated in the Finance Documents.
(c) ABB shall, by not less than 10 Business Days’ prior written notice to the Facility Agent, notify the Facility Agent (which shall
promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Borrower pursuant to
Clause 24 ( Changes to the Obligors ).
(d) Following the giving of any notice pursuant to paragraph (c) above, if the accession of such Additional Borrower obliges any
Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the
necessary information is not already available to it, ABB shall promptly upon the request of that Agent or any Lender supply,
or procure the supply of, such documentation and other evidence as is reasonably requested by that Agent (for itself or on
behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for that Agent or
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such Lender or any prospective new Lender to carry out and be satisfied with the results of all necessary “know your customer”
or other checks in relation to any relevant person pursuant to the accession of such Subsidiary to this Agreement as an
Additional Borrower
21. GENERAL UNDERTAKINGS
The undertakings in this Clause 21 remain in force from the date of this Agreement for so long as any amount is outstanding under the
Finance Documents or any Commitment is in force.
21.1 Authorisations
Each Obligor shall promptly:
(a) obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b) supply certified copies to the Facility Agent of,
any Authorisation (including, in the case of any Dutch Borrower, any applicable works council advice) required under any law or
regulation of its jurisdiction of incorporation to enable it to perform its obligations under the Finance Documents and to ensure the
legality, validity and subject to the Reservations enforceability or admissibility in evidence in its jurisdiction of incorporation of any
Finance Document.
21.2 Compliance with laws
Each Obligor shall comply in all respects with all laws (including, without limitation, Environmental Law, ERISA and the Dutch
Financial Supervision Act ( Wet op het financieel toezicht )) to which it may be subject, if failure so to comply would have a Material
Adverse Effect.
21.3 Negative pledge
(a) Neither ABB nor any Borrower shall (and ABB shall procure that no other Group Company will) create or permit to subsist
any Security over any of its assets.
(b) Paragraph (a) above does not apply to:
(i) any Security over any bank account in favour of the bank with which such account is held, in each case granted by any
Group Company in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;
(ii) any Security arising by operation of law;
(iii) any Security contained in a contract for sale or supply entered into in the ordinary course of trading, where such
Security is granted to such seller or, as the case may be, supplier and is limited in recourse to the asset sold or, as the
case may be, supplied;
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(iv) any Security over or affecting any asset acquired by a Group Company after the date of this Agreement if:
(A) the Security was not created in contemplation of the acquisition of that asset by a Group Company; and
(B) the principal amount secured has not been increased in contemplation of, or since the acquisition of that asset by
a Group Company;
(v) any Security over or affecting any asset of a Group Company after the date of this Agreement, where the Security is
created prior to the date on which that Company becomes a Group Company, if:
(A) the Security was not created in contemplation of the acquisition of that company; and
(B) the principal amount secured has not increased in contemplation of or since the acquisition of that company;
(vi) any Security provided by one Group Company (not being ABB) to another Group Company;
(vii) any Security created in respect of the Securitisations provided that the amounts so secured do not at any time exceed
USD 1,500,000,000 (or its equivalent in another currency or currencies);
(viii) any Security over the assets of a Project Company, any shareholder loan made to a Project Company or the shares in a
Project Company where such Security was created for the purpose of securing Indebtedness incurred to acquire and/or
develop the assets of such Project Company and where such Indebtedness constitutes Project Finance Indebtedness of
such Project Company;
(ix) any Security securing Indebtedness incurred by a Group Company to refinance Indebtedness secured by Security of the
type referred to in paragraphs (iv) or (v) above where such first-mentioned Security is over the same asset and is of the
same type as such second-mentioned Security and the conditions referred to in paragraph (iv) or, as the case may be,
(v) above continue to be satisfied, mutatis mutandis ; and
(x) any Security not falling within any of paragraphs (i) to (ix) above inclusive in respect of assets having an aggregate
value not exceeding 10% of the aggregate value of the gross assets of the Group (as set out in ABB’s most recently
published annual audited consolidated financial statements).
21.4 Claims Pari Passu
ABB shall ensure that at all times the claims of the Finance Parties against each Obligor under the Finance Documents rank at least pari
passu with the claims of all its other
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unsecured and unsubordinated creditors except for obligations mandatorily preferred by law applying to companies generally.
21.5 Merger
No Obligor shall enter into any amalgamation, demerger, merger or corporate reconstruction save where the Facility Agent is satisfied,
acting reasonably, that the relevant Obligor’s obligations under the Finance Documents will continue to be the legal, valid, binding and
(subject to the Reservations) enforceable obligations of the surviving entity.
21.6 Insurance
Each Obligor shall (and ABB shall ensure that each Group Company will) maintain insurances on and in relation to its business and
assets with reputable underwriters or insurance companies against those risks and to the extent as is usual for companies carrying on the
same or substantially similar business in the relevant jurisdiction and taking into account the availability of insurance generally.
21.7 Restriction on Subsidiary Debt
ABB shall ensure that the aggregate amount of Total Gross Debt other than:
(a) Project Finance Indebtedness;
(b) Indebtedness owed by one Group Company to another Group Company;
(c) amounts borrowed by a finance company which is a Group Company and which are on-lent, and remain on-lent, to an Obligor;
(d) amounts borrowed by a Group Company from a bank to which cash-collateral (in a substantially equivalent amount) has been
granted by a Group Company in respect of the relevant Group Company’s obligation to repay such amounts;
(e) Indebtedness relating to any leases that are not required to be treated as finance leases under US GAAP as at the date hereof;
(f) any amounts borrowed by a Group Company which constitute Total Gross Debt to the extent such amounts are borrowed for
the purposes of refinancing other borrowings constituting Total Gross Debt so long as amounts so borrowed are promptly
applied in such manner;
(g) Indebtedness in respect of bonds and commercial paper issued by members of the Group that are capital markets issuers; and
(h) amounts owed to Combustion Engineering Inc., or any trust established in connection with its Chapter 11 filing or any other
Chapter 11 filing or proceedings relating thereto,
of Group Companies which are not Obligors shall not exceed $1,000,000,000 as at the last date of each quarter of each of its financial
years.
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In this Clause 21.7 “ Total Gross Debt ” means the aggregate of short-term debt (including current maturities of long-term debt) and
long-term debt as reflected in ABB’s latest consolidated balance sheet.
21.8 Change of business
ABB shall procure that no change is made to the businesses of the Group which would result in the core businesses of the Group, taken
as a whole, being other than the businesses of power and automation technology.
22. EVENTS OF DEFAULT
Each of the events or circumstances set out in Clauses 22.1 ( Non-payment ) to 22.9 ( Cessation of business ) inclusive is an Event of
Default.
22.1 Non-payment
Any sum due from an Obligor or the Obligors under this Agreement is not paid at the time, at the place at, and in the currency in which,
it is expressed to be payable unless payment is made within 3 Business Days of its due date and the failure to pay is due solely to
administrative error or technical delays in the transmission of funds.
22.2 Other obligations
An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 22.1 ( Non-payment ))
and, if the failure to comply is capable of remedy, it is not remedied within 30 days of the Facility Agent giving notice to ABB of the
failure to comply.
22.3 Misrepresentation
Any representation or statement made or deemed (by virtue of Clause 19.14 ( Repetition )) to be made by ABB or any Borrower in this
Agreement is or proves to have been incorrect or misleading in any respect when made or deemed to be made and, where the
circumstances making such representation or statement incorrect or misleading are capable of being altered so that such representation or
statement is correct, such circumstances are not so altered within 30 days of the Facility Agent giving notice to ABB of such
representation or statement being incorrect.
22.4 Cross default
(a) Any Indebtedness of all or any of the Group Companies is not paid when due nor within any originally applicable grace
period.
(b) Any Indebtedness of all or any of the Group Companies has (i) become capable of being declared and is declared to be or
(ii) otherwise becomes due and payable, in any case, prior to its specified maturity as a result of a default or an event of default
(however described).
(c) Any commitment for any Indebtedness of all or any of the Group Companies is cancelled or suspended by a creditor of all or
any of the Group Companies as a result of a default or an event of default (however described).
(d) Any creditor of all or any of the Group Companies becomes entitled to declare any Indebtedness of all or any of the Group
Companies due and payable prior to
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its specified maturity as a result of a default or an event of default (however described).
(e) No Event of Default will occur under this Clause 22.4 if (1) the Indebtedness falling within paragraphs (a) to (d) is Project
Finance Indebtedness, intra-Group Indebtedness or Indebtedness under a Finance Document or (2) the aggregate amount of
Indebtedness or commitment for Indebtedness falling within paragraphs (a) to (d) (excluding any described in (1) above) above
is less than $50,000,000.
(f) No Event of Default will occur under this Clause 22.4 where the applicable default or relevant circumstances described in
paragraphs (a) to (d) above arise as a result of or in connection with any bankruptcy filing under Chapter 11 of the US
Bankruptcy Code in respect of Combustion Engineering Inc. or any other related bankruptcy filing under Chapter 11 of the US
Bankruptcy Code, or any proceedings relating to any such filing.
22.5 Insolvency
(a) Any Obligor or any Material Subsidiary is unable or admits in writing an inability to pay its debts as they fall due, suspends
making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with
one or more of its creditors with a view to rescheduling any of its indebtedness.
(b) A moratorium is declared in respect of any indebtedness of any Obligor or any Material Subsidiary.
(c) This Clause 22.5 shall not apply to Combustion Engineering Inc.
22.6 Insolvency proceedings
Any corporate action, legal proceedings or other procedure or step is taken in relation to:
(a) the suspension of payments, a moratorium of any indebtedness, dissolution or reorganisation (by way of voluntary
arrangement, scheme of arrangement or otherwise) of any Obligor or any Material Subsidiary other than a solvent liquidation
or reorganisation of any Material Subsidiary (other than a Borrower) or to the extent permitted by Clause 21.5 ( Merger );
(b) a composition, assignment or arrangement with any creditor of any Obligor or any Material Subsidiary (other than on a solvent
basis to the extent permitted by Clause 21.5 ( Merger ));
(c) the appointment of a liquidator (other than (i) a winding up petition which is frivolous or vexatious and which is, in any event,
discharged within 30 days of its presentation or (ii) in respect of a solvent liquidation of any Material Subsidiary (other than a
Borrower) or to the extent permitted by Clause 21.5 ( Merger )), receiver, administrator, administrative receiver, compulsory
manager or other similar officer in respect of any Obligor or any Material Subsidiary or any of its assets (having an aggregate
value of at least $50,000,000); or
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(d) enforcement of any Security over any assets (having an aggregate value of at least $50,000,000) of any Material Subsidiary or
Obligor by reason of a default or event of default (howsoever described) occurring under the relevant agreement relating to the
Indebtedness secured by such Security,
or any analogous procedure or step is taken in any jurisdiction provided that this Clause 22.6 shall not apply to Combustion
Engineering Inc.
22.7 Repudiation
An Obligor repudiates a Finance Document or evidences in writing an intention to repudiate a Finance Document.
22.8 Unlawfulness
Subject to Clause 8.2 ( Borrower Illegality ), it is or becomes unlawful for an Obligor to perform any of its material obligations under the
Finance Documents.
22.9 Cessation of business
The Group, taken as a whole, ceases or threatens to cease to do business.
22.10 Acceleration
On and at any time after the occurrence of an Event of Default which is continuing the Facility Agent may, and shall if so directed by the
Majority Lenders, by notice to ABB:
(a) cancel the Total Commitments whereupon they shall immediately be cancelled;
(b) declare that all or part of the Advances, together with accrued interest, and all other amounts accrued under the Finance
Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or
(c) declare that all or part of the Advances be payable on demand, whereupon they shall immediately become payable on demand
by the Facility Agent on the instructions of the Majority Lenders.
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23. CHANGES TO THE LENDERS
SECTION 8
CHANGES TO PARTIES
23.1 Assignments and transfers by the Lenders
Subject to this Clause 23, a Lender (the “ Existing Lender ”) may:
(a) assign any of its rights; or
(b) transfer by novation any of its rights and obligations,
to another bank (the “ New Lender ”).
23.2 Conditions of assignment or transfer
(a) The consent of ABB is required for an assignment or transfer by a Lender, unless the assignment or transfer is to another
Lender or an Affiliate of a Lender that is a bank or unless an Event of Default has occurred and is continuing.
(b) The consent of ABB to an assignment or transfer must not be unreasonably withheld or delayed. ABB will be deemed to have
given its consent 10 Business Days after the Lender has requested it unless consent is expressly refused by ABB within that
time.
(c) The consent of ABB to an assignment or transfer must not be withheld solely because the assignment or transfer may result in
an increase to the Mandatory Cost.
(d) An assignment or transfer shall be in respect of a Commitment or a Swingline Commitment of at least $10,000,000 or, if less,
the whole of the Commitment or Swingline Commitment of the relevant assignor or transferor (provided that any such
assignment or transfer shall be in respect of a Commitment or Swingline Commitment at least equal to €50,000 (calculated at
the then prevailing exchange rate)).
(e) An assignment or transfer by a Swingline Lender of any of its Swingline Commitments shall only be made if there is a
simultaneous assignment or transfer of an equal amount of its Commitment (or the Commitment of its Revolving Facility
Affiliate). This paragraph shall not apply to a transfer of any Swingline Commitment to a Lender or an Affiliate of a Lender
provided that no Swingline Commitment of a Lender may exceed the Commitment of that Lender or its Revolving Facility
Affiliate.
(f) An assignment or transfer by a Lender which is a Swingline Lender or the Revolving Facility Affiliate of a Swingline Lender
of any of its Commitment shall only be effective if after such assignment or transfer, the Commitment of that Lender is at least
equal to each of the Swingline Commitments of that Lender or its Swingline Affiliate.
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(g) An assignment will only be effective on: (i) receipt by the Facility Agent of written confirmation from the New Lender (in
form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the other
Finance Parties and the Obligors as it would have been under if it was an Original Lender; and (ii) performance by the Facility
Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to
such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and
the New Lender.
(h) A transfer will only be effective if the procedure set out in Clause 23.5 ( Procedure for transfer ) is complied with.
(i) If:
(i) a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office;
and
(ii) as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged,
or at such date it is reasonably foreseeable that an Obligor would be obliged, to make a payment to the New Lender or
Lender acting through its new Facility Office under Clause 9.5 ( Minimum Interest ), Clause 13 ( Tax gross up and
indemnities ) or Clause 14 ( Increased Costs ),
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses
to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the
assignment, transfer or change had not occurred.
(j) Each New Lender, by executing the relevant Transfer Certificate, confirms, for the avoidance of doubt, that the Facility Agent
has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender
or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in
accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have
been had it remained a Lender.
23.3 Assignment or transfer fee
The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a
fee of $1,500.
23.4 Limitation of responsibility of Existing Lenders
(a) Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no
responsibility to a New Lender for:
(i) the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;
(ii) the financial condition of ABB or any Borrower;
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(iii) the performance and observance by ABB or any Borrower of its obligations under the Finance Documents or any other
documents; or
(iv) the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any
other document,
and any representations or warranties implied by law are excluded.
(b) Each New Lender confirms to the Existing Lender and the other Finance Parties that it:
(i) has made (and shall continue to make) its own independent investigation and assessment of the financial condition and
affairs of ABB and each Borrower and its related entities in connection with its participation in this Agreement and has
not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance
Document; and
(ii) will continue to make its own independent appraisal of the creditworthiness of ABB and each Borrower and its related
entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.
(c) Nothing in any Finance Document obliges an Existing Lender to:
(i) accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred
under this Clause 23; or

(ii) support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by ABB or any
Borrower of its obligations under the Finance Documents or otherwise.
23.5 Procedure for transfer
(a) Subject to the conditions set out in Clause 23.2 ( Conditions of assignment or transfer ) a transfer is effected in accordance
with paragraph (b) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by
the Existing Lender and the New Lender. The Facility Agent shall, as soon as reasonably practicable after receipt by it of a
duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in
accordance with the terms of this Agreement, execute that Transfer Certificate.
(b) The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New
Lender upon its completion of all “know your customer” or other checks relating to any person that it is required to carry out in
relation to the transfer to such New Lender.
(c) Subject to Clause 23.9 ( Pro rata interest settlement ), on the Transfer Date:
(i) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations
under the Finance Documents each of ABB, the Borrowers and the Existing Lender shall be
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eleased from further obligations towards one another under the Finance Documents and their respective rights against
one another shall be cancelled (being the “ Discharged Rights and Obligations ”);
(ii) each of ABB, the Borrowers and the New Lender shall assume obligations towards one another and/or acquire rights
against one another which differ from the Discharged Rights and Obligations only insofar as ABB, that Borrower and
the New Lender have assumed and/or acquired the same in place of ABB, that Borrower and the Existing Lender;
(iii) the Agents, the Mandated Lead Arrangers, the New Lender and other Lenders shall acquire the same rights and assume
the same obligations between themselves as they would have acquired and assumed had the New Lender been an
Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent
the Agents, the Mandated Lead Arrangers and the Existing Lender shall each be released from further obligations to each
other under this Agreement; and
(iv) the New Lender shall become a Party as a “ Lender ”.
23.6 Disclosure of information
Any Lender may disclose to:
(a) any of its Affiliates (provided they are made aware of the confidential nature of the relevant information and that it may be
price-sensitive); and
(b) any other person:
(i) to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and
obligations under this Agreement;
(ii) with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any
other transaction under which payments are to be made by reference to, this Agreement or any Obligor; or
(iii) to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation,
any information about ABB, any Borrower, the Group and the Finance Documents as that Lender shall consider appropriate, provided
that in relation to paragraphs (b)(i) and (b)(ii) above only, the person to whom the information is to be given has entered into a
confidentiality undertaking unless such person is any central bank or supranational bank in which case no confidentiality undertaking
will be required.
Notwithstanding any of the provisions of the Finance Documents, the Obligors and the Finance Parties hereby agree that each Party and
each employee, representative or other agent of each Party may disclose to any and all persons, without limitation of any kind,
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the “ tax structure ” and “ tax treatment ” (in each case within the meaning of the U.S. Treasury Regulation Section 1.6011-4) of the
Facility and any materials of any kind (including opinions or other tax analyses) that are provided to any of the foregoing relating to such
tax structure and tax treatment.
23.7 Copy of Transfer Certificate and Increase Confirmation to ABB
The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Increase Confirmation, send
to ABB a copy of that Transfer Certificate or Increase Confirmation.
23.8 Security over Lenders’ rights
In addition to the other rights provided to Lenders under this Clause 23, each Lender may without consulting with or obtaining consent
from any Obligor, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any
of its rights under any Finance Document to secure obligations of that Lender to a federal reserve or central bank except that no such
charge, assignment or Security shall:
(a) release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge,
assignment or other Security for the Lender as a party to any of the Finance Documents; or
(b) require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights
than, those required to be made or granted to the relevant Lender under the Finance Documents.
23.9 Pro rata interest settlement
If the Facility Agent has notified the Lenders that it is able to distribute interest payments on a “pro rata basis” to Existing Lenders and
New Lenders then (in respect of any transfer pursuant to Clause 23.5 ( Procedure for transfer ) the Transfer Date of which, in each case,
is after the date of such notification and is not on the last day of an Interest Period):
(a) any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall
continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date (“ Accrued Amounts ”) and shall
become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current
Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals
after the first day of that Interest Period); and
(b) the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the
avoidance of doubt:
(i) when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and
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(ii) the amount payable to the New Lender on that date will be the amount which would, but for the application of this
Clause 23.9, have been payable to it on that date, but after deduction of the Accrued Amounts.
24. CHANGES TO THE OBLIGORS
24.1 Assignments and transfer by Obligors
Neither ABB nor any Borrower may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
24.2 Additional Borrowers
(a) Subject to compliance with paragraphs (c) and (d) of Clause 20.7 ( “Know your customer” checks ), ABB may request by
written notice that any of its wholly owned Subsidiaries becomes an Additional Borrower. That Subsidiary shall become an
Additional Borrower if:
(i) that Subsidiary is incorporated in an Agreed Jurisdiction or all the Lenders approve the addition of that Subsidiary;
(ii) ABB delivers to the Facility Agent a duly completed and executed Borrower Accession Letter;
(iii) ABB confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional
Borrower; and
(iv) the Facility Agent has received all of the documents and other evidence listed in Part II of Schedule 2 ( Conditions
Precedent ) in relation to that Additional Borrower, each in form and substance reasonably satisfactory to the Facility
Agent.
(b) The Facility Agent shall notify ABB and the Lenders promptly upon receiving (in form and substance reasonably satisfactory
to it) all the documents and other evidence listed in Part II of Schedule 2 ( Conditions Precedent ).
(c) Delivery of a Borrower Accession Letter constitutes confirmation by the relevant Subsidiary that the representations and
warranties in Clause 19.5 ( Validity and admissibility in evidence ) and the representations and warranties deemed to be
repeated pursuant to Clause 19.14 ( Repetition ) are true and correct in relation to it as at the date of delivery as if made by
reference to the facts and circumstances then existing.
24.3 Resignation of a Borrower
(a) ABB may request that a Borrower ceases to be a Borrower by delivering to the Facility Agent a Resignation Letter.
(b) The Facility Agent shall accept a Resignation Letter and notify ABB and the Lenders of its acceptance if:
(i) no Default would result from the acceptance of the Resignation Letter (and ABB has confirmed this to be the case); and
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(ii) the relevant Borrower is under no actual or contingent obligations under any Finance Documents,
whereupon that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance
Documents.
24.4 Repetition of Representation
Delivery of a Borrower Accession Letter constitutes confirmation by the relevant Subsidiary that the representations and warranties in
Clause 19.5 ( Validity and admissibility in evidence ) and the representations and warranties deemed to be repeated pursuant to Clause
19.14 ( Repetition ) are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances
then existing.
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SECTION 9
THE FINANCE PARTIES
25. ROLE OF THE AGENTS AND THE MANDATED LEAD ARRANGERS
25.1 Appointment of the Agents
(a) Each of the Mandated Lead Arrangers and the Lenders appoints each Agent to act as its agent under and in connection with the
Finance Documents.
(b) Each of the Mandated Lead Arrangers and the Lenders authorises each Agent to exercise the rights, powers, authorities and
discretions specifically given to such Agent under or in connection with the Finance Documents together with any other
incidental rights, powers, authorities and discretions.
(c) The Facility Agent and the Euro Swingline Agent shall, unless ABB agrees otherwise, act out of an office in London.
(d) The Dollar Swingline Agent shall, unless ABB agrees otherwise, act out of an office in New York.
(e) The SEK Swingline Agent shall, unless ABB agrees otherwise, act out of an office in Stockholm.
25.2 Duties of the Agents
(a) Subject to paragraph (b) below, each Agent shall promptly forward to a Party the original or a copy of any document which is
delivered to that Agent for that Party by any other Party.
(b) Without prejudice to Clause 23.7 ( Copy of Transfer Certificate and Increase Confirmation to ABB ), paragraph (a) above shall
not apply to any Transfer Certificate or Increase Confirmation.
(c) If the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the
circumstance described is a Default, it shall promptly notify the Lenders.
(d) The Facility Agent shall promptly notify:
(i) the Lenders of any Default arising under Clause 22.1 ( Non-payment ); and
(ii) each Swingline Agent of:
(A) any assignments or transfers by a Lender pursuant to Clause 23 ( Changes to the Lenders ); and
(B) any changes to the Obligors pursuant to Clause 24 ( Changes to the Obligors ).
(e) The Facility Agent shall provide to ABB within 5 Business Days of a request by ABB (made no more frequently than once per
calendar month), a list (which may be in electronic form) setting out the names of the Lenders as at the date such list is
provided, their respective Commitments and Swingline
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Commitments, the address and fax number (and the department or officer, if any, for whose attention any communication is to
be made) of each Lender for any communication to be made or document to be delivered under or in connection with the
Finance Documents, the electronic mail address and/or any other information required to enable the sending and receipt of
information by electronic mail or other electronic means to and by each Lender to whom any communication under or in
connection with the Finance Documents may be made by that means and the account details of each Lender for any payment to
be distributed by an Agent to that Lender under the Finance Documents.
(f) Each Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.
25.3 Role of the Mandated Lead Arrangers
Except as specifically provided in the Finance Documents, the Mandated Lead Arrangers have no obligations of any kind to any other
Party under or in connection with any Finance Document.
25.4 No fiduciary duties
(a) Nothing in this Agreement constitutes an Agent or a Mandated Lead Arranger as a trustee or fiduciary of any other person.
(b) No Agent nor any Mandated Lead Arranger shall be bound to account to any Lender for any sum or the profit element of any
sum received by it for its own account.
25.5 Business with the Group
Each Agent and each Mandated Lead Arranger may accept deposits from, lend money to and generally engage in any kind of banking or
other business with any of the Group Companies.
25.6 Rights and discretions of the Agents
(a) Each Agent may rely on:
(i) any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and
(ii) any statement made by a director, authorised signatory or employee of any person regarding any matters which may
reasonably be assumed to be within his knowledge or within his power to verify.
(b) Each Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:
(i) no Default has occurred (unless it has actual knowledge of a Default arising under Clause 22.1 ( Non-payment )); and
(ii) any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised.
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(c) Each Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.
(d) The Facility Agent may disclose the identity of a Defaulting Lender to the other Finance Parties and ABB and shall disclose
the same upon the written request of ABB or the Majority Lenders.
(e) Each Agent may act in relation to the Finance Documents through its personnel and agents.
25.7 Majority Lenders’ instructions
(a) Unless a contrary indication appears in a Finance Document, each Agent shall (a) act in accordance with any instructions
given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from acting or exercising any right,
power, authority or discretion vested in it as Agent) and (b) not be liable for any act (or omission) if it acts (or refrains from
taking any action) in accordance with such an instruction of the Majority Lenders.
(b) Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding
on all the Finance Parties.
(c) Each Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the
Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT)
which it may incur in complying with the instructions.
(d) In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) each Agent may act (or refrain from
taking action) as it considers to be in the best interest of the Lenders.
(e) No Agent is authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration
proceedings relating to any Finance Document.
25.8 Responsibility for documentation
No Agent nor any Mandated Lead Arranger:
(a) is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by an
Agent, a Mandated Lead Arranger, ABB, any Borrower or any other person given in or in connection with any Finance
Document or the Information Package;
(b) is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other
agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance
Document; or
(c) is responsible for any determination as to whether any information provided or to be provided to any Finance Party is nonpublic
information the use of which
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may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
25.9 Exclusion of liability
(a) Without limiting paragraph (b) below, no Agent will be liable for any action taken by it under or in connection with any
Finance Document, unless directly caused by its negligence, wilful default or wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or agent of an Agent in respect of any claim it might have
against such Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance
Document and any officer, employee or agent of such Agent may rely on this Clause.
(c) No Agent will (absent negligence, wilful default or wilful misconduct directly giving rise to such liability) be liable for any
delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid
by such Agent if that Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or
operating procedures of any recognised clearing or settlement system used by such Agent for that purpose.
(d) Nothing in this Agreement shall oblige the Facility Agent or any Mandated Lead Arranger to carry out any “know your
customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Facility Agent
and the Mandated Lead Arrangers that it is solely responsible for any such checks it is required to carry out and that it may not
rely on any statement in relation to such checks made by the Facility Agent or the Mandated Lead Arrangers.
25.10 Lenders’ indemnity to the Agents
The Lenders shall (in proportion to their Commitments or, if the Total Commitments are then zero, to their Commitments immediately
prior to their reduction to zero) severally indemnify each Agent, within three Business Days of demand, against any cost, loss or liability
incurred by such Agent (otherwise than by reason of such Agent’s negligence or wilful misconduct) in acting as Agent under the Finance
Documents (unless such Agent has been reimbursed by ABB or the Borrowers pursuant to a Finance Document).
25.11 Resignation of an Agent
(a) An Agent may resign and appoint one of its Affiliates as successor by giving notice to the Lenders and ABB provided that
such successor shall act (to the extent relevant) out of an office in the following locations (each a “ Required Location ”):
(i) in the case of the Facility Agent, London;
(ii) in the case of the Dollar Swingline Agent, New York;
(iii) in the case of the Euro Swingline Agent, London; and
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(iv) in the case of the SEK Swingline Agent, Stockholm.
(b) Alternatively an Agent may resign by giving notice to the Lenders and ABB, in which case the Majority Lenders may appoint
a successor Agent which will act out of an office in the relevant Required Location.
(c) If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after
notice of resignation was given, the resigning Agent may appoint a successor Agent which will act out of an office in the
relevant Required Location.
(d) A successor Agent may only be appointed with the prior consent of ABB (such consent not to be unreasonably withheld or
delayed).
(e) The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such
assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the
Finance Documents.
(f) Such Agent’s resignation notice shall only take effect upon the appointment of a successor as contemplated in paragraphs
(b) and (c) above.
(g) Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the
Finance Documents but shall remain entitled to the benefit of this Clause 25. Its successor and each of the other Parties shall
have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
25.12 Replacement of an Agent
(a) After consultation with ABB, the Majority Lenders may, by giving 30 days’ notice to an Agent (or, at any time an Agent is an
Impaired Agent, by giving any shorter notice determined by the Majority Lenders) replace that Agent by appointing a
successor Agent acting out of an office in the relevant Required Location. A successor Agent may only be appointed with the
prior consent of ABB (such consent not to be unreasonably withheld or delayed).
(b) The retiring Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the Lenders) make available
to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request
for the purposes of performing its functions as Agent under the Finance Documents.
(c) The appointment of a successor Agent shall take effect on the date specified in the notice from the Majority Lenders to the
retiring Agent. As from that date, the retiring Agent shall be discharged from any further obligation in respect of the Finance
Documents but shall remain entitled to the benefit of this Clause 25 (and any agency fees for the account of the retiring Agent
shall cease to accrue from (and shall be payable on) that date).
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(d) Any successor Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they
would have had if such successor had been an original Party.
25.13 Confidentiality
(a) In acting as agent for the Finance Parties, each Agent shall be regarded as acting through its agency division which shall be
treated as a separate entity from any other of its divisions or departments.
(b) If information is received by another division or department of an Agent, it may be treated as confidential to that division or
department and such Agent shall not be deemed to have notice of it.
(c) Notwithstanding any other provision of any Finance Document to the contrary, neither Agent nor either Mandated Lead
Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other information if the
disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty.
25.14 Relationship with the Lenders
(a) Subject to Clause 23.9 ( Pro rata interest settlement ), each Agent may treat the person shown in its records as Lender at the
opening of business (in the place of the relevant Agent’s principal office as notified to the Finance Parties from time to time) as
the Lender acting through its Facility Office:
(i) entitled to or liable for any payment due under any Finance Document on that day; and
(ii) entitled to receive and act upon any notice, request, document or communication or make any decision or determination
under any Finance Document made or delivered on that day,
unless it has received not less than 5 Business Days’ prior notice from that Lender to the contrary in accordance with the terms
of this Agreement.

(b) Each Lender shall supply the Facility Agent with any information required by the Facility Agent in order to calculate the
Mandatory Cost in accordance with Schedule 8 ( Mandatory Cost ).
(c) Any Lender may by notice to the Facility Agent, appoint a person to receive on its behalf all notices, communications,
information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain
the address, fax number and (where communication by electronic mail or other electronic means is permitted under paragraph
(b) of Clause 30.1 ( C ommunications in writing )) electronic mail address and/or any other information required to enable the
sending and receipt of information by that means (and, in each case, the department or officer, if any, for whose attention
communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address,
department and officer by that Lender for the purposes of Clause 30.2 ( Addresses ) and paragraph (b) of Clause
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30.1 ( C ommunications in writing ) and each Agent shall be entitled to treat such person as the person entitled to receive all
such notices, communications, information and documents as though that person were that Lender.
25.15 Credit appraisal by the Lenders
Without affecting the responsibility of each Obligor for information supplied by it or on its behalf in connection with any Finance
Document, each Lender confirms to each Agent and each Mandated Lead Arranger that it has been, and will continue to be, solely
responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance
Document including but not limited to:
(a) the financial condition, status and nature of each Group Company;
(b) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement,
arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance
Document;
(c) whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets
under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other
agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any
Finance Document; and
(d) the adequacy, accuracy and/or completeness of the Information Package and any other information provided by an Agent, any
other Party or by any other person under or in connection with any Finance Document, a Mandated Lead Arranger the
transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any Finance Document.
25.16 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Facility
Agent shall (in consultation with ABB) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.
26. CONDUCT OF BUSINESS BY THE FINANCE PARTIES
No provision of this Agreement will:
(a) interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b) oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order
and manner of any claim; or
(c) oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of
Tax.
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27. SHARING AMONG THE LENDERS
27.1 Payments to Lenders
If a Lender (a “ Recovering Lender ”) receives or recovers any amount from ABB or a Borrower other than in accordance with Clause
28 ( Payment mechanics ) (a “ Recovered Amount ”) and applies that amount to a payment due under the Finance Documents then:
(a) the Recovering Lender shall, within 3 Business Days, notify details of the receipt or recovery to the Facility Agent;
(b) the Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Lender would
have been paid had the receipt or recovery been received or made by the Facility Agent and distributed in accordance with
Clause 28 ( Payment mechanics ), without taking account of any Tax which would be imposed on the Facility Agent in relation
to the receipt, recovery or distribution; and
(c) the Recovering Lender shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount
(the “ Sharing Payment ”) equal to such receipt or recovery less any amount which the Facility Agent determines may be
retained by the Recovering Lender as its share of any payment to be made, in accordance with Clause 28.6 ( Partial
payments ).
27.2 Redistribution of payments
The Facility Agent shall treat the Sharing Payment as if it had been paid by ABB or the relevant Borrower (as the case may be) and
distribute it between the Finance Parties (other than the Recovering Lender) (the “ Sharing Finance Parties ”) in accordance with
Clause 28.6 ( Partial payments ) towards the obligations of that Obligor to the Sharing Finance Parties.
27.3 Recovering Lender’s rights
On a distribution by the Facility Agent under Clause 27.2 ( Redistribution of payments ) of a payment received by a Recovering Finance
Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to
the Sharing Payment will be treated as not having been paid by that Obligor.
27.4 Reversal of redistribution
If any part of the Sharing Payment received or recovered by a Recovering Lender becomes repayable and is repaid by that Recovering
Lender, then:
(a) each Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that
Recovering Lender an amount equal to its share of the Sharing Payment (together with an amount as is necessary to reimburse
that Recovering Lender for its proportion of any interest on the Sharing Payment which that Recovering Lender is required to
pay) (the “ Redistributed Amount ”); and
(b) as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed
Amount will be treated as not having been paid by that Obligor.
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27.5 Exceptions
(a) This Clause 27 shall not apply to the extent that the Recovering Lender would not, after making any payment pursuant to this
Clause, have a valid and enforceable claim against ABB or the relevant Borrower (as the case may be).
(b) A Recovering Lender is not obliged to share with any other Finance Party any amount which the Recovering Lender has
received or recovered as a result of taking legal or arbitration proceedings, if:
(i) it notified the other Lenders of the legal or arbitration proceedings; and
(ii) the other Lender had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as
reasonably practicable having received notice or did not take separate legal or arbitration proceedings.
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28. PAYMENT MECHANICS
SECTION 10
ADMINISTRATION
28.1 Payments to the Agents
(a) For the purpose of this Clause 28 a reference to the “ Relevant Agent ” means:
(i) in relation to payments under the Dollar Swingline Facility, the Dollar Swingline Agent;
(ii) in relation to payments under the Euro Swingline Facility, the Euro Swingline Agent;
(iii) in relation to payments under the SEK Swingline Facility, the SEK Swingline Agent; and
(iv) for all other payments, the Facility Agent.
(b) On each date on which a Borrower or a Lender is required to make a payment under a Finance Document, such Borrower or,
as the case may be, such Lender shall make the same available to the Relevant Agent (unless a contrary indication appears in a
Finance Document) for value on the due date at the time and in such funds specified by the Relevant Agent as being customary
at the time for settlement of transactions in the relevant currency in the place of payment.
(c) Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to Euro,
in a principal financial centre in a Participating Member State or London) with such bank as the Relevant Agent specifies.
28.2 Distributions by the Agents
Each payment received by an Agent under the Finance Documents for another Party shall, subject to Clause 28.3 ( Distributions to the
Obligors ) and Clause 28.4 ( Clawback ) be made available by such Agent as soon as practicable after receipt to the Party entitled to
receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as
that Party may notify to the relevant Agent by not less than 5 Business Days’ notice with a bank in the principal financial centre of the
country of that currency (or, in relation to Euro, in the principal financial centre of a Participating Member State or London).
28.3 Distributions to the Obligors
An Agent may (with the consent of ABB or the relevant Borrower (as the case may be) or in accordance with Clause 29 ( Set-off )) apply
any amount received by it for ABB or that Borrower in or towards payment (on the date and in the currency and funds of receipt) of any
amount due from ABB or that Borrower (as the case may be) under the Finance Documents or in or towards purchase of any amount of
any currency to be so applied.
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28.4 Clawback
(a) Where a sum is to be paid to an Agent under the Finance Documents for another Party, such Agent is not obliged to pay that
sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its
absolute satisfaction that it has actually received that sum (and such Agent shall make such due enquiry as a diligent agent
would make in so establishing).
(b) If an Agent pays an amount to another Party and it proves to be the case that such Agent had not actually received that amount,
then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by such Agent shall on
demand refund the same to such Agent together with interest on that amount from the date of payment to the date of receipt by
such Agent, calculated by such Agent to reflect its cost of funds.
(c) In the event that a Lender fails to make its participation in an Advance available to the Relevant Agent (as defined in Clause
28.1 ( Payments to the Agents )) in accordance with the terms of this Agreement, such Lender hereby indemnifies the Relevant
Agent on demand against all costs, losses and expenses that the Relevant Agent may incur as a result of such failure (including,
without limitation, where the Relevant Agent, at its sole option, makes arrangements to make available to the relevant
Borrower an amount equal to said participation).
(d) For the purposes of paragraph (c) of this Clause 28.4, if a Lender makes its participation available to the Relevant Agent after
3.00 p.m. (London time) on the due date, such participation shall be deemed to have been made available on the Business Day
immediately succeeding the said due date.
28.5 Impaired Agents
(a)
(i) If, at any time, an Agent becomes an Impaired Agent, an Obligor or a Lender which is required to make a payment
under the Finance Documents to that Agent in accordance with Clause 28.1 ( Payments to the Agents ) may (or shall, in
the case of a payment by a Lender if paragraph (ii) below applies) instead pay that amount direct to the required recipient
or (except where paragraph (ii) below applies) pay that amount to an interest - bearing account held with an Acceptable
Bank in relation to which no Insolvency Event has occurred and is continuing, in the name of the Obligor or the Lender
making the payment and designated as a trust account for the benefit of the Party or Parties beneficially entitled to that
payment under the Finance Documents. In each case such payments must be made on the due date for payment under
the Finance Documents.
(ii) This paragraph (ii) applies in relation to a payment by a Lender if ABB has notified that Lender in writing on or before
the date falling 3 Business Day prior to the date for payment (or 1 Business Day prior to the date for payment in respect
of any Swingline Advance), that the
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elevant Agent is an Impaired Agent and that this paragraph (ii) applies to such payment.
(b) All interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the beneficiaries of that
trust account pro rata to their respective entitlements.
(c) A Party which has made a payment in accordance with this Clause 28.5 shall be discharged of the relevant payment obligation
under the Finance Documents and shall not take any credit risk with respect to the amounts standing to the credit of the trust
account.
(d) Promptly upon the appointment of a successor Agent in accordance with Clause 25.11 ( Resignation of an Agent ) or 25.12
( Replacement of an Agent ), each Party which has made a payment to a trust account in accordance with this Clause 28.5 shall
give all requisite instructions to the bank with whom the trust account is held to transfer the amount (together with any accrued
interest) to the successor Agent for distribution in accordance with Clause 28.2 ( Distributions by the Agents ).
(e) In this Clause 28.5 “ Acceptable Bank ” means a bank which has a rating for its long-term unsecured and non credit-enhanced
debt obligations of A or higher by Standard & Poor’s Rating Services or A2 or higher by Moody’s Investor Services Limited.
(f) Each Agent shall notify ABB, the other Agents and the Lenders promptly after becoming an Impaired Agent.
28.6 Partial payments
(a) If an Agent receives a payment that is insufficient to discharge all the amounts then due and payable by ABB or the Borrowers
under the Finance Documents, such Agent shall apply that payment towards the obligations of the Obligors under the Finance
Documents in the following order:
(i) first , in or towards payment pro rata of any unpaid fees, costs and expenses of the Agents under the Finance
Documents;
(ii) secondly , in or towards payment pro rata of any accrued interest or commission due but unpaid under this Agreement;
(iii) thirdly , in or towards payment pro rata of any principal due but unpaid under this Agreement; and
(iv) fourthly , in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.
(b) The Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.
(c) Paragraphs (a) and (b) above will override any appropriation made by ABB or any Borrower.
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28.7 No set-off by Obligors
All payments to be made by ABB or the Borrowers under the Finance Documents shall be calculated and be made without (and free and
clear of any deduction for) set-off or counterclaim.
28.8 Business Days
(a) Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same
calendar month (if there is one) or the preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable
on the principal at the rate payable on the original due date.
28.9 Currency of account
(a) Subject to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any sum due from ABB
or the Borrowers under any Finance Document.
(b) A repayment of an Advance or Unpaid Sum or a part of an Advance or Unpaid Sum shall be made in the currency in which
that Advance or Unpaid Sum is denominated on its due date.
(c) Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was
denominated when that interest accrued.
(d) Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are
incurred.
(e) Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.
28.10 Change of currency

(a) Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central
bank of any country as the lawful currency of that country, then:
(i) any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency
of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Facility
Agent (after consultation with ABB); and
(ii) any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the
central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Facility
Agent (acting reasonably).
(b) If a change in any currency of a country occurs, this Agreement will, to the extent the Facility Agent (acting reasonably and
after consultation with ABB)
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29. SET-OFF
specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant
Interbank Market and otherwise to reflect the change in currency.
Without prejudice to the rights at law of each Finance Party, while an Event of Default is continuing, a Finance Party may set off any
matured obligation due from ABB or the Borrowers under the Finance Documents (to the extent beneficially owned by that Finance
Party) against any matured obligation owed by that Finance Party to ABB or the Borrowers, regardless of the place of payment, booking
branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a
market rate of exchange in its usual course of business for the purpose of the set-off.
30. NOTICES
30.1 Communications in writing
(a) Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless
otherwise stated, may be made by fax or letter.
(b) With the consent of the relevant Lender, the Agents may serve notices and other information on a Lender by way of electronic
mail.
30.2 Addresses
(a) The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of
each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:
(i) in the case of the Original Obligors, that identified in Part V ( The Original Obligors ) of Schedule 1, with a copy to
ABB and ABB Capital B.V., Zurich Branch;
(ii) in the case of ABB, that identified in Part V ( The Original Obligors ) of Schedule 1;
(iii) in the case of an Additional Borrower, that identified in the Borrower Accession Letter relating to that Additional
Borrower, with a copy to ABB and ABB Capital B.V., Zurich Branch;
(iv) in the case of ABB Capital B.V., Zurich Branch, that identified in paragraph (b) below;
(v) in the case of each Lender, that notified in writing to the Facility Agent on or prior to the date on which it becomes a
Party; and
(vi) in the case of an Agent, that identified in paragraph (b) below,
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(b)
or any substitute address, fax number or department or officer as the Party may notify to the Facility Agent (or the Facility
Agent may notify to the other Parties, if a change is made by the Facility Agent) by not less than 5 Business Days’ notice.
(i) the Facility Agent:
Credit Suisse AG, London Branch
One Cabot Square
London E14 4QJ
Attn: london.loansagency@credit-suisse.com
Tel: +44 20 7888 8364 / +44 20 7883 6322
Fax: +44 20 7888 8398
(ii) the Dollar Swingline Agent:
Credit Suisse AG, Cayman Islands Branch
Eleven Madison Avenue
New York
NY 10010-3629
Attn: Loans Agency/ Derrick Ray
Tel: +1-919-994-5559
Fax: +1-866-469-3871
E-mail: corpbanking.tmg@credit-suisse.com
(iii) the Euro Swingline Agent:
Credit Suisse AG, London Branch
One Cabot Square
London E14 4QJ
Attn: london.loansagency@credit-suisse.com
Tel: +44 20 7888 8364 / +44 20 7883 6322
Fax: +44 20 7888 8398
(iv) the SEK Swingline Agent:
Nordea Bank AB (publ)
Attn: Structured Loan Operations
Tel: +46 8 614 7080
Fax: +46 8 6147630
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E-mail: slo.sweden@nordea.com
(v) ABB Capital B.V., Zurich Branch:
Affolternstrasse 44
PO Box 8131
CH-8050
Switzerland
Attn: Head of GTO
Fax: +41 43 317 7474
Copy: Legal Department
Fax: +41 43 317 7992
30.3 Delivery
(a) Any communication or document made or delivered by one person to another under or in connection with the Finance
Documents will only be effective:
(i) if by way of fax, when received in legible form; or
(ii) if by way of letter, when it has been left at the relevant address or 5 (in the case of domestic mail) or 10 (in the case of
air mail) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;
or
(iii) if by way of electronic mail, when received.
and, if a particular department or officer is specified as part of its address details provided under Clause 30.2 ( Addresses ), if
addressed to that department or officer, provided that if receipt is on a day that is not a working day in the country of receipt
or is at a time outside normal business hours, such communication shall be effective on the next succeeding working day.
(b) Any communication or document to be made or delivered to an Agent will be effective only when actually received by such
Agent and then only if it is expressly marked for the attention of the department or officer identified in Clause 30.2
( Addresses ) (or any substitute department or officer as the relevant Agent shall specify for this purpose).
(c) All notices from or to an Obligor shall be sent through the Facility Agent.
30.4 Notification of address and fax number
Promptly upon receipt of notification of an address, fax number or change of address or fax number pursuant to Clause 30.2
( Addresses ) or changing its own address or fax number, the Facility Agent shall notify the other Parties.
30.5 Communication when an Agent is an Impaired Agent
If an Agent is an Impaired Agent the Parties may, instead of communicating with each other through that Agent, communicate with each
other directly and (while that Agent is an Impaired Agent) all the provisions of the Finance Documents which require
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communications to be made or notices to be given to or by that Agent shall be varied so that communications may be made and notices
given to or by the relevant Parties directly. This provision shall not operate after a replacement Agent has been appointed.
30.6 English language
(a) Any notice given under or in connection with any Finance Document must be in English.
(b) All other documents provided under or in connection with any Finance Document must be:
(i) in English; or
(ii) if not in English, and if so required by the Facility Agent, accompanied by a certified English translation.
31. CALCULATION AND CERTIFICATES
31.1 Accounts
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts
maintained by a Finance Party are prima facie evidence of the matters to which they relate.
31.2 Certificates and Determinations
Except where otherwise indicated, any certification or determination by a Finance Party of a rate or amount under any Finance
Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
31.3 Day count convention
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the
actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in
accordance with that market practice.
32. PARTIAL INVALIDITY
If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of
any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction will in any way be affected or impaired.
33. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents
shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the
exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
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34. AMENDMENTS AND WAIVERS
34.1 Required consents
(a) Subject to Clause 34.2 ( Exceptions ) any term of the Finance Documents may be amended or waived only with the consent of
the Majority Lenders and ABB and any such amendment or waiver will be binding on all Parties.
(b) The Facility Agent may effect (and is hereby so authorised by each Finance Party), on behalf of any Finance Party, any
amendment or waiver permitted by this Clause.
34.2 Exceptions
(a) An amendment or waiver that has the effect of changing or which relates to:
(i) the definition of “ Majority Lenders ” in Clause 1.1 ( Definitions );
(ii) an extension to the date of payment of any amount under the Finance Documents;
(iii) a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable;
(iv) an increase in any Commitment or Swingline Commitment other than an increase made in accordance with Clause 2.2
( Increase );
(v) any provision which expressly requires the consent of all the Lenders;
(vi) Clause 2.3 ( Lenders’ rights and obligations ), Clause 4.2 ( Further conditions precedent ), Clause 23 ( Changes to the
Lenders ), Clause 24 ( Changes to the Obligors ), Clause 27 ( Sharing among the Lenders ) or this Clause 34;
(vii) the nature or scope of the guarantee and indemnity granted under Clause 18 ( Guarantee and Indemnity ); or
(viii) any change to the Obligors other than in accordance with Clause 24 ( Changes to the Obligors ),
shall not be made without the prior consent of all the Lenders.
(b) An amendment or waiver which relates to the rights or obligations of any Agent or any Mandated Lead Arranger (in their
capacity as such) may not be effected without the consent of such Agent or such Mandated Lead Arranger.
92

34.3 Disenfranchisement of Defaulting Lenders
(a) For so long as a Defaulting Lender has any Commitment, in ascertaining the Majority Lenders or whether any given
percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments has been obtained to approve any
request for a consent, waiver, amendment or other vote under the Finance Documents:
(i) that Defaulting Lender’s Commitments will be reduced by the amount of its Available Commitments; and
(ii) that Defaulting Lender’s Commitments will be ignored if that Defaulting Lender fails to respond to a request for a
waiver or amendment within the time period specified by ABB and (unless it is an Impaired Agent) the Facility Agent.
(b) For the purposes of this Clause 34.3, the Facility Agent may assume that the following Lenders are Defaulting Lenders:
(i) any Lender which has notified the Facility Agent that it has become a Defaulting Lender (and each Lender shall notify
the Facility Agent and ABB promptly after becoming a Defaulting Lender);
(ii) any Lender in relation to which it is aware that any of the events or circumstances referred to in paragraphs (a), (b) or
(c) of the definition of “Defaulting Lender” has occurred,
unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably
requested by the Facility Agent) or the Facility Agent is otherwise aware that the Lender has ceased to be a Defaulting Lender.
34.4 Replacement of a Defaulting Lender
(a) ABB may, at any time a Lender has become and continues to be a Defaulting Lender, by giving 5 Business Days’ prior written
notice to the Facility Agent and such Lender:
(i) replace such Lender and any Revolving Facility Affiliate or Swingline Affiliate of that Lender by requiring such Lender
and any such Revolving Facility Affiliate or Swingline Affiliate to (and to the extent permitted by law that Lender or
Revolving Facility Affiliate or Swingline Affiliate shall) transfer pursuant to Clause 23 ( Changes to the Lenders ) all
(and, save to the extent provided for in this Clause, not part only) of its rights and obligations under this Agreement
(including in respect of any Separate Advances); or
(ii) require such Lender and/or its Revolving Facility Affiliate or Swingline Affiliate to (and to the extent permitted by law
such Lender or Revolving Facility Affiliate of Swingline Affiliate shall) transfer pursuant to Clause 23 ( Changes to the
Lenders ) all (and, save to the extent provided for in this Clause, not part only) of the undrawn Commitment and/or
Swingline
93

Commitment of such Lender and/or its Revolving Facility Affiliate or Swingline Affiliate,
to a Lender or other bank (a “ Replacement Lender ”) selected by ABB, and which confirms its willingness to assume and
does assume all the obligations or all the relevant obligations of the transferring Lender, Revolving Facility Affiliate or
Swingline Affiliate (including the assumption of participations or unfunded participations (as the case may be) of the transferor
on the same basis as the transferor) for a purchase price in cash payable at the time of transfer equal to the outstanding
principal amount of such Lender’s or Revolving Facility Affiliate’s or Swingline Affiliate’s participation in the outstanding
Advances and all accrued interest (to the extent that the Facility Agent has not given a notification under Clause 23.9 ( Pro rata
interest settlement ), Break Costs and other amounts payable in relation thereto under the Finance Documents. Where a Lender
to be replaced pursuant to this paragraph is a Swingline Lender that is the Swingline Affiliate of another Lender, the rights and
obligations required to be transferred pursuant to this Clause by that other Lender in its capacity as the Revolving Facility
Affiliate of that Swingline Lender may, at the option of ABB, be limited to those necessary for the Commitments of the
replacement Lender (or its Affiliate) to be at least equal to each of the Swingline Commitments to be transferred to such
replacement Lender pursuant to this Clause.
(b) Any transfer of rights and obligations of a Lender pursuant to this Clause shall be subject to the following conditions:
35. COUNTERPARTS
(i) ABB shall have no right to replace an Agent;
(ii) no Agent nor the Defaulting Lender nor any other Finance Party shall have any obligation to find a Replacement
Lender;
(iii) the transfer must take place no later than 20 days after the notice referred to in paragraph (a) above; and
(iv) in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees
received by the Defaulting Lender pursuant to the Finance Documents.
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the
counterparts were on a single copy of the Finance Document.
94

36. GOVERNING LAW
SECTION 11
GOVERNING LAW AND ENFORCEMENT
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
37. ENFORCEMENT
37.1 Jurisdiction
(a) The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement
(including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligations
arising out of or in connection with this Agreement) (a “ Dispute ”).
(b) The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly
no Party will argue to the contrary.
(c) This Clause 37 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking
proceedings relating to a Dispute (“ Proceedings ”) in any other courts with jurisdiction.
(d) If ABB Capital B.V. is represented by an attorney or attorneys in connection with the signing and/or execution and/or delivery
of this Agreement or any agreement or document referred to herein or made pursuant hereto and the relevant power or powers
of attorney is or are expressed to be governed by the laws of a particular jurisdiction, it is hereby expressly acknowledged and
accepted by the other parties hereto that such laws shall govern the existence and extent of such attorney’s or attorneys’
authority and the effects of the exercise thereof.
(e) ABB and each Borrower incorporated in a jurisdiction other than England and Wales agree that the documents which start any
Proceedings in England and any other documents required to be served in relation to those Proceedings may be served on ABB
Limited, at Daresbury Park, Daresbury, Warrington WA4 4BT, Cheshire, United Kingdom or, if different, its registered office,
with a copy to ABB. If the appointment of the person mentioned in this sub-clause (e) ceases to be effective, ABB and each
Borrower shall immediately appoint another person in England to accept service of process on its behalf in England. If ABB or
any Borrower fails to do so (and such failure continues for a period of not less than fourteen days), the Facility Agent shall be
entitled to appoint such a person by notice to ABB or the relevant Borrower (as the case may be). Nothing contained herein
shall restrict the right to serve process in any other manner allowed by law.
THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.
95

SCHEDULE 1
Part I
The Original Lenders
Name Commitment ($)
Banco Santander, S.A. 71,430,000
Bank of China Limited, London Branch 71,430,000
Barclays Bank PLC 71,430,000
BBVA Ireland p.l.c. 71,430,000
BNP Paribas 71,430,000
Citibank, N.A., London Branch/Citibank International plc /Citibank, N.A. 71,430,000
Commerzbank Aktiengesellschaft, Filiale Luxemburg 71,430,000
Crédit Agricole (Suisse) SA 71,430,000
Credit Suisse AG, London Branch 71,430,000
Deutsche Bank Luxembourg S.A. 71,430,000
DnB NOR Bank ASA 71,430,000
Goldman Sachs Bank USA 71,430,000
HSBC Bank plc 71,430,000
ICBC (London) Limited 71,390,000
ING Bank N.V., Dublin Branch 71,430,000
Intesa Sanpaolo SpA 71,430,000
J.P. Morgan Europe Limited, London 71,430,000
Merrill Lynch International Bank Limited 71,430,000
Morgan Stanley Bank, N.A. 71,430,000
Nordea Bank AB (publ) 71,430,000
Skandinaviska Enskilda Banken AB (publ) 71,430,000
Societe Generale 71,430,000
Standard Chartered Bank 71,430,000
Svenska Handelsbanken AB (publ) 71,430,000
The Royal Bank of Scotland plc, Niederlassung Frankfurt 71,430,000
96

Name Commitment ($)
UBS Limited 71,430,000
UniCredit Luxembourg S.A. 71,430,000
Zürcher Kantonalbank 71,430,000
Total 2,000,000,000
97
Part II
The Dollar Swingline Lenders
Name Dollar Swingline Commitment ($)
Banco Santander, S.A., New York Branch 31,250,000
Barclays Bank PLC 31,250,000
BBVA Ireland p.l.c. acting through Banco Bilbao Vizcaya Argentaria S.A., New York Branch 31,250,000
BNP Paribas 31,250,000
Citibank, N.A. 31,250,000
Commerzbank Aktiengesellschaft, New York Branch 31,250,000
Crédit Agricole (Suisse) SA 31,250,000
Credit Suisse AG, Cayman Islands Branch 31,250,000
Deutsche Bank Luxembourg S.A. 31,250,000
DnB NOR Bank ASA 31,250,000
Goldman Sachs Bank USA 31,250,000
HSBC Bank plc 31,250,000
ING Bank N.V., Dublin Branch 31,250,000
JPMorgan Chase Bank, N.A. 31,250,000
Merrill Lynch International Bank Limited 31,250,000
Morgan Stanley Bank, N.A. 31,250,000
Nordea Bank AB (publ) 31,250,000
Skandinaviska Enskilda Banken AB (publ) 31,250,000
Societe Generale, New York Branch 31,250,000
Standard Chartered Bank 31,250,000
Svenska Handelsbanken AB (publ), New York Branch 31,250,000
The Royal Bank of Scotland plc, Niederlassung Frankfurt 31,250,000
UBS AG, Stamford Branch 31,250,000
UniCredit Luxembourg S.A. 31,250,000
Total 750,000,000
98

Part III
The Euro Swingline Lenders
Name Euro Swingline Commitment ($)
Banco Santander, S.A. 30,000,000
Barclays Bank PLC 30,000,000
BBVA Ireland p.l.c. 30,000,000
BNP Paribas 30,000,000
Citibank, N.A., London Branch 30,000,000
Commerzbank Aktiengesellschaft, Filiale Luxemburg 30,000,000
Crédit Agricole (Suisse) SA 30,000,000
Credit Suisse AG, London Branch 30,000,000
Deutsche Bank Luxembourg S.A. 30,000,000
DnB NOR Bank ASA 30,000,000
Goldman Sachs Bank USA 30,000,000
HSBC Bank plc 30,000,000
ING Bank N.V., Dublin Branch 30,000,000
Intesa Sanpaolo SpA 30,000,000
J.P. Morgan Europe Limited, London 30,000,000
Merrill Lynch International Bank Limited 30,000,000
Morgan Stanley Bank, N.A. 30,000,000
Nordea Bank AB (publ) 30,000,000
Skandinaviska Enskilda Banken AB (publ) 30,000,000
Societe Generale 30,000,000
Standard Chartered Bank 30,000,000
Svenska Handelsbanken AB (publ) 30,000,000
The Royal Bank of Scotland plc, Niederlassung Frankfurt 30,000,000
UBS Limited 30,000,000
UniCredit Luxembourg S.A. 30,000,000
Total 750,000,000
99

Part IV
The SEK Swingline Lenders
Name SEK Swingline Commitment ($)
Nordea Bank AB (publ) 67,000,000
Skandinaviska Enskilda Banken AB (publ) 66,500,000
Svenska Handelsbanken AB (publ) 66,500,000
Total 200,000,000
100

Part V
The Original Obligors
Name of Original
Borrower Address
ABB Capital B.V. Burgemeester Haspelslaan 65, 5/F Netherlands
PO Box 74690
Amstelveen
NL-1181 NB
Netherlands
Attention: Managing Director
Fax: + 31 20 445 9844
Copy: Legal Department
Fax: + 41 43 317 7992
ABB Treasury Center (USA), Inc.
501 Merritt 7
P.O. Box 5308
Norwalk, CT 06856
U.S.A.
Attention: President
Fax: +1 203 750 24 36
Copy: Legal Department
Fax: + 41 43 317 7992
ABB Financial Services AB Norra Malmvägen 143 Sweden
SE-191 85 Sollentuna
Sweden
Attention: Country Treasurer
Fax: +46 21 34 89 50
Copy: Legal Department
Fax: + 41 43 317 7992
Name of Guarantor Address
ABB Ltd Affolternstrasse 44 Switzerland
CH-8050 Zurich
Switzerland
Attention: Group Treasurer
Fax: +41 43 317 3999
Copy: Legal Department
Fax: +41 43 317 7992
101
Jurisdiction of
incorporation
Delaware, United States of America
Jurisdiction of
incorporation

1. Corporate Documents
SCHEDULE 2
CONDITIONS PRECEDENT
Part I
Conditions Precedent
(a) A copy of the constitutional documents of each Obligor.
(b) A copy of a resolution of the board of directors of each Obligor (if applicable) or, in the case of ABB Capital B.V., a copy of a
resolution of the board of managing directors ( directie ) or, in the case of ABB, a copy of an excerpt of the minutes of, or a
circular resolution of, a meeting of the board of directors of ABB:
(i) approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and
resolving that it execute the Finance Documents to which it is a party;
(ii) (other than in relation to ABB) authorising a specified person or persons to execute the Finance Documents to which
it is a party on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including,
if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance
Documents to which it is a party.
(c) A copy of a shareholders resolution of ABB Capital B.V.
(d) A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.
(e) A certificate of each Obligor (signed without personal liability by an authorised signatory of each Obligor) confirming that
borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar
limit binding on that relevant Obligor to be exceeded.
(f) A copy of a good standing certificate (including verification of tax status) with respect to ABB Treasury Center (USA), Inc.,
issued as of a recent date by the Secretary of State or other appropriate official of its jurisdiction of incorporation.
(g) A certificate of an authorised signatory of the relevant Obligor, certifying without personal liability that each copy document
relating to it specified in paragraph 1(a) - (e) of this Schedule 2 is correct, complete and in full force and effect as at a date no
earlier than the date of this Agreement.
2. Legal opinions
(a) A legal opinion of Clifford Chance LLP, legal advisers to the Mandated Lead Arrangers and the Agents in England,
substantially in the form distributed to the Original Lenders prior to signing this Agreement.
102

(b) A legal opinion of Clifford Chance LLP, Amsterdam, legal advisers to the Mandated Lead Arranger and the Agents in the
Netherlands in the form approved by the Facility Agent.
(c) A legal opinion of Freshfields Bruckhaus Deringer US LLP, United States legal advisers to ABB Treasury Center (USA), Inc.
in the form approved by the Facility Agent.
(d) A legal opinion of Lalive, legal advisers to the Mandated Lead Arrangers and the Agents in Switzerland in the form approved
by the Facility Agent.
(e) A legal opinion of Advokatfirman Vinge, legal advisers to the Mandated Lead Arrangers and the Agents in Sweden in the form
approved by the Facility Agent.
3. Other documents and evidence
(a) Evidence that the process agent referred to in sub-clause (e) of Clause 37.1 ( Jurisdiction ) has accepted its appointment.
(b) Repayment and cancellation in full of the Existing Credit Facility.
(c) The Original Financial Statements of each Obligor.
(d) Evidence that the fees, costs and expenses then due from ABB pursuant to Clause 12 ( Fees ) and Clause 17 ( Costs and
expenses ) have been paid or will be paid by the first Utilisation Date.
Part II
Additional Borrower Conditions Precedent
1. A Borrower Accession Letter, duly executed by the Additional Borrower and ABB.
2. A copy of the constitutional documents of the Additional Borrower.
3. A copy of a resolution of the board of directors, or other suitable authority, of the Additional Borrower:
(a) approving the terms of, and the transactions contemplated by, the Borrower Accession Letter and the Finance Documents and
resolving that it execute the Borrower Accession Letter;
(b) authorising a specified person or persons to execute the Borrower Accession Letter on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including any
Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents.
4. If required under applicable law, a copy of a resolution of the Additional Borrower stating that the shareholders resolve and
approve the entering into, and the terms and conditions of, this Agreement.
5. A specimen of the signature of each person authorised by the resolution referred to in paragraph 3 above.
103

6. A certificate of the Additional Borrower (signed by two duly authorised signatories) confirming that borrowing the Total
Commitments would not cause any borrowing limit binding on it to be exceeded.
7. A copy of a good standing certificate (including verification of tax status) with respect to any Additional Borrower whose
jurisdiction of incorporation is a state of the United States of America or the District of Columbia, issued as of a recent date by the
Secretary of State or other appropriate official of such Additional Borrower’s jurisdiction of incorporation or organisation.
8. A certificate of an authorised signatory of the Additional Borrower certifying that each copy document listed in this Schedule 2 is
correct, complete and in full force and effect as at a date no earlier than the date of the Borrower Accession Letter.
9. A copy of any other Authorisation or other document, opinion or assurance which the Facility Agent reasonably considers to be
necessary in connection with the entry into and performance of the transactions contemplated by the Borrower Accession Letter or
for the validity and enforceability of any Finance Document.
10. If available, the latest audited financial statements of the Additional Borrower.
11. A legal opinion of Clifford Chance LLP, legal advisers to the Mandated Lead Arrangers and the Facility Agent in England.
12. If the Additional Borrower is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to
the Mandated Lead Arrangers and the Facility Agent in the jurisdiction in which the Additional Borrower is incorporated.
13. If the proposed Additional Borrower is incorporated in a jurisdiction other than England and Wales, evidence that the process
agent specified in sub-clause (e) of Clause 37.1 ( Jurisdiction ), if not a Borrower, has accepted its appointment in relation to the
proposed Additional Borrower.
104

From: [Name of Borrower]
To: [Agent]
Copied to: [Facility Agent]*
Dear Sirs
SCHEDULE 3
UTILISATION REQUEST
ABB Ltd - $2,000,000,000 Multicurrency Revolving Credit Agreement
dated [ • ] (the “Credit Agreement”)
Words and expressions defined in the Credit Agreement have the same meaning when used herein.
We wish to borrow a(n) [Advance/Dollar Swingline Advance/Euro Swingline Advance/SEK Swingline Advance] on the following terms:
We confirm that each condition specified in Clause 4.2 ( Further conditions precedent ) is satisfied on the date of this Utilisation Request.
The proceeds of this Advance should be credited to [account].
This Utilisation Request is irrevocable.
Yours faithfully
Proposed Utilisation Date: [ • ] (or, if that is not a Business Day, the next Business Day)
Currency of Advance: [ • ]
Amount:(1) [ • ]
Interest Period: [ • ]
(1) [ WARNING NOTE: PLEASE ENSURE THAT THE SHARE OF EACH LENDER IN ANY ADVANCE TO A DUTCH
BORROWER IS AT LEAST EUR50,000 (OR ITS EQUIVALENT IN ANOTHER CURRENCY). OTHERWISE, ANY LENDER THAT
PARTICIPATES IN A SMALLER AMOUNT SHOULD CONFIRM THAT IT IS A PROFESSIONAL MARKET PARTY WITHIN THE
MEANING OF THE DUTCH FINANCIAL SUPERVISION ACT (Wet op het financieel toezicht). ]
105
Dated: [ • ]

authorised signatory for
[Name of Borrower]
106

To: [ • ] as Facility Agent
SCHEDULE 4
FORM OF TRANSFER CERTIFICATE
From: [Existing Lender] (the “ Existing Lender ”) and [New Lender] (the “ New Lender ”)
ABB Ltd - $2,000,000,000 Multicurrency Revolving Credit Agreement
dated [ • ] (the “Credit Agreement”)
Words and expressions defined in the Credit Agreement have the same meaning when used herein.
We refer to Clause 23.5 ( Procedure for transfer ) of the Credit Agreement:
(a) The Existing Lender and the New Lender agree to the Existing Lender and the New Lender transferring by novation all or part
of the Existing Lender’s [Commitment/Swingline Commitment], rights and obligations referred to in the Schedule in
accordance with Clause 23.5 ( Procedure for transfer ).
(b) The proposed Transfer Date is [ • ].
(c) The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause
30.2 ( Addresses ) are set out in the Schedule.
The New Lender confirms, for the benefit of the Facility Agent and without liability to any Obligor, that it is [a Qualifying Lender falling within
paragraph[s] [ • ] of the definition of Qualifying Lender]/[not a Qualifying Lender].
The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause 23.4 ( Limitation
of responsibility of Existing Lenders ).
This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by English law.
107
Dated:

THE SCHEDULE
Commitment/Swingline Commitment/rights and obligations to be transferred
[ insert relevant details of Commitment, Dollar Swingline Commitment, Euro Swingline
Commitment and/or SEK SwinglineCommitment ]
[ Facility Office address, fax number and attention details for notices and account details for payments ]
[Existing Lender] [New Lender]
By: By:
This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [ • ].
[Facility Agent]
By:
Delivery of a duly
completed Utilisation
Request (Clause 5.1
( Delivery of a Utilisation
Request )
Facility Agent determines
(in relation to a
Utilisation) the Base
Currency Amount of the
Advance, if required
under Clause 5.4
( Lenders’ participation )
Facility Agent notifies the
Lenders of the Advance
in accordance with Clause
5.4 ( Lenders’
participation )
Delivery of a duly
completed Utilisation
Request (Clause 5.5
( Delivery of a Utilisation
Request for a Swingline
Advance ))
Swingline Agent notifies
each Swingline Lender of
the amount, currency and
the
Advances in
Euro
10 a.m. London time, 3
Business Days prior to
the proposed Utilisation
Date
11 a.m. London time, 3
Business Days prior to
the proposed Utilisation
Date
Promptly upon receipt
from the relevant
Borrower
9.30 a.m. London time on
the proposed Utilisation
Date
Promptly upon receipt
from the relevant
Borrower
108
SCHEDULE 5
TIMETABLES
Advances in
Dollars
11 a.m. London time, 3
Business Days prior to
the proposed Utilisation
Date
N/A
Promptly upon receipt
from the relevant
Borrower
11 a.m. New York time
on the proposed
Utilisation Date
Promptly upon receipt
from the relevant
Borrower
109
Advances in
SEK
11 a.m. London time, 3
Business Days prior to
the proposed Utilisation
Date
11 a.m. London time, 3
Business Day prior to the
proposed Utilisation Date
Promptly upon receipt
from the relevant
Borrower
10.00 a.m. Stockholm
time on the proposed
Utilisation Date
Promptly upon receipt
from the relevant
Borrower
Advances in
other
currencies
11 a.m. London time, 3
Business Days prior to the
proposed Utilisation Date
11 a.m. London time, 3
Business Days prior to the
proposed Utilisation Date
Promptly upon receipt
from the relevant Borrower
N/A
N/A

Base Currency Amount of
each Swingline Advance
(paragraph (c) of Clause
5.8 ( Swingline Lenders’
Participation ))
Facility Agent receives a
notification from a
Lender under Clause 6.2
( Unavailability of a
currency )
Facility Agent gives
notice in accordance with
Clause 6.2
( Unavailability of a
currency )
LIBOR or EURIBOR or
STIBOR is fixed
N/A
N/A
Advances in
Euro
Quotation Day as of
11.00 a.m. Brussels time
N/A
N/A
Advances in
Dollars
Quotation Day as of
11.00 a.m. London time
110
N/A
N/A
Advances in
SEK
Quotation Day as of
11.00 a.m. Stockholm
time
Advances in
other
currencies
Quotation Day as of 9 a.m.
London time
Upon receipt of
notification from the
Lenders
Quotation Day as of 11.
00 a.m. London time

To: [ • ] as Facility Agent
From: [Subsidiary] and ABB Ltd
Dear Sirs
SCHEDULE 6
FORM OF BORROWER ACCESSION LETTER
ABB Ltd - $2,000,000,000 Multicurrency Revolving Credit Agreement
dated [ • • ] (the “Credit Agreement”)
Dated: [ • ]
We refer to the Credit Agreement. This is a Borrower Accession Letter. Terms defined in the Credit Agreement have the same meaning in this
Borrower Accession Letter unless given a different meaning in this Borrower Accession Letter.
[Subsidiary] agrees to become an Additional Borrower and to be bound by the terms of the Credit Agreement as an Additional Borrower
pursuant to Clause 24.2 ( Additional Borrowers ) of the Credit Agreement.
[Subsidiary] is a company duly incorporated under the laws of [name of relevant jurisdiction].
[Subsidiary] is a wholly owned Subsidiary of ABB Ltd.
[Subsidiary’s] administrative details are as follows:
Address:
Fax No:
Attention:
This Borrower Accession Letter and any non-contractual obligations arising out of or in connection with it are governed by English law.
ABB Ltd [Subsidiary]
By: By:
111

To: [ • ] as Facility Agent
From: [resigning Borrower] and ABB Ltd
Dear Sirs
SCHEDULE 7
FORM OF RESIGNATION LETTER
ABB Ltd - $2,000,000,000 Multicurrency Revolving Credit Agreement
dated [ • ] (the “Credit Agreement”)
We refer to the Credit Agreement. This is a Resignation Letter. Terms defined in the Credit Agreement have the same meaning in this
Resignation Letter unless given a different meaning in this Resignation Letter.
Dated: [ • ]
Pursuant to Clause 24.3 ( Resignation of a Borrower ), we request that [resigning Borrower] be released from its obligations as a Borrower under
the Credit Agreement.
We confirm that:
(a) no Default would result from the acceptance of this request; and
(b) [resigning Borrower] is under no actual or contingent liability under the Credit Agreement.
This Resignation Letter and any non-contractual obligations arising out of or in connection with it are governed by English law.
ABB Ltd [Subsidiary]
By: By:
112

SCHEDULE 8
MANDATORY COST
1. The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the
Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or
(b) the requirements of the European Central Bank.
2. On the first day of each Interest Period (or as soon as possible thereafter) the Facility Agent shall calculate, as a percentage rate, a rate (the
“ Additional Cost Rate ”) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the
Facility Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each
Lender in the relevant Advance) and will be expressed as a percentage rate per annum.
3. The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by
that Lender to the Facility Agent. This percentage will be certified by that Lender in its notice to the Facility Agent to be its reasonable
determination of the cost (expressed as a percentage of that Lender’s participation in all Advances made from that Facility Office) of
complying with the minimum reserve requirements of the European Central Bank in respect of advances made from that Facility Office.
4. The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Facility Agent as
follows:
(a) in relation to a sterling Advance:
(b) in relation to an Advance in any currency other than sterling:
Where:
per cent. per annum.
per cent. per annum
A is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to
time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.
B is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Advance is an Unpaid Sum, the
additional rate of interest specified in paragraph (a) of Clause 9.3 ( Default interest )) payable for the relevant Interest Period on
the Advance.
113

C is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing
Special Deposits with the Bank of England.
D is the percentage rate per annum payable by the Bank of England to the Facility Agent on interest bearing Special Deposits.
E is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Facility Agent as being the
average of the most recent rates of charge supplied by the Reference Banks to the Facility Agent pursuant to paragraph 7 below
and expressed in pounds per £1,000,000.
5. For the purposes of this Schedule:
(a) “ Eligible Liabilities ” and “ Special Deposits ” have the meanings given to them from time to time under or pursuant to the
Bank of England Act 1998 or (as may be appropriate) by the Bank of England;
(b) “ Fees Rules ” means the rules on periodic fees contained in the Financial Services Authority Fees Manual or such other law or
regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;
(c) “ Fee Tariffs ” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any
minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and
(d) “ Tariff Base ” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.
6. In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the
formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be
rounded to four decimal places.
7. If requested by the Facility Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority,
supply to the Facility Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees
Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as
being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the
Tariff Base of that Reference Bank.
8. Each Lender shall supply any information required by the Facility Agent for the purpose of calculating its Additional Cost Rate. In
particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:
114

(a) the jurisdiction of its Facility Office; and
(b) any other information that the Facility Agent may reasonably require for such purpose.
Each Lender shall promptly notify the Facility Agent of any change to the information provided by it pursuant to this paragraph.
9. The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E
above shall be determined by the Facility Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the
assumption that, unless a Lender notifies the Facility Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and
Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction
as its Facility Office.
10. The Facility Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under
compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to
paragraphs 3, 7 and 8 above is true and correct in all respects.
11. The Facility Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the
Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3,
7 and 8 above.
12. Any determination by the Facility Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or
any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties.
13. The Facility Agent may from time to time, after consultation with ABB and the Lenders, determine and notify to all Parties any
amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from
time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other
authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and
binding on all Parties.
115

SCHEDULE 9
MATERIAL SUBSIDIARIES
Company Name Jurisdiction
116
SCHEDULE 10
FORM OF INCREASE CONFIRMATION
To: [ ] as Facility Agent, and ABB Ltd, for and on behalf of each Obligor
From: [the Increase Lender] (the “ Increase Lender ”)
Dated:
ABB Ltd - $2,000,000,000 Multicurrency Revolving Credit Agreement
dated [ • ] (the “Credit Agreement”)
We refer to the Credit Agreement. This is an Increase Confirmation. Terms defined in the Credit Agreement have the same meaning in this
Increase Confirmation unless given a different meaning in this Increase Confirmation.
We refer to Clause 2.2 ( Increase ).
The Increase Lender agrees to assume and will assume all of the obligations corresponding to the [Commitment/Swingline Commitment]
specified in the Schedule (the “ Relevant Commitment ”) as if it were an Original Lender under the Credit Agreement.
The proposed date on which the increase in relation to the Increase Lender and the Relevant Commitment is to take effect (the “ Increase Date
”) is [ ].
On the Increase Date, the Increase Lender becomes party to the Finance Documents as a Lender.
The Facility Office and address, fax number and attention details for notices to the Increase Lender for the purposes of Clause 30.2 ( Addresses )
are set out in the Schedule.
The Increase Lender confirms, for the benefit of the Facility Agent and without liability to any Obligor, that it is [a Qualifying Lender falling
within paragraph[s] [•] of the definition of Qualifying Lender]/[not a Qualifying Lender].
The Increase Lender expressly acknowledges the limitations on the Lenders’ obligations referred to in paragraph (g) of Clause 2.2 ( Increase ).
This Increase Confirmation may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts
were on a single copy of this Increase Confirmation.
This Increase Confirmation and any non - contractual obligations arising out of or in connection with it are governed by English law.
This Credit Agreement has been entered into on the date stated at the beginning of this Credit Agreement.
ABB Interest
(%)
ABB Finance B.V. Netherlands 100
ABB Capital B.V. Netherlands 100
ABB International Finance Limited Guernsey 100
ABB Holdings Inc. United States 100
ABB Beteiligungs- und Verwaltungsges. mbH Germany 100
ABB S.p.A. Italy 100
ABB Schweiz AG Switzerland 100
ABB (China) Ltd China 100
ABB Inc. United States 100

117

THE SCHEDULE
Relevant Commitment/rights and obligations to be assumed by the Increase Lender
[ insert relevant details of Commitment, Dollar Swingline Commitment, Euro Swingline Commitment and/or SEK Swingline Commitment ]
[Increase Lender]
By:
[ Facility office address, fax number and attention details for notices and account details for payments ]
This Increase Confirmation is accepted as an Increase Confirmation for the purposes of the Credit Agreement by the Facility Agent and
the Increase Date is confirmed as [ ].
Facility Agent
By:
118

SIGNATURES
[signature pages have been intentionally removed]
119

THE GUARANTOR
ABB LTD
SIGNATORIES
By: Alex Hall By: Richard A. Brown
Title: Group Senior Vice President Title: Group Senior Vice President
THE BORROWERS
ABB CAPITAL B.V.
By: Brian Van Reijn By: Urs Arnold
Title: Managing Director Title: Managing Director
ABB TREASURY CENTER (USA), INC.
By: Daniel Hagmann By: George Irvine
Title: President Title: Vice President
ABB FINANCIAL SERVICES AB
By: John Krum By: Ann Larsson
Title: Director Title: Managing Director
120

THE FACILITY AGENT
CREDIT SUISSE AG, LONDON BRANCH
for and on behalf of itself, in its capacity as agent and for and on behalf of the Finance Parties under the Credit Agreement
By: Steve Martin By: Russell J. Wood
Title: Vice President Title: Vice President, Operations
121

ABB, Consolidated Companies (excl. Dormant) as per 28.02.2011
Country Name Location Group Interest %
ALGERIA
ABB Power Technologies SpA
Hydra
100.00
ALGERIA
SARPI - Société Algérienne pour la réalisation de Alger
50.00
projets industriels
ANGOLA
Asea Brown Boveri Electrica SGPS (Angola) Luanda
100.00
Limitada
ARGENTINA
ABB S.A.
Buenos Aires
100.00
ARGENTINA
Sache Service S.A.
Buenos Aires
100.00
ARUBA (NL)
ABB Import & Export Services Ltd.
Oranjestad/Aruba (NA)
100.00
AUSTRALIA
ABB Australia Pty Limited
Sydney
100.00
AUSTRALIA
ABB Group Holdings Pty. Ltd.
Sydney
100.00
AUSTRALIA
ABB Group Investment LLP
Sydney
100.00
AUSTRALIA
ABB Group Investment Management Pty. Ltd. Sydney
100.00
AUSTRALIA
Baldor Australia PTY Limited
Seven Hills, NSW
100.00
AUSTRALIA
Ventyx Australia Pty Ltd.
Brisbane
100.00
AUSTRIA
ABB AG
Vienna
100.00
AZERBAIJAN
ABB Azerbaijan LLC
Baku
100.00
BAHRAIN
ABB Technologies W.L.L.
Bahrain
100.00
BARBADOS
Ventyx Software SRL
St. Michael
100.00
BELGIUM
ABB N.V.
Zaventem
100.00
BOLIVIA
Asea Brown Boveri Ltda.
La Paz
99.81
BOTSWANA
ABB (Pty) Ltd.
Gaborone
100.00
BRAZIL
ABB Ltda.
Osasco
100.00
BULGARIA
ABB Automation EOOD
Rakovski
100.00
BULGARIA
ABB Avangard AD
Sevlievo
99.91
BULGARIA
ABB Bulgaria EOOD
Sofia
100.00
CAMEROON
Asea Brown Boveri S.A.
Douala
99.90
CANADA
ABB Bomem Inc.
Quebec
100.00
CANADA
ABB Inc.
St. Laurent, Quebec
100.00
CANADA
Baldor Electric Canada Inc.
Stratford, Ontario
100.00
CANADA
Ventyx Software Inc.
Richmond
100.00
CHILE
ABB S.A.
Santiago
100.00
CHILE
Baldor Electric Company de Chile Ltda
Santiago
100.00
CHILE
CMS Tecnologia S.A.
Santiago
100.00
CHINA
ABB (China) Engineering Co. Ltd.
Xiamen
100.00
CHINA
ABB (China) Ltd.
Beijing
100.00
CHINA
ABB Bailey Beijing Engineering Co. Ltd. Beijing
51.00
CHINA
ABB Beijing Drive Systems Co. Ltd.
Beijing
90.00
CHINA
ABB Chongqing Transformer Company Ltd. Chongqing
62.20
CHINA
ABB DATONG Traction Transformers Co., Ltd. Datong
50.00
CHINA
ABB Electrical Machines Ltd.
Shanghai
100.00
CHINA
ABB Engineering (Shanghai) Ltd.
Shanghai
100.00
CHINA
ABB Generators Ltd.
Nanchang
51.00
CHINA
ABB Genway Xiamen Electrical Equipment Co. Xiamen
70.00
Ltd.
CHINA
ABB Guangdong Sihui Instrument Transformer Sihui
67.00
Co. Ltd.
CHINA
ABB Hefei Transformer Co. Ltd.
Hefei
100.00
CHINA
ABB High Voltage Switchgear (Xiamen) Xiamen
51.00
Company Ltd.
CHINA
ABB High Voltage Switchgear Co. Ltd.
Beijing
60.00
CHINA
ABB Holding Ltd.
Hong Kong
100.00
CHINA
ABB Jiangjin Turbo Systems Company Limited Chongqing
61.00
CHINA
ABB LV Installation Materials Co. Ltd.
Beijing
85.70
CHINA
ABB Microunion Traction Equipment Limited Beijing
50.00
CHINA
ABB Shanghai Motors Co. Ltd.
Shanghai
75.00
CHINA
ABB Shanghai Transformer Co. Ltd.
Shanghai
51.00
CHINA
ABB Tianjin Switchgear Co., Ltd.
Tianjin
60.00
CHINA
ABB Transmission & Distribuition Automation Xiamen
100.00
Equipment (Xiamen) Co. Ltd.
CHINA
ABB Xi’an High Power Rectifier Company Xi’an
62.00
Limited
CHINA
ABB Xi’an Power Capacitor Company Limited Xi’an
91.00
CHINA
ABB Xiamen Electrical Controlgear Co. Ltd. Xiamen
80.00
CHINA
ABB Xiamen Low Voltage Equipment Co. Ltd. Xiamen
100.00
CHINA
ABB Xiamen Switchgear Co. Ltd.
Xiamen
64.30
CHINA
ABB Xinhui Low Voltage Switchgear Co. Ltd. Xinhui
90.00
CHINA
ABB Zhongshan Transformer Company Ltd. Zhongshan
51.00
CHINA
Baldor Electric (Shanghai) Company Ltd. Shanghai
100.00
CHINA
Comem (Hefei) Transformers Equipments Ltd Hefei
100.00
Exhibit 8.1
Share Capital
in thousands - Curr
108000 DZD
814500 DZD
200 USD
56772 ARS
100 ARS
10006 USD
122436 AUD
316200 AUD
146232 AUD
8110 AUD
99 AUD
19856 AUD
15000 EUR
900 EUR
500 USD
108 USD
13290 EUR
518 BOB
541 BWP
94396 BRL
17100 BGN
6867 BGN
3010 BGN
532000 XAF
5052 CAD
358986 CAD
21710 CAD
29426 CAD
4733956 CLP
5000 CLP
5131236 CLP
2100 USD
120000 USD
1796 USD
5000 USD
48647 USD
6000 USD
14400 USD
20000 USD
5000 USD
13000 USD
50000 CNY
29000 USD
8000 USD
11400 USD
27887 HKD
16000 USD
17100 USD
6000 USD
11217 USD
7000 USD
8000 USD
2100 USD
2500 USD
37022 USD
4300 USD
6200 USD
5000 USD
6200 USD
15000 USD
27314 CNY
1300 EUR

CHINA
CHINA
CHINA
CHINA
COLOMBIA
COTE D’IVOIRE
CROATIA
CZECH REPUBLIC
DENMARK
DENMARK
ECUADOR
EGYPT
EGYPT
EGYPT
EGYPT
EGYPT
EGYPT
EGYPT
EL SALVADOR
ESTONIA
FINLAND
FINLAND
FRANCE
FRANCE
FRANCE
FRANCE
FRANCE
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GERMANY
GREECE
GUERNSEY
GUERNSEY
GUERNSEY
GUERNSEY
GUERNSEY
HONG KONG
HONG KONG
HUNGARY
Hangzhou Winmation Automation Company HangZhou
Limited
K-TEK (Tianjin) Level Co. Ltd.
TEDA-Tianjin
Maska Power Transmission (Changzhou) Co.Ltd. Changzhou
Ventyx Sofltware Technology (Beijing) Co. Ltd. Beijing
Asea Brown Boveri Ltda.
Bogotá
ABB Technology SA
Abidjan
ABB Ltd.
Zagreb
ABB s.r.o.
Prague
ABB A/S
Skovlunde
Ventyx Services (Denmark) APS
Copenhagen
ABB Ecuador S.A.
Quito
ABB Construction (ABACON) S.A.E.
Heliopolis
ABB Electrical Industries (ABB ARAB) S.A.E. Cairo
ABB For Feeding Industries SAE
10th of Ramadan City
ABB Power Systems and Automation Technology Cairo
S.A.E
ABB Transformers S.A.E.
El-Nozha El-Gedida
ABB Turbochargers S.A.E.
Suez
Asea Brown Boveri S.A.E.
Cairo
ABB S.A. de CV
San Salvador
ABB AS
Tallinn
ABB Oy
Helsinki
Efora Oy
Helsinki
ABB France SAS
Rueil Malmaison cedex
ABB S.A.
Rueil-Malmaison
L’Ebenoid
Villeurbanne
Striebel & John S.A.R.L.
Fellering
Ventyx France S.A.
Montigny le Bretonneux
ABB AG
Mannheim
ABB Airport Technologies GmbH
Mannheim
ABB Automation GmbH
Mannheim
ABB Automation Products GmbH,
Ladenburg
ABB Automatisierungsanlagen Cottbus GmbH Cottbus
ABB Bauprojektmanagement GmbH
Mannheim
ABB Beteiligungs- und Verwaltungsges. mbH Mannheim
ABB Beteiligungs-Management GmbH
Mannheim
ABB Beteiligungsgesellschaft mbH
Mannheim
ABB Business Services GmbH
Heidelberg
ABB Grundbesitz GmbH
Ladenburg
ABB Logistics Center Europe GmbH
Menden
ABB New Ventures GmbH
Mannheim
ABB Service GmbH Bobingen
Bobingen
ABB Stotz-Kontakt GmbH
Heidelberg
ABB Stotz-Kontakt/Striebel & John Vertriebs- Heidelberg
GmbH
ABB Training Center GmbH & Co. KG
Heidelberg
ABB Wirtschaftsbetriebe GmbH
Mannheim
Baldor Electric Germany GmbH
Munich
Busch-Jaeger Elektro GmbH
Mannheim/Lüdenscheid
Hartmann & Braun Grundstücksverwaltungs Mannheim
GmbH
JLEC Power Ventures GmbH
Mannheim
Komposit-Risikoberatungs- und
Ladenburg
Versicherungsvermittlungs-GmbH
Pucaro Elektro-Isolierstoffe GmbH
Roigheim
Striebel & John GmbH & Co. KG
Sasbach-Obersasbach
Striebel Vermögensverwaltungs-GmbH
Sasbach-Obersasbach
Asea Brown Boveri S.A.
Metamorphossis Attica
ABB Equity Limited,
St. Peter’s Port
ABB ESAP Limited
St. Peter’s Port
ABB Insurance Limited
St. Peter’s Port
ABB International Finance Limited
St. Peter’s Port
ABB Transinvest Limited
St. Peter’s Port
ABB (Hong Kong) Ltd.
Hong Kong
ABB Turbo Systems (Hong Kong) Limited Hong Kong
ABB Engineering Trading and Service Ltd. Budapest
100.00
100.00
100.00
100.00
99.99
99.00
100.00
100.00
100.00
100.00
96.87
100.00
100.00
100.00
100.00
65.00
100.00
100.00
100.00
100.00
100.00
49.00
99.83
100.00
100.00
51.00
99.90
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
75.50
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
61.00
100.00
5000 USD
2897 CNY
13808 CNY
486440 COP
500000 XOF
2730 HRK
400000 CZK
100000 DKK
125 DKK
325 USD
72750 EGP
40000 EGP
5000 EGP
35000 EGP
30000 EGP
300 USD
16000 USD
82 USD
25985 EEK
10003 EUR
5100 EUR
25778 EUR
38921 EUR
1000 EUR
686 EUR
180 EUR
167500 EUR
5700 DEM
15000 EUR
10620 EUR
12000 DEM
50 DEM
120000 DEM
9000 EUR
37800 DEM
25 EUR
10000 DEM
50 DEM
432 EUR
50 DEM
7500 EUR
511 EUR
2366 EUR
500 DEM
1534 EUR
1535 EUR
10000 DEM
50 DEM
50 DEM
4500 DEM
2000 DEM
50 DEM
1182 EUR
10 GBP
50 CHF
4000 USD
240 USD
3641 CHF
20000 HKD
14000 HKD
444090 HUF

INDIA
INDIA
INDIA
INDIA
INDONESIA
INDONESIA
IRAN, ISLAMIC REPUBLIC OF
IRAQ
IRELAND
ISRAEL
ITALY
ITALY
JAPAN
JAPAN
JAPAN
JAPAN
JORDAN
JORDAN
KAZAKHSTAN
KAZAKHSTAN
KAZAKHSTAN
KENYA
KOREA, REPUBLIC OF
KUWAIT
LATVIA
LITHUANIA
LUXEMBOURG
MALAYSIA
MALAYSIA
MALAYSIA
MALAYSIA
MALAYSIA
MAURITIUS
MEXICO
MEXICO
MEXICO
MOROCCO
NAMIBIA
NETHERLANDS
NETHERLANDS
NETHERLANDS
NETHERLANDS
NETHERLANDS
NETHERLANDS
NETHERLANDS
NETHERLANDS
NETHERLANDS
NETHERLANDS
NEW CALEDONIA (FR)
NEW ZEALAND
NEW ZEALAND
NIGERIA
NIGERIA
NORWAY
NORWAY
NORWAY
NORWAY
OMAN
PAKISTAN
PANAMA
PANAMA
PERU
PHILIPPINES
POLAND
POLAND
ABB Global Industries and Services Limited
ABB Limited
Baldor Electric India Pvt Ltd.
K-Tek Level Engineering Pvt. Ltd.
PT ABB Bailey
PT ABB Sakti Industri
ABB (P.J.S.C.)
Iraq Technology for Advanced Energy LLC
ABB Ltd
ABB Technologies Ltd.
ABB Environmental Service Srl.
ABB S.p.A.
ABB Bailey Japan Limited
ABB K.K.
Baldor Japan Corporation
Turbo Systems United Co. Ltd.
ABB Ltd. Jordan
ABB Near East Trading Ltd.
ABB LLP.
CJSC Energia Kazakh Scientific Research
Institute of Energy
Energoinvestprojekt JV LLP
ABB Limited
ABB Ltd.
ABB Engg. Technologies Co. (KSCC)
ABB SIA
ABB UAB
ABB S.A., Leudelange
ABB Holdings Sdn. Bhd.
ABB Industrial and Building Syst. Sdn. Bhd.
ABB Malaysia Sdn Bhd.
ABB Manufacturing Sdn. Bhd.
ABB Transmission and Distribution Sdn. Bhd.
Asea Brown Boveri Ltd.
ABB Mexico S.A. de C.V.
Asea Brown Boveri S.A. de C.V.
Baldor Electric Company de Mexico SA de CV
ABB S.A.
Asea Brown Boveri (Pty) Ltd.
ABB BV
ABB Capital, B.V.
ABB Equity Ventures B.V.
ABB Finance B.V.
ABB Group Accounting Services B.V.
ABB Holdings BV
ABB Investments B.V.
Ventyx Dutch Holdings B.V.
Ventyx Services Netherlands B.V.
Ventyx Software B.V.
ABB SAS
ABB Limited
ABB Maintenance Services Limited
ABB OGP LIMITED
ABBNG Limited
ABB AS
ABB Holding AS
EIE 1 AS
EIE 2 AS
ABB LLC,
ABB (Pvt) Ltd.
ABB S.A.
Baldor Panama S.A.
ABB S.A.
ABB, Inc.
ABB Entrelec Sp. zo.o.
ABB REAL ESTATE Sp.zoo.
Bangalore
Bangalore
Pune, Maharashtra
Navi Mumbai
Jakarta
Jakarta
Teheran
Baghdad
Dublin
Tirat Carmel
Milan
Milan
Shizuoka-Ken
Tokyo
Yokohama
Tokyo
Amman
Amman
Almaty
Almaty
Almaty
Nairobi
Seoul
Safat
Riga
Vilnius
Subang Jaya
Subang Jaya
Subang Jaya
Subang Jaya
Subang Jaya
Port Louis
Tlalnepantla
Tlalnepantla
El Salto, Jalisco
Casablanca
Windhoek
Rotterdam
Amsterdam
Amsterdam
Amsterdam
Rotterdam
Amsterdam
Amsterdam
Amsterdam
Amsterdam
Amsterdam
New Caledonia
Auckland
Auckland
Lagos
Lagos
Billingstad
Billingstad
Billingstad
Billingstad
Al Hamriya
Lahore
Panama
Panama City
Lima
Paranaque, Metro Manila
Leborska
Warsaw
100.00
75.00
100.00
100.00
100.00
55.00
100.00
100.00
100.00
99.99
99.99
100.00
51.00
100.00
100.00
60.00
100.00
95.00
100.00
92.57
100.00
100.00
100.00
49.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
100.00
100.00
100.00
65.00
100.00
100.00
100.00
80.60
100.00
100.00
99.89
3585930 INR
423817 INR
18563 INR
10000 INR
400000 USD
15476 USD
6444000 IRR
635 EUR
420 ILS
41 EUR
107000 EUR
192659 JPY
1000000 JPY
13000 JPY
400000 JPY
350 JOD
30 JOD
2925664 KZT
51170 KZT
10482 KZT
15500 KES
18670000 KRW
100 KWD
2506 LVL
2554 LTL
1496 EUR
4490 MYR
3000 MYR
3500 MYR
700 MYR
3500 MYR
3000 MUR
156618 MXN
419096 MXN
278143 MXN
5400 MAD
3120 NAD
9076 EUR
9080 EUR
18 EUR
20 EUR
50 EUR
119 EUR
100 EUR
18 EUR
20 EUR
18 EUR
5000 XPF
34000 NZD
1 NZD
10000 NGN
162054 NGN
15100 NOK
800000 NOK
2100 NOK
2100 NOK
250 OMR
31966 PKR
100 USD
1 USD
35469 PEN
123180 PHP
4205 PLN
50 PLN

POLAND
POLAND
PORTUGAL
PORTUGAL
QATAR
ROMANIA
RUSSIAN FEDERATION
RUSSIAN FEDERATION
RUSSIAN FEDERATION
RUSSIAN FEDERATION
RUSSIAN FEDERATION
SAUDI ARABIA
SAUDI ARABIA
SAUDI ARABIA
SAUDI ARABIA
SAUDI ARABIA
SAUDI ARABIA
SENEGAL
SERBIA
SINGAPORE
SINGAPORE
SINGAPORE
SINGAPORE
SINGAPORE
SINGAPORE
SLOVAKIA
SLOVENIA
SOUTH AFRICA
SOUTH AFRICA
SOUTH AFRICA
SOUTH AFRICA
SOUTH AFRICA
SOUTH AFRICA
SPAIN
SWEDEN
SWEDEN
SWEDEN
SWEDEN
SWEDEN
SWEDEN
SWEDEN
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
SWITZERLAND
TAIWAN, PROVINCE OF CHINA
TANZANIA, UNITED REPUBLIC
THAILAND
THAILAND
THAILAND
TUNISIA
TUNISIA
TURKEY
TURKEY
ABB Real Estate Spolka z ograniczona
odpowiedzialnoscia spolka komandytowa
ABB Sp. zo.o.
ABB (Asea Brown Boveri), S.A.
ABB Stotz Kontakt Eléctrica, Unipessoal, Lda.
ABB Qatar LLC.
ABB SRL
ABB Electroengineering Ltd.
ABB Ltd.
ABB Moskabel Ltd.
ABB Power and Automation Systems Ltd.
Asea Brown Boveri Ltd.
ABB Automation Co. Ltd.
ABB Contracting Company Ltd.
ABB Electrical Industries Ltd.
ABB Service Co. Ltd.
Electrical Materials Center
Saudi SAE Technical Construction Co. Ltd.
ABB Technologies S.A.
ABB d.o.o.
ABB Agencies Pte. Ltd.
ABB Holdings Pte. Ltd.
ABB Pte. Ltd.
ABB Treasury Center (Asia Pacific) Pte. Ltd.
Baldor Electric (Asia) PTE Ltd.
Indus International Asia Pte Ltd.
ABB, s.r.o.
ABB D.o.o.
ABB Holdings (Pty) Ltd.
ABB South Africa (Pty) Ltd.
K-TEK Instruments (PTY) Ltd.
Nelspruit Airport Operating Company (Pty) Ltd.
Primkop Airport Management (Pty) Ltd.
Ventyx Data Services South Africa (Proprietary)
Limited
Asea Brown Boveri S.A.
ABB AB
ABB Fastighet AB
ABB Financial Services AB
ABB Norden Holding AB
ABB Technology AB
Fastighets Aktiebolaget Mohamn
Fastighetsbolaget Akivdul AB
ABB Asea Brown Boveri Ltd
ABB Finanz AG
ABB Immobilien AG
ABB Information Systems Ltd.
ABB International Marketing Ltd.
ABB Intra AG
ABB Ltd
ABB Management Services Ltd.
ABB MEA Participations Ltd.
ABB Research Ltd.
ABB Schweiz AG
ABB Sécheron S.A.
ABB Technology Ltd.
ABB Technology Ventures Ltd.
ABB Turbo-Systems AG
ABB Turbo-Systems Holding Ltd.
Baldor Electric Switzerland AG
ABB Ltd.
ABB Limited
ABB LIMITED
Asea Brown Boveri Holding Ltd.
Kent Meters (Thailand) Ltd.
ABB Maghreb Services S.A.
L’Ebenoid Production
ABB Elektrik Sanayi A.S.
ABB Holding A.S.
Warsaw
Warsaw
Paco de Arcos
Porto
Doha
Bucharest
Moscow
Moscow
Moscow
Moscow
Moscow
Riyadh
Riyadh
Riyadh
Al Khobar
Riyadh
Riyadh
Dakar
Belgrade
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Bratislava
Ljubljana
Sunninghill
Modderfontein
Elenvale
Nelspruit
Nelspruit
Centurion
Madrid
Västerås
Västerås
Sollentuna
Västerås
Västeras
Västerås
Västerås
Zurich
Zurich
Baden
Zurich
Zurich
Zurich
Zurich
Zurich
Zurich
Zurich
Baden
Satigny
Zurich
Zurich
Baden
Baden
Feuerthalen
Taipei
Dar Es Salaam
Bangkok
Bangkok
Bangkok
Tunis
Tunisie
Istanbul
Istanbul
99.89
99.89
100.00
100.00
49.00
100.00
100.00
100.00
100.00
76.20
100.00
65.00
65.00
65.00
65.00
0.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
80.00
80.00
80.00
90.00
90.00
74.80
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.94
99.95
81644 PLN
260644 PLN
4117 EUR
700 EUR
200 QAR
2300 USD
39888 RUB
200 USD
7500 USD
2200 USD
332 USD
10250 SAR
40000 SAR
68750 SAR
2000 SAR
500 SAR
10000 SAR
475200 XOF
100 USD
410 SGD
32797 SGD
28842 SGD
378 USD
7640 SGD
332 EUR
1580 EUR
4050 ZAR
5000 ZAR
0 ZAR
0 ZAR
4000 ZAR
727 ZAR
33318 EUR
400000 SEK
3000 SEK
50000 SEK
2344783 SEK
8001 SEK
500 SEK
50 SEK
2768000 CHF
100 CHF
20000 CHF
500 CHF
1000 CHF
100 CHF
2378046 CHF
571 CHF
1000 CHF
100 CHF
55000 CHF
22000 CHF
100 CHF
1000 CHF
10000 CHF
40000 CHF
2110 CHF
200000 TWD
141000 TZS
1034000 THB
1200 THB
2836 THB
85 TND
180000 TND
10571 USD
12844 USD

TURKEY
TURKEY
UGANDA
UKRAINE
UNITED ARAB EMIRATES
UNITED ARAB EMIRATES
UNITED ARAB EMIRATES
UNITED ARAB EMIRATES
UNITED ARAB EMIRATES
UNITED ARAB EMIRATES
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
UNITED STATES
VENEZUELA
VIET NAM
ZAMBIA
ZIMBABWE
ABB Ihracat Ticaret Ve Elektrik Sanayi As
Elmek Elektromekanik Sanayi ve Ticaret Anonim
Sirketi SA
ABB Ltd.
ABB Ltd.
ABB Automation L.L.C.
ABB FZ-LLC
ABB Global Marketing FZ LLC
ABB Industries (L.L.C.)
ABB Industries FZ
ABB Transmission & Distribution Ltd.
ABB Combined Heat and Power Ltd.
ABB Holdings Limited
ABB Investments Ltd.
ABB Limited
ABB Service Limited
Baldor UK Ltd.
Jokab Safety UK LTD
Ventyx (UK) Ltd.
Ventyx Energy Ltd.
ABB Holdings Inc.
ABB Inc.
ABB Susa Inc.
ABB Treasury Center USA Inc.
Baldor Canada Holdings Inc.
Baldor Electric Company
Baldor Holdings Inc
Baldor UK Holding Company Inc.
Combustion Engineering Inc.
K-TEK Corp
K-TEK Holding Corp
KEC Acquisition Corporation
Kuhlman Electric Corporation
Mobile Data Solutions Inc.
Obvient Strategies Inc.
Ventyx Asia Inc.
Ventyx Energy LLC
Ventyx Energy Software Inc.
Ventyx Inc.
Asea Brown Boveri S.A.
ABB Ltd.
ABB Ltd.
ABB (Private) Ltd.
Istanbul
Istanbul
Kampala
Kiev
Abu Dhabi
Dubai
Dubai
Dubai
Dubai
Abu Dhabi
Warrington
Warrington
Warrington
Warrington
Warrington
Bristol, England
Cheshire
Surrey
Surrey
Cary, NC
Cary, NC
North Brunswick, NJ
Norwalk, CT
Fort Smith, AR
Fort Smith, AR
Fort Smith, AR
Fort Smith, AR
Norwalk, CT
Praireville, LA
Praireville, LA
Versailles KY
Crystal Springs MS
Atlanta
Atlanta
Atlanta
Atlanta
Sacramento
Atlanta
Caracas
Hanoi
Lusaka
Harare
99.93
99.94
100.00
100.00
49.00
100.00
100.00
49.00
100.00
49.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
300 TRY
6833 USD
520 UGX
85400 UAH
150 AED
500 AED
500 AED
5000 AED
3000 AED
150 AED
43474 GBP
203014 GBP
13 GBP
60000 GBP
0 GBP
5378 GBP
284 GBP
630 GBP
1584 GBP
2 USD
1 USD
1 USD
1 USD
27940 USD
5651 USD
0
0
1 USD
35690 USD
35725 USD
0 USD
0 USD
7287 USD
300 USD
30047 USD
48110 VEF
28871 USD
100 ZMK
1000 ZWD

I, Joseph M. Hogan, certify that:
CERTIFICATIONS
1. I have reviewed this Annual Report on Form 20-F of ABB Ltd;
Exhibit 12.1
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented
in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company’s

Date: March 17, 2011
/s/ JOSEPH M. HOGAN
Joseph M. Hogan
Chief Executive Officer
auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
2

I, Michel Demaré, certify that:
CERTIFICATIONS
1. I have reviewed this Annual Report on Form 20-F of ABB Ltd;
Exhibit 12.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented
in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company’s

Date: March 17, 2011
/s/ MICHEL DEMARÉ
Michel Demaré
Chief Financial Officer
auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
2

Exhibit 13.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF ABB LTD, PURSUANT TO SECTION 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2010 of ABB Ltd (the “Company”) as filed
with the U.S. Securities and Exchange Commission (the “Commission”) on the date hereof (the “Report”) and pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Joseph M. Hogan, Chief Executive Officer of the Company, certify, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: March 17, 2011
By: /s/ JOSEPH M. HOGAN
Name: Joseph M. Hogan
Title: Chief Executive Officer

Exhibit 13.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER OF ABB LTD, PURSUANT TO SECTION 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2010 of ABB Ltd (the “Company”) as filed
with the U.S. Securities and Exchange Commission (the “Commission”) on the date hereof (the “Report”) and pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Michel Demaré, Chief Financial Officer of the Company, certify, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: March 17, 2011
By: /s/ MICHEL DEMARÉ
Name: Michel Demaré
Title: Chief Financial Officer

Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
Exhibit 15.1
1) Registration Statements (Form S-8 No. 333-171971) of ABB Ltd pertaining to the Baldor Electric Company 2006 Equity Incentive
Plan and Baldor Electric Company 1994 Incentive Stock Plan, and
2) Registration Statements (Form S-8 No. 333-129271) of ABB Ltd pertaining to the ABB Employees Share Acquisition Plan – U.S.
Share Acquisition Sub-Plan of ABB Ltd
of our reports dated March 17, 2011, with respect to the consolidated financial statements of ABB Ltd and the effectiveness of internal control
over financial reporting of ABB Ltd included in its Annual Report (Form 20-F) for the year ended December 31, 2010.
/s/ Ernst & Young AG
Zürich, Switzerland
March 17, 2011