1st Quarter Results

ABB Ltd
29 April 2003

Core divisions sustain growth in Q1 2003

•         Core divisions increase EBIT to US$ 290 million, up 33 percent over
          first quarter 2002

•         Group EBIT falls to US$ 92 million due to non-core and corporate
          activities

•         Operating cash flow negatively impacted by extraordinary items

•         Cost savings program on schedule

•         ABB remains confident of 2003 targets



Zurich, Switzerland, April 29, 2003 - ABB's core divisions Power Technologies
and Automation Technologies improved both revenues and earnings in the first
quarter of 2003, sustaining the positive trend established in 2002.



Overall group earnings were lower, due to non-core and corporate activities.
Cash flow from operations fell because of payments for asbestos and discontinued
operations.



'The core divisions are performing according to plan. We are taking profitable
market share while improving our cost competitiveness,' said Jurgen Dormann, ABB
chairman and CEO. 'We remain on course to meet our full-year targets in 2003
despite flat market conditions. Our near-term priorities remain to lower our
cost base and strengthen our finances through continued divestments.'



ABB core divisions Q1 2003 results (US$ millions)
                                                 Jan.-Mar. 2003     Jan.-Mar. 2002           Change
                                                                                       Nominal      Local
Orders           Power Technologies            2,051              1,931              6%           -3%
                 Automation Technologies       2,494              2,164              15%          1%
Revenues         Power Technologies            1,784              1,527              17%          6%
                 Automation Technologies       2,230              1,861              20%          5%
EBIT*            Power Technologies            128                110                16%          6%
                 Automation Technologies       162                108                50%          28%
EBIT margin      Power Technologies            7.2%               7.2%
                 Automation Technologies       7.3%               5.8%

* Earnings before interest and taxes



Core divisions

ABB's core divisions reported an 11 percent increase in orders (flat in local
currencies).



Revenues were 18 percent higher at US$ 4,014 million (up 5 percent in local
currencies) due to a strong order backlog, and their combined EBIT increased 33
percent to US$ 290 million, driven mainly by productivity improvements. Order
backlog for the core divisions at the end of March 2003 totaled US$ 9.9 billion.









ABB Group Q1 2003 results (US$ millions)
                               Jan.-Mar. 2003        Jan.-Mar. 2002                        Change
                                                                                           Nominal
Orders                                  5,081                 4,695                             8%
Revenues                                4,495                 3,951                            14%
EBIT*                                      92                   272                           -66%
Net income                                -45                   155                           n.a.

* Earnings before interest and taxes



Group results

For the first three months of 2003, the group -  the Power and Automation
Technologies divisions, non-core and corporate activities -  reported an 8
percent increase in orders (-4 percent in local currencies) to US$ 5,081
million, compared to US$ 4,695 million in the same period last year. Base orders
(orders below US$ 15 million) amounted to US$ 4,766 million, or about 94 percent
of total orders, the same as a year earlier. The order backlog was US$ 10,684
million, up about 7 percent from December 31, 2002.



Total revenues in the first quarter were 14 percent higher (flat in local
currencies) at US$ 4,495 million, reflecting the sound order backlog of the core
divisions.



Group EBIT was US$ 92 million compared to US$ 272 million in the first quarter
of 2002, a decrease of US$ 180 million, but ahead of plan for the quarter.
Earnings in 2002 included one-time positive items, including a capital gain from
the divestment of the Air Handling business of US$ 54 million, recorded in
Corporate. In the first quarter of 2003, EBIT was negatively impacted by an
approximate US$ 30 million book loss following the divestment of the aircraft
leasing portfolio, and write-downs and lower earnings in non-core activities
(mainly Building Systems, remaining parts of Structured Finance and Insurance).



Finance net was negative US$ 130 million compared to negative US$ 58 million in
the first quarter of 2002, reflecting higher financing costs, a US$ 23 million
mark-to-market unrealized loss and related amortization on the equity conversion
option on the convertible bond (bifurcation), and an about US$ 30 million
write-down in marketable securities.



Discontinued operations reported a net loss of US$ 10 million compared to income
of US$ 22 million in the first quarter of 2002. The loss reflects the negative
results in the Oil, Gas and Petrochemicals division. The division reported EBIT
of US$ 35 million compared to US$ 53 million in the first quarter of last year.



The group's first quarter net loss amounted to US$ 45 million, compared to net
income of US$ 155 million for the same period in 2002.



Divestments

The company continued its program of divesting non-core businesses. The company
sold its aircraft leasing portfolio for cash proceeds of about US$ 90 million,
recording a book loss of about US$ 30 million. ABB also disposed of car leasing
assets in its ABB Export Bank unit in the first quarter, realizing a small
capital gain on the transaction. ABB said talks were continuing with potential
buyers of the Oil, Gas and Petrochemicals division, and ABB remains on target to
sell the division and most of the Building Systems business in 2003. The company
re-confirmed plans to sell its Equity Ventures participations and the remaining
parts of its Structured Finance business.



Cost reduction

ABB said it realized net savings of some US$ 70 million in the first quarter of
the year from its Step Change cost savings program. About 1,700 people left the
company as a result of Step Change, out of a total reduction of around 4,000
jobs in the quarter. The 18-month program, introduced in late 2002, aims to
lower ABB's cost base by about US$ 800 million.



As of March 31, 2003, ABB employed 135,067 people, compared to 139,051 at the
end of 2002.



Cash flow

Net cash used by operating activities was US$ 928 million in the first quarter.
This figure was influenced by the payment of US$ 226 million by Combustion
Engineering for the asbestos trust, and US$ 254 million for discontinued
operations, in Oil, Gas and Petrochemicals, as well as US$ 162 million in
non-core activities and US$ 57 million in restructuring costs.



The combined cash flow from operations in the two core divisions in the quarter
amounted to negative US$ 192 million, which is in line with the seasonal
increase in working capital during the first few months of the year.



Balance sheet

Cash and marketable securities totaled US$ 3,814 million at March 31, 2003, (US$
4,613 million at the end of the previous quarter, December 31, 2002). Long-term
debt at March 31, 2003 as a percentage of total debt was 60 percent compared to
68 percent at the end of December 2002. Gross debt amounted to US$ 8,156
million, compared to US$ 7,952 million three months earlier. Gross debt included
a draw down of US$ 747 million on the US$ 1.5 billion revolving credit facility
negotiated in December 2002.



Mainly as a result of the sale of about 80 million treasury shares during
February and March, stockholders' equity rose slightly to US$ 1,078 million at
March 31, 2003 from US$ 1,013 million three months previously.



Asbestos

ABB announced in February this year that a U.S. subsidiary, Combustion
Engineering (CE), had filed for a pre-packaged Chapter 11 in the U.S. bankruptcy
courts. Voting on the pre-packaged plan ended on February 19 and CE has
confirmed that it has received more than 75 percent of claimant votes in favor
of the plan, representing more than two-thirds of the total value of claims as
required for approval by eligible claimants. The court hearing to review and
confirm the plan started on April 24 and will continue on May 1 and 2. ABB
remains confident the plan will be approved.



Group outlook*

The outlook remains unchanged. From 2002 through 2005, ABB expects a compound
average annual revenue growth of about 4 percent.



For 2003, ABB aims to achieve an EBIT margin of 4 percent. For 2005, the Group's
target EBIT margin is 8 percent.



By December 31, 2003, total debt is expected to be reduced to about US$ 6.5
billion, and gearing (total debt divided by total debt plus stockholders equity)
to be about 70 percent. For 2005, total debt is expected to be reduced to about
US$ 4 billion, and gearing to be approximately 50 percent.



*All targets exclude major acquisitions and divestments, and are based on local
currencies.



Divisional performance Q1 2003

Beginning this quarter, ABB will report according to its new divisional
structure consisting of Power Technologies and Automation Technologies.
Unaudited, restated full-year 2001 and quarterly 2002 figures for these
divisions were published in the full-year 2002 results on February 27, 2003.



For all figures except EBIT margins, comments refer to the first quarter results
expressed in local currencies. EBIT excluding capital gains/losses is shown only
if the aggregate of such gains/losses for the division is material (if capital
gains/losses represent more than 10 percent of divisional EBIT).



Power Technologies division
US$ in millions                       Jan. -March     Jan.-March      Change         Change
(except where indicated)              2003            2002                           In local
                                                                                     currencies
Orders                                2,051           1,931           6%             -3%
Revenues                              1,784           1,527           17%            6%
EBIT                                  128             110             16%            6%
EBIT margin                           7.2%            7.2%
Restructuring costs                   -11             -24

(included in EBIT)



Although orders for Power Technologies decreased slightly, base orders (orders
below US$ 15 million) increased by 2 percent, reflecting ABB's strong
technologies and customer focus. The Medium-Voltage Products business area
contributed with double-digit growth. Large orders (orders above US$ 15 million)
decreased compared to the first quarter of last year when ABB took a US$ 115
million order in Mexico. Order improvements in Asia, the Middle East and Africa,
and Eastern Europe more than compensated for weak demand in the Americas and
mixed demand in Western Europe.



Revenues increased by 6 percent, reflecting our focus on faster project
execution. Higher product billings in some Asian and Western European countries
also fueled improved revenues. The increase was mainly driven by the Power
Systems, Medium-Voltage Products and Utility Automation Systems business areas.



EBIT in the first quarter increased in line with higher revenues. The EBIT
margin remained at 7.2 percent as a result of continuing benefits from
restructuring programs and improved margins in the systems business and most of
the product businesses.



New business highlights included a large order for railway power supply in the
U.K., the largest-ever export order recorded by ABB in India, and three
significant contracts for power plant automation in Cyprus, Germany and Italy.



Automation Technologies division
US$ in millions                       Jan. -March     Jan.-March      Change         Change in local
(except where indicated)              2003            2002                           currencies
Orders                                2,494           2,164           15%            1%
Revenues                              2,230           1,861           20%            5%
EBIT                                  162             108             50%            28%
EBIT margin                           7.3%            5.8%
Restructuring costs                   -16             -18

(included in EBIT)



In spite of continued price pressure and strong European currencies, orders
increased slightly for the quarter. Order increases in the Petroleum, Chemical
and Consumer business area, mainly from oil and gas industry customers, were
offset by a decline in the Paper, Minerals, Marine and Turbochargers business
area. Geographically, the growth came primarily from Europe and Asia (mainly
China and India).



Revenues increased 5 percent because of volume growth in the Drives and Motors
business area. Last year's demand from original equipment manufacturers (OEMs)
and Tier-1 automotive suppliers fueled strong revenue growth in the first
quarter of this year for the Robotics, Automotive and Manufacturing business
area.



EBIT improved by 28 percent, reflecting productivity improvements. The continued
strong focus on improving the gross profit margin on orders, while reducing our
overall cost base, resulted in higher EBIT margins in all business areas
compared to the same period last year. Strong demand for several new products
and continued double-digit growth in our service business also improved
first-quarter performance. EBIT margin increased to 7.3 percent from 5.8
percent.



New business highlights included two services agreements in Germany and Italy,
worth more than US$ 200 million that are in line with the division's strategy to
build higher-margin business across its large installed base, as well as an
automation, power and safety contract in Norway.



Non-Core Activities

US$ in millions                                                        Jan-Mar.              Jan-Mar.**

                                                                           2003                    2002
EBIT                                                                        -64                      39
Insurance                                                                    -2                      17
Equity Ventures                                                              22                      14
Remaining Structured Finance                                                -28                      72
Building Systems                                                            -33                      -8
New Ventures                                                                 -4                     -19
Other non-core activities*                                                  -19                     -37

* Comprises mainly Group Processes

** Restated



Non-core activities recorded an EBIT loss for the first quarter of US$ 64
million.



Insurance earnings continued to benefit from a positive premium income
development, as experienced in 2002, which was offset in the current quarter by
an additional write-down in marketable securities (US$ 13 million).



The loss in the remaining Structured Finance activities is the result of the
reduced lease and loan portfolio, lower income from the 35 percent stake in the
Swedish Export Credit Corporation, and the loss on the disposal of the aircraft
leasing portfolio.



Building Systems posted a loss for the quarter of US$ 33 million, following
further project write-downs and restructuring, mainly in Germany and Sweden.



New Ventures reduced losses by implementing cost savings in selling, general and
administrative of more than 50 percent.



Corporate
US$ in millions                                                       Jan.-Mar.               Jan.-Mar.

                                                                           2003                    2002
EBIT                                                                       -134                      15
Headquarters/Stewardship                                                   -106                      29
Research and development                                                    -21                     -18
Other*                                                                       -7                       4

* includes consolidation, real estate and Treasury Services.



Headquarters/Stewardship costs increased mainly due to the non-recurrence of
several one-time gains during the first quarter of 2002. These one-time items
included the profit on disposal of the Air Handling business and the recovery of
former chief executives' pension payments.



Other Income and Expenses (included in EBIT)

US$ in millions                                                        Jan-Mar.                Jan-Mar.

                                                                           2003                    2002
EBIT                                                                        -25                      81
Restructuring charges                                                       -33                     -43
Capital (losses) / gains                                                     -9                      57
Write-downs of assets                                                         0                      -7
Income from equity accounted companies, licenses and                         17                      74
other





Discontinued Operations
US$ in millions                                                        Jan-Mar.                Jan-Mar.

                                                                           2003                    2002
Income (loss)                                                               -10                      22
Oil, Gas and Petrochemicals                                                 -12                      16
Structured Finance                                                            -                      16
Metering                                                                     -3                      11
Asbestos                                                                      4                       0
Other divested businesses                                                     0                      -3
Abandoned businesses/Other                                                    1                     -18



For the first quarter of 2003, losses from discontinued operations amounted to
US$ 10 million versus income of US$ 22 million for the same period a year ago,
reflecting a decrease in Oil, Gas and Petrochemicals earnings, due to lower EBIT
and higher allocated interest expenses.

Oil, Gas and Petrochemicals

US$ in millions                            Jan.-Mar.       Jan.-Mar.        Change     Change in local
                                                                                            currencies
(except where indicated)                        2003            2002
Orders                                           502             627          -20%                -24%
Revenues                                         779             973          -20%                -26%
EBIT                                              35              53          -34%                 n.a



Orders and revenues decreased in the quarter, driven by lower activity in both
the Upstream and Downstream markets. Downstream orders included a US$ 97 million
contract for BP SECCO in China, while Upstream received a US$ 39 million order
for Kizomba B engineering services in Angola. Upstream and Downstream reported
lower earnings, reflecting higher project costs.



More information

The 2003 Q1 results press release and presentation slides are available from
April 29, 2003 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 telephone conference for journalists today starting at 1100
Central European Time. Callers should dial [phone] (from the U.S.), +41
91 610 56 00 (from Europe), or [phone]  (from Sweden). Lines will be
open 15 minutes before the start of the conference.



To listen to a playback of the conference call, available after 1300 CET on
April 29 until May 6 at 1300 CET:  Playback numbers: [phone] (Europe) or
[phone] (U.S.). The code is 087, which needs to be confirmed by pressing
the # key.



A conference call for analysts and investors is scheduled to begin at 1500 CET.
Callers should dial [phone] (Europe), [phone] (from the U.S.),
Callers are requested to phone in 10 minutes before the start of the conference
call.



The audio playback of the conference call will start one hour after the end of
the call and be available for 72 hours.  Playback numbers: [phone]
(Europe) or [phone] (U.S). The code is 385, which needs to be confirmed
by pressing the # key.



Further reporting dates in 2003 are July 29 (Q2), and October 28 (Q3). The
annual general meeting will be held on Friday, May 16 in Switzerland with an
information meeting for shareholders in Sweden on Monday, May 19.



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 135,000 people.



This press release includes forward-looking information and statements that are
subject to risks and uncertainties that could cause actual results to differ.
These statements are based on current expectations, estimates and projections
about global economic conditions, the economic conditions of the regions and
industries that are major markets for ABB Ltd and ABB Ltd's lines of business.
These expectations, estimates and projections are generally identifiable by
statements containing words such as 'expects,' 'believes,' 'estimates' or
similar expressions. Important factors that could cause actual results to differ
materially from those expectations include, among others, economic and market
conditions in the geographic areas and industries that are major markets for
ABB's businesses, market acceptance of new products and services, changes in
governmental regulations, interest rates, fluctuations in currency exchange
rates and such other factors as may be discussed from time to time in ABB's
filings with the U.S. Securities and Exchange Commission. 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, Zurich:                      Investor Relations
Thomas Schmidt, Wolfram Eberhardt             Switzerland: Tel. + 41 43 317 3804
Tel:  [phone]        Sweden: Tel. + 46 21 325 719
Fax: [phone]                          USA: Tel: [phone]
[e-mail]                    [e-mail]




ABB Ltd
Summary Consolidated Income Statements



ABB Ltd
Summary Consolidated Balance Sheets



ABB Ltd
Summary Consolidated Statements of Cash Flows

* Reclassified to reflect the change in all provisions (previously this line was
comprised of restructuring provisions only)





ABB Ltd notes to summary consolidated financial statements (unaudited)

                    (US$ in millions, except per share data)



Note 1  Developments in the three months ended March 31, 2003:



•      Sale of treasury shares

In March 2003, the Company sold approximately 80 million treasury shares in two
transactions for approximately $156 million.



•      Reclassifications and restatements

Amounts in prior periods have been reclassified to conform to the Company's
current presentation.

On April 17, 2003, Swedish Export Credit Corporation, an equity accounted
investee of the Company, filed an amendment to its annual report on Form 20-F
for the fiscal year ended December 31, 2001, to correct an error in its
accounting for the fair value of certain financial instruments. Amounts
presented in these summary consolidated financial statements include the effect
of adjustments recorded by Swedish Export Credit Corporation in the period ended
March 31, 2002, to properly account for such instruments in accordance with
United States generally accepted accounting principles. These adjustments were
not reflected in previously disclosed 2002 quarterly results.



•      Restructuring program

The 2001 program initiated in July 2001 in an effort to improve productivity,
reduce cost base, simplify product lines, reduce multiple location activities
and perform other downsizing in response to weakening markets and consolidation
of major customers in certain industries continues to be paid out in 2003.

In the first quarter of 2003, the Company paid termination benefits of $37
million to approximately 850 employees and $1 million to cover costs associated
with lease terminations and other exit costs related to the 2001 program. Based
on changes in management's original estimate a $2 million reduction in the
amounts accrued for workforce reductions, lease terminations and other exit
costs have been included in other income (expense), net. Currency fluctuations
resulted in a $5 million increase in the liabilities accrued for workforce
reductions, lease terminations and other exit costs.  At March 31, 2003, accrued
liabilities included $57 million for termination benefits and $54 million for
lease terminations and other exit costs. The 2001 program was substantially
completed during 2002 and the remaining liability will be used through 2003.

In October 2002, the Company announced the Step change program. The Company
estimates that restructuring charges under the Step change program will be
approximately $300 million and $200 million, in 2003 and 2004, respectively. The
goals of the Step change program are to increase competitiveness of the
Company's core businesses, reduce overhead costs and streamline operations by
approximately $800 million on an annual basis by 2005. The Step change program
is expected to be completed by mid-2004.

In the first quarter of 2003, related to Step change program, the Company
recognized restructuring charges of $24 million related to workforce reductions
and $9 million related to lease terminations and other exit costs associated
with the Step change program. These costs are included in other income
(expense), net. Termination benefits of $16 million were paid to approximately
430 employees and $3 million were paid to cover costs associated with lease
terminations and other exit costs. Workforce reductions include production,
managerial and administrative employees. Based on changes in management's
original estimate a $2 million increase in the amounts accrued for workforce
reductions, lease terminations and other exit costs have been included in other
income (expense), net. Currency fluctuations resulted in a $1 million increase
in the liabilities accrued for workforce reductions, lease terminations and
other exit costs. At March 31, 2003, accrued liabilities included $46 million
for termination benefits and $34 million for lease terminations and other exit
costs.



•      Borrowings

The Company's total borrowings outstanding at March 31, 2003, and December 31,
2002, amounted to $8,156 million and $7,952 million, respectively. Of the total
outstanding, $490 million and $478 million at March 31, 2003, and December 31,
2002, respectively was in the form of commercial paper.

In December 2002, the Company established a new $1.5 billion 364-day revolving
credit facility. This facility includes a 364-day term-out option whereby up to
a maximum amount of $750 million may be extended for up to a further 364 days in
the form of term loans. As of December 31, 2002, nothing had been drawn under
this new facility. In 2003, amounts have been drawn under the facility within
the facility's monthly drawing limits and at March 31, 2003, an amount of $747
million was outstanding under the facility.

The facility is secured by a package of ABB assets, including the shares of the
Oil, Gas and Petrochemicals division (which is earmarked for divestment and is
included in assets and liabilities in discontinued operations), specific
stand-alone businesses and certain regional holding companies. The facility is
also secured by certain intra-group loans.

The facility contains certain financial covenants including minimum interest
coverage, maximum gross debt level, a minimum level of consolidated net worth as
well as minimum levels of disposal proceeds for specified assets and businesses
during 2003.



•      Accounting for the convertible bonds

In May 2002, the Company issued $968 million aggregate principal amount of
convertible unsubordinated bonds due 2007. The Company's shares to be issued if
the bonds are converted are denominated and traded in Swiss francs while the
bonds are denominated in U.S. dollars. Therefore, under Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, and as clarified in discussions between the Company and the United
States Securities and Exchange Commission, a component of the convertible bonds
must be accounted for as a derivative. A portion of the issuance proceeds is
deemed to relate to the value of the derivative on issuance and subsequent
changes in value of the derivative are recorded through earnings and as an
adjustment to the carrying value of the bond. The allocation of a portion of the
proceeds to the derivative creates a discount on issuance which is amortized to
earnings over the life of the bond. As a result of the decline in the Company's
share price since issuance of the bonds, at December 31, 2002 the Company
recorded a gain from the change in fair value of the derivative, partially
offset by amortization of the effective discount, resulting in a net decrease to
interest and other finance expense of  $215 million, with a corresponding
reduction in long-term borrowings. At March 31, 2003, as a result of an increase
in the value of the derivative since the year-end, combined with the continued
amortization of the discount on issuance, there was a charge to earnings of $23
million for the period to March 31, 2003 and a corresponding increase in
long-term borrowings, when compared to the December 31, 2002 balance.



•      Discontinued operations

In November 2002, the Company sold the majority of its Structured Finance
business to GE Commercial Finance for total cash proceeds of approximately $2.0
billion. The Company provided to GE Commercial Finance several cash
collateralized letters of credit for a total amount of $202 million as security
for certain performance-related obligations retained by the Company in
connection with the sale. The Structured Finance portfolio divested includes
global infrastructure financing, equipment leasing and financing businesses. The
divestment of this activity is in line with the Company's strategy to focus on
power and automation technologies for industry and utility customers. In
addition, the sale of Structured Finance was an important step in the Company's
ongoing program to strengthen the balance sheet and reduce net debt.

Also in December 2002, the Company sold its Metering business to Ruhrgas
Industries GmbH of Germany, for total cash proceeds of approximately $223
million. Water and electricity metering is no longer a core business for the
Company, and its divestment was part of the Company's strategy to focus on power
and automation technologies for industry and utility customers.

In the fourth quarter of 2002, the Company committed to sell its Oil, Gas and
Petrochemical business which has been reflected as discontinued operations as of
December 31, 2002. In addition, the Company has also discontinued certain other
minor operations and projects.

These divestments and discontinuations are treated as discontinued operations
pursuant to Statement of Financial Accounting Standards No. 144 (SFAS 144),
Accounting for the Impairment or Disposal of Long-Lived Assets, issued in August
2001 by the Financial Accounting Standards Board. The balance sheet and income
statement data for all periods presented have been restated to present the
financial position and results of operations of the businesses meeting the
criteria of SFAS 144 as assets and liabilities in discontinued operations and as
discontinued operations. In the statement of cash flows the effects of the
discontinued operations are not segregated, as permitted by Statement of
Financial Accounting Standards No. 95, Statement of Cash Flows.

The loss from discontinued operations, including taxes, of $10 million recorded
in the first quarter of 2003 includes revenues of $776 million.

At March 31, 2003, the major classes of assets in discontinued operations were:
$278 million of cash, cash equivalents and marketable securities; $1,420 million
of receivables; $383 million of inventories; $193 million of prepaid expenses
and other; $60 million of financing receivables; $137 million of property, plant
and equipment; $485 million of goodwill, $62 million of other intangible assets;
and $238 million of investments and other. At March 31, 2003, the major classes
of liabilities in discontinued operations were: $1,686 million of accounts
payable; $52 million of borrowings; $351 million of accrued liabilities and
other; $91 million of pension and post-retirement benefits; $89 million of
deferred tax liabilities; and $81 million of other liabilities.



•      Earnings per share

The potential common shares from the warrants and options outstanding in
connection with the Company's management incentive plan, were excluded from the
computation of diluted earnings (loss) per share in the periods presented, as
their inclusion would have been antidilutive. The potential common shares from
the convertible bonds were excluded from the computation of diluted earning
(loss) per share in the periods presented, as their inclusion would have been
antidilutive.




•      Stock-based compensation

The Company has a management incentive plan under which it offers stock warrants
to key employees, for no consideration. The Company accounts for the warrants
using the intrinsic value method of APB Opinion No. 25 (APB 25), Accounting for
Stock Issued to Employees, as permitted by Statement of Financial Accounting
Standards No. 123 (SFAS 123), Accounting for Stock Based Compensation. All
warrants were issued with exercise prices greater than the market prices of the
stock on the dates of grant. Accordingly, the Company has recorded no
compensation expense related to the warrants, except in circumstances when a
participant ceases to be employed by a consolidated subsidiary, such as after a
divestment by the Company. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS 123 to stock-based employee compensation. Fair
value of the warrants was determined on the date of grant by using the Binomial
option model.






•      Commitments and contingencies

Asbestos

In February 2003, the Company announced that its U.S. subsidiary, Combustion
Engineering (CE), had filed for a pre-packaged Chapter 11 in the U.S. bankruptcy
courts. Voting on the pre-packaged plan ended on February 19, 2003, and CE has
confirmed that it has received more than 75 percent of claimant votes in favor
of the plan, representing more than two-thirds of the total value of claims as
required for approval by eligible claimants. A hearing on April 24, 2003, to
review and confirm the plan was extended by the judge to May 1 and 2, 2003, to
allow sufficient time to hear all of the presentations to the court. The Company
remains confident the court will approve the plan.





Note 2  Significant Accounting Policies

The summary consolidated financial information is prepared on the basis of
United States (US) generally accepted accounting principles (USGAAP) and is
presented in US dollars ($) unless otherwise stated. Data for orders and number
of employees are shown as additional information and are not a required
disclosure under USGAAP.

Par value of capital stock is denominated in Swiss francs. The summary financial
information as of March 31, 2003, should be read in conjunction with the
December 31, 2002, financial statements contained in the Company's Annual
Report.



New accounting standards

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 143 (SFAS 143), Accounting for Asset Retirement
Obligations, which is effective for fiscal years beginning after June 15, 2002,
and requires that the fair value of a legal obligation associated with the
retirement of tangible long-lived assets be recognized in the period in which it
is incurred. The associated asset retirement costs are capitalized as part of
the carrying amount of the asset and allocated to expense over its useful life.
The Company adopted SFAS 143 effective January 1, 2003. SFAS 143 has not had a
material impact on the Company's results of operations.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment
or Disposal of Long-Lived Assets. This Statement supersedes Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-lived Assets to Be Disposed Of, while retaining
many of its requirements regarding impairment loss recognition and measurement.
In addition, the new Statement broadens the presentation of discontinued
operations to include more sold and abandoned businesses. The Company adopted
this statement effective January 1, 2002, and, as a result, reflected the
assets, liabilities and results of operations of several businesses and groups
of assets as discontinued operations for all periods presented to the extent
these businesses and groups of assets met the new criteria during 2002.
Disposals and abandonments in previous years were not re-evaluated or
reclassified.

In April 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44
and 64, Amendment of FASB Statement No. 13, and Technical Corrections, which
rescinds previous requirements to reflect all gains and losses from debt
extinguishment as extraordinary. The Company elected to early adopt the new
standard effective April 1, 2002, and, as a result, the gains from
extinguishment of debt of $6 million recorded as extraordinary items in the
first quarter of 2002 are no longer reflected in extraordinary items.

In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, which requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred. The standard is effective January 1, 2003, and has been applied to
restructuring plans initiated after that date.

In November 2002, the Financial Accounting Standards Board issued Interpretation
No. 45 (FIN 45), Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45
requires the guarantor to recognize a liability for the non-contingent component
of a guarantee; that is the obligation to stand ready to perform in the event
that specified triggering events or conditions occur. The initial measurement of
this liability is the fair value of the guarantee at its inception. The
recognition of the liability is required even if it is not probable that
payments will occur under the guarantee or if the guarantee was issued with a
premium payment or as part of a transaction with multiple elements. FIN 45 also
requires additional disclosures related to guarantees. The recognition
measurement provisions of FIN 45 are effective for all guarantees entered into
or modified after December 31, 2002. The Company has adopted FIN 45 as of
January 1, 2003.

In December 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 148 (SFAS 148), Accounting for Stock-Based
Compensation - Transition and Disclosure. An Amendment of FASB Statement No.
123. The Company has elected to continue with its current practice of applying
the recognition and measurement principles of APB No. 25, Accounting for Stock
Issued to Employees. The Company has adopted the disclosure requirements of SFAS
148 as of December 31, 2002.

In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46 (FIN 46), Consolidation of Variable Interest Entities. FIN 46 requires
existing unconsolidated variable interest entities (VIEs) to be consolidated by
their primary beneficiaries if the entities do not effectively disperse risks
among the parties involved. FIN 46 applies immediately to VIEs created after
January 31, 2003 and to VIEs in which an enterprise obtains an interest after
that date. For VIEs in which an enterprise holds a variable interest that was
acquired before February 1, 2003, FIN 46 applies for periods beginning after
June 15, 2003.

In November 2002, the Emerging Issues Task Force of the Financial Accounting
Standards Board issued Emerging Issues Task Force No. 00-21 (EITF 00-21),
Accounting for Revenue Arrangements with Multiple Deliverables, which was
amended in January 2003 and requires that (a) revenue should be recognized
separately for separate units of accounting in multiple deliverables
arrangement, (b) revenue for a separate unit of accounting should be recognized
only when the arrangement consideration is reliably measurable and the earnings
process is substantially complete, and (c) consideration should be allocated
among the separate units of accounting based on their relative fair value. EITF
00-21 is applicable to transactions entered into after January 1, 2004. The
Company believes that EITF 00-21 will not result in a significant change in its
practice of accounting for arrangements involving delivery or performance of
multiple products and services.





Note 3  Summary of Consolidated Stockholders' Equity






Note 4  Segment and Geographic Data

In order to streamline the Company's structure and improve operational
performance, the Company has, as of January 1, 2003, put into place two new
divisions: Power Technologies, which combines the former Power Technology
Products and Utilities divisions; and Automation Technologies, which combines
the former Automation Technology Products and Industries divisions.

•      The Power Technologies division serves electric, gas and water utilities,
as well as industrial and commercial customers, with a broad range of products,
systems and services for power transmission, distribution and power plant
automation.

•      The Automation Technologies division blends a product, system and service
portfolio with end-user expertise and global presence to deliver solutions for
control, motion, protection, and plant optimization across the full range of
process, discrete and utility industries.

•      The Non-Core Activities division was created in the fourth quarter of
2002 to group the following activities and businesses of the Company: Insurance,
Equity Ventures, the remaining Structured Finance business, Building Systems,
New Ventures, Air Handling, Customer Service, Group Processes, Logistic Systems,
and Semiconductors.



The Company evaluates performance of its divisions based on earnings before
interest and taxes (EBIT), which excludes interest and dividend income, interest
expense, provision for taxes, minority interest, and income from discontinued
operations, net of tax. In accordance with Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related
Information, the Company presents division revenues, depreciation and
amortization, and EBIT, all of which have been restated to reflect the changes
to the Company's internal structure.

Segment data



Geographic Information



(1) Includes adjustments to eliminate inter-company transactions.



(2) Includes businesses in discontinued operations.



(3) Orders received and revenues have been reflected in the regions based on the
location of the customers.






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