Final Results (Replacement)
ABB Ltd
27 February 2003
This announcement replaces RNS 0473I released at 07:59 today, 27 February 2003.
The announcement text now includes full financial tables. All other details
remain unchanged.
Press Release
ABB Group 2002: Strong performance by core businesses
Core businesses: Q4 2002 EBIT up 38 percent; full-year 2002 EBIT up 4.3 percent;
2003 EBIT expected to increase more than 20 percent
Discontinued operations, asbestos provisions result in net loss
Q4 02 Q4 01 Change US$ millions 2002 20011 Change
Nominal Local Nominal Local
currencies currencies
4,501 4,893 -8% -14% Orders 18,112 19,672 -8% -10%
5,268 5,530 -5% -10% Revenues 18,295 19,382 -6% -8%
0 -438 n.a. n.a. EBIT* 336 179 88% 82%
-838 -980 n.a. n.a Net income -787 -691 n.a. n.a
* Earnings before interest and taxes
1 Restated to reflect the move of businesses to discontinued operations, which
do not contribute to revenues or EBIT
• Net debt reduced by US$ 1.5 billion - on target
• Group EBIT margin at 1.8 percent - above 1.5 percent target
• Full-year loss (US$ 787 million) and weaker cash flow (US$ 126
million) on asbestos provisions and losses in discontinued operations
Zurich, Switzerland, February 27, 2003 - ABB's core divisions, Power
Technologies and Automation Technologies, showed a strong performance in 2002,
but the ABB Group reported a net loss for the full-year today as a result of
asbestos charges and losses in discontinued operations.
The core divisions, created last year to sharpen the company's focus, showed
astrong fourth quarter, with combined earnings before interest and taxes (EBIT)
growing 38 percent.
For the full-year 2002, the ABB Group posted EBIT of US$ 336 million, up from
US$ 179 million the year before. As a percentage of revenue, the EBIT margin
reached 1.8 percent, above the target of 1.5 percent for the year. On a
comparable basis, the company cut its net debt by US$ 1.5 billion in 2002.
'It has been a difficult year, but we've put the worst behind us,' said Jurgen
Dormann, ABB chairman and CEO. 'In 2002, we secured a new credit facility that
gives us financial flexibility until the end of 2004. We are putting the
asbestos issue to rest and divesting non-core businesses. Our core businesses
are performing well. I'm confident we can deliver on our growth targets and
return to profitability in 2003.'
For the full-year 2002, the core divisions' orders were down 2 percent, while
revenues edged 1 percent higher. The two divisions reported full-year revenues
of US$ 15.6 billion and EBIT of US$ 946 million. Power Technologies division
increased revenues 3 percent and EBIT 9 percent. Automation Technologies
division had flat revenues and saw a slight rise in EBIT (up 1 percent).
ABB Group orders for the full year, including non-core activities and corporate,
were down 8 percent in nominal terms, at US$ 18.1 billion, and revenues
decreased 6 percent to US$ 18.3 billion. Losses in ABB's non-core businesses and
discontinued operations offset the core divisions' improved performance,
resulting in a net loss for the Group of US$ 787 million.
Interest and other finance expense for 2002 included a gain of US$ 215 million,
arising from the accounting treatment of the convertible bonds that ABB issued
in May 2002.
The net loss was mainly due to asbestos provisions, the disposal loss on the
sale of Structured Finance in 2002, and operational losses in businesses to be
sold in 2003, including the Oil, Gas and Petrochemicals division (all included
in discontinued operations). The Building Systems business (reported in non-core
activities) also showed a loss.
Net debt
ABB cut net debt by US$ 1.5 billion on an adjusted basis. Before adjusting for
the transfer of Oil, Gas and Petrochemicals to discontinued operations, and
accounting for the asbestos settlement, net debt was cut to about US$ 2.6
billion from the previously reported US$ 4.1 billion at the end of 2001. After
these adjustments, net debt was US$ 3.3 billion at December 31, 2002, compared
to US$ 4.3 billion a year earlier.
Divestments
ABB sold most of its Structured Finance business in 2002 to GE Commercial
Finance and realized cash proceeds of about US$ 2.3 billion. The company also
sold its metering business and a number of other smaller operations. Dormann
said ABB was in talks with several potential buyers to sell the Oil, Gas and
Petrochemicals division and remained on target to sell most of the Building
Systems business in 2003. The company has also said it plans to sell its Equity
Ventures participations and the remaining parts of the Structured Finance
business. The businesses to be divested employ some 30,000 people.
Cost reduction
ABB said more than 1,300 projects to reduce costs had been identified in its '
Step Change' program to lower the cost base by an amount equivalent to 4 percent
of revenues - about US$ 800 million - by mid-year 2004.
The cost savings projects, including 10,000-12,000 job reductions, are underway
in all countries. As a result of these job reductions and 30,000 employees
leaving ABB in connection with divestments, ABB is expected to employ fewer than
100,000 people by mid-2004, down from 139,000 today.
Cash flow and equity
For the full-year 2002, cash flow from operations was US$ 126 million, as strong
cash flow in the core businesses was offset by asbestos payments and weaker cash
flow from businesses in discontinued operations.
Equity was down to US$ 1,052 million, mainly as a result of fourth quarter
asbestos provisions and other losses from discontinued operations.
The company expects a small decrease in under-funded pension liabilities for
2002.
Group outlook
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. 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, the Group's target EBIT margin is 8 percent. 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, as well as foreign
currency movements.
More information
A presentation of ABB's results will take place today at ABB's Corporate
Research Center in Daettwil, Switzerland starting at 1000 CET. Journalists can
call in at +1 412 858 4600 (U.S.), +44 207 866 4111 (U.K.), or +41 91 610 5600
(other countries). The company will also present the results to analysts and
investors at the same location starting at 1500 CET. Participants can join by
phone by calling the above numbers. Lines will be open 15 minutes before the
start of the conferences. Both events will be Webcast on www.abb.com.
Where to look
Page
Summary of key reporting changes 4
Discussion of ABB Group 2002 Q4 results 9-10
Discussion of ABB Group 2002 full-year results 14-15
Divisional targets 2002-2005 16
Division results for 2002 Q4 16-19
Discontinued operations (incl. Oil, Gas and Petrochemicals) 19
Non-core activities and Corporate 19-20
Summary financial information year-ended December 2002 21
Appendix 1: Key financial figures by division (new structure) Q1-Q4 2002 35
Appendix 2: Summary Consolidated Income Statement Q1-Q4 2002 38
Summary Consolidated Balance Sheet Q1-Q4 2002 39
Summary Consolidated Statement of Cash Flows Q1-Q4 2002 41
Changes in reporting and additional information
As a result of recent changes in ABB's divisional structure and the
qualification of its Oil, Gas and Petrochemicals division as discontinued
operations, ABB has modified the way it presents some financial information and
included some additional comparative information in this press release. The
intention is to allow comparisons and set the stage for the reporting structure
that ABB will implement for its first quarter 2003 results, due for release in
April.
New and former divisions
ABB announced in its 2002 third-quarter results that it streamlined its
divisional structure. Two new core divisions were created: Power Technologies,
which combined the former Power Technology Products and Utilities divisions, and
Automation Technologies, which combined the former Automation Technology
Products and Industries divisions.
In addition to showing its 2002 results according to the old structure, ABB
provides both full-year and fourth-quarter 2002 results using the new division
structure on a pro forma basis (see tables from page 35 onward). The company
will report its first quarter 2003 results using only data from the new division
structure.
Following the sale of most of its Structured Finance activities to GE Commercial
Finance of the U.S. last year, ABB will no longer report the Financial Services
business as a separate division nor provide a separate balance sheet for these
activities.
Discontinued operations
During the preparation of year-end accounts, ABB's Oil, Gas and Petrochemicals
(OGP) activities have qualified to be reported as discontinued operations
following ABB's decision to divest this business in 2003. Discontinued
operations also includes losses of ABB's U.S. subsidiary Combustion Engineering
(CE), the Structured Finance activities sold to GE Commercial Finance, the
divested metering business and other smaller abandoned and sold units.
Combustion Engineering is now treated for accounting purposes as though it
already had filed for the pre-packaged Chapter 11 in the U.S. bankruptcy court
by December 31, 2002.
Non-core activities and Corporate
Non-core activities comprise Equity Ventures, the remaining parts of Structured
Finance not sold to GE Commercial Finance, Insurance, Building Systems and Other
activities (mainly Group Processes and New Ventures). Corporate consists of
Headquarters/Stewardship, Research and Development and Other
(Consolidation, treasury services and real estate). EBIT figures covering the
full years 2001, 2002, and the four quarterly results for 2002 are presented in
the Appendix (page 37).
Fourth quarter performance - key figures in detail
US$ in millions Oct.-Dec. Oct.-Dec Change Change in local
(except where indicated) currencies
2002 2001
Group orders 4,501 4,893 -8% -14%
Utilities 805 1,620 -50% -52%
Industries 1,166 1,071 9% 2%
Power Technology Products 1,064 949 12% 6%
Automation Technology Products 1,339 1,073 25% 15%
Non-core activities 1,091 1,340 -19% -27%
Corporate -964 -1,160
Group revenues 5,268 5,530 -5% -10%
Utilities 1,288 1,672 -23% -25%
Industries 1,339 1,406 -5% -10%
Power Technology Products 1,179 1,140 3% -1%
Automation Technology Products 1,394 1,196 17% 8%
Non-core activities 1,166 1,560 -25% -32%
Corporate -1,098 -1,444
Group earnings before interest and taxes 0 -438 n.a. n.a.
(EBIT)
Utilities -10 36 n.a. n.a.
Industries 16 20 -20% -32%
Power Technology Products 101 44 130% 123%
Automation Technology Products 91 44 107% 85%
Non-core activities -110 -480 n.a. n.a.
Corporate -88 -102
Group EBIT margin (%) 0.0% -7.9%
Utilities -0.8% 2.2%
Industries 1.2% 1.4%
Power Technology Products 8.6% 3.9%
Automation Technology Products 6.5% 3.7%
Non-core activities -9.4% -30.8%
Corporate n.a. n.a.
Net income -838 -980 n.a. n.a.
Earnings per share
(US$ basic)
-Income from continuing operations (0.12) (0.41)
-Net income (loss) (0.75) (0.88)
Earnings per share
(US$ diluted)
-Income from continuing operations (0.12) (0.41)
-Net income (loss) (0.75) (0.88)
Net cash provided by operating activities 361 1,796
Oil, Gas and Petrochemicals (for comparison*)
US$ in millions Oct.-Dec. 2002 Oct.-Dec. 2001 Change Change in local
currencies
Orders 1,153 801 44% 34%
Revenues 982 1,039 -5% -11%
EBIT -69 -40 n.a. n.a.
* Results from the Oil, Gas and Petrochemicals division are reported under
discontinued operations and do not contribute to ABB's 2002 full-year orders,
revenues and EBIT.
Fourth quarter performance - key figures in detail
(Unaudited based on new division structure)
US$ in millions Oct-Dec Oct-Dec Change Change in local
(except where indicated) currencies
2002 2001
Group orders 4,501 4,893 -8% -14%
Automation Technologies 2,177 1,958 11%
Power Technologies 1,589 1,844 -14%
Non-core activities 1,091 1,340
Corporate -356 -249
Group revenues 5,268 5,530 -5% -10%
Automation Technologies 2,386 2,354 1%
Power Technologies 2,047 2,051 0%
Non-core activities 1,166 1,560
Corporate -331 -435
Group earnings before interest and taxes 0 -438 n.a. n.a.
(EBIT)
Automation Technologies 107 64 67%
Power Technologies 91 80 14%
Non-core activities -110 -480
Corporate -88 -102
Group EBIT margin (%) 0.0% -7.9%
Automation Technologies 4.5% 2.7%
Power Technologies 4.4% 3.9%
Non-core activities -9.4% -30.8%
Corporate n.a. n.a.
Net income -838 -980 n.a. n.a.
Net cash provided by operating activities 361 1,796
Fourth quarter 2002
(Discussion based on previous division structure)
Income statement
Fourth quarter orders decreased 14 percent in local currencies and 8 percent in
nominal currencies to US$ 4,501 million, compared to Q4 2001. Divisions
reporting increased orders expressed in local currencies included Industries (+2
percent), Power Technology Products (+6 percent) and Automation Technology
Products (+15 percent). Growth was offset, however, by fewer large orders and
deferred bid awards in the Utilities division, resulting in a 52 percent order
drop, and a 27 percent order reduction in non-core activities.
Base orders (orders below US$ 15 million) amounted to US$ 4,317 million,
slightly below last year (2001: US$ 4,439 million). In Q4 2002, base orders
represented 96 percent of fourth quarter orders, up from 91 percent for Q4 2001.
Fourth quarter revenues declined 10 percent in local currencies and 5 percent in
nominal terms to US$ 5,268 million, compared to Q4 2001. All divisions reported
lower revenues in local currency terms except Automation Technology Products,
which increased by 8 percent. The order backlog was US$ 13,408 million, down
about 6 percent from September 30, 2002.
EBIT for the fourth quarter was zero compared to a loss of US$ 438 million in
the fourth quarter of 2001. Utilities and non-core activities recorded losses,
and EBIT fell in the Industries division. These were offset by EBIT increases in
Power Technology Products and Automation Technology Products, combined with
lower restructuring charges and reduced asset write-downs. Fourth quarter EBIT
for the core operational businesses (before non-core activities and Corporate)
increased to US$ 198 million (Q4 2001: US$ 144 million).
Power Technology Products and Automation Technology Products both posted
significant margin increases - to 8.6 percent and 6.5 percent, respectively - as
cost-cutting and productivity improvements began to show. Industries' margin
declined to 1.2 percent.
Losses in non-core activities were sharply reduced to US$ 110 million (Q4 2001
loss: US$ 480 million), as were costs for Corporate, which were US$ 88 million
(Q4 2001 costs: US$ 102 million).
EBIT included Other Expense of US$ 83 million (Q4 2001: US$ 206 million),
comprised of:
- Restructuring charges of US$ 116 million (Q4 2001: US$ 193 million)
- Capital gains of US$ 37 million (Q4 2001: US$ 50 million)
- Write-downs of assets US$ 30 million (Q4 2001: US$ 87 million)
- Income from equity accounted companies, licenses and other of US$ 26
million (Q4 2001: US$ 24 million).
Finance net was US$ 161 million compared to US$ 57 million in the fourth quarter
of 2001.
Discontinued operations reported a loss of US$ 710 million compared to a loss of
US$ 525 million in the fourth quarter of 2001. This amount mainly comprises US$
420 million in asbestos-related provisions, operational losses after provisions
for Downstream projects in the former Oil, Gas and Petrochemicals division (US$
93 million), as well as a disposal loss on the divestment of Structured
Finance).
As a result, ABB reported a fourth quarter net loss of US$ 838 million, compared
to a loss of US$ 980 million for the same period in 2001.
Cash flow and balance sheet
Net cash provided by operating activities was US$ 361 million in the fourth
quarter, after asbestos cash payments of US$ 45 million. Cash flow was lifted by
working capital (net operating assets and liabilities) of US$ 587 million.
Cash and marketable securities totalled US$ 4,690 million at December 31, 2002
(US$ 3,493 million at the end of the previous quarter, September 30, 2002).
After the reclassification of the former Oil, Gas and Petrochemicals division to
discontinued operations, and the asbestos settlement, net debt (defined as
short, medium and long-term debt less cash and marketable securities) amounted
to US$ 3,262 million compared to US$ 5,623 million three months previously. Net
debt was mainly reduced by proceeds from the divestments of the Structured
Finance and Metering businesses that were cash-effective in the fourth quarter.
Long-term debt at December 31, 2002 as a percentage of total debt was 68 percent
compared to 60 percent at the end of September 2002.
Mainly as a result of the fourth quarter net income loss, stockholders' equity
was reduced to US$ 1,052 million at December 31, 2002 from US$ 1,932 million
three months previously.
Full-year 2002 performance - key figures in detail
US$ in millions Full year Full year Change Change in local
(except where indicated) currencies
2002 2001
Group orders 18,112 19,672 -8% -10%
Utilities 4,458 6,436 -31% -31%
Industries 4,614 4,865 -5% -7%
Power Technology Products 4,387 4,221 4% 3%
Automation Technology Products 5,074 4,669 9% 5%
Non-core activities 4,161 5,072
Corporate -4,582 -5,591
Group revenues 18,295 19,382 -6% -8%
Utilities 4,826 5,634 -14% -15%
Industries 4,412 4,995 -12% -14%
Power Technology Products 4,355 3,961 10% 9%
Automation Technology Products 5,035 4,756 6% 3%
Non-core activities 4,186 5,130
Corporate -4,519 -5,094
Group earnings before interest and taxes 336 179 88% 82%
(EBIT)
Utilities 75 158 -53% -49%
Industries 145 151 -4% -6%
Power Technology Products 353 234 51% 50%
Automation Technology Products 373 364 2% -1%
Non-core activities -217 -397
Corporate -393 -331
Group EBIT margin (%) 1.8% 0.9%
Utilities 1.6% 2.8%
Industries 3.3% 3.0%
Power Technology Products 8.1% 5.9%
Automation Technology Products 7.4% 7.7%
Non-core activities
Corporate n.a. n.a.
Net income -787 -691 n.a. n.a.
Earnings per share
(US$ basic)
-Income (loss) from continuing operations 0.06 (0.11)
-Net income (loss) (0.71) (0.61)
Earnings per share
(US$ diluted)
-Income (loss) from continuing operations (0.10) (0.11)
-Net income (loss) (0.84) (0.61)
Net cash provided by operating activities
Oil, Gas and Petrochemicals (for comparison*)
US$ in millions 2002 2001 Change Change in local
currencies
Orders 3,625 3,403 7% 3%
Revenues 3,869 3,489 11% 7%
EBIT 40 79 -49% -49%
* Results from the Oil, Gas and Petrochemicals division are reported under
discontinued operations and do not contribute to ABB's 2002 full-year orders,
revenues and EBIT.
Full-year 2002 performance - key figures in detail
(Unaudited based on new division structure)
US$ in millions Full year Full year Change Change in local
(except where indicated) currencies
2002 2001
Group orders 18,112 19,672 -8% -10%
Automation Technologies 8,699 8,319 5% 1%
Power Technologies 6,843 7,474 -8% -10%
Non-core activities 4,161 5,072
Corporate -1,591 -1,193
Group revenues 18,295 19,382 -6% -8%
Automation Technologies 8,482 8,508 0% -3%
Power Technologies 7,103 6,873 3% 2%
Non-core activities 4,186 5,130
Corporate -1,476 -1,129
Group earnings before interest and taxes 336 179 88% 82%
(EBIT)
Automation Technologies 518 515 1% -3%
Power Technologies 428 392 9% 10%
Non-core activities -217 -397
Corporate -393 -331
Group EBIT margin (%) 1.8% 0.9%
Automation Technologies 6.1% 6.1%
Power Technologies 6.0% 5.7%
Non-core activities -5.2% -7.7%
Corporate n.a. n.a.
Net income -787 -691 n.a. n.a.
Net cash provided by operating activities 126 1,983
Full year 2002
Income statement
Orders for 2002 were US$ 18,112 million, down 10 percent in local currencies and
8 percent in nominal terms from US$ 19,672 for the full year 2001. Lower orders
were mainly due to fewer large project orders in Utilities, as well as difficult
market conditions for businesses in non-core activities, particularly Building
Systems. Both Power Technology Products and Automation Technology Products grew
orders in local currency terms (+ 3 percent and +5 percent, respectively)
compared to 2001, while Industries recorded a 7 percent drop.
Revenues amounted to US$ 18,295 million, down 8 percent in local currencies and
6 percent in nominal terms compared to the year before (2001: US$ 19,382
million). Utilities, Industries and non-core activities reported lower revenues,
while Power Technology Products and Automation Technology Products grew by 9
percent and 3 percent, respectively.
EBIT margin was 1.8 percent versus 0.9 percent in 2001. Industries and Power
Technology Products reported higher margins as productivity and cost-cutting
programs started to positively impact EBIT, while Automation Technology
Products' margin was down due to higher restructuring costs. Utilities' margin
was negatively impacted as a result of the execution of low-margin projects
taken in 1999 and 2000.
EBIT was US$ 336 million, almost doubling compared to 2001 (US$ 179 million).
Losses from non-core activities were sharply reduced to US$ 217 million from US$
397 million in 2001 (EBIT 2001 included a one-time US$ 295 million charge for
Insurance, following a change in accounting for reserves). Costs were higher in
Corporate, at US$ 393 million (2001: US$ 331 million).
EBIT includes Other Expense of US$ 116 million, comprising:
• Restructuring charges of US$ 261 million (2001: US$ 220 million)
• Capital gains of US$ 119 million (2001: US$ 57 million)
• Write-downs of assets of US$ 93 million (2001: US$ 92 million)
• Income from equity accounted companies, licenses and other of US$ 119
million (2001: US$ 150 million)
Finance net was US$ 129 million, (2001: US$ 190 million). Interest expense for
2002 was reduced by a gain of US$ 215 million, arising from the accounting
treatment of the convertible bonds that ABB issued in May 2002. This is an
unrealized, mark-to-market gain on the equity conversion option on the
convertible bond, which may fluctuate in future with market prices and be
amortized during the life of the bond.
The loss from discontinued operations amounted to US$ 853 million for the
full-year 2002, up from US$ 501 million in 2001. This was a result of
asbestos-related provisions, the disposal loss on the 2002 divestment of
Structured Finance (US$ 135 million, excluding currency translation
adjustments), as well as losses associated with units in discontinued operations
(including the former Oil, Gas and Petrochemicals division at a US$ 86 million
loss) or abandonment.
ABB posted a net loss of US$ 787 million for the full-year 2002 (2001 loss: US$
691 million).
Cash flow and balance sheet
Net cash provided by operating activities amounted to US$ 126 million (2001: US$
1,983 million), after asbestos cash payments of US$ 206 million (US$ 136 million
in 2001). Operating assets and liabilities provided a net US$ 419 million in
cash, notwithstanding a negative impact of US$ 1,130 million from other assets
and liabilities. This was mainly due to higher sales in excess of invoicing
(arising from percentage of completion accounting), and lower advances from
customers, non-trade payables and accrued expenses.
Cash and marketable securities totalled US$ 4,690 million at December 31, 2002
(US$ 5,366 million at December 31, 2001). ABB cut net debt by US$ 1.5 billion on
a comparative basis. Before adjusting for the transfer of Oil, Gas and
Petrochemicals to discontinued operations, and accounting for the asbestos
settlement, net debt was cut to about US$ 2.6 billion from the previously
reported US$ 4.1 billion at the end of 2001. After these adjustments, net debt
was US$ 3.3 billion at December 31, 2002, compared to US$ 4.3 billion a year
earlier.
Long-term debt at December 31, 2002 as a percentage of total debt was 68 percent
compared to 52 percent at the end of December 2001. ABB has achieved its target
to extend the maturity of its debt to two-thirds long-term and one-third
short-term debt.
Stockholders' equity was US$ 1.1 billion at December 31, 2002.
Asbestos
In 2002, 34,568 claims against U.S. subsidiary Combustion Engineering (CE) were
settled, 26 percent more than in the same period in 2001.More than 33 percent
were settled without payment. Around 79,200 new claims were filed in 2002,
compared to 2001. Settlement costs prior to insurance reimbursement were US$ 206
million (US$ 136 million in 2001).
In the fourth quarter of 2002, new asbestos claims (33,880) increased by 114
percent over the third quarter of 2002, while claims settled (8,332) went up by
10 percent. At the end of December 2002, 136,648 claims were pending (111,052
end of September 2002). All of these claims are covered in the pre-packaged
Chapter 11 proceedings.
On Feb. 17, 2003, ABB announced that CE had filed for a pre-packaged Chapter 11
in the U.S. bankruptcy courts. Voting on the pre-packaged plan ended on Feb. 19.
Although the vote is subject to review and confirmation by the court, 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.
ABB remains confident the court will approve the plan.
Note on new division structure, targets
ABB announced in its 2002 third-quarter results that it streamlined its
divisional structure. Two new core divisions were created: 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.
ABB's full-year 2002 results are shown for the new division structure on a pro
forma basis on pages X and Y. For purposes of comparison, results for the new
divisions for each quarter of 2002 and for the full year 2001 are provided in
Appendix 2, page 41.
Divisional targets
Power Technologies: The division maintains its targets for compound average
annual revenue growth of 5.3 percent from 2002 through 2005, and an EBIT margin
of 10 percent for 2005. For 2003, divisional revenues are expected to grow by
5.3 percent, with an EBIT margin of 7 percent.
Automation Technologies: The division aims to achieve compound average annual
revenue growth of 3.3 percent from 2002 through 2005, and an EBIT margin target
of 10.7 percent for 2005. For 2003, divisional revenues are expected to grow by
3 percent with an EBIT margin of 7.1 percent.
Divisional performance Q4 2002
The Power Technology Products and Automation Technology Products divisions serve
their customers through external channel partners and ABB's end-user divisions.
More customers are being served directly by channel partners such as
wholesalers, systems integrators and distributors. Orders, revenues and earnings
associated with these customers are accordingly no longer reflected in the
end-user divisions.
As a result, in the end-user divisions, orders and revenues from these
'pull-through' products are decreasing correspondingly. Unless otherwise stated,
there is no material impact on the EBIT of the end-user divisions. Overall,
there is no impact on the Group's consolidated results, since the pull-through
effects are offset by reduced internal eliminations (currently presented in
Corporate). There is no impact on the product divisions, since for them it
remains a sale to the same customer whether products are sold via external
channel partners or internal end-user divisions.
For all figures except for EBIT margins, comments refer to the fourth quarter
results expressed in local currencies. EBIT excluding capital gains is shown
only if the aggregate of such gains for the division is material (in any case,
if capital gains represent more than 10 percent of divisional EBIT).
Utilities
US$ in millions Oct.-Dec. Oct.-Dec. Change Change in local
currencies
(except where indicated) 2002 2001
Orders 805 1,620 -50% -52%
Revenues 1,288 1,672 -23% -25%
EBIT -10 36 n.a. n.a.
EBIT margin -0.8% 2.2%
Restructuring costs -19 -26
Orders dropped by 52 percent compared to the fourth quarter of 2001, mainly due
to weak demand in the Americas and delays of some large project awards into
2003. Europe was mixed. A more selective bidding approach to secure future
earnings quality also influenced order levels. Orders were down 38 percent,
excluding product sales handled via channel partners.
Revenues were 25 percent lower. Excluding the pull-through effect, revenues
decreased by 6 percent.
EBIT for the quarter was negative and the EBIT margin for the underlying
operational performance (excluding pull-through, restructuring, capital gains in
2001 and 2002, and non-recurring amortization) decreased to 0.6 percent from 3.8
percent. The lower earnings were mainly due to the execution of low-margin
systems projects (pre-2001) in Utility Power Systems. Steps have since been
taken to improve project management and support higher project margins. In the
fourth quarter, Utilities reported a capital gain of US$ 7 million.
Industries
US$ in millions Oct.-Dec. Oct.-Dec. Change Change in local
currencies
(except where indicated) 2002 2001
Orders 1,166 1,071 9% 2%
Revenues 1,339 1,406 -5% -10%
EBIT 16 20 -20% -32%
EBIT margin 1.2% 1.4%
Restructuring costs -44 -36
In spite of weak markets, orders increased slightly, driven by demand in two
business areas: Petroleum, Chemical and Life Sciences, and Paper Printing,
Metals and Minerals. Excluding product sales now handled via channel partners,
orders increased by 32 percent.
Revenues were 10 percent lower but up 8 percent excluding the pull-through
effect. Revenues were down except in the Petroleum, Chemical and Life Sciences
business area.
EBIT decreased primarily as a result of lower revenues and one-time charges. The
EBIT margin for the underlying operational performance (excluding restructuring,
capital gains, non-recurring amortization and one-time charges) increased from
5.3 percent to 5.8 percent.
Oil, Gas and Petrochemicals
Please refer to the section discontinued operations on page 18.
Power Technology Products
US$ in millions Oct.-Dec. Oct.-Dec. Change Change in local
currencies
(except where indicated) 2002 2001
Orders 1,064 949 12% 6%
Revenues 1,179 1,140 3% -1%
EBIT 101 44 130% 123%
EBIT margin 8.6% 3.9%
Restructuring costs 0 -41
Orders rose by 6 percent compared to the same quarter of 2001, driven mainly by
continuing strong demand in Asia, especially China. Higher demand in the Power
Distribution business area also contributed to the improvement. Demand in North
America was weak but stable. The European market remained mixed. Revenues in the
quarter were flat.
Continuing operational improvements and productivity gains significantly lowered
the cost base. As a result of this and in the absence of restructuring charges,
EBIT more than doubled (up 123 percent) and the EBIT margin for the underlying
operational performance (excluding restructuring, capital gains and
non-recurring amortization) rose to 8.6 percent from 6.7 percent. The number of
employees decreased by 9 percent (excluding acquisitions and divestments).
Automation Technology Products
US$ in millions Oct.-Dec. Oct.-Dec. Change Change in local
currencies
(except where indicated) 2002 2001
Orders 1,339 1,073 25% 15%
Revenues 1,394 1,196 17% 8%
EBIT 91 44 107% 85%
EBIT margin 6.5% 3.7%
Restructuring costs -41 -39
Orders increased by 15 percent. All business areas contributed to the positive
development. Robotics reported a double-digit increase in orders driven by
demand in North America and Europe. Low-Voltage Products and Drives and Power
Electronics benefited from the high demand in Asia, especially China. Overall,
the American and European markets were mixed while Asia showed strong demand.
The process automation market stabilized at a low level.
Revenues increased by 8 percent. Lower revenues in Control and Force Measurement
and Electrical Machines were more than offset by the positive development in the
other business areas.
EBIT increased by 85 percent, reflecting operational improvements and
productivity gains from restructuring. The number of employees decreased by 6
percent (excluding acquisitions and divestments). The EBIT margin for the
underlying operational performance (excluding restructuring, capital gains and
non-recurring amortization) increased from 7.6 percent to 9.5 percent.
Financial Services
ABB divested a large part of its Financial Services division in 2002. In
addition, ABB has announced its intention to divest other financial business
activities. Therefore, the Financial Services division has been wound down and
its results will no longer be separately reported. The fourth quarter 2002
results from the part of Structured Finance sold to GE Commercial Finance can be
found in the breakdown of items for discontinued operations on page 19. The EBIT
for the remainder of Structured Finance, as well as Equity Ventures and
Insurance is shown in Non-core activities, also on page 19.
Discontinued operations
During the preparation of year-end accounts, ABB's Oil, Gas and Petrochemicals
(OGP) activities have qualified to be reported as discontinued operations
following ABB's decision to divest this business in 2003. For comparison,
fourth-quarter 2002 orders, revenues, EBIT and EBIT margin are shown below:
Oil, Gas and Petrochemicals
US$ in millions Oct.-Dec. Oct.-Dec. Change Change in local
currencies
(except where indicated) 2002 2001
Orders 1,153 801 44% 34%
Revenues 982 1,039 -5% -11%
EBIT -69 -40 n.a. n.a.
Orders in the quarter increased by 34 percent, driven mainly by several large
orders in the Upstream market where demand strengthened. Downstream markets
remained flat. Revenues decreased as a result of lower order intake in the
previous quarters. Cost overruns and project write-downs of approximately US$
104 million in the fourth quarter led to a loss.
Discontinued operations
US$ in millions Oct.-Dec. Oct.-Dec. Full year Full year
2002 2001
(except where indicated) 2002 2001
Income/(Loss)* -710 -525 -853 -501
Oil, Gas and Petrochemicals -93 -26 -86 -4
Structured Finance -78 12 -190 8
Combustion Engineering -420 -470 -420 -470
Other divested businesses -119 -41 -157 -35
* including taxes
For the fourth quarter 2002, losses from discontinued operations increased to
US$ 710 million following US$ 420 million in provisions for Combustion
Engineering, project losses in Oil, Gas and Petrochemicals, and the final
divestment costs for Structured Finance. Of Structured Finance's fourth quarter
US$ 78 million divestment cost, US$ 55 million was for currency translation
adjustments that were already reflected in stockholders' equity.
Other divested businesses posted losses of US$ 119 million, mainly due to
goodwill write-down.
For the full year 2002, the loss from discontinued operations was US$ 853
million, up from US$ 501 million in 2001. The main items were asbestos
provisions, the US$ 135 million divestment loss (excluding the currency
translation adjustment) for Structured Finance, and US$ 86 million in losses for
the full year for Oil, Gas and Petrochemicals. The OGP loss was after project
provisions of US$ 167 million for the year.
Non-core activities
US$ in millions Oct.-Dec Oct.-Dec.
(except where indicated) 2002 2001
EBIT -110 -480
Equity Ventures/Remaining Structured Finance -6 50
Insurance -3 -354
Building Systems -42 -6
Other activities* -59 -170
* Comprises mainly Group Processes and New Ventures
The EBIT loss for the fourth quarter was US$ 110 million, sharply down from the
US$ 480 million loss reported for the fourth quarter in 2001. The main reason
for reduced losses was the inclusion of a US$ 295 million charge for a change in
accounting for reserves in Scandinavian Re, part of Insurance, together with US$
90 million in portfolio write-downs that were booked in the fourth quarter of
2001. For the fourth quarter 2002, good premium income was offset by a
write-down in marketable securities, resulting in a small loss.
Equity Ventures and the remaining Structured Finance businesses reported lower
EBIT, as no new business is being written in either unit.
Building Systems posted a loss for the quarter of US$ 42 million, following
further project write-downs and restructuring.
The loss from other activities was sharply reduced to US$ 59 million, mainly due
to reduced write-downs in New Ventures.
Corporate
US$ in millions Oct.-Dec. Oct.-Dec.
(except where indicated) 2002 2001
EBIT -88 -102
Headquarters/Stewardship 7 25
Research and development -24 -39
Other* -71 -88
* includes consolidation, real estate and Treasury Services.
Costs for Corporate decreased to US$ 88 million for the fourth quarter 2002.
Reduced infrastructure costs and a one-time rebate on previously booked costs
led to a small positive income for Headquarters/Stewardship. Research and
development costs decreased following the successful reorganization of ABB's
global research centers earlier in the year.
Further information
The 2002 Q4 and full-year results press release and presentation slides are
available from February 27, 2003 on the ABB Investor Relations homepage at
www.abb.com/investorrelations.
The audio playback of the conference call will be available for 72 hours after
the call. Further reporting dates in 2003 are April 29 (Q1), 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 impacts. The ABB Group of companies operates in more than 100
countries and employs about 139,000 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 3408
Tel: +41 43 317 6492, +41 43 317 6512 Sweden: Tel. + 46 21 325 729
Fax: +41 43 317 7958 USA: Tel: +1 203 750 7743
media.relations@ch.abb.com investor.relations@ch.abb.com
Summary Financial Information
Year Ended December 2002
ABB Ltd
Summary Consolidated Income Statements (unaudited)
January - December October - December
2002 2001 2002 2001
---------- all amounts are unaudited ----------
(in millions, except per share data )
Revenues $ 18,295 $ 19,382 $ 5,268 $ 5,530
Cost of sales (13,769) (14,910) (4,122) (4,557)
Gross profit 4,526 4,472 1,146 973
Selling, general and administrative expenses (4,033) (3,993) (1,052) (1,154)
Amortization expense (41) (195) (11) (51)
Other income (expense), net (116) (105) (83) (206)
Earnings before interest and taxes 336 179 -- (438)
Interest and dividend income 193 414 3 101
Interest and other finance expense (322) (604) (164) (158)
Income (loss) from continuing operations before taxes and 207 (11) (161) (495)
minority interest
Provision for taxes (70) (80) 55 61
Minority interest (71) (36) (22) (21)
Income (loss) from continuing operations 66 (127) (128) (455)
Loss from discontinued operations, net of tax (853) (501) (710) (525)
Cumulative effect of change in accounting principles -- (63) -- --
(SFAS 133), net of tax
Net loss $ (787) $ (691) $ (838) $ (980)
Basic earnings (loss) per share:
Income (loss) from continuing operations $ 0.06 $ (0.11) $ (0.12) $ (0.41)
Net loss $ (0.71) $ (0.61) $ (0.75) $ (0.88)
Diluted earnings (loss) per share:
Income (loss) from continuing operations $ (0.10) $ (0.11) $ (0.12) $ (0.41)
Net loss $ (0.84) $ (0.61) $ (0.75) $ (0.88)
addback to ico (187) 0 0 0
basic shares 1,113 1,132 1,113 1,113
convertible dil 53 0 0 0
dil shares 1,166 1,132 1,113 1,113
Amounts in prior periods have been reclassified to conform to the Company's
current presentation.
ABB Ltd
Summary Consolidated Balance Sheets (unaudited)
At At At
December 31 September 30 December 31
2002 2002 2001
--------- all amounts are unaudited ---------
(in millions)
Cash and equivalents $ 2,478 $ 1,597 $ 2,442
Marketable securities 2,212 1,896 2,924
Receivables, net 7,197 6,513 6,692
Inventories, net 2,377 2,883 2,568
Prepaid expenses and other 2,694 2,097 2,122
Assets in discontinued operations 3,095 7,124 5,912
Total current assets 20,053 22,110 22,660
Financing receivables, non-current 1,802 1,996 2,086
Property, plant and equipment, net 2,792 2,657 2,753
Goodwill 2,321 2,333 2,188
Other intangible assets, net 591 594 587
Investments and other 1,990 2,237 2,070
Total assets $ 29,549 $ 31,927 $ 32,344
Accounts payable, trade $ 2,961 $ 2,495 $ 2,506
Accounts payable, other 2,195 2,410 2,517
Short-term borrowings and current maturities of long-term 2,576 3,641 4,701
borrowings
Accrued liabilities and other 8,352 7,038 7,100
Liabilities in discontinued operations 2,295 3,664 3,342
Total current liabilities 18,379 19,248 20,166
Long-term borrowings 5,376 5,475 5,003
Pension and other related benefits 1,659 1,829 1,617
Deferred taxes 1,179 1,088 1,049
Other liabilities 1,647 2,085 2,280
Total liabilities 28,240 29,725 30,115
Minority interest 257 270 215
Capital stock and additional paid-in capital (1,280,009,432 2,027 2,027 2,028
shares authorized, 1,200,009,432 shares issued)
Retained earnings 2,648 3,486 3,435
Accumulated other comprehensive loss (1,873) (1,831) (1,699)
Treasury stock, at cost (86,830,312 shares at December 31, (1,750) (1,750) (1,750)
2002)
Total stockholders' equity 1,052 1,932 2,014
Total liabilities and stockholders' equity $ 29,549 $ 31,927 $ 32,344
Amounts in prior periods have been reclassified to conform to the Company's
current presentation.
ABB Ltd
Summary Consolidated Statements of Cash Flows (unaudited)
January - December October - December
2002 2001 2002 2001
--------all amounts are unaudited--------
(in millions)
Operating activities
Net loss $ (787) $ (691) $ (838) $ (980)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 611 787 169 204
Change in provisions* (188) 1,146 230 1,149
Pension and other related benefits 144 1 75 (13)
Deferred taxes (121) (89) (72) (102)
Net gain from sale of property, plant and equipment (23) (23) (3) (10)
Other 71 121 213 119
Changes in operating assets and liabilities:
Marketable securities (trading) 498 72 -- (7)
Trade receivables 605 65 231 199
Inventories 367 (106) 502 443
Trade payables 79 736 132 292
Other assets and liabilities, net (1,130) (36) (278) 502
Net cash provided by operating activities 126 1,983 361 1,796
Investing activities
Changes in financing receivables 13 (907) (99) 198
Purchases of marketable securities (other than trading) (4,184) (3,280) (1,848) (1,032)
Purchases of property, plant and equipment (602) (761) (158) (201)
Acquisitions of businesses (net of cash acquired) (144) (578) (45) (3)
Proceeds from sales of marketable securities (other than 4,332 3,873 1,696 1,105
trading)
Proceeds from sales of property, plant and equipment 476 152 86 72
Proceeds from sales of businesses (net of cash disposed) 2,583 283 2,326 252
Net cash provided by (used in) investing activities 2,474 (1,218) 1,958 391
Financing activities
Changes in borrowings (2,815) 2,639 (1,796) (1,661)
Treasury and capital stock transactions -- (1,393) -- 40
Dividends paid -- (502) -- --
Other 73 (67) 140 (6)
Net cash provided by (used in) financing activities (2,742) 677 (1,656) (1,627)
Effects of exchange rate changes on cash and equivalents 141 (72) 91 (25)
Net change in cash and equivalents (1) 1,370 754 535
Cash and equivalents (beginning of period - restated) 2,442 1,244 1,597 1,964
Cash and equivalents (beginning of period - assets in 325 153 415 268
discontinued operations)
Cash and equivalents (beginning of period - total) 2,767 1,397 2,012 2,232
Cash and equivalents (end of period - restated) 2,478 2,442 2,478 2,442
Cash and equivalents (end of period - assets in discontinued 288 325 288 325
operations)
Cash and equivalents (end of period - total) $ 2,766 $ 2,767 $ 2,766 $ 2,767
Interest paid $ 475 $ 702 $ 30 $ 123
Taxes paid $ 298 $ 273 $ 96 $ 10
* Restated to reflect the change in all provisions (previously this line
comprised of restructuring provisions only)
Amounts in prior periods have been reclassified to conform to the Company's
current presentation.
ABB Ltd notes to summary consolidated financial statements (unaudited)
(US$ in millions, except per share amounts)
Note 1 Developments in the year ended December 31, 2002:
• Annual general meeting
At the Company's annual general meeting held on March 12, 2002, the Company's
shareholders approved the resolution to not pay a dividend in 2002. In addition,
shareholders approved the resolution to not effect a capital reduction of 24
million shares purchased during the first half of 2001, as a result of changed
market conditions.
• Restructuring program
2001 program
In July 2001, the Company announced a restructuring program anticipated to
extend over 18 months. This restructuring program was initiated in an effort to
simplify product lines, reduce multiple location activities and perform other
downsizing in response to consolidation of major customers in certain
industries.
In 2002, the Company recognized total restructuring charges and related asset
write-downs of $187 million. Charges of $166 million were related to workforce
reductions and charges of $38 million were related to lease terminations and
other exit costs associated with this restructuring program. These costs are
included in other income (expense), net. Based on analysis, Management's
estimate has been revised resulting in a $31 million reduction in the amounts
accrued for workforce reductions, lease terminations and other exit costs. This
revision is recognized as a component of other income (expense), net.
Termination benefits of $176 million were paid to approximately 4,000 employees
and $29 million was paid to cover costs associated with lease terminations and
other exit costs. Workforce reductions include production, managerial and
administrative employees. At December 31, 2002, accrued liabilities included $78
million for termination benefits and $49 million for lease terminations and
other exit costs.
As a result of the 2001 restructuring program, certain assets have been
identified as impaired or will no longer be used in continuing operations. The
company recorded $14 million to write down these assets to fair value. These
costs are included in other income (expense), net.
Step Change Program
In October 2002 the company announced The Step Change program to reduce ABB's
cost base and increase competitiveness, and pave the way for a change of
culture. It is scheduled to cut at least $800 million over an 18-month period.
In2002, the Company recognized total restructuring charges and related asset
write-downs of $79 million. Charges of $51 million were related to workforce
reductions and charges of $26 million were related to lease terminations and
other exit costs associated with this restructuring program. These costs are
included in other income (expense), net. Termination benefits of $13 million
were paid to approximately 200 employees and $1 million was paid to cover costs
associated with lease terminations and other exit costs. Workforce reductions
include production, managerial and administrative employees. At December 31,
2002, accrued liabilities included $38 million for termination benefits and $25
million for lease terminations and other exit costs.
As a result of Step Change program, certain assets have been identified as
impaired or will no longer be used in continuing operations. The company
recorded $2 million to write down these assets to fair value. These costs are
included in other income (expense), net.
• Borrowings
The Company's total borrowings outstanding at December 31, 2002 and 2001,
amounted to $7,952 million and $9,704 million respectively (after
reclassification to liabilities in discontinued operations of $86 million at
December 31, 2001 in connection with the discontinuation of certain businesses).
Of the total outstanding, $478 million at December 31, 2002 and $3,297 million
at December 31, 2001 was in the form of commercial paper with an average
interest rate of 4.8% and 2.7% respectively.
In March 2002, the Company drew down $2,845 million of a $3 billion committed
bank facility established in December 2001. A portion of these proceeds was used
to repay commercial paper borrowings, which were reduced to $1,760 million at
March 31, 2002. In the second quarter of 2002, primarily as a result of amounts
maturing, the outstanding commercial paper borrowings were further reduced to
$349 million at June 30, 2002. Following the issuance of additional commercial
paper in the third quarter of 2002, there was a net increase in commercial paper
outstanding to $674 million at September 30, 2002.
In May 2002, the Company issued $968 million aggregate principal amount of
convertible unsubordinated bonds due 2007. The bonds pay interest semi-annually
in arrears at a fixed annual rate of 4.625% and are convertible into
approximately 85 million shares of the Company.
Also in May 2002, the Company issued bonds due in 2009 with an aggregate
principal amount of 200 million pound sterling, or approximately $292 million,
which pay interest semi-annually in arrears at 10% per annum. In addition, the
Company issued in May 2002, bonds due 2008 with an aggregate principal amount of
500 million euro, or approximately $466 million, which pay interest annually in
arrears at 9.5% per annum. In line with the Company's policy of reducing its
interest rate and currency exposure, a cross currency and an interest rate swap,
respectively, have been used to modify the characteristics of these bonds.
Pursuant to the terms of the Company's $3 billion committed bank facility,
amended in April 2002, the proceeds from the convertible bonds, the
sterling-denominated bonds and the euro-denominated bonds were used to repay and
reduce the amount available under the facility to $1,315 million at June 30,
2002. Also in line with the terms of the facility, the proceeds from the sale of
the Company's Swedish real estate property announced in the second quarter of
2002, were used to repay and further reduce the amount available and outstanding
under the facility to $1,000 million by September 30, 2002. This amount was
repaid in the fourth quarter of 2002 and the facility closed.
In December 2002, the Company established a new $1.5 billion 364-day revolving
credit facility. As of December 31, 2002, nothing had been drawn under this new
facility. Up to a maximum amount of $750 million may be extended for up to a
further 364 days in the form of term loans.
The facility is secured by a package of ABB assets, including a portion of the
Oil, Gas and Petrochemicals division, which is earmarked for divestment in 2003
and is included in assets and liabilities in discontinued operations.
The facility also 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
As described above, 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, a component of the
convertible bonds must be accounted for as a derivative, with changes in fair
value recorded through earnings. As a result of the decline in the Company's
share price since issuance of the bonds, the Company has recorded a net gain of
$215 million in interest and other finance expense from the decrease in fair
value of the derivative liability, with a corresponding reduction in long-term
borrowings on the balance sheet.
• 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 $2.3
billion. The Structured Finance portfolio divested includes global
infrastructure financing, equipment leasing and financing businesses. The
Company recognized losses of approximately $190 million on the disposal of the
Structured Finance business. 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 approximately $244 million on a cash and debt
free basis. The Company recognized losses of approximately $54 million on the
disposal of the Metering business. 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 addition, the Company has discontinued a minor operation in its Power
Technology Products division and another minor operation in the New Ventures
business area.
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 $853 million recorded
in 2002 includes revenues of $3,947 million.
At December 31, 2002, the major classes of assets in discontinued operations
are: cash, cash equivalents and marketable securities for $300 million;
receivables for $1,285 million; inventories for $397 million; prepaid expenses
and other for $152 million; financing receivables for $41 million; goodwill for
$502 million, other intangible assets for $59 million; property, plant and
equipment for $121 million; and investments and other for $238 million. At
December 31, 2002, the major classes of liabilities in discontinued operations
are: accounts payable for $1,677 million; borrowings for $45 million; accrued
liabilities and other for $315 million; pension and post-retirement benefits for
$90 million; deferred tax liabilities for $40 million; and other liabilities for
$129 million.
• 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 2002 and 2001 periods
presented, as their inclusion would have been antidilutive. In the full year
2002 period, the potential common shares from the convertible bonds were
included in the computation of diluted earnings (loss) per share for the period
they were outstanding, while they were excluded from the computation of diluted
earning (loss) per share in the fourth quarter of 2002, as their inclusion would
have been antidilutive.
Basic earnings (loss) per share January - December October - December
2002 2001 2002 2001
(in millions, except per share data)
Income (loss) from continuing operations $ 66 $ (127) $ (128) $ (455)
Loss from discontinued operations, net of tax (853) (501) (710) (525)
Cumulative effect of change in accounting principles -- (63) -- --
(SFAS 133), net of tax
Net loss $ (787) $ (691) $ (838) $ (980)
Weighted average number of shares outstanding 1,113 1,132 1,113 1,113
Basic earnings (loss) per share:
Income (loss) from continuing operations $ 0.06 $ (0.11) $ (0.12) $ (0.41)
Loss from discontinued operations, net of tax (0.77) (0.44) (0.63) (0.47)
Cumulative effect of change in accounting principles -- (0.06) -- --
(SFAS 133), net of tax
Net loss $ (0.71) $ (0.61) $ (0.75) $ (0.88)
Diluted earnings (loss) per share January - December October - December
2002 2001 2002 2001
(in millions, except per share data)
Income (loss) from continuing operations $ 66 $ (127) $ (128) $ (455)
Effect of dilution:
Convertible bonds, net of tax (187) -- -- --
Income (loss) from continuing operations, adjusted (121) (127) (128) (455)
Loss from discontinued operations, net of tax (853) (501) (710) (525)
Cumulative effect of change in accounting principles -- (63) -- --
(SFAS 133), net of tax
Net loss $ (974) $ (691) $ (838) $ (980)
Weighted average number of shares outstanding 1,113 1,132 1,113 1,113
Dilution from convertible bonds 53 -- -- --
Diluted weighted average number of shares outstanding 1,166 1,132 1,113 1,113
Diluted earnings (loss) per share:
Income (loss) from continuing operations $ (0.10) $ (0.11) $ (0.12) $ (0.41)
Loss from discontinued operations, net of tax $ (0.74) $ (0.44) $ (0.63) $ (0.47)
Cumulative effect of change in accounting $ -- $ (0.06) $ -- $ --
principles (SFAS 133), net of tax
Net loss $ (0.84) $ (0.61) $ (0.75) $ (0.88)
• Commitments and contingencies
Asbestos related claims
In 2002, 34,568 claims against U.S. subsidiary Combustion Engineering (CE) were
settled, 26 percent more than in the same period in 2001.More than 33 percent
were settled without payment. Around 79,200 new claims were filed in 2002,
compared to 2001. Settlement costs prior to insurance reimbursement were US$ 206
million (US$ 136 million in 2001).
In the fourth quarter of 2002, new asbestos claims (33,880) increased by 114
percent over the third quarter of 2002, while claims settled (8,332) went up by
10 percent. At the end of December 2002, 136,648 claims were pending (111,052
end of September 2002). All of these claims are covered in the pre-packaged
Chapter 11 proceedings.
On February 17, 2003, ABB announced that CE has filed for a pre-packaged
Chapter 11 in the U.S. bankruptcy courts. Voting on the pre-packaged plan ended
on Feb. 19. Although the vote is subject to review and confirmation by the
court, 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.
ABB 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 U.S. dollars ($) unless otherwise stated. These figures are still
subject to final audit clearance. 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 December 31, 2002, should be read in conjunction with the
December 31, 2001, financial statements contained in the Company's Annual Report
and the Form 20-F.
New accounting standards
In 2001, the Company accounted for the adoption of Statement of Financial
Accounting Standards No. 133 (SFAS 133), Accounting for Derivative Instruments
and Hedging Activities, as amended, as a change in accounting principle. Based
on the Company's derivative positions at January 1, 2001, the Company recognized
the cumulative effect of the accounting change as a loss of $63 million, net of
tax, in the consolidated income statement and a reduction of $41 million, net of
tax, in accumulated other comprehensive income (loss).
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combinations, and Statement of
Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other Intangible
Assets, which modified the accounting for business combinations, goodwill and
identifiable intangible assets. All business combinations initiated after June
30, 2001, must be accounted for by the purchase method. Goodwill from
acquisitions completed after that date is not amortized, but will be charged to
operations when specified tests indicate that the goodwill is impaired, that is,
when the goodwill's fair value is lower than its carrying value. Certain
intangible assets will be recognized separately from goodwill, and will be
amortized over their useful lives. During 2002, all goodwill was required to be
tested for impairment as of January 1, 2002, with a transition adjustment
recognized for any impairment found. The Company completed this test in the
second quarter of 2002 and determined that no impairment of goodwill existed at
January 1, 2002. All goodwill amortization also ceased at that date. The Company
recognized goodwill amortization expense of $191 million and $55 million in the
year and three months ended December 31, 2001, respectively. Accordingly, income
from continuing operations and net loss would have been $28 million ($0.02 per
share) and $500 million ($0.44 per share), respectively, in the year ended
December 31, 2001, and loss from continuing operations and net loss would have
been $411 million ($0.37 per share) and $925 million ($0.83 per share),
respectively, in the three months ended December 31, 2001, if the Company had
not recognized amortization expense for goodwill that is no longer being
amortized in accordance with SFAS 142.
In June 2001, the Financial Accounting Standards Board issued SFAS 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. After management review of existing third party
contracts, lease agreements and other similar agreements and initial estimation
of the fair value of identified asset retirement obligations, the Company came
to a conclusion that application of the new rules will not result in any
material increase in property and equipment or increase in liabilities, and a
cumulative effect on net income and stockholder's equity in not expected to be
significant.
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 group of
assets as discontinued operations for all periods presented. 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 $12
million and of $6 million, net of tax, recorded as extraordinary items in the
fourth quarter of 2001 and in the first quarter of 2002, respectively, have been
reclassified and included in income from continuing operations.
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 is to be applied to
restructuring plans initiated after that date. The Company does not expect SFAS
146 to have a material impact on its results of operations.
Note 3 Summary of Consolidated Stockholders' Equity
(in millions)
Stockholders' equity at January 1, 2002 $ 2,014
Comprehensive loss:
Net loss (787)
Foreign currency translation adjustments (111)
Foreign currency translation adjustments related to discontinued operations (90)
Unrealized gain on available-for-sale securities, net of tax 3
Minimum pension liability adjustment, net of tax (107)
Derivatives qualifying as hedges (SFAS 133), net of tax 131
Total comprehensive loss (961)
Other (1)
Stockholders' equity at December 31, 2002 (unaudited) $ 1,052
Note 4 Segment and Geographic Data
During 2001, the Company realigned its worldwide enterprise around customer
groups, replacing its former business segments with four end-user divisions, two
channel partner divisions, and a financial services division. The four end-user
divisions - Utilities, Process Industries, Manufacturing and Consumer
Industries, and Oil, Gas and Petrochemicals - serve end-user customers with
products, systems and services. The two channel partner divisions - Power
Technology Products and Automation Technology Products - serve external channel
partners such as wholesalers, distributors, original equipment manufacturers and
system integrators directly and end-user customers indirectly through the
end-user divisions. The Financial Services division provides services and
project support for the Company as well as for external customers.
In April 2002, the Company merged its Process Industries division and its
Manufacturing and Consumer Industries division to form a new Industries
division, consisting of the following business areas: Automotive Industries;
Manufacturing; Electronics and Consumer Industries; Marine and Turbocharging;
Paper, Printing, Metals and Minerals; and Petroleum, Chemicals and Life
Sciences. Segment data are presented below to reflect this change and prior
period data have been restated accordingly.
• The Utilities division serves electric, gas and water
utilities - whether state-owned or private, global or local, operating in
liberalized or regulated markets - with a portfolio of products, services and
systems. The division's principal customers are generators of power, owners and
operators of power transmission systems, energy traders and local distribution
companies.
• The Industries division serves the automotive, cement,
chemical, distribution, electronics, food and beverage, life sciences, marine,
metals, mining, paper, petroleum, printing and telecommunications industries
with application-specific power and automation technology.
• The Power Technology Products division covers the entire
spectrum of technology for power transmission and power distribution including
transformers, switchgear, breakers, capacitors and cables as well as other
products, platforms and technologies for high- and medium-voltage applications.
Power technology products are used in industrial, commercial and utility
applications. They are sold through the Company's end user divisions as well as
through external channel partners, such as distributors, contractors and
original equipment manufacturers and system integrators.
• The Automation Technology Products division provides
products, software and services for the automation and optimization of
industrial and commercial processes. Key technologies include measurement and
control, instrumentation, process analysis, drives and motors, power
electronics, robots, and low voltage products, all geared toward one common
industrial IT architecture for real-time automation and information solutions
throughout a business. These technologies are sold to customers through the
end-user divisions as well as through external channel partners such as
wholesalers, distributors, original equipment manufacturers and system
integrators.
• The Non-core activities division was created to group the following
activities of the Company: Equity Ventures, Insurance, the remaining Structured
Finance business, Building Systems, Semiconductors, Customer Service, Group
Processes, Air Handling, Logistic Systems, and New Ventures.
In order to streamline the Company's structure and improve operational
performance, the Company is, as of January 1, 2003, putting into place two
divisions: Power Technologies, which will combine the Power Technology Products
and Utilities divisions; and Automation Technologies, which will combine the
Automation Technology Products and Industries divisions.
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. For the 2001 periods presented, division
revenues and EBIT are presented as if certain historical third-party sales by
subsidiaries in the product divisions had been routed through other divisions.
Segment data
Orders received
(in millions) January - December October - December
2002 2001 2002 2001
Utilities $ 4,458 $ 6,436 $ 805 $ 1,620
Industries 4,614 4,865 1,166 1,071
Power Technology Products 4,387 4,221 1,064 949
Automation Technology Products 5,074 4,669 1,339 1,073
Non-core activities 4,161 5,072 1,091 1,340
Corporate(1) (4,582) (5,591) (964) (1,160)
Total $ 18,112 $ 19,672 $ 4,501 $ 4,893
Revenues
(in millions) January - December October - December
2002 2001 2002 2001
Utilities $ 4,826 $ 5,634 $ 1,288 $ 1,672
Industries 4,412 4,995 1,339 1,406
Power Technology Products 4,355 3,961 1,179 1,140
Automation Technology Products 5,035 4,756 1,394 1,196
Non-core activities 4,186 5,130 1,166 1,560
Corporate(1) (4,519) (5,094) (1,098) (1,444)
Total $ 18,295 $ 19,382 $ 5,268 $ 5,530
EBIT (operating income)(2)
(in millions) January - December October - December
2002 2001 2002 2001
Utilities $ 75 $ 158 $ (10) $ 36
Industries 145 151 16 20
Power Technology Products 353 234 101 44
Automation Technology Products 373 364 91 44
Non-core activities (217) (397) (110) (480)
Corporate(1) (393) (331) (88) (102)
Total $ 336 $ 179 $ 0 $ (438)
Depreciation and amortization(2)
(in millions) January - December October - December
2002 2001 2002 2001
Utilities $ 52 $ 73 $ 14 $ 19
Industries 56 94 17 25
Power Technology Products 117 119 31 31
Automation Technology Products 158 218 38 49
Non-core activities 113 120 34 34
Corporate 77 86 25 25
Total $ 573 $ 710 $ 159 $ 183
(in millions) Net operating assets
December 31, 2002 December 31, 2001
Utilities $ 992 $ 790
Industries 1,129 924
Power Technology Products 1,389 1,283
Automation Technology Products 2,278 2,287
Non-core activities 3,759 3,525
Corporate 1,634 1,974
Total $ 11,181 $ 10,783
Number of employees(3)
December 31, 2002 December 31, 2001
Utilities 14,774 15,745
Industries 23,257 23,392
Power Technology Products 26,392 27,555
Automation Technology Products 33,343 39,462
Non-core activities 26,441 33,953
Oil, Gas and Petrochemicals 11,915 13,471
Corporate 2,929 3,287
Total 139,051 156,865
(1) Includes adjustments to eliminate inter-company transactions.
(2) The Company recognized, in its operating segments, the following
amortization expense for goodwill in 2001 and the fourth quarter of 2001,
respectively: Utilities, $24 million and $6 million; Industries, $41 million and
$11 million; Power Technology Products, $6 million and $2 million; Automation
Technology Products, $58 million and $16 million. The Company's total
amortization expense for goodwill in 2001 and the fourth quarter of 2001 was
$191 million and $55 million, respectively.
(3) Includes businesses in discontinued operations.
Geographic Information
Orders received (4)
(in millions) January - December October - December
2002 2001 2002 2001
Europe $ 10,191 $ 10,748 $ 2,609 $ 2,466
The Americas 3,993 4,972 858 1,484
Asia 2,528 2,700 732 585
Middle East and Africa 1,400 1,252 302 358
Total $ 18,112 $ 19,672 $ 4,501 $ 4,893
Revenues (4)
(in millions) January - December October - December
2002 2001 2002 2001
Europe $ 10,264 $ 10,852 $ 2,958 $ 3,087
The Americas 4,101 4,863 1,068 1,367
Asia 2,603 2,435 804 724
Middle East and Africa 1,327 1,232 438 352
Total $ 18,295 $ 19,382 $ 5,268 $ 5,530
(4) Orders received and revenues have been reflected in the regions based on the
location of the customer.
Appendix
Key financial figures by division (new structure) Q1-Q4 2002, full-year 2001
Unaudited
Please note that this is a preliminary restatement. The figures may change
depending on adjustments to the scope of activities within each division.
Orders Received
US$ in millions Oct.-Dec. July-Sep. April-June Jan.-Mar. Full year
2002 2002 2002 2002 2001
Automation Technologies 2,177 2,036 2,322 2,164 8,319
Power Technologies 1,589 1,514 1,809 1,931 7,474
Non-core activities 1,091 1,105 1,023 942 5,072
Corporate -356 -406 -487 -342 -1,193
Total 4,501 4,249 4,667 4,695 19,672
Revenues
US$ in millions Oct.-Dec. July-Sep. April-June Jan.-Mar. Full year
2002 2002 2002 2002 2001
Automation Technologies 2,386 2,064 2,171 1,861 8,508
Power Technologies 2,047 1,743 1,786 1,527 6,873
Non-core activities 1,166 1,113 1,040 867 5,130
Corporate -331 -395 -440 -310 -1,129
Total 5,268 4,525 4,557 3,945 19,382
Earnings before interest and taxes
US$ in millions Oct.-Dec. July-Sep. April-June Jan.-Mar. Full year
2002 2002 2002 2002 2001
Automation Technologies 107 141 162 108 515
Power Technologies 91 97 130 110 392
Non-core activities1) -110 -72 -12 -23 -397
Corporate1) -88 -154 -166 15 -331
Total 0 12 114 210 179
1) See next page for detailed breakdown of EBIT for these activities
Depreciation and amortization
US$ in millions Oct.-Dec. July-Sep. April-June Jan.-Mar. Full year
2002 2002 2002 2002 2001
Automation Technologies 55 52 54 53 312
Power Technologies 45 42 38 44 192
Non-core activities 34 31 24 24 120
Corporate 25 17 15 20 86
Total 159 142 131 141 710
Restructuring
US$ in millions Full year 2002 Full year 2001
Automation Technologies -129 -81
Power Technologies -60 -76
Non-core activities -52 -22
Corporate -20 -41
Total -261 -220
Restructuring and related asset write-downs
US$ in millions Oct.-Dec. July-Sep. April-June Jan.-Mar. Full year
2002 2002 2002 2002 2001
Automation Technologies -89 -10 -16 -18 -83
Power Technologies -24 -12 -5 -24 -76
Non-core activities -30 -45 -7 -17 -91
Corporate -3 -9 -54 9 -61
Total -146 -76 -82 -50 -311
Capital expenditure
US$ in millions Full year 2002 Full year 2001
Automation Technologies 146 157
Power Technologies 117 132
Non-core activities 54 145
Corporate 143 173
Total 460 607
Number of Employees
Full year 2002 Full year 2001
Automation Technologies 56,600 62,854
Power Technologies 41,166 43,300
Non-core activities 26,441 33,953
Corporate 2,929 3,287
Oil, Gas and Petrochemicals 11,915 13,471
Total 139,051 156,865
Earnings before interest and taxes (EBIT) for Non-core activities, Corporate
US$ in millions Oct.-Dec. July-Sep. April-June Jan.-Mar. Full year
2002 2002 2002 2002 2001
Non-core activities -110 -72 -12 -23 -397
Equity Ventures 8 -1 17 14 76
Remaining Structured Finances -14 43 19 10 82
Insurance -3 12 14 17 -342
Building Systems -42 -42 -22 -8 20
Other activities -59 -84 -40 -56 -233
Corporate -88 -154 -166 15 -331
HQ/Stewardship 7 -115 -77 29 -137
Research & development -24 -24 -27 -18 -103
Other -71 -15 -62 4 -91
Summary Consolidated Income Statements (unaudited)
US$ in millions Oct.-Dec. 2002 July-Sep. April-June Jan.-Mar. 2002 Full year
2002 2002 2001
Revenues 5,268 4,525 4,557 3,945 19,382
Cost of sales (4,122) (3,478) (3,326) (2,843) (14,910)
Gross profit 1,146 1,047 1,231 1,102 4,472
Selling, general and administrative (1,052) (984) (1,090) (907) (3,993)
expenses
Amortization expense (11) (10) (10) (10) (195)
Other income (expense), net (83) (41) (17) 25 (105)
Earnings (loss) before interest and 0 12 114 210 179
taxes
Finance, net (161) 177 (87) (58) (190)
Income (loss) from continuing (161) 189 27 152 (11)
operations before taxes and minority
interest
Provision for taxes 55 (64) (9) (52) (80)
Minority interest (22) (22) (14) (13) (36)
Income (loss) from continuing (128) 103 4 87 (127)
operations
Income (loss) from discontinued (710) (173) 3 27 (501)
operations, net of tax
Cumulative effect of change in -- -- -- -- (63)
accounting principles (SFAS 133),
net of tax
Net income (loss) (838) (70) 7 114 (691)
Summary Consolidated Balance Sheet (unaudited)
US$ in millions At Dec. 31 At Sept. 30 At June 30 At Mar. 31 At Dec. 31
2002 2002 2002 2002 2001
Cash and equivalents 2,478 1,597 2,040 3,670 2,442
Marketable securities 2,212 1,896 2,212 2,578 2,924
Receivables, net 7,197 6,513 6,980 6,395 6,692
Inventories, net 2,377 2,883 2,914 2,675 2,568
Prepaid expenses and other 2,694 2,097 2,257 1,757 2,122
Assets in discontinued operations 3,095 7,124 7,157 6,137 5,912
Total current assets 20,053 22,110 23,560 23,212 22,660
Financing receivables, non-current 1,802 1,996 2,033 2,143 2,086
Property, plant and equipment, net 2,792 2,657 2,829 2,792 2,753
Goodwill 2,321 2,333 2,295 2,186 2,188
Other intangible assets, net 591 594 601 573 587
Investments and other 1,990 2,237 2,253 2,133 2,070
Total assets 29,549 31,927 33,571 33,039 32,344
Accounts payable, trade 2,961 2,495 2,567 2,569 2,506
Accounts payable, other 2,195 2,410 2,600 2,267 2,517
Short-term borrowings and current 2,576 3,641 3,945 6,626 4,701
maturities of long-term borrowings
Accrued liabilities and other 8,352 7,038 7,297 6,618 7,100
Liabilities in discontinued 2,295 3,664 3,857 3,080 3,342
operations
Total current liabilities 18,379 19,248 20,266 21,250 20,166
Long-term borrowings 5,376 5,475 5,789 4,367 5,003
Pension and other related benefits 1,659 1,829 1,812 1,612 1,617
Deferred taxes 1,179 1,088 1,072 1,069 1,049
Other liabilities 1,647 2,085 2,170 2,285 2,280
Total liabilities 28,240 29,725 31,109 30,583 30,115
Minority interest 257 270 218 217 215
Capital stock and additional 2,027 2,027 2,027 2,028 2,028
paid-in capital (1,280,009,432
shares authorized, 1,200,009,432
shares issued)
Retained earnings 2,648 3,486 3,556 3,549 3,435
Accumulated other comprehensive (1,873) (1,831) (1,589) (1,588) (1,699)
loss
Treasury stock, at cost (1,750) (1,750) (1,750) (1,750) (1,750)
(86,830,312)
Total stockholders' equity 1,052 1,932 2,244 2,239 2,014
Total liabilities and stockholders' 29,549 31,927 33,571 33,039 32,344
equity
Summary Consolidated Statements of Cash Flows (unaudited)
US$ in millions Oct-Dec July-Sept April-June Jan-Mar 2002 Full year
2002 2002 2001
2002
Operating Activities
Net income (loss) (838) (70) 7 114 (691)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciations and amortization 169 151 139 152 787
Change in provisions1) 230 (89) (183) (146) 1,146
Pension and other related benefits 75 40 28 1 1
Deferred taxes (72) (27) (28) 6 (89)
Net gain from sale of property, plant (3) (9) (8) (3) (23)
and equipment
Other 213 (158) 56 (40) 121
Changes in operating assets and
liabilities:
Marketable securities (trading) -- 35 397 66 72
Trade receivables 231 161 (134) 347 65
Inventories 502 67 (38) (164) (106)
Trade payables 132 (131) 111 (33) 736
Other assets and liabilities, net (278) (109) (262) (481) (36)
Net cash provided by (used in) 361 (139) 85 (181) 1,983
operating activities
Investing activities
Changes in financing receivables (99) 192 73 (153) (907)
Purchases of marketable securities (1,848) (792) (708) (836) (3,280)
(other than trading)
Purchases of property, plant and (158) (147) (145) (152) (761)
equipment
Acquisitions of businesses (net of cash (45) (35) (54) (10) (578)
acquired)
Proceeds from sales of marketable 1,696 797 736 1,103 3,873
securities (other than trading)
Proceeds from sales of property, plant 86 47 320 23 152
and equipment
Proceeds of sales from businesses (net 2,326 28 59 170 283
of cash disposed)
Net cash provided by (used in) 1,958 90 281 145 (1,218)
investing activities
1) Restated to reflect the change in all provisions (previously this line
comprised restructuring provisions only)
continued next page
Summary Consolidated Statements of Cash Flows (unaudited) (cont'd)
US$ in millions Oct-Dec July-Sept April-June Jan-Mar 2002 Full year
2002 2002 2001
2002
Financing activities
Changes in borrowings (1,796) (272) (2,083) 1,336 2,639
Treasury and capital stock transactions -- -- -- -- (1,393)
Dividends paid -- -- -- -- (502)
Other 140 (16) 18 (69) (67)
Net cash provided by (used in) financing (1,656) (288) (2,065) 1,267 677
activities
Effects of exchange rate changes on cash 91 (34) 90 (6) (72)
and cash equivalents
Net change in cash and cash equivalents 754 (371) (1,609) 1,225 1,370
Cash and equivalents (beginning of period 1,597 2,041 3,670 2,442 1,244
- restated)
Cash and equivalents (end of period - 415 342 322 325 153
assets in discontinued operations)
Cash and equivalents (beginning of period 2,012 2,383 3,992 2,767 1,397
- total)
Cash and equivalents (end of period - 2,478 1,597 2,041 3,670 2,442
restated)
Cash and equivalents (end of period - 288 415 342 322 325
assets in discontinued operations)
Cash and equivalents (end of period - 2,766 2,012 2,383 3,992 2,767
total)
Interest paid 30 169 139 137 702
Taxes paid 96 62 97 43 273
This information is provided by RNS
The company news service from the London Stock Exchange RIDFIV
Latest directors dealings
- 1 day ago The Renewables Infrastructure Group Limited
- 1 day ago The Renewables Infrastructure Group Limited
- 1 day ago Smurfit Westrock (DI)
- 1 day ago Menhaden Resource Efficiency
- 1 day ago BP