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

 

Form 6-K

 

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

 

For the month of July 2008

 

Commission File Number 001-16429

 

ABB Ltd

(Translation of registrant’s name into English)

 

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

(Address of principal executive office)

 

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

 

Form 20-F  x

 

Form 40-F  o

 

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

 

Note:

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

 

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

 

Note:

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

 

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

 

Yes  o

No  x

 

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

 

 

 



 

This Form 6-K consists of the following:

 

1.    Press release issued by ABB Ltd dated July 24, 2008.

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

 

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

 

2



 

ABB Group Q2 results 2008

 

Press Release

 

 

Q2 net income up 34% on strong top-line growth

 

·                  Orders and revenues continue robust growth

·                  EBIT reaches $1.4 billion, EBIT margin at 16.1 percent

·                  Cash flow from operations more than doubled to $978 million

 

Zurich, Switzerland, July 24, 2008 – ABB reported record orders, revenues and earnings before interest and taxes (EBIT) in the second quarter of 2008, with net income reaching $975 million. Global demand for ABB’s core technologies to provide reliable electrical power and improved industrial efficiency remained robust, while ongoing operational improvements contributed to increased profitability.

 

EBIT reached $1.4 billion, up 42 percent from a year earlier. The EBIT margin increased to 16.1 percent from 14.4 percent in the second quarter of 2007 as ABB continued to benefit from high capacity utilization, greater sourcing of components from emerging economies and other operational improvements.

 

Orders increased in all divisions in a strong market and were up 31 percent (local currencies: 19 percent) to a single-quarter record of $11.3 billion. It was also the first quarter in which orders from emerging markets exceeded orders from the mature economies(1), accounting for 51 percent of total orders received.

 

Revenues increased by 27 percent (local currencies: 15 percent) to $9 billion. Utilities continued to invest in new and refurbished power infrastructure while industrial customers, especially in the oil and gas, marine and minerals sectors, further expanded capacity. The need for more energy efficient industrial technologies to meet the challenges of rising energy and raw materials costs also continued to drive growth.

 

“This was a record quarter for ABB,” said Michel Demaré, ABB’s Chief Executive Officer and Chief Financial Officer. “Global demand for our market-leading technologies in power infrastructure, energy efficiency and industrial productivity remained at high levels. Our strong market positions in both the emerging and mature economies continue to provide us with excellent organic growth opportunities. At the same time, we continue to improve our profitability and total return on capital through measures such as better project execution and risk management, lower cost sourcing, and footprint optimization.”

 

2008 Q2 key figures key figures

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 08

 

Q2 07(1)

 

US$

 

Local

 

Orders

 

11,271

 

 

8,594

 

 

31

%

 

19

%

 

Order backlog (end June)

 

29,127

 

 

20,264

 

 

44

%

 

31

%

 

Revenues

 

9,025

 

 

7,092

 

 

27

%

 

15

%

 

EBIT

 

1,449

 

 

1,024

 

 

42

%

 

 

 

 

as % of revenues

 

16.1

%

 

14.4

%

 

 

 

 

 

 

 

Net income

 

975

 

 

729

 

 

34

%

 

 

 

 

Basic net income per share ($)

 

0.43

 

 

0.32

 

 

 

 

 

 

 

 

Cash flow from operating activities

 

978

 

 

396

 

 

 

 

 

 

 

 

 


(1)Adjusted to reflect the reclassification of activities to discontinued operations

 


(1) OECD countries excluding Czech Rep., Hungary, South Korea, Mexico, Poland, Slovak Rep., and Turkey

 

3



 

Summary of Q2 2008 results

 

Orders received and revenues

 

Orders grew in all divisions. The Process Automation and Automation Products divisions benefited from continued investments by oil and gas, marine and minerals customers in new capacity or upgrades of their existing capacity as global demand for energy, raw materials and shipping remained at high levels. Order growth in the Power Products and Power Systems divisions was driven mainly by utility investments in power infrastructure upgrades and further regional interconnections. The Robotics division continued to benefit from increasing demand in general industry for higher process quality and production flexibility which more than offset lower demand in the automotive sector. The pricing environment remained favorable across most of ABB’s markets.

 

Regionally, orders grew strongest in the Middle East and Africa (up 98 percent; 84 percent in local currencies) as demand continued to grow across most market sectors, especially in oil and gas. Orders increased 38 percent in the Americas (local currencies: 31 percent), including growth of 18 percent (local currencies: 16 percent) in the U.S. Orders in Asia were up 26 percent in the second quarter versus the same period in 2007 (local currencies: 18 percent), driven mainly by demand for both power and automation products in China. Orders in Europe grew at a double-digit pace in all divisions except Power Systems, where large grid interconnection orders taken in the same quarter a year ago were not matched this year. As a result, total orders in Europe were up 17 percent (local currencies: 2 percent).

 

The volume of large orders (more than $15 million) rose 72 percent (56 percent in local currencies) in the second quarter to $2.5 billion. Base orders (less than $15 million) were up 23 percent (12 percent in local currencies).

 

Execution of the order backlog combined with higher demand in the quarter contributed to strong revenue growth. Revenues increased at a double-digit rate in both U.S. dollar and local currency terms across all divisions. Price increases in previous quarters to offset higher raw material costs also supported the revenue improvement.

 

The order backlog at the end of June 2008 amounted to $29.1 billion, $8.9 billion higher (44 percent; 31 percent in local currencies) than at the end of the second quarter of 2007, and $2.3 billion higher than at the end of the first quarter of 2008 (up 8.6 percent; 9.1 percent in local currencies).

 

Earnings before interest and taxes

 

EBIT increased by 42 percent compared to the same quarter a year earlier, mainly the result of volume growth. The EBIT margin benefited from high capacity utilization, ongoing initiatives to remove production bottlenecks in order to generate higher revenues and earnings from the existing base of fixed costs, and greater sourcing of components from emerging economies.

 

Net income

 

In addition to the increase in EBIT, net income in the quarter reflected ABB’s strong cash position and low debt levels, which resulted in a positive finance net of $41 million compared to $1 million in the same quarter of 2007. Net income in the second quarter of 2008 also included a loss in discontinued operations of $17 million due mainly to pension adjustments related to a divested business, compared to a gain of $23 million in the same period a year earlier. The tax rate in the quarter was 29 percent, compared to 25 percent in the second quarter of 2007.

 

4



 

Balance sheet and cash flow

 

Net cash at the end of the second quarter was $6 billion compared to $5.6 billion at the end of the previous quarter. The company purchased 7.5 million ABB shares during  the second quarter in the amount of approximately $240 million in line with the previously announced Sfr. 2.2-billion share buy-back program. Total cash outflow in the second quarter related to the share buyback program amounted to $263 million, including withholding tax paid in respect of transactions in the first quarter.

 

Cash flow from operations increased by approximately $580 million compared to the second quarter of 2007, reflecting primarily the higher volume of business, as well as the effect of ongoing working capital management measures. Investments in working capital in the quarter were more than $200 million lower than in the same period in 2007. Also included in cash flow from operations was a planned payment to asbestos trusts of $25 million.

 

On May 8, ABB’s annual general meeting approved the payment of a dividend in the form of a nominal value reduction of Sfr. 0.48 per share. ABB expects the nominal value reduction to be registered with the Zurich Commercial Register on July 25, 2008, in which case shares traded on the SWX Europe exchange will begin trading with a reduced nominal value on July 28, 2008. Thereafter, the company will affect the nominal value reduction payment.

 

Management appointments

 

ABB announced on July 17 that Joseph M. Hogan has been appointed Chief Executive Officer of the ABB Group, effective September 1, 2008. Hogan is currently CEO of GE Healthcare, the global leader in medical diagnostic technology and biosciences, and is a member of the GE Senior Executive Council.

 

Michel Demaré, who has held the CEO position on an ad-interim basis since February 13, 2008, will continue to serve as ABB’s CFO.

 

Acquisitions

 

ABB announced on July 16 that it had agreed to acquire U.S. transformer company Kuhlman Electric Corporation from the global private equity firm The Carlyle Group. The acquisition is aimed at expanding ABB’s power products portfolio in the Americas. The acquisition is subject to customary regulatory approvals. ABB expects the transaction to close in a few months.

 

Compliance

 

ABB continues to cooperate with the U.S. Department of Justice and the U.S. Securities and Exchange Commission regarding various suspect payments that have occurred across several years. ABB also continues to cooperate with various anti-trust authorities, including the European Commission, regarding certain allegedly anti-competitive practices. As previously communicated, the outcome of these matters as well as previously disclosed matters could have a material impact on the company’s consolidated operating results, cash flows and financial position.

 

Outlook

 

The global market for power transmission and distribution infrastructure is expected to remain buoyant for the rest of 2008. Demand is forecast to be driven in Europe and North America by the need for equipment replacement, improved grid reliability and efficiency and further grid interconnections. In Asia and the Middle East and Africa, demand is expected to be driven by the development of new power infrastructure.

 

5



 

The industrial automation market is expected to remain attractive in the emerging economies, driven by high commodity prices and the need for greater energy efficiency and process quality. In the mature economies, some countries or early-cycle sectors may see a dampening of demand related to slower overall economic growth, but the outlook for raw materials processing industries remains strong.

 

Based on this outlook, and barring an extended recession in the global economy, the company confirms its expectations of growth rates for the full year 2008 of about 15-20 percent for the power-related activities. As a result of the very satisfactory growth recorded in the first half of the year, the company expects full-year growth in its automation activities to be clearly above 10 percent.

 

Divisional performance Q2 2008

 

Power Products

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 08

 

Q2 07(1)

 

US$

 

Local

 

Orders

 

3,592

 

 

2,707

 

 

33

%

 

21

%

 

Order backlog (end June)

 

8,954

 

 

6,482

 

 

38

%

 

26

%

 

Revenues

 

3,026

 

 

2,421

 

 

25

%

 

14

%

 

EBIT

 

586

 

 

412

 

 

42

%

 

 

 

 

as % of revenues

 

19.4

%

 

17.0

%

 

 

 

 

 

 

 

Cash flow from operating activities

 

324

 

 

286

 

 

 

 

 

 

 

 

 


(1)Adjusted to reflect the reclassification of activities to discontinued operations

 

Orders grew in the second quarter in all businesses, led by transformers, as utility spending to improve grid infrastructure and industrial spending to increase capacity continued. Orders were up in both eastern and western Europe, led by Spain, Germany and Russia. Orders from the Americas grew mainly on higher demand in Canada, the U.S. and Brazil. In Asia, continued strong growth in China and India was supported in the quarter by a sharp increase in orders from South Korea and Australia. Orders decreased in the Middle East and Africa, mainly the result of lower large orders in Saudi Arabia as compared to the same quarter in 2007.

 

Revenues grew significantly in all businesses on execution of the order backlog and price increases to offset higher raw material costs. Expenses related to the transformer consolidation program announced in 2005 amounted to $9 million in the second quarter of 2008.

 

EBIT and EBIT margin rose, mainly reflecting the improved cost efficiency of higher factory loadings, continuing operational improvements and a supportive pricing environment.

 

Power Systems

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 08

 

Q2 07

 

US$

 

Local

 

Orders

 

2,611

 

 

2,217

 

 

18

%

 

8

%

 

Order backlog (end June)

 

9,695

 

 

7,415

 

 

31

%

 

20

%

 

Revenues

 

1,736

 

 

1,300

 

 

34

%

 

21

%

 

EBIT

 

123

 

 

109

 

 

13

%

 

 

 

 

as % of revenues

 

7.1

%

 

8.4

%

 

 

 

 

 

 

 

Cash flow from operating activities

 

141

 

 

(4

)

 

 

 

 

 

 

 

 

Order growth in the second quarter was driven by an increase in large projects. An order related to a new power plant in Qatar contributed to strong growth in the Middle East and Africa. Orders in Asia included a high-voltage direct current power link in China and were flat compared to the same quarter in 2007.

 

6



 

Orders were lower in Europe as a large interconnection order won the previous year in the U.K. was not matched this year. Orders grew in both North and South America.

 

Revenues continued to grow strongly in the quarter on the execution of the order backlog, contributing to higher EBIT. The EBIT margin decreased, mainly reflecting a lower-margin project mix compared to the same quarter a year ago, plus a provision related to personnel security on a large project.

 

Automation Products

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 08

 

Q2 07

 

US$

 

Local

 

Orders

 

2,967

 

 

2,221

 

 

34

%

 

20

%

 

Order backlog (end June)

 

4,602

 

 

3,136

 

 

47

%

 

31

%

 

Revenues

 

2,751

 

 

2,147

 

 

28

%

 

15

%

 

EBIT

 

538

 

 

374

 

 

44

%

 

 

 

 

as % of revenues

 

19.6

%

 

17.4

%

 

 

 

 

 

 

 

Cash flow from operating activities

 

341

 

 

318

 

 

 

 

 

 

 

 

 

Orders continued to grow strongly during the second quarter as customers in most industrial sectors continued to invest in expanding capacity and improving the productivity of existing plants. Service markets also continued to grow.

 

Orders grew at a double-digit pace in all regions. Growth in Europe was led by Switzerland and Russia. China and India continued to drive growth in Asia, while growth of more than 20 percent in the U.S. supported increased orders in the Americas. Orders were also higher in the Middle East and Africa.

 

Higher revenues reflected the order growth during the quarter and benefited from the strong opening order backlog. Revenue growth and continued high capacity utilization led to a further increase in EBIT and EBIT margin.

 

Process Automation

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 08

 

Q2 07

 

US$

 

Local

 

Orders

 

2,681

 

 

1,937

 

 

38

%

 

24

%

 

Order backlog (end June)

 

7,730

 

 

4,799

 

 

61

%

 

44

%

 

Revenues

 

2,058

 

 

1,586

 

 

30

%

 

16

%

 

EBIT

 

243

 

 

167

 

 

46

%

 

 

 

as % of revenues

 

11.8

%

 

10.5

%

 

 

 

 

 

 

Cash flow from operating activities

 

370

 

 

107

 

 

 

 

 

 

 

 

Orders continued to grow strongly across most customer segments in the second quarter, led by oil and gas, marine and turbocharging. Customers continued to invest in both new capacity and improved productivity. Large orders almost doubled compared to the same quarter in 2007. Order growth in Europe was driven by the marine and minerals sectors, and the minerals industry also fuelled a very strong quarter in the Americas. Orders were stable at high levels in Asia during the quarter, where demand was led by the metals and  marine sectors. In the Middle East and Africa, customer investments in the oil and gas sectors again were the main drivers of higher orders.

 

Revenue growth in the second quarter principally reflected execution of the order backlog as well as growth in the product and service businesses. Higher revenues combined with a continued emphasis on project execution resulted in higher EBIT and EBIT margin.

 

7



 

Robotics

 

 

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 08

 

Q2 07

 

US$

 

Local

 

Orders

 

503

 

 

392

 

 

28

%

 

15

%

 

Order backlog (end June)

 

760

 

 

582

 

 

31

%

 

18

%

 

Revenues

 

417

 

 

339

 

 

23

%

 

10

%

 

EBIT

 

29

 

 

19

 

 

53

%

 

 

 

 

as % of revenues

 

7.0

%

 

5.6

%

 

 

 

 

 

 

 

Cash flow from operating activities

 

30

 

 

9

 

 

 

 

 

 

 

 

 

Orders rose in the quarter mainly on higher demand from general industry, such as packaging, consumer electronics and food processing, who increasingly need technologies to improve process quality and make production processes more flexible. Orders were higher in Europe on greater demand from the metal fabrication, solar cell manufacturing and consumer segments. In Asia, higher demand in China supported a strong increase in orders. Orders were lower in the Americas as an increase in Brazil was more than offset by a decrease in the U.S., reflecting the weaker automotive market.

 

Revenues increased in the second quarter and were up in all regions, mainly reflecting execution of the strengthening order backlog. Higher revenues and the higher proportion of sales to general industry contributed to the improvement in EBIT and EBIT margin.

 

8



 

More information

 

The 2008 Q2 results press release and presentation slides are available from July 24, 2008, on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations.

 

ABB will host a press conference today starting at 10:00 a.m. Central European Time (CET). U.K. callers should dial +44 20 7107 0611. From Sweden, +46 8 5069 2105, and from the rest of Europe, +41 91 610 56 00. Lines will be open 15 minutes before the start of the conference. Audio playback of the call will start one hour after the call ends and will be available for 72 hours: Playback numbers: +44 20 7108 6233 (U.K.), +41 91 612 4330 (rest of Europe) or +1 (1) 866 416 2558 (U.S./Canada). The code is 19231, followed by the # key.

 

A conference call for analysts and investors is scheduled to begin today at 3:00 p.m. CET (9:00 a.m. EDT). Callers should dial +1 412 858 4600 (from the U.S./Canada) or +41 91 610 56 00 (Europe and the rest of the world). Callers are requested to phone in 15 minutes before the start of the call. The audio playback of the call will start one hour after the end of the call and be available for two weeks. Playback numbers: +1 866 416 2558 (U.S./Canada) or +41 91 612 4330 (Europe and the rest of the world). The code is 16323, followed by the # key.

 

Investor calendar 2008

 

 

Q3 2008 results

 

Oct. 23, 2008

 

ABB (www.abb.com) is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 115,000 people.

 

Zurich, July 24, 2008

Michel Demaré, CEO and CFO

 

Important notice about forward-looking information

 

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

 

For more information please contact:

 

Media Relations:

Investor Relations:

ABB Ltd

Thomas Schmidt, Wolfram Eberhardt

Switzerland: Tel. +41 43 317 7111

Affolternstrasse 44

(Zurich, Switzerland)

Sweden: Tel. +46 21 329 108

CH-8050 Zurich, Switzerland

Tel: +41 43 317 6568

USA: Tel. +1 203 750 7743

 

Fax: +41 43 317 7958

investor.relations@ch.abb.com

 

media.relations@ch.abb.com

 

 

 

9



 

ABB 2008 second-quarter (Q2) and first-half (H1) key figures

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q2 08

 

Q2 07(1)

 

US$

 

Local

 

H1 08

 

H1 07(1)

 

US$

 

Local

 

Orders

 

Group

 

11,271

 

 

8,594

 

 

31

%

 

19

%

 

22,214

 

 

17,159

 

 

29

%

 

18

%

 

 

 

Power Products

 

3,592

 

 

2,707

 

 

33

%

 

21

%

 

7,603

 

 

5,891

 

 

29

%

 

18

%

 

 

 

Power Systems

 

2,611

 

 

2,217

 

 

18

%

 

8

%

 

4,659

 

 

4,014

 

 

16

%

 

6

%

 

 

 

Automation Products

 

2,967

 

 

2,221

 

 

34

%

 

20

%

 

6,037

 

 

4,632

 

 

30

%

 

17

%

 

 

 

Process Automation

 

2,681

 

 

1,937

 

 

38

%

 

24

%

 

5,236

 

 

3,678

 

 

42

%

 

27

%

 

 

 

Robotics

 

503

 

 

392

 

 

28

%

 

15

%

 

959

 

 

770

 

 

25

%

 

12

%

 

 

 

Corporate and other (Inter-division eliminations)

 

(1,083

)

 

(880

)

 

 

 

 

 

 

 

(2,280

)

 

(1,826

)

 

 

 

 

 

 

 

Revenues

 

Group

 

9,025

 

 

7,092

 

 

27

%

 

15

%

 

16,981

 

 

13,280

 

 

28

%

 

16

%

 

 

 

Power Products

 

3,026

 

 

2,421

 

 

25

%

 

14

%

 

5,648

 

 

4,454

 

 

27

%

 

16

%

 

 

 

Power Systems

 

1,736

 

 

1,300

 

 

34

%

 

21

%

 

3,409

 

 

2,454

 

 

39

%

 

26

%

 

 

 

Automation Products

 

2,751

 

 

2,147

 

 

28

%

 

15

%

 

5,154

 

 

4,045

 

 

27

%

 

14

%

 

 

 

Process Automation

 

2,058

 

 

1,586

 

 

30

%

 

16

%

 

3,807

 

 

2,969

 

 

28

%

 

15

%

 

 

 

Robotics

 

417

 

 

339

 

 

23

%

 

10

%

 

804

 

 

644

 

 

25

%

 

13

%

 

 

 

Corporate and other (Inter-division eliminations)

 

(963

)

 

(701

)

 

 

 

 

 

 

 

(1,841

)

 

(1,286

)

 

 

 

 

 

 

 

EBIT

 

Group

 

1,449

 

 

1,024

 

 

42

%

 

 

 

 

2,802

 

 

1,843

 

 

52

%

 

 

 

 

 

 

Power Products

 

586

 

 

412

 

 

42

%

 

 

 

 

1,120

 

 

725

 

 

54

%

 

 

 

 

 

 

Power Systems

 

123

 

 

109

 

 

13

%

 

 

 

 

298

 

 

189

 

 

58

%

 

 

 

 

 

 

Automation Products

 

538

 

 

374

 

 

44

%

 

 

 

 

995

 

 

683

 

 

46

%

 

 

 

 

 

 

Process Automation

 

243

 

 

167

 

 

46

%

 

 

 

 

468

 

 

306

 

 

53

%

 

 

 

 

 

 

Robotics

 

29

 

 

19

 

 

53

%

 

 

 

 

54

 

 

34

 

 

59

%

 

 

 

 

 

 

Corporate and other

 

(70

)

 

(57

)

 

 

 

 

 

 

 

(133

)

 

(94

)

 

 

 

 

 

 

 

EBIT
margin (%)

 

Group

 

16.1

%

 

14.4

%

 

 

 

 

 

 

 

16.5

%

 

13.9

%

 

 

 

 

 

 

 

 

 

Power Products

 

19.4

%

 

17.0

%

 

 

 

 

 

 

 

19.8

%

 

16.3

%

 

 

 

 

 

 

 

 

 

Power Systems

 

7.1

%

 

8.4

%

 

 

 

 

 

 

 

8.7

%

 

7.7

%

 

 

 

 

 

 

 

 

 

Automation Products

 

19.6

%

 

17.4

%

 

 

 

 

 

 

 

19.3

%

 

16.9

%

 

 

 

 

 

 

 

 

 

Process Automation

 

11.8

%

 

10.5

%

 

 

 

 

 

 

 

12.3

%

 

10.3

%

 

 

 

 

 

 

 

 

 

Robotics

 

7.0

%

 

5.6

%

 

 

 

 

 

 

 

6.7

%

 

5.3

%

 

 

 

 

 

 

 

 


(1)Adjusted to reflect the reclassification of activities to discontinued operations

 

ABB Q2 2008 orders received and revenues by region

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

Q2 08

 

Q2 07(1)

 

US$

 

Local

 

Q2 08

 

Q2 07(1)

 

US$

 

Local

 

Europe

 

4,792

 

4,080

 

17

%

 

2

%

 

4,219

 

3,225

 

31

%

 

14

%

Americas

 

1,887

 

1,367

 

38

%

 

31

%

 

1,582

 

1,257

 

26

%

 

21

%

Asia

 

2,840

 

2,261

 

26

%

 

18

%

 

2,331

 

1,867

 

25

%

 

16

%

Middle East and Africa

 

1,752

 

886

 

98

%

 

84

%

 

893

 

743

 

20

%

 

12

%

Group total

 

11,271

 

8,594

 

31

%

 

19

%

 

9,025

 

7,092

 

27

%

 

15

%

 


(1)Adjusted to reflect the reclassification of activities to discontinued operations

 

10



 

Appendix I

 

Reclassifications

 

Amounts reported for prior periods in the consolidated financial information have been reclassified to conform to the current period’s presentation, primarily as a result of the application of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, in reflecting the results from discontinued operations.

 

Equity securities transactions

 

On February 13, 2008, the Company announced a share-buyback program up to a maximum value of CHF 2.2 billion (equivalent to $2 billion at then-current exchange rates). The Company intends to complete the buyback program prior to the Annual General Meeting of Shareholders in 2010 and to propose the cancellation of the shares at that meeting. A total of 16.875 million shares were repurchased under the program up to the end of June 2008, at a total cost of CHF 500 million ($483 million, using exchange rates effective at the respective repurchase dates). The repurchased shares are included in treasury stock in the consolidated balance sheet at June 30, 2008.

 

Employee benefits funding

 

During the first six months of 2008 ABB made contributions of $110 million to its pension plans and $6 million to its other postretirement plans. The planned “Standard” contributions for full year 2008, based on current plan structures, are about $225 million to defined benefit pension plans and approximately $12 million to other postretirement benefit plans. The company expects that additional discretionary contributions will be made in the remaining part of the year.

 

Accounting pronouncements

 

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51 (SFAS 160) and revised Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141(R)). Among other things, the statements require most assets, liabilities, noncontrolling interests, and goodwill acquired in a business combination to be recorded at full fair value and require noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with noncontrolling interest holders. Both statements are effective for periods beginning on or after December 15, 2008, and earlier adoption is prohibited. The Company will apply SFAS 141(R) to business combinations occurring after the effective date. SFAS 160 will be applied prospectively to all noncontrolling interests, including any that arose before the effective date.

 

Local currencies

 

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

 

11



 

Appendix II

Reconciliation of non-GAAP financial measures regarding Q2 2008

($ millions, unaudited)

 

EBIT margin

 

 

 

Earnings before interest and taxes (EBIT)

 

1,449

 

Revenues

 

9,025

 

EBIT margin (EBIT as % of revenues)

 

16.1

%

 

 

 

 

Finance net

 

 

 

Interest and dividend income

 

86

 

Interest and other finance expense

 

(45

)

Finance net

 

41

 

 

 

 

 

Net cash

 

 

 

Cash and equivalents

 

8,087

 

Marketable securities and short-term investments

 

513

 

Cash and marketable securities

 

8,600

 

 

 

 

 

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

 

(383

)

Long-term debt

 

(2,212

)

Total debt

 

(2,595

)

 

 

 

 

Net cash

 

6,005

 

 

EBIT margin is calculated by dividing EBIT by total revenues. Management believes EBIT margin is a useful measure of profitability and uses it as a performance target.

 

Net cash is a financial measure that is calculated as the total of cash and equivalents, marketable securities and short-term investments minus our total debt.

 

12



 

ABB Ltd Consolidated Income Statements

 

 

 

Six Months Ended

 

Three Months Ended

 

$ millions, except per share data (unaudited)

 

June 30, 2008

 

June 30, 2007 (1)

 

June 30, 2008

 

June 30, 2007 (1)

 

Sales of products

 

14,427

 

11,297

 

7,679

 

6,039

 

Sales of services

 

2,554

 

1,983

 

1,346

 

1,053

 

Total revenues

 

16,981

 

13,280

 

9,025

 

7,092

 

 

 

 

 

 

 

 

 

 

 

Cost of products

 

(9,668

)

(7,837

)

(5,198

)

(4,178

)

Cost of services

 

(1,676

)

(1,320

)

(875

)

(706

)

Total cost of sales

 

(11,344

)

(9,157

)

(6,073

)

(4,884

)

Gross profit

 

5,637

 

4,123

 

2,952

 

2,208

 

Selling, general and administrative expenses

 

(2,888

)

(2,328

)

(1,526

)

(1,190

)

Other income (expense), net

 

53

 

48

 

23

 

6

 

Earnings before interest and taxes

 

2,802

 

1,843

 

1,449

 

1,024

 

Interest and dividend income

 

175

 

91

 

86

 

41

 

Interest and other finance expense

 

(77

)

(116

)

(45

)

(40

)

Income from continuing operations before taxes and minority interest

 

2,900

 

1,818

 

1,490

 

1,025

 

Provision for taxes

 

(783

)

(482

)

(430

)

(259

)

Minority interest

 

(132

)

(99

)

(68

)

(60

)

Income from continuing operations

 

1,985

 

1,237

 

992

 

706

 

Income (loss) from discontinued operations, net of tax

 

(7

)

29

 

(17

)

23

 

Net income

 

1,978

 

1,266

 

975

 

729

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

0.87

 

0.55

 

0.43

 

0.31

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.02

 

0.00

 

0.01

 

Net income

 

0.86

 

0.57

 

0.43

 

0.32

 

Weighted average basic shares (in millions)

 

2,291

 

2,230

 

2,286

 

2,269

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

0.86

 

0.54

 

0.43

 

0.31

 

Income (loss) from discontinued operations, net of tax

 

0.00

 

0.01

 

(0.01

)

0.01

 

Net income

 

0.86

 

0.55

 

0.42

 

0.32

 

Weighted average dilutive shares (in millions)

 

2,304

 

2,306

 

2,300

 

2,310

 

 


1) Adjusted to reflected the reclassification of activities to discontinued operations.

 

13



 

ABB Ltd Consolidated Balance Sheets

 

$ millions, except share data (unaudited)

 

June 30, 2008

 

Dec. 31, 2007

 

 

 

 

 

 

 

Cash and equivalents

 

8,087

 

4,650

 

Marketable securities and short-term investments

 

513

 

3,460

 

Receivables, net

 

9,841

 

8,582

 

Inventories, net

 

5,817

 

4,863

 

Prepaid expenses

 

273

 

307

 

Deferred taxes

 

859

 

783

 

Other current assets

 

545

 

368

 

Assets held for sale and in discontinued operations

 

 

132

 

Total current assets

 

25,935

 

23,145

 

 

 

 

 

 

 

Financing receivables, net

 

487

 

487

 

Property, plant and equipment, net

 

3,625

 

3,246

 

Goodwill

 

2,501

 

2,421

 

Other intangible assets, net

 

273

 

270

 

Prepaid pension and other employee benefits

 

378

 

380

 

Investments in equity method companies

 

69

 

63

 

Deferred taxes

 

775

 

862

 

Other non-current assets

 

112

 

127

 

Total assets

 

34,155

 

31,001

 

 

 

 

 

 

 

Accounts payable, trade

 

4,712

 

4,167

 

Billings in excess of sales

 

1,116

 

829

 

Accounts payable, other

 

1,502

 

1,289

 

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

 

383

 

536

 

Advances from customers

 

2,284

 

2,045

 

Deferred taxes

 

497

 

371

 

Provisions and other

 

3,616

 

3,342

 

Accrued expenses

 

1,640

 

1,737

 

Asbestos obligations

 

53

 

101

 

Liabilities held for sale and in discontinued operations

 

 

62

 

Total current liabilities

 

15,803

 

14,479

 

 

 

 

 

 

 

Long-term debt

 

2,212

 

2,138

 

Pension and other employee benefits

 

659

 

631

 

Deferred taxes

 

448

 

407

 

Other liabilities

 

1,777

 

1,797

 

Total liabilities

 

20,899

 

19,452

 

 

 

 

 

 

 

Minority interest

 

538

 

592

 

Stockholders’ equity:

 

 

 

 

 

Capital stock and additional paid-in capital

 

5,673

 

5,634

 

Retained earnings

 

8,933

 

6,955

 

Accumulated other comprehensive loss

 

(1,123

)

(1,330

)

Less: Treasury stock, at cost (34,367,675 and 18,725,475 shares at June 30, 2008 and December 31, 2007)

 

(765

)

(302

)

Total stockholders’ equity

 

12,718

 

10,957

 

Total liabilities and stockholders’ equity

 

34,155

 

31,001

 

 

14



 

ABB Ltd Consolidated Statements of Cash Flows

 

 

 

Six Months Ended

 

Three Months Ended

 

$ millions (unaudited)

 

June 30, 2008

 

June 30, 2007

 

June 30, 2008

 

June 30, 2007

 

Operating activities

 

 

 

 

 

 

 

 

 

Net income

 

$

1,978

 

$

1,266

 

$

975

 

$

729

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

317

 

286

 

167

 

139

 

Provisions, net

 

(98

)

(149

)

(116

)

(144

)

Pension and postretirement benefits

 

45

 

(12

)

48

 

(5

)

Deferred taxes

 

173

 

66

 

53

 

25

 

Net gain from sale of property, plant and equipment

 

(28

)

(19

)

(11

)

(6

)

Income from equity accounted companies

 

(8

)

(39

)

(4

)

(10

)

Minority interest

 

132

 

100

 

68

 

60

 

Other

 

39

 

97

 

27

 

48

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Trade receivables

 

(882

)

(836

)

(455

)

(683

)

Inventories

 

(563

)

(587

)

(282

)

(118

)

Trade payables

 

350

 

308

 

321

 

186

 

Billings in excess of sales

 

258

 

68

 

162

 

46

 

Advances from customers

 

157

 

285

 

76

 

173

 

Other assets and liabilities, net

 

(428

)

(135

)

(51

)

(44

)

Net cash provided by operating activities

 

1,442

 

699

 

978

 

396

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

Changes in financing receivables

 

(3

)

15

 

(1

)

12

 

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

 

(1,380

)

(4,260

)

(63

)

(2,223

)

Purchases of property, plant and equipment and intangible assets

 

(473

)

(284

)

(269

)

(160

)

Acquisition of businesses (net of cash acquired)

 

(28

)

(43

)

(28

)

(17

)

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

 

4,251

 

4,304

 

1,341

 

2,406

 

Proceeds from sales of property, plant and equipment

 

39

 

29

 

16

 

10

 

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

 

23

 

337

 

(1

)

225

 

Net cash provided by investing activities

 

2,429

 

98

 

995

 

253

 

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Net changes in debt with maturities of 90 days or less

 

91

 

1

 

77

 

(24

)

Increase in debt

 

177

 

93

 

52

 

44

 

Repayment of debt

 

(484

)

(84

)

(165

)

(58

)

Issuance of shares

 

 

153

 

 

153

 

Purchase of treasury shares

 

(445

)

(199

)

(263

)

(199

)

Dividends paid

 

 

(449

)

 

(449

)

Dividends paid to minority shareholders

 

(103

)

(100

)

(102

)

(95

)

Other

 

31

 

(38

)

21

 

(9

)

Net cash used in financing activities

 

(733

)

(623

)

(380

)

(637

)

 

 

 

 

 

 

 

 

 

 

Effects of exchange rate changes on cash and equivalents

 

273

 

55

 

(3

)

53

 

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

 

26

 

(11

)

 

(12

)

Net change in cash and equivalents - continuing operations

 

3,437

 

218

 

1,590

 

53

 

 

 

 

 

 

 

 

 

 

 

Cash and equivalents beginning of period

 

4,650

 

4,198

 

6,497

 

4,363

 

Cash and equivalents end of period

 

8,087

 

4,416

 

8,087

 

4,416

 

 

 

 

 

 

 

 

 

 

 

Supplementary disclosure of cash flow information

 

 

 

 

 

 

 

 

 

Interest paid

 

112

 

104

 

56

 

45

 

Taxes paid

 

557

 

401

 

307

 

243

 

Carrying value of debt and accrued interest converted into capital stock

 

 

670

 

 

10

 

 

15



 

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

 

 

 

 

$  millions (unaudited)

 

Capital
stock and
additional
paid-in
capital

 

Retained
earnings

 

 

Foreign
currency
translation
adjustment

 

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

 

Pension and
other post
retirement
plan
adjustments

 

Unrealized
gain (loss)
of cash
flow hedge
derivatives

 

Total
accumulated
other
comprehensive
loss

 

 

Treasury
stock

 

Total
stockholders’
equity

 

Balance at January 1, 2007

 

$

4,514

 

$

3,647

 

 

$

(1,462

)

$

(2

)

$

(629

)

$

74

 

$

(2,019

)

 

$

(104

)

$

6,038

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

1,266

 

 

 

 

 

 

 

 

 

1,266

 

Foreign currency translation adjustments

 

 

 

 

150

 

 

 

 

150

 

 

 

150

 

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

 

 

 

 

 

2

 

 

 

2

 

 

 

2

 

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

 

 

 

 

 

 

10

 

 

10

 

 

 

10

 

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

 

 

 

 

 

 

 

(11

)

(11

)

 

 

(11

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,417

 

Issuance of shares

 

153

 

 

 

 

 

 

 

 

 

 

153

 

Dividends paid

 

 

(449

)

 

 

 

 

 

 

 

 

(449

)

Share-based payment arrangements

 

11

 

 

 

 

 

 

 

 

 

 

11

 

Treasury share transactions

 

(1

)

 

 

 

 

 

 

 

 

(198

)

(199

)

Conversion of convertible bonds

 

660

 

 

 

 

 

 

 

 

 

 

660

 

Call options

 

6

 

 

 

 

 

 

 

 

 

 

6

 

Balance at June 30, 2007

 

$

5,343

 

$

4,464

 

 

$

(1,312

)

 

$

(619

)

$

63

 

$

(1,868

)

 

$

(302

)

$

7,637

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

 

 

 

 

$  millions (unaudited)

 

Capital
stock and
additional
paid-in
capital

 

Retained
earnings

 

 

Foreign
currency
translation
adjustment

 

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

 

Pension and
other post
retirement
plan
adjustments

 

Unrealized
gain (loss)
of cash
flow hedge
derivatives

 

Total
accumulated
other
comprehensive
loss

 

 

Treasury
stock

 

Total
stockholders’
equity

 

Balance at January 1, 2008

 

$

5,634

 

$

6,955

 

 

$

(906

)

$

7

 

$

(486

)

$

55

 

$

(1,330

)

 

$

(302

)

$

10,957

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

1,978

 

 

 

 

 

 

 

 

 

1,978

 

Foreign currency translation adjustments

 

 

 

 

254

 

 

 

 

254

 

 

 

254

 

Foreign currency translation adjustments related to sold businesses

 

 

 

 

6

 

 

 

 

6

 

 

 

6

 

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

 

 

 

 

 

(12

)

 

 

(12

)

 

 

(12

)

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

 

 

 

 

 

 

(24

)

 

(24

)

 

 

(24

)

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

 

 

 

 

 

 

 

(17

)

(17

)

 

 

(17

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

2,185

 

Treasury share transactions

 

(20

)

 

 

 

 

 

 

 

 

20

 

 

Shares repurchased under buyback program

 

 

 

 

 

 

 

 

 

 

(483

)

(483

)

Share-based payment arrangements

 

28

 

 

 

 

 

 

 

 

 

 

28

 

Call options

 

31

 

 

 

 

 

 

 

 

 

 

31

 

Balance at June 30, 2008

 

$

5,673

 

$

8,933

 

 

$

(646

)

$

(5

)

$

(510

)

$

38

 

$

(1,123

)

 

$

(765

)

$

12,718

 

 

16



 

April – June 2008 – Q2

 

ABB Ltd announces that the following members of the Executive Committee or Board of Directors of ABB have purchased, sold or been granted ABB’s registered shares, warrants and warrant appreciation rights (“WARs”), in the following amounts:

 

Name

 

Date

 

Description

 

Purchased or Granted

 

Sold

 

Price

 

Michel Demaré*

 

4 April 2008

 

Shares

 

157,343

 

 

 

CHF 27.64

 

Diane de Saint Victor*

 

4 April 2008

 

Shares

 

59,150

 

 

 

CHF 27.64

 

Ulrich Spiesshofer*

 

4 April 2008

 

Shares

 

107,955

 

 

 

CHF 27.64

 

Gary Steel*

 

4 April 2008

 

Shares

 

146,854

 

 

 

CHF 27.64

 

Peter Leupp

 

24 April 2008

 

WARs

 

 

 

62,500

 

CHF 4.80

 

Gary Steel

 

25 April 2008

 

Shares

 

 

 

100,000

 

CHF 31.39

 

Ulrich Spiesshofer

 

25 April 2008

 

Shares

 

 

 

25,000

 

CHF 31.38

 

Ulrich Spiesshofer

 

25 April 2008

 

Shares

 

 

 

15,957

 

CHF 31.11

 

Ulrich Spiesshofer

 

25 April 2008

 

Shares

 

 

 

9043

 

CHF 31.12

 

Veli-Matti Reinikkala

 

25 April 2008

 

WARs

 

 

 

75,000

 

CHF 4.82

 

Veli-Matti Reinikkala

 

25 April 2008

 

WARs

 

 

 

112,500

 

CHF 4.72

 

Ravi Uppal

 

25 April 2008

 

WARs

 

 

 

175,000

 

CHF 4.77

 

Hubertus von Grünberg

 

25 April 2008

 

Shares

 

5,200

 

 

 

CHF 31.34

 

Anders Jonsson

 

13 May 2008

 

Shares

 

4,582

 

 

 

CHF 33.18

 

Anders Jonsson

 

13 May 2008

 

Shares

 

1,632

 

 

 

CHF 33.16

 

Peter Leupp

 

20 May 2008

 

WARs

 

 

 

225,000

 

CHF 5.44

 

 

17



 

Name

 

Date

 

Description

 

Purchased or Granted

 

Sold

 

Price

 

Hubertus von Grünberg **

 

22 May 2008

 

Shares

 

7,919

 

 

 

CHF 26.52

 

Hans-Ulrich Märki **

 

22 May 2008

 

Shares

 

7,199

 

 

 

CHF 26.52

 

Roger Agnelli **

 

22 May 2008

 

Shares

 

1,968

 

 

 

CHF 26.52

 

Jacob Wallenberg **

 

22 May 2008

 

Shares

 

3,936

 

 

 

CHF 26.52

</