Note 14Leases, continuedNote 15Commitments and contingenciesContingencies – EnvironmentalMinimum lease payments have not been reduced by minimum sublease rentals due in the future under non-cancelablesubleases. Such minimum sublease rentals were not significant. The present value of minimum lease payments ispresented in “Short-term debt and current maturities of long-term debt” or “Long-term debt” in the Consolidated BalanceSheets.The Company is engaged in environmental clean-up activities at certain sites arising under various United States andother environmental protection laws and under certain agreements with third parties. In some cases, these environmentalremediation actions are subject to legal proceedings, investigations or claims, and it is uncertain to what extent theCompany is actually obligated to perform. Provisions for these unresolved matters have been set up if it is probable thatthe Company has incurred a liability and the amount of loss can be reasonably estimated. If a provision has been recognizedfor any of these matters, the Company records an asset when it is probable that it will recover a portion of thecosts 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 materialadverse effect on the Company’s consolidated financial statements.Contingencies related to former Nuclear Technology businessThe Company retained liabilities for certain specific environmental remediation costs at two sites in the United Statesthat were operated by its former subsidiary, <strong>ABB</strong> CE-Nuclear Power Inc., which the Company sold to British Nuclear FuelsPLC (BNFL) in 2000. Pursuant to the sale agreement with BNFL, the Company has retained the environmental liabilitiesassociated with its Combustion Engineering Inc. subsidiary’s Windsor, Connecticut, facility and agreed to reimburseBNFL for a share of the costs that BNFL incurs for environmental liabilities associated with its former Hematite, Missouri,facility. The primary environmental liabilities associated with these sites relate to the costs of remediating radiologicaland chemical contamination. Such costs are not incurred until a facility is taken out of use and generally are thenincurred over a number of years. Based on information available, the Company believes that radiological remediation atthe Windsor site will be concluded in 2013. In February 2011, the Company and Westinghouse Electric Company LLC(BNFL’s former subsidiary) agreed to settle and release the Company from its continuing environmental obligations underthe sale agreement in respect of the Hematite site. The settlement 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 remediationof the portion of the Windsor site under the U.S. Government’s Formerly Utilized Sites Remedial Action Programfrom the U.S. Army Corps of Engineers to the Nuclear Regulatory Commission which has oversight responsibility for theremaining 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 AmericaThe Company is involved in the remediation of environmental contamination at present or former facilities, primarily inthe United States. The clean up of these sites involves primarily soil and groundwater contamination. A significantportion of the provisions in respect of these contingencies reflects the provisions of acquired companies. A substantialportion of one of the acquired entities remediation liability is indemnified by a prior owner. Accordingly, an asset equalto that portion of the 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,net of tax” was not significant in <strong>2012</strong>, 2011 and 2010. The impact on “Income from discontinued operations, netof tax” was not significant in <strong>2012</strong> and 2011, and was an income of $29 million in 2010.The effect of the above Nuclear Technology and other environmental obligations on the Company’s Consolidated Statementsof Cash Flows was not significant for the year ended December 31, <strong>2012</strong>, and amounted to $149 million and$26 million for the years ended December 31, 2011 and 2010, respectively, primarily related to the Nuclear Technologybusiness.The Company’s estimated cash expenditures for 2013 are $18 million and are covered by provisions included in“Provisions and other current liabilities”.The total effect of the above Nuclear Technology and other environmental obligations on the Company’s ConsolidatedBalance Sheets was as follows:December 31, ($ in millions) <strong>2012</strong> 2011Provision balance relating to:Nuclear Technology business 9 24Various businesses 82 6891 92Environmental provisions included in:Provisions and other current liabilities 22 22Other non-current liabilities 69 7091 92Provisions for the above estimated losses have not been discounted as the timing of payments cannot be reasonablyestimated.110 Financial review | <strong>ABB</strong> <strong>Annual</strong> <strong>Report</strong> <strong>2012</strong>
Note 15Commitments and contingencies,continuedContingencies –Regulatory, Compliance and LegalAntitrustIn January 2007, the European Commission granted the Company full immunity from fines under its leniency programfor the Company’s involvement in anti-competitive practices in the Gas Insulated Switchgear (GIS) business. The Company’sGIS business remains under investigation for alleged anti-competitive practices in certain other jurisdictions,including Brazil. An informed judgment about the outcome of these investigations or the amount of potential loss orrange of loss for the Company, if any, relating to these investigations cannot be made at this stage.In October 2009, the European Commission fined the Company euro 33.75 million (equivalent to $49 million on dateof payment) for its involvement in anti-competitive practices in the power transformers business. In September <strong>2012</strong>,the German Antitrust Authority (Bundeskartellamt) fined one of the Company’s German subsidiaries euro 8.7 million(equivalent to approximately $11 million on date of payment) for its involvement in anti-competitive practices in the Germanpower transformers business. The Company did not appeal either decision and it paid both fines in full.The Company’s cables business is under investigation for alleged anti-competitive practices in a number of jurisdictions,including the European Union and Brazil. The Company has received the European Commission’s Statement ofObjections concerning its investigation into the cables business and in June <strong>2012</strong> participated in the related OralHearing before the European Commission. The Company has also received an initial summary of the Brazilian AntitrustAuthority’s (CADE) allegations regarding its investigation into the cables business. An informed judgment about theoutcome of these investigations or the amount of potential loss or range of loss for the Company, if any, relating to theseinvestigations cannot be made at this stage, except with respect to the Brazilian investigation, where the Companyexpects an unfavorable outcome.In May <strong>2012</strong>, the Brazilian Antitrust Authority opened an investigation into certain power businesses of the Company,including its FACTS and power transformers business. An informed judgment about the outcome of this investigation orthe amount of potential loss or range of loss for the Company, if any, relating to this investigation cannot be made atthis stage.With respect to the foregoing matters which are still ongoing, Management is cooperating fully with the antitrustauthorities.Suspect paymentsIn April 2005, the Company voluntarily disclosed to the United States Department of Justice (DoJ) and the United StatesSecurities and Exchange Commission (SEC) certain suspect payments in its network management unit in the UnitedStates. Subsequently, the Company made additional voluntary disclosures to the DoJ and the SEC regarding suspectpayments made by other Company subsidiaries in a number of countries in the Middle East, Asia, South America andEurope (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 compliancereviews.In September 2010, the Company reached settlements with the DoJ and the SEC regarding their investigations intothese 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 SECtotaling $58 million, which were settled in the fourth quarter of 2010. One subsidiary of the Company pled guilty to onecount of conspiracy to violate the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act and one count ofviolating those provisions. The Company entered into a deferred prosecution agreement and settled civil charges broughtby the SEC. These settlements resolved the foregoing investigations. In lieu of an external compliance monitor, the DoJand SEC have agreed to allow the Company to report on its continuing compliance efforts and the results of the reviewof its internal processes through September 2013.GeneralIn addition, the Company is aware of proceedings, or the threat of proceedings, against it and others in respect ofprivate claims by customers and other third parties with regard to certain actual or alleged anti-competitive practices.Also, the Company is subject to other various legal proceedings, investigations, and claims that have not yet beenresolved. With respect to the above-mentioned regulatory matters and commercial litigation contingencies, the Companywill bear the costs of the continuing investigations and any related legal proceedings.Liabilities recognizedAt December 31, <strong>2012</strong> and 2011, the Company had aggregate liabilities of $211 million and $208 million, respectively,included in “Provisions and other current liabilities” and in “Other non-current liabilities”, for the above regulatory, complianceand legal contingencies. As it is not possible to make an informed judgment on the outcome of certain mattersand as it is not possible, based on information currently available to management, to estimate the maximum potentialliability on other matters, there could be material adverse outcomes beyond the amounts accrued.GuaranteesGeneralThe following table provides quantitative data regarding the Company’s third-party guarantees. The maximum potentialpayments represent a “worst-case scenario”, and do not reflect management’s expected results. The carrying amount ofliabilities recorded in the Consolidated Balance Sheets reflects the Company’s best estimate of future payments, whichit may incur as part of fulfilling its guarantee obligations.<strong>ABB</strong> <strong>Annual</strong> <strong>Report</strong> <strong>2012</strong> | Financial review 111
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Building on our technology leadersh
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Chairman and CEO letterDear shareho
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HighlightsResilient performance thr
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As of March 1, 2013Executive Commit
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Brice Koch was appointed Executive
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ABB’s success depends on its abil
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