20-F

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TABLE OF CONTENTS
Index to Consolidated Financial Statements and Schedules

As filed with the Securities and Exchange Commission on March 10, 2009

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

FORM 20-F

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-16429

ABB Ltd
(Exact name of registrant as specified in its charter)

Switzerland
(Jurisdiction of incorporation or organization)
Affolternstrasse 44
CH-8050 Zurich
Switzerland
(Address of principal executive offices)
Richard A. Brown
Affolternstrasse 44
CH-8050 Zurich
Switzerland
Telephone: +41-43-317-7111
Facsimile: +41-43-317-7992
(Name, Telephone, E-mail and/or Facsimile
number and Address of Company Contact Person)

          Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
American Depositary Shares, each representing one Registered Share Registered Shares, par value CHF 2.02	New York Stock Exchange New York Stock Exchange*

          Securities registered or to be registered pursuant to Section 12(g) of the Act: None.

          Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.

          Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 2,322,792,835 Registered Shares (including treasury shares)

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

          If this is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o    No ý

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o

          Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ý International Financial Reporting Standards as issued by the International Accounting Standards Board o Other o

          If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. item 17    o item 18 o

          If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

*

Listed on the New York Stock Exchange not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.

TABLE OF CONTENTS

	Page
PART I	3
Item 1. Identity of Directors, Senior Management and Advisers	3
Item 2. Offer Statistics and Expected Timetable	3
Item 3. Key Information	3
Item 4. Information on the Company	15
Item 4A. Unresolved Staff Comments	33
Item 5. Operating and Financial Review and Prospects	33
Item 6. Directors, Senior Management and Employees	82
Item 7. Major Shareholders and Related Party Transactions	99
Item 8. Financial Information	100
Item 9. The Offer and Listing	102
Item 10. Additional Information	104
Item 11. Quantitative and Qualitative Disclosures About Market Risk	117
Item 12. Description of Securities Other than Equity Securities	119
PART II	120
Item 13. Defaults, Dividend Arrearages and Delinquencies	120
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds	120
Item 15. Controls and Procedures	120
Item 15T. Controls and Procedures	121
Item 16A. Audit Committee Financial Expert	121
Item 16B. Code of Ethics	121
Item 16C. Principal Accountant Fees and Services	121
Item 16D. Exemptions from the Listing Standards for Audit Committees	122
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	122
Item 16.F. Change in Registrant's Certifying Accountant	122
Item 16.G. Corporate Governance	122
PART III	123
Item 17. Financial Statements	123
Item 18. Financial Statements	123
Item 19. Exhibits	123

i

INTRODUCTION

        ABB Ltd is a corporation organized under the laws of Switzerland. In this report, "the ABB Group," "ABB," the "Company," "we," "our" and "us" refer to ABB Ltd and its consolidated subsidiaries (unless the context otherwise requires). We also use these terms to refer to ABB Asea Brown Boveri Ltd and its subsidiaries prior to the establishment of ABB Ltd as the holding company for the entire ABB Group in 1999, as described in this report under "Item 4. Information on the Company—Introduction—History of the ABB Group." Our American Depositary Shares (each representing one registered share of ABB Ltd) are referred to as "ADSs." The registered shares of ABB Ltd are referred to as "shares."

        Our principal corporate offices are located at Affolternstrasse 44, CH-8050 Zurich, Switzerland, telephone number +41-43-317-7111.

FINANCIAL AND OTHER INFORMATION

        ABB Ltd has prepared its statutory unconsolidated financial statements in accordance with the Swiss Code of Obligations. The Consolidated Financial Statements of ABB Ltd, including the notes thereto, as of December 31, 2008 and 2007 and for each of the years in the three-year period ended December 31, 2008 (our Consolidated Financial Statements) have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP).

        In this report: (i)"$," "U.S. dollars" and "USD" refer to the lawful currency of the United States of America; (ii) "CHF" and "Swiss francs" refer to the lawful currency of Switzerland; (iii) "€" and "euro" refer to the lawful currency of the participating member states of the European Economic and Monetary Union (Eurozone); (iv) "SEK" and "Swedish krona" refer to the lawful currency of Sweden; (v) "£," "sterling," "pounds sterling" and "GBP" refer to the lawful currency of the United Kingdom; (vi) "Indian rupee" refers to the lawful currency of India; and (vii) "Chinese renminbi" refers to the lawful currency of the People's Republic of China.

        Except as otherwise stated, all monetary amounts in this report are presented in U.S. dollars. Where specifically indicated, amounts in Swiss francs have been translated into U.S. dollars. These translations are provided for convenience only, and they are not representations that the Swiss franc could be converted into U.S. dollars at the rate indicated. These translations have been made using the twelve o'clock buying rate in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York as of December 31, 2008, unless otherwise indicated. The twelve o'clock buying rate for Swiss francs on December 31, 2008 was $1.00 = CHF 1.0673. The twelve o'clock buying rate for Swiss francs on March 6, 2009 was $1.00 = CHF 1.1525.

FORWARD-LOOKING STATEMENTS

        This report includes forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "may," "will," or "should" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, dispositions, strategies and the countries and industries in which we operate.

        These forward-looking statements include, but are not limited to the following:

•

Statements in "Item 3. Key Information—Dividends and Dividend Policy" regarding our policy on future dividend payments;

1

•

Statements in "Item 3. Key Information—Risk Factors," "Item 4. Information on the Company" and "Item 5. Operating and Financial Review and Prospects" regarding our management objectives and the timing of intended capital expenditures;

•

Statements in "Item 5. Operating and Financial Review and Prospects" regarding our management objectives, including our mid term outlook, as well as trends in results, prices, volumes, operations, margins and overall market trends; and

•

Statements in "Item 8. Financial Information—Legal Proceedings" regarding the outcome of certain compliance matters under investigation.

        By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the countries and industries in which we operate, may differ materially from those described in or suggested by the forward-looking statements contained in this report. In addition, even if our results of operations, financial condition and liquidity, and the development of the countries and industries in which we operate, are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause actual results to differ materially from our expectations are contained in cautionary statements in this report and include, without limitation, the following:

•

Our business is exposed to risks associated with the ongoing financial crisis, the weakening of the global economy and political conditions

•

Illegal behavior by any of our employees or agents could have a material adverse impact on our consolidated operating results, cash flows, and financial position as well as on our reputation and our ability to do business.

•

Our operations in emerging markets expose us to risks associated with conditions in those markets.

•

Undertaking long-term fixed price or turnkey projects exposes our businesses to risk of loss should our actual costs exceed our estimated or budgeted costs.

•

Our international operations expose us to the risk of fluctuations in currency exchange rates.

•

Our hedging activities may not protect us against the consequences of significant fluctuations in exchange rates, interest rates or commodity prices on our earnings and cash flows.

•

Increases in the costs of our raw materials may adversely affect our financial performance.

•

The weakening or unavailability of our intellectual property rights could adversely affect our business.

•

We operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.

•

Industry consolidation could result in more powerful competitors and fewer customers.

•

We are subject to environmental laws and regulations in the countries in which we operate. We incur costs to comply with such regulations, and our ongoing operations may expose us to environmental liabilities.

•

We may be the subject of product liability claims.

•

We may encounter difficulty in managing our business due to the global nature of our operations.

2

•

We have retained liability for environmental remediation costs relating to businesses that we sold in 2000, and we could be required to make payments in respect of these retained liabilities in excess of established provisions.

•

If we fail to make the payments required under the Modified Plan of Reorganization for Combustion Engineering (the CE Plan) we could trigger an injunction default which would lead to the termination of the channeling injunction under the CE Plan.

•

If we are unable to obtain performance and other guarantees from financial institutions, we may be prevented from bidding on, or obtaining, some contracts, or our costs with respect to such contracts could be higher.

•

If we cannot successfully implement the planned integration of our different Enterprise Resource Planning (ERP) systems, then we may be unable to produce reliable accounts, and our business and reputation may be adversely affected.

•

If we are unable to successfully adapt our internal controls over financial reporting to changes in circumstance, our ability to report our financial results on a timely and accurate basis may be adversely affected. As a result, investors could lose confidence in our financial reporting, which may harm our business and the trading price of our stock.

•

If we are unable to attract and retain qualified management and personnel then our business may be adversely affected.

        We urge you to read the sections of this report entitled "Item 3. Key Information—Risk Factors," "Item 4. Information on the Company" and "Item 5. Operating and Financial Review and Prospects" for a more complete discussion of the factors that could affect our future performance and the countries and industries in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking circumstances described in this report and the assumptions underlying them may not occur.

        Except as required by law or applicable stock exchange rules or regulations, we undertake no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this report.

PART I

Item 1.    Identity of Directors, Senior Management and Advisers

        Not applicable

Item 2.    Offer Statistics and Expected Timetable

        Not applicable

Item 3.    Key Information

SELECTED FINANCIAL DATA

        The following table presents our selected financial and operating information at the dates and for each of the periods indicated. You should read the following information together with the information contained in "Item 5. Operating and Financial Review and Prospects," as well as our Consolidated Financial Statements and the notes thereto, included elsewhere in this report.

3

        Our selected financial data are presented in the following tables in accordance with U.S. GAAP and have been derived from our published Consolidated Financial Statements. Our Consolidated Financial Statements as of and for each of the years ended December 31, 2008, 2007, 2006, 2005 and 2004 were audited by Ernst & Young AG, except for the 2004 financial statements of Jorf Lasfar Energy Company S.C.A. (Jorf Lasfar), a corporation in which, prior to its sale in May 2007, we had a 50 percent interest, which were audited by other independent auditors.

        The Consolidated Financial Statements as of December 31, 2004 have not been audited after the reclassifications of certain businesses between continuing operations and discontinued operations.

INCOME STATEMENT DATA⁽¹⁾:

		Year ended December 31,
		2008			2007			2006			2005			2004
		($ in millions, except per share data)
Total revenues			34,912			29,183			23,281			20,964			18,987
Total cost of sales			(23,972	)		(20,215	)		(16,537	)		(15,510	)		(14,219	)
Gross profit			10,940			8,968			6,744			5,454			4,768
Selling, general and administrative expenses			(5,822	)		(4,975	)		(4,326	)		(3,780	)		(3,672	)
Other income (expense), net			(566	)		30			139			37			(41	)
Earnings before interest and taxes			4,552			4,023			2,557			1,711			1,055
Interest and dividend income			315			273			147			153			146
Interest and other finance expense			(349	)		(286	)		(307	)		(407	)		(355	)
Income from continuing operations before taxes, minority interest and cumulative effect of accounting change			4,518			4,010			2,397			1,457			846
Provision for taxes			(1,119	)		(595	)		(686	)		(464	)		(258	)
Minority interest			(260	)		(244	)		(179	)		(126	)		(100	)
Income from continuing operations before cumulative effective of accounting change			3,139			3,171			1,532			867			488
Income (loss) from discontinued operations, net of tax(2)			(21	)		586			(142	)		(127	)		(523	)
Income (loss) before cumulative effect of accounting change			3,118			3,757			1,390			740			(35	)
Cumulative effect of accounting change, net of tax(3)			—			—			—			(5	)		—
Net income (loss)			3,118			3,757			1,390			735			(35	)
Basic earnings (loss) per share:
	Income from continuing operations before cumulative effect of accounting change		1.37			1.40			0.72			0.43			0.24
	Income (loss) from discontinued operations, net of tax		(0.01	)		0.26			(0.07	)		(0.07	)		(0.26	)
	Cumulative effect of accounting change, net of tax		—			—			—			—			—
	Net income (loss)		1.36			1.66			0.65			0.36			(0.02	)
Diluted earnings (loss) per share:
	Income from continuing operations before cumulative effect of accounting change		1.37			1.38			0.69			0.42			0.24
	Income (loss) from discontinued operations, net of tax		(0.01	)		0.25			(0.06	)		(0.06	)		(0.26	)
	Cumulative effect of accounting change, net of tax		—			—			—			—			—
	Net income (loss)		1.36			1.63			0.63			0.36			(0.02	)

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BALANCE SHEET DATA⁽¹⁾:

	At December 31,
	2008		2007		2006		2005		2004
	($ in millions)
Cash and equivalents		6,399		4,650		4,198		3,136		3,558
Marketable securities and short-term investments		1,407		3,460		528		368		524
Total assets		33,181		31,001		25,142		22,276		24,677
Long-term debt		2,009		2,138		3,160		3,932		4,717
Total debt(4)		2,363		2,674		3,282		4,096		5,334
Capital stock and additional paid-in capital		4,695		5,634		4,514		3,121		3,083
Total stockholders' equity		11,158		10,957		6,038		3,483		2,824

CASH FLOW DATA:

	Year ended December 31,
	2008			2007			2006			2005			2004
	($ in millions)
Net cash provided by (used in) operating activities		3,958			3,054			1,939			1,012			902
Net cash provided by (used in) investing activities		114			(2,291	)		(694	)		(316	)		354
Net cash provided by (used in) financing activities		(2,119	)		(625	)		(392	)		(896	)		(2,745	)

⁽¹⁾

During 2006, Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123R) and Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106 and 123(R) (SFAS 158) were adopted. For the impact of these standards, see "Note 17 Employee benefits" and "Note 18 Share-based payment arrangements" to our Consolidated Financial Statements. As of January 1, 2007, we adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). For the impact of FIN 48, see "Note 2 Significant accounting policies" and "Note 16 Taxes" to our Consolidated Financial Statements.

⁽²⁾

Income (loss) from discontinued operations, net of tax includes costs related to the Company's asbestos obligation of its U.S. subsidiary Combustion Engineering Inc., of approximately $31 million, $0 million, $70 million, $133 million and $262 million in 2008, 2007, 2006, 2005 and 2004 respectively. Income from discontinued operations in 2007 primarily relates to the gain of $530 million realized on the sale of the Company's downstream oil and gas business. For additional information, see "Item 5. Operating and Financial Review and Prospects" and "Note 3 Acquisitions, divestments and discontinued operations" and "Note 15 Commitments and contingencies" to the Consolidated Financial Statements.

⁽³⁾

We accounted for the adoption of Interpretation 47 of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (FIN 47) as a change in accounting principle in 2005. Based on our outstanding obligations, we recognized the cumulative effect of the accounting change of $5 million loss in 2005 in the Consolidated Income Statement.

⁽⁴⁾

Total debt is equal to the sum of short-term debt (including current maturities of long-term debt) and long-term debt.

5

        The weighted-average number of shares outstanding was as follows:

	Year ended December 31,
	2008		2007		2006		2005		2004
Weighted-average number of shares (in millions)		2,287		2,258		2,128		2,029		2,028

DIVIDENDS AND DIVIDEND POLICY

        Payment of dividends is subject to general business conditions, the ABB Group's current and expected financial condition and performance and other relevant factors including growth opportunities.

        Dividends may be paid only if ABB Ltd has sufficient distributable profits from previous fiscal years or sufficient free reserves to allow the distribution of a dividend. In addition, at least 5 percent of ABB Ltd's annual net profits must be retained and booked as legal reserves, unless these reserves already amount to 20 percent of ABB Ltd's share capital. As a holding company, ABB Ltd's main sources of income are dividend and interest from its subsidiaries. At December 31, 2008, of the CHF 12,567 million of stockholders' equity recorded in the unconsolidated statutory financial statements of ABB Ltd prepared in accordance with Swiss law, CHF 4,692 million was attributable to the share capital, CHF 1,633 million was attributable to legal reserves, CHF 1,032 million was attributable to reserves for treasury shares, CHF 2,655 million was attributable to other reserves and CHF 2,555 million represents net income and retained earnings available for distribution.

        ABB Ltd may only pay out a dividend if it has been proposed by a shareholder or the board of directors of ABB Ltd and approved at a general meeting of shareholders, and the auditors confirm that the dividend conforms to statutory law and the Articles of Incorporation of ABB Ltd. In practice, the shareholders' meeting usually approves dividends as proposed by the board of directors, if the board of directors' proposal is confirmed by the statutory auditors.

        Dividends are usually due and payable no earlier than three trading days after the shareholders' resolution. Dividends not collected within five years after the due date accrue to ABB Ltd and are allocated to its other reserves. For information about the deduction of withholding taxes from dividend payments, see "Item 10. Additional Information—Taxation."

        We have established a dividend access facility for shareholders who are resident in Sweden under which these shareholders may register with VPC AB (Sweden) (VPC), as a holder of up to 600,004,716 shares, and receive dividends in the Swedish kronor equivalent to the dividend paid in Swiss francs without deduction of Swiss withholding tax. For further information, see "Item 10. Additional Information—Taxation."

        Because ABB Ltd pays cash dividends, if any, in Swiss francs (subject to the exception for certain shareholders in Sweden described above), exchange rate fluctuations will affect the U.S. dollar amounts received by holders of ADSs upon conversion of those cash dividends by Citibank, N.A., the depositary, in accordance with the Amended and Restated Deposit Agreement dated May 7, 2001.

        ABB Ltd did not pay any dividends with respect to the year ended December 31, 2004. With respect to the years ended December 31, 2005 and December 31, 2006, ABB Ltd paid a dividend in May 2006 of CHF 0.12 (USD 0.10) per share and in May 2007 of CHF 0.24 (USD 0.20) per share. With respect to the year ended December 31, 2007, ABB Ltd paid a dividend in 2008 of CHF 0.48 (USD 0.46) per share by way of a nominal value reduction (reduction in the par value of each share). The USD amounts for each of the foregoing dividend payments made in CHF have been translated using the average rates of the month in which the dividends were paid.

        With respect to the year ended December 31, 2008, ABB Ltd's board of directors has proposed to pay a dividend of CHF 0.48 per share by way of a nominal value reduction, subject to approval by its shareholders at the May 2009 Annual General Meeting and certain subsequent actions required under Swiss law.

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RISK FACTORS

You should carefully consider all of the information set forth in this report and the following description of risks and uncertainties that we currently believe may exist. Our business, financial condition or results of operations could be adversely affected by any of these risks. Additional risks of which we are unaware or that we currently deem immaterial may also impair our business operations. This annual report also contains forward-looking statements that involve risks and uncertainties. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those described below and elsewhere in this annual report. See "Forward-Looking Statements."

Our business is exposed to risks associated with the ongoing financial crisis, the weakening of the global economy and political conditions.

        Adverse changes in economic or political conditions, both inside and outside the U.S., could have a material adverse effect on our business, financial condition, results of operations and liquidity. During 2008, the volatility in the global financial markets reached unprecedented levels. Volatile oil prices, falling equity market values, declining business, weakened consumer confidence, risks of increased inflation and deflation and increased unemployment rates have created fears of a severe recession. These disruptions are likely to have an ongoing adverse effect on the world economy. We are unable to predict how long the economic downturn will last. A continuing economic downturn and financial market disruptions may adversely impact the demand for our products and services. For example, the current lack of confidence and the shortage of credit in the financial markets may prevent our customers and suppliers from obtaining the financing required to pursue their business activities as planned, and thereby force them to modify, delay or cancel plans to purchase or supply our products or services or to execute transactions. Payment terms, especially the level of advance payments in large orders, may become less favorable. In addition, if our customers do not generate sufficient revenue, or fail to obtain access to the capital markets, they may not be able to pay, or may delay payment of, the amounts they owe us. Customers with liquidity issues may lead to additional bad debt expense for us, which may adversely affect our results of operations and cash flows. In addition, we are subject to the risk that the counterparties to our credit agreements and hedging transactions may go bankrupt if they suffer catastrophic demand on their liquidity that will prevent them from fulfilling their contractual obligations to us.

        The U.S. Government recently enacted legislation and created several programs to help stabilize credit markets and financial institutions and restore liquidity, including the Emergency Economic Stabilization Act of 2008, the Federal Reserve's Commercial Paper Funding Facility (CPFF) and Money Market Investor Funding Facility, the Federal Deposit Insurance Corporation's (FDIC) Temporary Liquidity Guarantee Program. Additionally, the governments of many nations have announced similar measures for institutions in their respective countries. There is no assurance that these programs individually or collectively will have beneficial effects in the credit markets, will address credit or liquidity issues of companies that participate in the programs or will reduce volatility or uncertainty in the financial markets. The failure of these programs to have their intended effects could have a material adverse effect on the financial markets, which in turn could materially and adversely affect our business, financial condition and results of operations.

        Apart from the effects of the credit crisis and the economic slowdown that it entailed, our business environment is influenced by numerous other economic or political uncertainties which will affect the global economy and the international capital market. In periods of slow economic growth or decline, our customers are more likely to decrease expenditures on the types of products and systems we supply and we are more likely to experience decreased revenues as a result. Our Power Products and Power Systems divisions are affected by the level of investments by utilities, and our Process Automation, Automation Products, and Robotics divisions are affected by conditions in a broad range of industries, including the automotive, pharmaceutical, pulp and paper, metals and minerals and manufacturing and

7

consumer industries. At various times during the last several years, we also have experienced, and may experience in the future, gross margin declines in certain businesses, reflecting the effect of items such as competitive pricing pressures, inventory write-downs, charges associated with the cancellation of planned expansion, increases in pension and postretirement benefit expenses, and increases in component and manufacturing costs resulting from higher labor and material costs borne by our manufacturers and suppliers that, as a result of competitive pricing pressures or other factors, we are unable to pass on to our customers. Economic downturns also may lead to restructuring actions and associated expenses. Uncertainty about future economic conditions makes it difficult for us to forecast operating results and to make decisions about future investments.

        In addition, we are subject to the risks that our business operations in or with certain countries, including those identified as state sponsors of terrorism, may be adversely effected by trade or economic sanctions or other restrictions imposed on these countries and that actual or potential investors that object to these business operations may adversely effect the price of our shares by disposing of or deciding not to purchase our shares.

Illegal behavior by any of our employees or agents could have a material adverse impact on our consolidated operating results, cash flows, and financial position as well as on our reputation and our ability to do business.

        Certain of our employees or agents have taken, and may in the future take, actions that violate or are alleged to violate the U.S. Foreign Corrupt Practices Act of 1977 (FCPA), legislation promulgated pursuant to the 1997 Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, applicable antitrust laws and other applicable laws or regulations. For more information regarding investigations of past actions taken by certain of our employees, see "Item 8. Financial Information—Legal Proceedings." Such actions have resulted, and in the future could result, in governmental investigations, enforcement actions and civil and criminal penalties, including monetary penalties or other sanctions. It is possible that any governmental investigation or enforcement action arising from these matters could conclude that a violation of applicable law has occurred and the consequences of any such investigation or enforcement action may have a material adverse impact on our consolidated operating results, cash flows and financial position. In addition, such actions, whether actual or alleged, could damage our reputation and ability to do business.

        Further, detecting, investigating and resolving such actions could be expensive and could consume significant time and attention of our senior management. While we are committed to conducting business in a legal and ethical manner, our internal control systems have not been, and in the future may not be, completely effective to prevent and detect such improper activities by our employees and agents.

Our operations in emerging markets expose us to risks associated with conditions in those markets.

        A significant amount of our operations are conducted in the emerging markets of Latin America, Asia, the Middle East and Africa. In 2008, approximately one-third of our consolidated revenues were generated from these emerging markets. Operations in emerging markets can present risks that are not encountered in countries with well-established economic and political systems, including:

•

Economic instability, which could make it difficult for us to anticipate future business conditions in these markets, cause delays in the placement of orders for projects that we have been awarded and subject us to volatile geographic markets;

•

Political or social instability, which makes our customers less willing to make cross-border investments in such regions and complicates our dealings with governments regarding permits or other regulatory matters, local businesses and workforces;

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•

Boycotts and embargoes that may be imposed by the international community on countries in which we operate, which could adversely affect the ability of our operations in those countries to obtain the materials necessary to fulfill contracts and our ability to pursue business or establish operations in those countries;

•

Foreign state takeovers of our facilities in these countries;

•

Significant fluctuations in interest rates and currency exchange rates;

•

The imposition of unexpected taxes or other payments on our revenues in these markets;

•

The ability to obtain financing and/or insurance coverage from export credit agencies; and

•

The introduction of exchange controls and other restrictions by foreign governments.

        In addition, the legal and regulatory systems of many emerging market countries are less developed and less well-enforced than in industrialized countries. Therefore, our ability to protect our contractual and other legal rights in these countries could be limited. Consequently, our exposure to the conditions in or affecting emerging markets may adversely affect our business, financial condition, results of operations and liquidity.

Undertaking long-term fixed price or turnkey projects exposes our businesses to risk of loss should our actual costs exceed our estimated or budgeted costs.

        We derive a portion of our revenues from long-term, fixed price or turnkey projects that are awarded on a competitive basis and can take many months, or even years, to complete. Such contracts involve substantial risks, including the possibility that we may underbid and the fact that we typically assume substantially all of the risks associated with completing the project and the post-completion warranty obligations. These risks include the project's technical risk, meaning that we must tailor our products and systems to satisfy the technical requirements of a project even though, at the time we are awarded the project, we may not have previously produced such a product or system. The revenue, cost and gross profit realized on such contracts can vary, sometimes substantially, from our original projections because of changes in conditions, including but not limited to:

•

Unanticipated technical problems with the equipment being supplied or developed by us which may require us to incur incremental expenses to remedy the problem;

•

Changes in the cost of components, materials or labor;

•

Difficulties in obtaining required governmental permits or approvals;

•

Project modifications which create unanticipated costs;

•

Delays caused by local weather and geological conditions, including natural disasters;

•

Customer delays;

•

Shortages of construction equipment;

•

Supply bottlenecks, especially of key components; and

•

Suppliers', subcontractors' or consortium partners' failure to perform.

        These risks are exacerbated if the duration of the project is extended because there is an increased risk that the circumstances upon which we originally bid and developed a price will change in a manner that increases our costs. In addition, we sometimes bear the risk of delays caused by unexpected conditions or events. Our project contracts often make us subject to penalties if we cannot complete portions of the project in accordance with agreed-upon time limits and guaranteed performance levels.

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Our international operations expose us to the risk of fluctuations in currency exchange rates.

        Exchange rate fluctuations have had, and could continue to have, a material impact on our operating results, the comparability of our results between periods, the value of assets or liabilities as recorded on our Consolidated Balance Sheet and the price of our securities. The global financial crisis has led to increased volatility in exchange rates, which makes it harder to predict exchange rates and thus do accurate financial planning. Changes in exchange rates can unpredictably and adversely affect our consolidated operating results, and could result in exchange losses.

        Currency Translation Risk.    The results of operations and financial position of most of our non-U.S. companies are initially recorded in the currency, which we call "local currency," of the country in which the respective company resides. That financial information is then translated into U.S. dollars at the applicable exchange rates for inclusion in our Consolidated Financial Statements. The exchange rates between local currencies and the U.S. dollar can fluctuate substantially, which could have a significant translation effect on our reported consolidated results of operations and financial position.

        Increases and decreases in the value of the U.S. dollar versus local currencies will affect the reported value of our local currency assets, liabilities, revenues and costs in our Consolidated Financial Statements, even if the value of these items has not changed in local currency terms. These translations could significantly and adversely affect our results of operations and financial position from period to period.

        Currency Transaction Risk.    Currency risk exposure also affects our operations when our sales are denominated in currencies that are different from those in which our manufacturing or sourcing costs are incurred. In this case, if after the parties agree on a price, the value of the currency in which the price is to be paid were to weaken relative to the currency in which we incur manufacturing or sourcing costs, there would be a negative impact on the profit margin for any such transaction. This transaction risk may exist regardless of whether or not there is also a translation risk as described above.

        Currency exchange rate fluctuations in those currencies in which we incur our principal manufacturing expenses or sourcing costs may adversely affect our ability to compete with companies whose costs are incurred in other currencies. If our principal expense currencies appreciate in value against such other currencies, our competitiveness may be weakened.

Our hedging activities may not protect us against the consequences of significant fluctuations in exchange rates, interest rates or commodity prices on our earnings and cash flows.

        Our policy is to hedge material currency exposures by entering into offsetting transactions with third party financial institutions. Given the effective horizons of our risk management activities and the anticipatory nature of the exposures intended to be hedged, there can be no assurance that our currency hedging activities will fully offset the adverse financial impact resulting from unfavorable movements in foreign exchange rates. In addition, the timing of the accounting for recognition of gains and losses related to a hedging instrument may not coincide with the timing of gains and losses related to the underlying economic exposures.

        As a resource-intensive operation, we are exposed to a variety of market and asset risks, including the effects of changes in commodity prices and interest rates. We monitor and manage these exposures as an integral part of our overall risk management program, which recognizes the unpredictability of markets and seeks to reduce the potentially adverse effects on our business. Nevertheless, changes in commodity prices and interest rates cannot always be predicted or hedged.

        If we are unable to successfully manage the risk of changes in exchange rates, interest rates or commodity prices or if our hedging counterparties are unable to perform their obligations under our

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hedging agreements with them, then substantial changes in these rates and prices could have an adverse effect on our financial condition and results of operations.

Increases in the costs of our raw materials may adversely affect our financial performance.

        We purchase large amounts of commodity-based raw materials, including steel, copper, aluminum, and oil. Prevailing prices for such commodities are subject to fluctuations due to changes in supply and demand and a variety of additional factors beyond our control, such as global political and economic conditions. Historically, prices for some of these raw materials have been volatile and unpredictable, and such volatility is expected to continue. Therefore, commodity price changes may result in unexpected increases in raw material costs, and we may be unable to increase our prices to offset these increased costs without suffering reduced volumes, revenues or operating income. We do not fully hedge against changes in commodity prices and our hedging procedures may not work as planned.

        We depend on third parties to supply raw materials and other components and may not be able to obtain sufficient quantities of these materials and components, which could limit our ability to manufacture products on a timely basis and could harm our profitability. For some raw materials and components, we rely on a single supplier or a small number of suppliers. If one of these suppliers were unable to provide us with a raw material or component we need, our ability to manufacture some of our products could be adversely affected until we are able to establish a new supply arrangement. We may be unable to find a sufficient alternative supply channel in a reasonable time period or on commercially reasonable terms, if at all. If our suppliers are unable to deliver sufficient quantities of materials on a timely basis, the manufacture and sale of our products may be disrupted, we might have obligations under our performance guarantees and our sales and profitability could be materially adversely affected.

The weakening or unavailability of our intellectual property rights could adversely affect our business.

        Our intellectual property rights are fundamental to all of our businesses. We generate, maintain, utilize and enforce a substantial portfolio of trademarks, trade dress, patents and other intellectual property rights. We use our intellectual property rights to protect the goodwill of our products, promote our product recognition, protect our proprietary technology and development activities, enhance our competitiveness and otherwise support our business goals and objectives. However, there can be no assurance that the steps we take to obtain, maintain and protect our intellectual property rights will be adequate. Our intellectual property rights may fail to provide us with significant competitive advantages, particularly in foreign jurisdictions that do not have, or do not enforce, strong intellectual property rights. The weakening or unavailability of our trademarks, trade dress, patents and other intellectual property rights could adversely affect our business.

We operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.

        We operate in very competitive environments in several specific respects, including product performance, developing integrated systems and applications that address the business challenges faced by our customers, pricing, new product introduction time and customer service. The relative importance of these factors differs across the geographic markets and product areas that we serve. The markets for our products and services are characterized by evolving industry standards (particularly for our automation technology products and systems), rapidly changing technology and increased competition as a result of privatization (particularly for our power products and systems). For example, for a number of years, power transmission and distribution providers throughout the world have been undergoing substantial privatization. This has increased their need for timely product and service innovations that increase efficiency and allow them to compete in a deregulated environment. Additionally, the continual development of advanced technologies for new products and product

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enhancements is an important way in which we maintain acceptable pricing levels. If we fail to keep pace with technological changes in the industrial sectors that we serve, we may experience price erosion and lower margins.

        The principal competitors for our automation technology products, systems and services include Emerson Electric Co., Honeywell International, Inc., Invensys plc, Schneider Electric SA and Siemens AG. We primarily compete with Areva., Schneider Electric SA and Siemens AG in sales of our power technology products and systems to our utilities customers. The principal competitors with our Robotics business include Fanuc Robotics, Inc., Kuka Robot Group and Yaskawa Electric Corporation. All of our primary competitors are sophisticated companies with significant resources that may develop products and services that are superior to our products and services or may adapt more quickly than we do to new technologies, industry changes or evolving customer requirements. Our failure to anticipate or respond quickly to technological developments or customer requirements could adversely affect our business, results of operations, financial condition and liquidity.

Industry consolidation could result in more powerful competitors and fewer customers.

        Competitors in the industries in which our business divisions operate are consolidating. In particular, the automation industry is undergoing consolidation that is reducing the number but increasing the size of companies that compete with us. As our competitors consolidate, they likely will increase their market share, gain economies of scale that enhance their ability to compete with us and/or acquire additional products and technologies that could displace our product offerings.

        Our customer base also is undergoing consolidation. Consolidation within our customers' industries (such as the marine and cruise industry, the automotive, aluminum, steel, pulp and paper, pharmaceutical industries and the oil and gas industry) could affect our customers and their relationships with us. If one of our competitors' customers acquires any of our customers, we may lose its business. Additionally, as our customers become larger and more concentrated, they could exert pricing pressure on all suppliers, including ABB. For example, in an industry such as power transmission, which historically has consisted of large and concentrated customers such as utilities, price competition can be a factor in determining which products and services will be selected by a customer.

We are subject to environmental laws and regulations in the countries in which we operate. We incur costs to comply with such regulations, and our ongoing operations may expose us to environmental liabilities.

        Our operations are subject to U.S., European and other laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Our manufacturing facilities use and produce paint residues, solvents, metals, oils and related residues. We use petroleum-based insulation in transformers, polyvinylchloride (PVC) resin to manufacture PVC cable and chloroparafine as a flame retardant. We use inorganic lead as a counterweight in robots that we produce. We have manufactured and sold, and we are using in some ABB factories, certain types of transformers and capacitors containing polychlorinated biphenyls (PCBs). These are considered to be hazardous substances in many jurisdictions in which we operate. We may be subject to substantial liabilities for environmental contamination arising from the use of such substances. All of our manufacturing operations are subject to ongoing compliance costs in respect of environmental matters and the associated capital expenditure requirements.

        In addition, we may be subject to significant fines and penalties if we do not comply with environmental laws and regulations including those referred to above. Some environmental laws provide for joint and several strict liability for remediation of releases of hazardous substances, which could result in us incurring a liability for environmental damage without regard to our negligence or fault. Such laws and regulations could expose us to liability arising out of the conduct of operations or conditions caused by others, or for our acts which were in compliance with all applicable laws at the

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time the acts were performed. Additionally, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances. Changes in the environmental laws and regulations, or claims for damages to persons, property, natural resources or the environment, could result in substantial costs and liabilities to us.

We may be the subject of product liability claims.

        We may be required to pay for losses or injuries purportedly caused by the design, manufacture or operation of our products and systems. Additionally, we may be subject to product liability claims for the improper installation of products and systems designed and manufactured by others.

        Product liability claims brought against us may be based in tort or in contract, and typically involve claims seeking compensation for personal injury or property damage. If the claimant runs a commercial business, claims are often made also for financial losses arising from interruption of operations. Based on the nature and application of many of the products we manufacture, a defect or alleged defect in one of these products could have serious consequences. For example:

•

If the products produced by our Power Products and Power Systems divisions are defective, there is a risk of fires, explosions and power surges and significant damage to electricity generating, transmission and distribution facilities as well as electrical shock causing injury or death.

•

If the products produced by our Automation Products and Process Automation divisions are defective, our customers could suffer significant damage to facilities that rely on these products and systems to properly monitor and control their manufacturing processes. Additionally, people could be exposed to electrical shock and/or other harm causing injury or death.

•

If the products produced by our Robotics division malfunction, then they could injure persons or damage other equipment or facilities.

•

If any of the products produced by us contain hazardous substances then there is a risk that such products or substances could injure or kill people.

        If we were to incur a very large product liability claim, our insurance protection might not be adequate or sufficient to cover such a claim in terms of paying any awards or settlements, and/or paying for our defense costs. Further, some claims may be outside the scope of our insurance coverage. If a litigant were successful against us, a lack or insufficiency of insurance coverage could result in an adverse effect on our business, financial condition, results of operations and liquidity. Additionally, a well-publicized actual or perceived problem could adversely affect our market reputation which could result in a decline in demand for our products.

We may encounter difficulty in managing our business due to the global nature of our operations.

        We operate in approximately 100 countries around the world and, as of December 31, 2008, employed approximately 120,000 people. As of December 31, 2008, approximately 54 percent of our employees were located in Europe, approximately 17 percent in the Americas, approximately 24 percent in Asia and approximately 5 percent in the Middle East and Africa. In order to manage our day-to-day operations, we must overcome cultural and language barriers and assimilate different business practices. In addition, we are required to create compensation programs, employment policies and other administrative programs that comply with the laws of multiple countries. We also must communicate and monitor group-wide standards and directives across our global network. Our failure to successfully manage our geographically diverse operations could impair our ability to react quickly to changing business and market conditions and to enforce compliance with group-wide standards and procedures.

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We have retained liability for environmental remediation costs relating to businesses that we sold in 2000, and we could be required to make payments in respect of these retained liabilities in excess of established provisions.

        We have retained liability for environmental remediation costs at two sites in the United States that were operated by our nuclear technology business, which we sold in April 2000 to British Nuclear Fuels plc (BNFL). We have retained all environmental liabilities associated with our Combustion Engineering subsidiary's Windsor, Connecticut facility and a portion of the liabilities associated with our former ABB C-E Nuclear Power, Inc. subsidiary's Hematite, Missouri facility. The primary environmental liabilities associated with these sites relate to the costs of remediating radiological and chemical contamination upon decommissioning the facilities. Based on information that BNFL has made available, we believe remediation may take until 2015 at the Hematite site. We estimate that the remediation will take until 2012 at the Windsor site. At the Windsor site, we believe that a significant portion of such remediation costs will be the responsibility of the U.S. government pursuant to U.S. federal law, although the exact amount of such responsibility cannot reasonably be estimated. In connection with the sale of the nuclear business in April 2000, we established a provision of $300 million in respect of estimated remediation costs related to these facilities. Expenditures charged to the remediation provision were $4 million and $3 million during 2008 and 2007, respectively. The provision balance was $241 million and $245 million at December 31, 2008 and 2007, respectively. Due to the nature of remediation activities, it is possible that we could be required to make expenditures in excess of the provision. Potential excess expenditures cannot reasonably be estimated at this time. See "Item 5. Operating and Financial Review and Prospects—Environmental Liabilities."

If we fail to make the payments required under the Modified Plan of Reorganization for Combustion Engineering (the CE Plan) we could trigger an injunction default which would lead to the termination of the channeling injunction under the CE Plan.

        Our Combustion Engineering, Inc. subsidiary (CE) had been a co-defendant in a large number of lawsuits claiming damage for personal injury resulting from exposure to asbestos. Since early 2003, we and our subsidiaries have been seeking to resolve our asbestos-related personal injury liabilities related to CE. A plan of reorganization for CE was filed under Chapter 11 of the U.S. Bankruptcy Code and during 2006, the CE Plan became effective.

        On the effective date of the CE Plan, the U.S. Bankruptcy Court issued an injunction, referred to as a channeling injunction, pursuant to which all asbestos-related personal injury claims against ABB Ltd and certain entities in the ABB group (including CE) arising out of CE's business operations will be settled or otherwise satisfied from the proceeds of the trust established for such purposes.

        Under the CE Plan, ABB Ltd and certain of its subsidiaries have contingent payment obligations of $50 million for which we have established a provision as of December 31, 2008. Failure to satisfy those payment obligations could lead to an injunction default which would lead to the termination of the channeling injunction under the plan. In such case, all claims which were previously subject to the injunction would need to be resolved through the tort system. This could also cause our credit ratings to be downgraded, restrict our access to the capital markets or otherwise have a material adverse effect on our financial condition, results of operations, cash flows and liquidity.

If we are unable to obtain performance and other guarantees from financial institutions, we may be prevented from bidding on, or obtaining, some contracts, or our costs with respect to such contracts could be higher.

        In the normal course of our business and in accordance with industry practice, we provide a number of guarantees including bid-bonds, advance payment guarantees and performance guarantees, which guarantee our own performance. These guarantees may include guarantees that a project will be completed or that a project or particular equipment will achieve defined performance criteria. If we fail

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to attain the defined criteria, we must make payments in cash or in kind. Performance guarantees frequently are requested in relation to large projects in our core power and automation businesses.

        Some customers require that performance guarantees be issued by a financial institution. In considering whether to issue a guarantee on our behalf, financial institutions consider our credit ratings. In addition, the global financial crisis has made it more difficult and expensive to obtain these guarantees. If, in the future, we cannot obtain such a guarantee from a financial institution on reasonable terms, we could be prevented from bidding on, or obtaining, some contracts, or our costs with respect to such contracts could be higher, which would reduce the profitability of the contracts. If we cannot obtain guarantees on commercially reasonable terms from financial institutions in the future, there could be a material impact on our business, financial condition, results of operations or liquidity.

If we cannot successfully implement the planned integration of our different ERP systems, then we may be unable to produce reliable accounts, and our business and reputation may be adversely affected.

        In a number of specific countries, we are integrating our various ERP systems into country-wide ERPs in an effort to standardize and consolidate our accounting and reporting processes. A significant portion of these remaining system integrations are planned to occur during 2009 and 2010. If we cannot successfully implement the planned integration activities, we may be unable to produce reliable accounts and our business and reputation may be adversely affected.

If we are unable to successfully adapt our internal controls over financial reporting to changes in circumstance, our ability to report our financial results on a timely and accurate basis may be adversely affected. As a result, investors could lose confidence in our financial reporting, which may harm our business and the trading price of our stock.

        We are required to include in this Annual Report on Form 20-F a report by our management regarding the effectiveness of our internal control over financial reporting. The report includes, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management.

        If we are unable to conclude that our internal control over financial reporting is effective in any future period (or if our auditors are unable to express an opinion on the effectiveness of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports, which may have an adverse effect on our stock price.

If we are unable to attract and retain qualified management and personnel then our business may be adversely affected.

        Our success depends in part on the abilities of our personnel, particularly our senior management team and key employees. If we are unable to attract and retain members of our senior management team and key employees this could have an adverse effect on our business.

Item 4.    Information on the Company

INTRODUCTION

        We are a global leader in power and automation technologies that are designed to improve performance and lower the environmental impact of our utility and industrial customers. We provide a broad range of products, systems, solutions and services that are designed to improve power grid reliability, increase industrial productivity and enhance energy efficiency. Our focus on power transmission, distribution and power-plant automation serves electric, gas and water utilities, as well as

15

industrial and commercial customers. We also deliver automation systems that measure, control, protect and optimize plant applications across a full range of industries. We apply our expertise to develop creative ways of integrating our products and systems with our customers' business processes to enhance their productivity and efficiency.

History of the ABB Group

        The ABB Group was formed in 1988 through a merger between Asea AB and BBC Brown Boveri AG. Initially founded in 1883, Asea AB was a major participant in the introduction of electricity into Swedish homes and businesses and in the development of Sweden's railway network. In the 1940s and 1950s, Asea AB expanded into the power, mining and steel industries. Brown Boveri and Cie. (later renamed BBC Brown Boveri AG) was formed in Switzerland in 1891 and initially specialized in power generation and turbines. In the early to mid 1900s, it expanded its operations throughout Europe and broadened its business operations to include a wide range of electrical engineering activities.

        In January 1988, Asea AB and BBC Brown Boveri AG each contributed almost all of their businesses to the newly formed ABB Asea Brown Boveri Ltd, of which they each owned 50 percent. In 1996, Asea AB was renamed ABB AB and BBC Brown Boveri AG was renamed ABB AG. In February 1999, the ABB Group announced a group reconfiguration designed to establish a single parent holding company and a single class of shares. ABB Ltd was incorporated on March 5, 1999, under the laws of Switzerland. In June 1999, ABB Ltd became the holding company for the entire ABB Group. This was accomplished by having ABB Ltd issue shares to the shareholders of ABB AG and ABB AB, the two publicly traded companies that formerly owned the ABB Group. The ABB Ltd shares were exchanged for the shares of those two companies, which, as a result of the share exchange and certain related transactions, became wholly owned subsidiaries of ABB Ltd and are no longer publicly traded. ABB Ltd shares are currently listed on the SIX Swiss Exchange (traded on SWX Europe), the NASDAQ OMX Stockholm Exchange and the New York Stock Exchange (in the form of American Depositary Shares).

Organizational Structure

        Our business is international in scope and we generate revenues in numerous currencies. We operate in approximately 100 countries and have structured our global organization into four regions: Europe, the Americas, Asia and the Middle East and Africa (MEA). We are headquartered in Zurich, Switzerland.

        We manage our business based on a divisional structure. Our business comprises five divisions: Power Products; Power Systems; Automation Products; Process Automation and Robotics.

        Following the sale of the majority of our non-core activities, Non-core and Other is no longer presented separately but included in Corporate and Other.

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	Revenues Year ended December 31,									Percentage of Core division Revenues Year ended December 31,
	2008			2007			2006			2008		2007		2006
	($ in millions)									(%)
Power Products		11,890			9,777			7,275			31		31		29
Power Systems		6,912			5,832			4,544			18		18		18
Automation Products		10,250			8,644			6,837			27		27		27
Process Automation		7,815			6,420			5,448			20		20		21
Robotics		1,642			1,407			1,288			4		4		5
Core divisions		38,509			32,080			25,392			100		100		100
Corporate, Non-core and Other Activities and Eliminations		(3,597	)		(2,897	)		(2,111	)
Total		34,912			29,183			23,281

        For a breakdown of our consolidated revenues derived from each geographic region in which we operate, see "Item 5. Operating and Financial Review and Prospects—Analysis of Results of Operations—Revenues."

        Our principal corporate offices are located at Affolternstrasse 44, CH-8050 Zurich, Switzerland, telephone number +41-43-317-7111. Our agent for U.S. federal securities law purposes is ABB Holdings Inc., located at 501 Merritt 7, Norwalk, Connecticut 06851.

BUSINESS DIVISIONS

Industry Background

        Our five divisions operate across two key markets, the power market and the automation market. Our Power Products and Power Systems divisions operate in the power market. Our Automation Products, Process Automation and Robotics divisions operate in the automation market.

Power Market

        The power market uses products, systems and services designed primarily to deliver electricity. Electricity is generated in power stations and is then fed into an electricity grid, from where it is transmitted and distributed to consumers. The portions of an electricity grid that operate at the highest voltages are "transmission" systems, while those that operate at lower voltages are "distribution" systems. Transmission systems link power generation sources to distribution systems and then branch out over shorter distances to carry electricity from the transmission system to end users. These electricity networks incorporate sophisticated devices to control and monitor operations and to prevent damage from failures or stresses.

        Electricity is transformed at different stages in the delivery process between the source and the ultimate end user. For example, electrical power is often generated in large power plants at 10 to 20 kilovolts. Because this voltage is too low to be transmitted efficiently, transformers are used to increase the voltage (up to 1,000 kilovolts) for long-distance commercial transmission. This reduces losses and increases the amount of power that can be carried per line.

        Transformers are also used to decrease the voltage at the local end for distribution to end users, such as residential, commercial or industrial consumers. An electric utility distribution system comprises distribution substations and networks, both overhead and underground. Some large industrial and commercial facilities receive electricity at higher voltage levels from the transmission or distribution

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network, while most industrial, commercial and residential users receive electricity from distribution network feeders at lower voltages.

        Drivers in the power market vary by region. In North America the focus is on replacing aged infrastructure and improving grid reliability. In Europe the focus is on replacement of aged infrastructure and the integration of renewable energy sources, such as wind farms in the North Sea. Another driver in Europe is the increased demand for interconnections between countries to facilitate the market for energy trading. Both in North America and in Europe, improving energy efficiency also stimulates power investment. In the Middle East, a high level of investments is driven by large infrastructure projects and the related need for electricity. In emerging markets, including most parts of Asia, there is a need for electricity grid increases to cope with rising energy needs.

        There is a global trend toward deregulation and privatization of the power market, which is creating a more competitive environment for our customers. This trend is evident in the United States, parts of Latin America, and Europe, and is developing in other regions. The creation of a free market for electricity requires our customers to become more cost-efficient and reliable to compete as a lowest-cost provider among power suppliers. Grid operators must be able to deliver power to customers that are hundreds or thousands of miles away within a few minutes. As more disturbance-sensitive loads (such as computers and telecommunications systems) have been added to networks, demand for reliable, high-quality electricity and "smarter" grid has increased. Power suppliers can achieve this efficiency and reliability in a number of ways, including the following:

•

Replacing and modernizing assets and investing in information technology-based control and monitoring equipment and communications networks to control and supervise power networks based on instantaneous access to information.

•

Upgrading current technologies and introducing new technologies to improve network reliability, increase network power rating and enhance the control of power flow through existing transmission and distribution assets.

•

Developing new power transmission systems to link power generation sources with distant load centers, as is the case for example in China, or to link neighboring power grids in order to optimize existing power generation capacity across borders, as for example in Europe between Central Europe and Scandinavia.

•

Developing energy trading systems.

        Another major trend is the discussion on climate change, which has created a strong interest in energy-efficient and environmentally-friendly solutions. Both drivers have a direct impact on our business as ABB delivers technologically-driven solutions to increase the energy efficiency on existing electrical infrastructure and to integrate renewable energy such as wind and solar power into the electricity grid while meeting the grid code requirements.

Automation Market

        The automation market uses products, systems and services designed primarily to improve product quality, energy efficiency, productivity and consistency in industrial and manufacturing applications. The automation market can be divided into three sectors:

•

Process automation refers to control systems, plant electrification and other process applications applied in processes where the main objective is continuous production, such as in the oil and gas, power, chemicals, minerals, metals and pulp and paper industries. Product lines for this market include plant electrification, instrumentation, analytical measurement and control products and systems, as well as motors and drives.

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•

Factory automation refers to discrete operations that manufacture individual items for automotive and general industry areas such as foundry, metal fabrication, plastics, consumer electronics and food & beverage. Product lines for this market include robots and application equipment, product and system services and modular manufacturing solutions, as well as motors, drives, and low voltage products for control and power applications.

•

Building automation comprises product lines and applications particularly targeted at the building industry. Product lines for this market include a wide range of low-voltage products for control of climate, lighting and security for optimal management of the energy cost of buildings.

Power Products Division

Overview

        Our Power Products division serves electric, gas and water utilities, as well as industrial and commercial customers, with a broad range of products and services for power transmission and distribution. Direct sales account for a majority of the division's total product sales, and sales through external channel partners, such as wholesalers, distributors and original equipment manufacturers (OEMs), account for the remainder. Key technologies include high- and medium-voltage switchgear and apparatus, circuit breakers for various current and voltage levels, power and distribution transformers, as well as sensors and products to automate and control electrical and other utility networks. The division had approximately 33,600 employees and 110 manufacturing plants as of December 31, 2008 and generated $11.9 billion of revenues in 2008.

The Power Products Division

        Our Power Products division manufactures three categories of products: High-voltage Products, Medium-voltage Products and Transformers. The division sells primarily to utilities, distributors, wholesalers, installers and OEMs in the utilities and power generation industries. Some of the division's products are integrated into the offering of the Power Systems and Process Automation divisions or are sold through external channel partners such as engineering, procurement and construction (EPC) firms.

        The division manufactures distribution transformers (up to 72.5 kilovolts) for use in industrial facilities, commercial buildings and utility distribution networks to step down electrical voltage to the levels needed by end users. Industrial transformers are mainly delivered to the steel and aluminum industry, which need their own high-voltage transformers and substations on-site to service their heavy electricity requirements. We manufacture and sell a full range of distribution transformers including oil-type, dry-type and special application distribution transformers. Although oil-type transformers are more commonly used, demand for dry-type transformers is growing because they minimize fire hazards and have applications in high-density office buildings, windmills, offshore drilling platforms, marine vessels and high-volume industrial plants.

        We also design and manufacture power transformers (72.5 to 1,000 kilovolts) for utility, transportation and industrial customers, as well as transformer components such as bushings and tap changers. Generator transformers are used in power generation when it is necessary to increase power voltage from a power plant for long-distance transmission. We produce traction transformers used in electric locomotives and we provide a wide range of transformer service and retrofit solutions for utilities and industry customers. The division also produces insulation material.

        In the medium-voltage area, the division develops products and systems that reduce outage times and improve power quality and control, which are key to improving operational efficiency of both utility and industrial customers. It supplies switching equipment both directly to end users and through distributors and OEMs. Its products provide connections between higher voltage substations and lower voltage uses. It produces a comprehensive line of medium-voltage equipment (1 to 50 kilovolts),

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including products such as indoor and outdoor switch disconnectors, breakers, reclosers, fuses, contactors, instrument transformers and sensors as well as air- and gas-insulated switchgear, motor control centers, and ring main units for primary and secondary distribution. It also produces indoor and outdoor modular systems, compact substations and power distribution centers. In addition, a significant portion of its products are sold through external channel partners such as OEMs.

        The Power Products division also provides high-voltage transmission equipment to power utilities that enables them to operate more efficiently and with lower environmental impact, both of which are significant business concerns in the market in which our customers operate. We manufacture the principal components of power transmission systems (50 to 800 kilovolts), including air- and gas-insulated switchgear, capacitors, high-voltage circuit breakers, grounding switches and instrument transformers. The division also delivers the entire ABB portfolio of low-, medium- and high-voltage capacitors and surge arresters. Its products and components also include circuit breaker drives and cable accessories.

Customers

        The Power Products division's principal customers are electric, gas and water utilities, owners and operators of power transmission systems, utilities that own or operate networks and owners and operators of power generating plants. Other customers include gas transmission companies, local distribution companies and multi-utilities, which are involved in the transmission or distribution of more than one commodity. The division also serves industrial and commercial customers, such as operators of large commercial buildings and heavy industrial plants.

Sales and Marketing

        The Power Products division sells its products individually and as parts of larger systems through our Power Systems division. Direct sales account for a majority of the division's total product sales, and sales through external channel partners, such as wholesalers, distributors and OEMs, account for the remainder. Because the Power Products and Power Systems divisions share many of the same customers and technologies, and are influenced by the same market drivers, the two divisions share a common sales force in most regions and countries.

Competition

        On a global basis, the Power Products division's principal competitors are Siemens AG and Areva, and, in the medium-voltage market, Schneider Electric SA. We also compete regionally with companies such as Cooper Industries, Eaton Electric Corporation, Crompton Greaves and Bharat Heavy Electricals Ltd.

Capital Expenditures

        The Power Products division's capital expenditures for property, plant and equipmentwere $305 million in 2008, compared to $209 million and $145 million in 2007 and 2006, respectively. Principal investments in 2008 included investments to replace existing equipment, particularly in Sweden, China, Germany and the United States. Geographically, in 2008, Europe accounted for 48 percent of our capital expenditures, followed by 34 percent in Asia, 16 percent in the Americas and 2 percent in Middle East and Africa.

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Power Systems Division

Overview

        Our Power Systems division serves electric, gas and water utilities, as well as industrial and commercial customers, with a broad range of systems and services for power generation, transmission and distribution. Key technologies include substations, high-voltage power converters, advanced cables for underground and sub-sea power transmission, and systems to automate and control power plants, electrical and other utility networks. The division had approximately 15,800 employees in more than 70 countries as of December 31, 2008 and generated $6.9 billion of revenues in 2008.

The Power Systems Division

        Our Power Systems division delivers systems in four areas: grid systems, network management, power generation, and substations. The division sells primarily to utilities, EPC companies and power generation industries. Some of the Power Product division's products are integrated into the offering of the Power Systems division.

        For grid systems, we provide power systems that are essential to grid reliability, including flexible alternating current transmission systems (FACTS) and we also sell high-voltage direct current (HVDC) systems. Critical components in these systems are power semiconductors and cables which are also manufactured by the Power Systems division.

        We are a leading manufacturer of HVDC technology, which is an advanced technology for transporting electricity over long distances, feeding power from mainland sites to off-shore platforms or integrating large off-shore windpower into the power grid. It reduces power losses, increases system stability and provides a more controllable flow than high-voltage alternating current. An HVDC transmission system typically includes converters, which change alternating current to direct current and then back to alternating current when it reaches the terminal point, and transmission line cables, either above or below ground. Advances in converter and cable technology have enabled us to introduce a system called HVDC Light™. Converter stations for HVDC Light™ are approximately one-fifth the size of conventional HVDC technology for the same rated power. HVDC Light™ extends the range of applications for underground or submarine high-voltage direct current. Typical applications include interconnection of separate networks that operate on different frequencies or provide variational power quality, such as wind parks. The system can also be used as a substitute for local power generation in remote areas, islands or oil platforms.

        We also provide FACTS devices to enhance power grid stability, improve power quality and thus increase transmission capability. FACTS devices include series compensators, static volt-amperes reactive compensators (SVCs) and SVC Light™ (based on the same unique technology as HVDC Light™).

        HVDC, HVDC Light™, FACTS, and SVC Light™ systems rely on advanced power semiconductor components. Our power semiconductor business develops and manufactures tailor-made components to maximize the performance of these systems. The Power Systems division supplies power semiconductor devices to other ABB businesses and to external customers in the power transmission and distribution, drives, and transportation markets.

        Our cable business is specialized in sub-sea cable solutions and land-cables for bulk energy transfer over long distances.

        Our network systems offering includes high-end supervisory control and data acquisition (SCADA) systems for power and gas customers. SCADA systems are used to monitor and control energy transmission, distribution and power generation. They are also used in market systems for power networks providing real time information about the status of the grid. SCADA systems allow utilities to

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optimize their business by improving the performance of their installed network equipment to meet changing customer requirements and new market conditions.

        The division also provides wireless and fixed communication systems for power, water and gas utilities, including both operational and corporate communication networks. It offers fiber optics, microwave radio and power line applications for data networking and broadband network management, as well as teleprotection and substation communication networks and voice switching management systems.

        In the area of power generation, the division offers complete system integration of instrumentation, control and electrical equipment for the power generation market. The services offered include combustion management, plant performance optimization, condition monitoring and asset management. We also offer turnkey water pumping stations including control systems.

        Substations interconnect electricity grids operating on different voltage levels, sectionalize portions of the grid and protect the electrical system against damage from outside sources such as lightning and overload. By sectionalizing the grid, power can be rerouted from portions of the transmission system that are experiencing problems to sections that are functioning properly, thereby enhancing the overall reliability of the power supply.

        We deliver complete air- and gas-insulated substations for power transmission. Substations are also necessary in a power distribution network to sectionalize and reduce the voltage of the main power lines and cables to the lower voltages required for efficient distribution and consumption. For power distribution, we sell traditional custom-engineered substations.

        This division offers services and support for management of existing power transmission and distribution assets, including both ABB products and those manufactured by third parties.

        In addition, the Power Systems division offers a range of services aimed at reducing the in-house operational and maintenance requirements of utility customers. Our services range from contracts for spare parts management, support agreements and retrofits, to service, consulting and training. The Power Systems division also undertakes analyses of the design of new transmission and distribution systems as well as optimization that take into account technical, economic and environmental considerations.

Customers

        The Power System division's principal customers are electric, gas and water utilities, owners and operators of power transmission systems, utilities that own or operate networks and owners and operators of power generating plants. Other customers include transmission companies, local distribution companies and multi-utilities, which are involved in the transmission or distribution of more than one commodity. The division also serves industrial and commercial customers, such as operators of large commercial buildings and heavy industrial plants.

Sales and Marketing

        The Power Systems division sells its systems primarily through a direct sales force of specialized sales engineering teams. Some sales are also handled through third-party channels, such as OEMs and system integrators or EPC firms. Because the Power Systems and Power Products divisions share many of the same customers and technologies, and are influenced by the same market drivers, the two divisions share a common sales force in most regions and countries.

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Competition

        On a global basis, the Power Systems division's principal competitors are Siemens AG and Areva. In the power generation area, the division's principal competitors are Areva, Emerson Electric Co., General Electric Company, Invensys plc and Siemens AG.

Capital Expenditures

        The Power System division's capital expenditures for property, plant and equipment were $89 million in 2008, compared to $50 million and $26 million in 2007 and 2006, respectively. Principal investments in 2007 included investments to replace existing equipment, particularly in Sweden, Germany, and Switzerland. Geographically, in 2008, Europe accounted for 83 percent of our capital expenditures, followed by 7 percent in Asia, 5 percent in the Americas and 5 percent in Middle East and Africa.

Automation Products Division

Overview

        The Automation Products division provides products, with related services, that are used as components in machinery, switchboards, distribution panels, and building and automation systems. The Automation Products offering covers a wide range of products and services including low-voltage switchgear, breakers, switches, control products, DIN-rail components, enclosures, wiring accessories, instrumentation, drives, motors, generators, and power electronics systems. These products help customers to improve productivity, save energy and increase safety. Key applications include power distribution, protection and control, energy conversion, data acquisition and processing, and actuation. The majority of these applications are for industrial applications, with others provided for building construction, rail transportation, and utilities.

        The Automation Products division is a global business that employs approximately 36,000 people worldwide and generated $10.3 billion revenues in 2008 through sales activities in more than 100 countries. The division has more than 100 manufacturing sites in 50 countries. Each day, the division delivers around one million products.

        A majority of the division's revenues comes from sales through distributors, wholesalers, machine builders and OEMs, system integrators, and panel builders, although a portion of the division's revenues come from direct sales to end-users.

The Automation Products Division

        The Automation Products division manufactures low-voltage circuit breakers, switches and control products to protect people, installations and electronic equipment from electrical overloads. It also manufactures instrumentation products to measure and control the flow of fluids.

        This division makes line protection products, wiring accessories and enclosures and cable systems that are primarily used for control and protection in building installations. It also produces European Installation Bus/Powernet systems, which integrate and automate a building's electrical installations, ventilation, security and data communication networks.

        The process instrumentation products manufactured by this division interact with the Open Control System products from the Process Automation division and include products for the measurement of process variables such as pressure, temperature, volume and flow. The increasing sophistication of many process automation systems often requires thousands of measurement points for such variables. These instrumentation products are sold separately or in combination with control systems. The various analytical measurement devices produced by this division form an important part

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of instrumentation and control systems. These devices measure chemical characteristics while process instrumentation products measure physical characteristics.

        This division also provides low-voltage and medium-voltage AC drive products and systems for industrial, commercial and residential applications. Drives provide motion and torque while adding control and efficiency to equipment such as fans, pumps, compressors, conveyors, kilns, centrifuges, mixers, hoists, cranes, extruders, printing machinery and textile machines. Our drives are used in the building automation, marine, power, transportation and manufacturing industries, among others.

        The Automation Products division also produces a range of power electronics products. These include static excitation and synchronizing systems that provide stability for power stations, as well as high power rectifiers that convert AC power to DC power for very high-amperage applications such as furnaces in zinc plants and aluminum and magnesium smelters. The division also manufactures frequency converters that use semiconductor technology to convert electrical power into the type and frequency required by individual customers.

        In addition, this division supplies a comprehensive range of electrical motors and generators, including high-efficiency motors that conform to leading environmental and efficiency standards. Efficiency is an important criterion for selection by customers, because electric motors account for nearly two-thirds of the electricity consumed by industrial plants. This division manufactures synchronous motors for the most demanding applications and a full range of low and high-voltage induction motors.

Sales and Marketing

        Sales are made both through direct sales forces as well as through third-party channel partners, such as distributors, wholesalers, installers, machine builders and OEMs, system integrators, and panel builders. The proportion of direct sales compared to channel partner sales varies among the different industries, product technologies and geographic markets. For the division as a whole, the majority of products are sold through channel partners, with the remainder sold through the division's own direct sales channels.

Competition

        The Automation Products division's principal competitors vary by product line but include Alstom, Baldor Electric Company, Eaton Electric Corporation, Emerson Electric Co., Endress+Hauser, Legrand, Mitsubishi, Rockwell Automation, Schneider Electric SA, Siemens AG, Yokogawa Electric Corporation and WEG Industries.

Capital Expenditures

        The Automation Products division's capital expenditures for property, plant and equipment were $305 million in 2008, compared to $193 million and $148 million in 2007 and in 2006, respectively. Principal investments in 2008 were primarily related to ordinary course replacements of machinery and equipment mainly in Germany, Finland, Italy and China plus expansion investments in China, India and Estonia. Geographically, in 2008, Europe accounted for 71 percent of the capital expenditure, followed by 23 percent in Asia, 4 percent in Middle East and Africa and 2 percent in the Americas.

Process Automation Division

Overview

        The Process Automation division provides products, systems, and services for the automation and optimization of industrial processes. Our main offerings are process automation, plant electrification and quality control systems, analytical measurement devices, turbochargers and marine propulsion and

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control systems. Our key end markets are the oil and gas, pulp and paper, metals and minerals, chemicals and pharmaceuticals, turbocharging and marine industries. The division had approximately 26,800 employees as of December 31, 2008, and generated revenues of $7.8 billion in 2008.

        The Process Automation division offers its products both as separately sold devices and as part of a total automation system. Our technologies are marketed both through direct sales forces and third-party channels.

The Process Automation Division

        The Process Automation division offers integrated process control systems, plant electrification systems, information management systems and industry-specific application knowledge for a variety of industries, primarily pulp and paper, minerals and mining, metals, chemicals and pharmaceuticals, oil and gas, turbocharging, power and the marine industry. Some of the Automation Product and Power Product divisions' products are integrated into the offering of the Process Automation division.

        Our control systems are used in such applications as batch management, asset optimization, energy management and safety control. They are the hubs that link instrumentation, devices and systems for control and supervision of an industrial process and enable customers to integrate their production systems with their enterprise, resource and planning systems, thereby providing a link to their ordering, billing and shipping processes. This link allows customers to manage their entire manufacturing and business process based on real-time access to plant information. Additionally, it allows customers to increase production efficiency, optimize their assets and reduce environmental waste.

        This division emphasizes Open Control Systems, including batch control systems, supervisory control and data acquisition systems, and, to a lesser extent, programmable logic controls and remote terminal units.

        Batch control systems control the production of a variety of products in shorter runs, such as certain pharmaceuticals and food and beverage products. Supervisory control and data acquisition systems are used to collect and manage data over wide areas or long distances such as those involved in operating electric power networks.

        In December 2003, this division commercially released the System 800xA process automation platform. This system extends the capability of traditional process control systems, introducing advanced functions such as batch management, asset optimization and field device integration which "plug in" to a common user environment. The same user interface may also be used to manage components of existing multiple ABB control systems that have been installed in the market over the past approximately 20 years. In this way, System 800xA gives customers a way to migrate to new functions one step at a time, rather than having to make a large-scale capital investment to replace their entire control system. By creating a common user interface that can be used to manage multiple systems, the System 800xA also reduces the research and development investment needed to achieve a "one size fits all" solution across our large installed systems base.

        The division's product offerings for the pulp and paper industries include quality control systems for pulp and paper mills, control systems, drive systems, on-line sensors, actuators and field instruments. On-line sensors measure product properties, such as weight, thickness, color, brightness, moisture content and additive content. Actuators allow the customer to make automatic adjustments during the production process to improve the quality and consistency of the product. Field instruments measure properties of the process, such as flow rate, chemical content and temperature.

        We offer our customers in the metals and minerals industries specialized products and services, as well as total production systems. We design, plan, engineer, supply, erect and commission electric equipment, drives, motors and equipment for automation and supervisory control within a variety of

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areas including mining, mineral handling, aluminum smelting, hot and cold steel applications and cement production.

        In the oil and gas sector, we provide solutions for onshore and offshore production and exploration, refining,and petrochemical processes, and oil/gas transportation and distribution. In the pharmaceuticals and fine chemicals areas, we offer applications to support manufacturing, packaging, quality control and compliance with regulatory agencies.

        In the marine field, we provide global shipbuilders with power and automation technologies for luxury cruise liners, ferries, tankers, offshore oil rigs and special purpose vessels. We design, engineer, build, supply and commission electrical systems for marine power generation, power distribution and diesel electric propulsion, as well as turbochargers to improve efficiency for diesel and gasoline engines.

        We also offer full-service contracts across all of our customer segments, in which we take over in-house maintenance activities for customers and apply strategies to reduce overall maintenance costs and helps optimize these investments. Demand for our process automation services is increasing as our customers seek to increase productivity by improving the performance of existing assets.

Customers

        The Process Automation division's end customers are primarily companies in the pulp and paper, minerals and mining, metals, chemicals and pharmaceuticals, oil and gas, turbocharging, power and the marine industries. In each of these industries, we sell both through direct sales forces as well as through third-party channels, such as distributors, wholesalers, installers, system integrators and OEMs.

Sales and Marketing

        The Process Automation division uses a direct sales forces as well as third-party channel partners, such as distributors, system integrators and OEMs. For the division as a whole, the majority of revenues are derived through the division's own direct sales channels.

Competition

        The Process Automation division's principal competitors vary by industry or product line but include, Emerson Electric Co., Honeywell International Inc., Invensys plc, Metso Automation, Rockwell Automation, Schneider Electric SA, Siemens AG, Voith AG, Aspen Technologies, and Yokogawa Electric Corporation.

Capital Expenditures

        The Process Automation division's capital expenditures for property, plant and equipment were $79 million in 2008, compared to $91 million and $70 million in 2007 and in 2006, respectively. Principal investments in 2008 were primarily related to our turbocharging production facilities and service stations in Switzerland, China, Unites States, India, and ordinary course purchase of machinery and equipment mainly in Algeria, Finland, Sweden, and Germany. In 2008, Europe accounted for 64 percent of the capital expenditure, followed by 20 percent in Asia, 14 percent in the Americas and 2 percent in Middle East and Africa

Robotics Division

Overview

        Our Robotics division offers robot products, systems and service for the automotive and manufacturing industries. The division develops standardized manufacturing cells for many applications including machine tending, welding, cutting, painting, finishing and packing. It also provides fully

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engineered systems to automobile manufacturers for press automation, paint process automation, body in white assembly and power train assembly. The division also provides a full range of robotics services, from product and system maintenance to system design. The division had approximately 5,300 employees as of December 31, 2008 and generated $1.6 billion of revenues in 2008. The Robotics division's manufacturing and research and development locations are organized globally, with major centers in China, the United States, Sweden, Norway and France.

The Robotics Division

        The Robotics division offers robot products, systems and service for the automotive manufacturers and their sub-suppliers as well as general manufacturing industries, to improve product quality, productivity and consistency in manufacturing processes. Robots are also used in inhospitable environments which may be hazardous to employee health and safety, such as repetitive lifting, cold rooms or painting booths.

        In the automotive industry, the division's products and systems are used in such areas as press shop, body shop, paint shop, power train assembly, trim and final assembly. General industry segments in which robotics solutions are used range from metal fabrication, foundry, plastics, food & beverage, chemicals & pharmaceuticals to consumer electronics, solar and wood. Typical general industry applications include welding, material handling, painting, picking, packing and palletizing.

        Shortened product life cycles and rapidly changing consumer preferences have brought new challenges to our robotics customers. They must be able to adapt their production lines to increasingly frequent changes in product design. At the same time, they have to continuously deliver their products faster and at higher quality standards. Furthermore, constant price pressure requires them to decrease production costs by improving manufacturing processes. Robots and robotics systems continue to play a key role in our customers' ability to adapt to their rapidly-changing business environment.

        Our services include design and project management, engineering, installation, training and life-cycle care of the complete production line.

Customers

        The Robotics division's end customers are primarily companies in the automotive and manufacturing industries. We sell to these customers through both direct and indirect sales forces. Our third-party channels include distributors, system integrators, OEMs and machine builders.

Sales and Marketing

        Sales are made through both direct and indirect sales forces and third-party channel partners, such as distributors, system integrators, OEMs and machine builders. The proportion of direct sales compared to indirect sales varies among the different industries, product technologies and geographic markets. Sales from the systems and service businesses are made almost entirely through direct sales forces.

Competition

        The Robotics division's principal competitors vary by product and system but major competitors include Fanuc Robotics Inc., Kuka Robot Group, Yaskawa Electric Corporation, Dürr AG, Kawasaki Robotics and Stäubli AG, as well as a growing base of small and medium-sized system integrators.

Capital Expenditures

        The Robotics division's capital expenditures for property, plant and equipment were $28 million in 2008, compared to $14 million in both 2007 and in 2006, respectively. Geographically, in 2008, Europe

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accounted for 43 percent of the capital expenditure, followed by 33 percent in Asia, 23 percent in the Americas and 1 percent in Middle East and Africa.

DISCONTINUED OPERATIONS

Overview

        The following businesses and costs are included in our Consolidated Financial Statements as discontinued operations at December 31, 2008, 2007 and 2006:

•

Our Transformer business in South Africa, which was sold in 2008.

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Our Lummus Global business, which was sold during 2007.

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Our Building Systems business in Germany, which was sold during 2007.

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Our Cable business in Ireland, which was sold during 2006.

•

In 2006, we and the buyer of the upstream oil and gas business entered into an agreement to settle certain items which were disputed by the buyer after the closing of the transaction in 2004. In 2007 and 2006, we recorded income in connection with the release of certain provisions related to the divestment.

•

Our Power Lines businesses in South Africa and Venezuela, which were sold in 2006, as well as the remaining Power Lines businesses in Brazil and Mexico, which were sold during 2007.

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Provisions and other expenses incurred in connection with asbestos-related claims. The status of our potential asbestos obligation is described in "Note 15 Commitments and contingencies" to our Consolidated Financial Statements.

•

Legal, professional and other fees related to the above disposals.

        See "Note 3 Acquisitions, divestments and discontinued operations" to the Consolidated Financial Statements for additional information.

CAPITAL EXPENDITURES

        Total capital expenditures for property, plant and equipment including intangible assets amounted to $1,171 million, $756 million and $536 million in 2008, 2007 and 2006, respectively. Compared to the depreciation expenses, capital expenditures were 77 percent higher in 2008, 27 percent higher in 2007 and 3 percent lower in 2006.

        Due to the current geographic distribution of our production facilities, capital expenditures in 2008 remained at a significant level in western Europe and the United States. Investments for capital expenditures in western Europe were primarily driven by maintenance and upgrades of existing production facilities to improve productivity, mainly in Sweden, Germany and Switzerland. Capital expenditures in emerging markets increased significantly in 2008, particularly in China, India, Poland and Mexico. Investments in capital expenditures in emerging markets were mostly made to expand or build new facilities to increase the production capacity, as a result of the rapid growth in these geographical markets. The share of emerging market capital expenditure as a percentage of total capital expenditure increased from 37 percent in 2007 to 43 percent in 2008.

        The carrying value of property, plant and equipment sold amounted to $50 million, $30 million and $54 million in 2008, 2007 and 2006, respectively. Of the total sales of property, plant and equipment in 2008, the majority related to real estate properties in Switzerland, Mexico, Poland and Italy. Of the total sales of property, plant and equipment in 2007, a significant portion was related to real estate properties in Norway, Sweden and Italy. In 2006, the sale of property, plant and equipment was mostly related to real estate properties, primarily in Switzerland and Germany.

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        Construction in progress for property, plant and equipment at December 31, 2008 was $534 million, which mainly related to construction projects in Sweden, the United States, Switzerland, China and Germany. Construction in progress for property, plant and equipment at December 31, 2007 was $285 million, mainly in Sweden, the United States, China, India, Switzerland and Germany. At December 31, 2006, the amount of construction in progress was $173 million, mainly in Germany, Finland, China, Sweden and Switzerland.

        In 2009, we plan to reduce our capital expenditures, but estimate the amount to be higher than our annual depreciation and amortization charge. We anticipate higher investments in Asia and relatively lower capital spending in Europe.

SUPPLIES AND RAW MATERIALS

        We purchase a variety of raw materials for use in our production and project execution processes. The primary materials used in our products, by weight, are steel, copper, aluminum, mineral oil and various plastics. We also purchase a wide variety of fabricated products and electronic components.

        We operate a worldwide supply chain management network with employees dedicated to this function in business units and key countries. Additionally, over twenty global commodity teams have been established to take advantage of opportunities to leverage the scale of the ABB Group, to optimize the efficiency of our supply networks, and to capture lowest possible costs worldwide.

        Our supply management organization's activities have continued to expand in recent years, to:

1.

pool and leverage procurement of materials and services used by many of our production facilities,



2.

improve our collaboration with supplier partners, through tools such as our supplier portal ASCC,



3.

enhance the transparency of our spending with further implementations to eSMART, our global sourcing and spend intelligence network, and



4.

evaluate processes and solutions that will allow us to speed our preparation, deployment and execution in our sourcing projects.

        The price of raw materials is highly volatile, and has varied substantially, from year to year. For many commodities we purchase, such as steel, copper, aluminum and products derived from crude oil, continuing global economic growth in China and other emerging economies, coupled with the uncertainty brought upon the markets by the recent world financial crisis, and the volatility in foreign exchange rates, all led to significant fluctuations in raw material costs over the last few years. While some market volatility will be offset through the use of either long-term contracts or hedging, we expect global commodity prices to remain highly volatile. Declines in raw material prices in recent months are further testimony of the level of uncertainty and volatility we are facing.

        We mitigate our exposure to commodity risk arising from changes in prices of raw materials by entering into hedges. For example, we manage copper and aluminum price risk using swap and forward contracts based on London Metal Exchange prices or on New York Mercantile Exchange prices for these commodities. Our hedging policy is designed to minimize price volatility and create a stable cost base for the ABB Group. Hedging has the effect of minimizing the unfavorable impact of price increases in commodities, but it also limits the favorable impact of decreasing prices. Certain gains and losses derived from our commodity hedging transactions are deferred and reflected in the cost of goods sold when the underlying physical transaction affects cost of goods sold. In addition to using hedging to reduce our exposure to fluctuations in raw materials prices, in some cases we can reduce this risk by incorporating changes in raw materials prices into the prices of our products.

        Our costs for most of our electronic components, subassemblies and fabricated products remained stable, or in many cases decreased slightly, in 2008 compared to 2007. Procurement personnel in the

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business units, and in the countries in which ABB operates, along with the global commodities teams, continued to focus on component cost reduction efforts in these areas to partially mitigate the impact of the cost increases in raw materials.

PATENTS AND TRADEMARKS

        We believe that intellectual property is as important as tangible assets for a technology group such as ABB. Over the past ten years, we have almost doubled our total number of first patent filings, and we intend to continue our aggressive approach to seeking patent protection. Currently, we have over 16,000 patent applications and registrations, of which approximately 7,400 are pending applications. In 2008, we filed patent applications for approximately 620 new inventions. Based on our existing intellectual property strategy, we believe that we have adequate control over our core technologies. The "ABB" trademarks and logo are protected in all of the countries in which we operate. We aggressively defend the reputation associated with the ABB brand.

SUSTAINABILITY ACTIVITIES

        Sustainability management is one of our highest business priorities. We address sustainability issues in all our business operations. Our goal is to improve our social and environmental performance continuously, and improve the quality of life in the communities and countries where we operate.

        Our social and environmental efforts include:

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Joining initiatives that foster economic, environmental, social and educational development;

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Making positive contributions in the communities where we operate so they will welcome us and consider ABB an attractive employer and a good investment;

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Offering our customers eco-efficient products that save energy and are safe to use, that optimize the use of natural resources, minimize waste and reduce environmental impact over their complete life cycles;

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Applying non-financial risk assessment to projects;

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Sharing our latest technologies with emerging markets by, for example, helping customers in developing countries implement environmentally sound processes and technologies and providing environmental awareness training;

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Ensuring that our operations and processes comply with applicable environmental standards and social legislation. Specifically, every operating unit must implement an environmental management system that continuously improves its environmental performance;

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Ensuring that our social and environmental policies are communicated and implemented;

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Working towards achieving best practices in occupational health and safety, and ensuring the health and safety of our employees, contractors and others involved in or affected by our activities; and

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Favoring suppliers that have sustainability policies and systems similar to our own.

        To manage environmental aspects of our own operations, we have implemented environmental management systems according to the ISO 14001 standard at our manufacturing and service sites. Almost all such sites currently work in compliance with the requirements of the standard (approximately 350 sites) and our environmental management program now covers operations in almost 50 countries. For non-manufacturing sites we have implemented an adapted environmental management system in order to ensure management of aspects and continual improvement of performance.

        We have Environmental Product Declarations to communicate the environmental performance of our core products. These describe the significant environmental aspects and impacts of a product line,

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viewed over its complete life cycle. Declarations are based on Life Cycle Assessment studies, created according to the international standard ISO/TR 14025. More than 70 declarations for major product lines are published on our Web site (www.abb.com), some of which have been externally certified by agencies such as Det Norske Veritas (DNV) of Norway and the RINA Management System Certification Society in Italy.

        We have expanded the scope of our environmental reporting in recent years. In 2008, a total of 85 percent of our employees were covered by confirmed data gathered through ABB's formal environmental reporting system that is verified by an independent verification body. The parts of our business that are not yet covered by our reporting system, mainly sales offices in countries where we do not perform manufacturing, have very limited environmental exposure. A total of 4 environmental incidents were reported in 2008, none of which had a material environmental impact.

        In 2008, a total of 93 percent of employees are covered by confirmed data gathered through ABB's formal social reporting system that is verified by an independent verification body. The parts of our business that are not yet covered by our reporting system, mainly sales offices in countries where we do not perform manufacturing, have very limited social exposure.

        One of our corporate objectives is to phase out the use of the hazardous substances that are recorded on our list of "restricted" substances. Priorities for replacement are set by each business using criteria such as the environmental aspects of alternatives, the risk of the substance escaping into the environment, how hazardous the substance is, whether we can use the substance under strict control and whether there are any technically acceptable alternatives.

        We have retained liability for environmental remediation costs at two sites in the United States that were operated by our former nuclear business, which we have sold to BNFL. The primary environmental liabilities associated with these sites relate to the costs of remediating radiological contamination upon decommissioning the facilities. See "Note 15 Commitments and contingencies" to our Consolidated Financial Statements.

REGULATION

        Our operations are subject to numerous governmental laws and regulations including those governing antitrust and competition, corruption, the environment, securities transactions and disclosures, import and export of products, currency conversions and repatriation, taxation of foreign earnings and earnings of expatriate personnel and use of local employees and suppliers.

        As a reporting company under Section 12 of the U.S. Securities Exchange Act of 1934, we are subject to the FCPA's antibribery provisions with respect to our conduct around the world.

        Our operations are also subject to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, as implemented by the 34 signatory countries. The convention obliges signatories to adopt national legislation that makes it a crime to bribe foreign public officials. As of December 31, 2008, those countries which have adopted implementing legislation and have ratified the convention include the United States and several European nations in which we have significant operations.

        We conduct business in certain countries known to experience governmental corruption. While we are committed to conducting business in a legal and ethical manner, our employees or agents have taken, and in the future may take, actions that violate the U.S. FCPA, legislation promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, antitrust laws or other laws or regulations. These actions have resulted and could result in monetary or other penalties against us and could damage our reputation and, therefore, our ability to do business. For more information, see "Item 8. Financial Information—Legal Proceedings."

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SIGNIFICANT SUBSIDIARIES

        ABB Ltd, Zurich, Switzerland is the ultimate parent company of the ABB Group, which is comprised of 254 consolidated operating and holding subsidiaries worldwide, as of February 28, 2009. In addition to ABB Ltd Zurich, the only other listed company in the ABB Group is ABB Limited, India, which is listed on the Bombay Stock Exchange and the National Stock Exchange in India.

        The following table sets forth, as of February 28, 2009, the name, country of incorporation and ownership interest of ABB Ltd in its significant subsidiaries:

Company Name	Country	ABB Group Interest %
ABB S.A., Buenos Aires	ARGENTINA		100.00
ABB Australia Pty Limited, Sydney	AUSTRALIA		100.00
ABB AG, Vienna	AUSTRIA		100.00
ABB N.V., Zaventem	BELGIUM		100.00
ABB Ltda., Osasco	BRAZIL		100.00
ABB Bulgaria EOOD, Sofia	BULGARIA		100.00
ABB Inc., St. Laurent, Quebec	CANADA		100.00
ABB (China) Ltd., Beijing	CHINA		100.00
Asea Brown Boveri Ltda., Bogotá	COLOMBIA		99.99
ABB Technology SA, Abidjan	COTE D'IVOIRE		99.00
ABB Ltd., Zagreb	CROATIA		100.00
ABB s.r.o., Prague	CZECH REPUBLIC		100.00
ABB A/S, Skovlunde	DENMARK		100.00
ABB Ecuador S.A., Quito	ECUADOR		96.87
Asea Brown Boveri S.A.E., Cairo	EGYPT		100.00
ABB AS, Tallinn	ESTONIA		100.00
ABB Oy, Helsinki	FINLAND		100.00
ABB S.A., Rueil-Malmaison	FRANCE		100.00
ABB AG, Mannheim	GERMANY		100.00
ABB Automation GmbH, Mannheim	GERMANY		100.00
ABB Automation Products GmbH, Ladenburg	GERMANY		100.00
ABB Beteiligungs- und Verwaltungsges. mbH, Mannheim	GERMANY		100.00
ABB Stotz-Kontakt GmbH, Heidelberg	GERMANY		100.00
Busch-Jaeger Elektro GmbH, Mannheim/Lüdenscheid	GERMANY		100.00
Asea Brown Boveri S.A., Metamorphossis Attica	GREECE		100.00
ABB (Hong Kong) Ltd., Hong Kong	HONG KONG		100.00
ABB Engineering Trading and Service Ltd., Budapest	HUNGARY		100.00
ABB Limited, Bangalore	INDIA		52.11
ABB Ltd, Dublin	IRELAND		100.00
ABB Technologies Ltd., Tirat Carmel	ISRAEL		99.99
ABB S.p.A., Milan	ITALY		100.00
ABB K.K., Tokyo	JAPAN		100.00
ABB Ltd., Seoul	KOREA, REPUBLIC OF		100.00
ABB Holdings Sdn. Bhd., Subang Jaya	MALAYSIA		100.00
Asea Brown Boveri S.A. de C.V., Tlalnepantla	MEXICO		100.00
ABB BV, Rotterdam	NETHERLANDS		100.00
ABB Finance B.V., Amsterdam	NETHERLANDS		100.00
ABB Holdings BV, Amsterdam	NETHERLANDS		100.00
ABB Limited, Auckland	NEW ZEALAND		100.00
ABB Holding AS, Billingstad	NORWAY		100.00
ABB S.A., Lima	PERU		80.60
ABB, Inc., Paranaque, Metro Manila	PHILIPPINES		100.00
ABB Sp. zo.o., Warsaw	POLAND		99.88
ABB (Asea Brown Boveri), S.A., Paco de Arcos	PORTUGAL		100.00

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Company Name	Country	ABB Group Interest %
Asea Brown Boveri Ltd., Moscow	RUSSIAN FEDERATION		100.00
ABB Contracting Company Ltd., Riyadh	SAUDI ARABIA		65.00
ABB Holdings Pte. Ltd., Singapore	SINGAPORE		100.00
ABB Holdings (Pty) Ltd., Sunninghill	SOUTH AFRICA		80.00
Asea Brown Boveri S.A., Madrid	SPAIN		100.00
ABB AB, Västerås	SWEDEN		100.00
ABB Norden Holding AB, Västerås	SWEDEN		100.00
ABB Asea Brown Boveri Ltd, Zurich	SWITZERLAND		100.00
ABB Schweiz AG, Baden	SWITZERLAND		100.00
ABB LIMITED, Bangkok	THAILAND		100.00
ABB Holding A.S., Istanbul	TURKEY		99.95
ABB Ltd., Kiev	UKRAINE		100.00
ABB Holdings Limited, Warrington	UNITED KINGDOM		100.00
ABB Limited, Warrington	UNITED KINGDOM		100.00
ABB Holdings Inc., Norwalk	UNITED STATES		100.00
ABB Inc., Norwalk CT	UNITED STATES		100.00
Asea Brown Boveri S.A., Caracas	VENEZUELA		100.00

DESCRIPTION OF PROPERTY

        As of December 31, 2008, the ABB Group owns or leases real estate in approximately 100 countries throughout the world. The facilities consist mainly of manufacturing plants, office buildings, research centers and warehouses. A substantial portion of our production and development facilities are situated in Germany, Sweden, the United States, Switzerland, China, Finland, India and Italy. We own essentially all of the machinery and equipment used in our manufacturing operations.

        From time to time, we have a surplus of space arising from acquisitions, production efficiencies and/or restructuring of operations. Normally, we seek to sell such surplus space which may involve leasing property to third parties for an interim period.

        The net book value of our property, plant and equipment as of December 31, 2008 was $3,562 million, of which machinery and equipment represented $1,467 million, land and buildings represented $1,561 million and construction in progress of $534 million. We believe that our current facilities are in good condition and are adequate to meet the requirements of our present and foreseeable future industrial operations.

Item 4A.    Unresolved Staff Comments

        Not applicable.

Item 5.    Operating and Financial Review and Prospects

You should read the following discussion of our financial condition and results of operations in conjunction with our Consolidated Financial Statements and the related notes and other financial information contained elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties, including those discussed in "Item 3. Key Information—Risk Factors." See "Forward-looking statements" at the beginning of this annual report.

MANAGEMENT OVERVIEW

        During 2008, we continued to focus on our core strengths: power and automation products, systems and services that increase grid reliability and industrial productivity and result in significant energy savings.

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        Despite uncertainties surrounding the economic situation especially in the second half of 2008, we have continued to benefit from our technological leadership, our flexible global production base and the operational improvements we continue to make in our businesses. Our strategy continues to focus on business execution, cost and risk management and organic growth, which continue to enable improvements in operating performance with stronger financial results in our businesses.

        Our efforts for 2008 were aimed at three key areas: Strategy, Execution and People.

Strategy

        We believe our strategy in 2008 remained sound. Our businesses supported both growth and profitability as a result of their leading market positions and competitive technologies. Furthermore, our global geographic scope has provided us with strong positions in Asia—with particular focus on China and India—and the Middle East, and we have continued to serve established, mature markets in Europe and North America.

Execution

        Execution continued to be our top priority. We have maintained in 2008 attractive organic growth through our range of technologies and superior service. We continued to improve our gross profit margins through cost control, productivity improvements and risk control in all of our divisions. Our execution framework has centered around our business processes, regular business and project reviews, a flat organizational structure and a focus on compliance.

People

        During 2008 we continued to build on our strong foundation as an attractive, dynamic global employer. We focused on retaining and recruiting quality people for our growth areas. Together with our zero tolerance policy, we continued to implement our Code of Conduct through employee education programs focusing on values, leadership and business ethics.

Outlook

        Given the disruption of the global financial system and the economic downturn it entailed, the outlook for 2009 remains uncertain.

        We believe that the increased cost of capital and the scarcity of funding that started to delay many investment decisions in the fourth quarter of 2008, will continue for some time in the future and consequently contribute to weakening industrial and construction-related demand.

        At the same time, we expect the need in the global market for power transmission and distribution infrastructure, both in terms of equipment replacement and new projects, to remain essentially unchanged in 2009. In addition, we believe governments may leverage infrastructure investments in the energy sector to stimulate the economy. There are political commitments in the EU, the U.S, and Asia to increase the share of renewable energy sources, which could spur activity in the sector.

        However, given the overall uncertainty in the global markets, we are unable to forecast when the various government stimulus programs will take effect or when the availability of funding will improve.

        Therefore, our priority for 2009 will be to ensure that we have the flexibility to respond quickly to changing market conditions. For this purpose, we have initiated a program to be completed by the end of 2010 to sustainably reduce our cost base. In February 2009, we reaffirmed our targets for 2011. We intend to take advantage of our global footprint, our strong balance sheet and our leading technologies to further strengthen our competitive position.

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APPLICATION OF CRITICAL ACCOUNTING POLICIES

General

        We prepare our Consolidated Financial Statements in accordance with United States generally accepted accounting principles (U.S. GAAP).

        The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including, but not limited to, those related to: costs expected to be incurred to complete projects; costs of product guarantees and warranties; provisions for bad debts; recoverability of inventories, investments, fixed assets, goodwill and other intangible assets; income tax related expenses and accruals; provisions for restructuring; gross profit margins on long-term construction-type contracts; pensions and other postretirement benefit assumptions and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our estimates and assumptions.

        We deem an accounting policy to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or if changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our Consolidated Financial Statements. We also deem an accounting policy to be critical when the application of such policy is essential to our ongoing operations. We believe the following critical accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. These policies should be considered when reading our Consolidated Financial Statements.

Revenues and cost of sales recognition

        We generally recognize revenues when persuasive evidence of an arrangement exists to sell products and/or services, the price is fixed or determinable, collectibility is reasonably assured and upon transfer of title, including the risks and rewards of ownership, or upon the rendering of services.

        Revenues under long-term contracts are recognized using the percentage-of-completion method of accounting pursuant to Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP 81-1). We principally use the cost-to-cost or delivery events method to measure progress towards completion on contracts. Management determines the method used by type of contract based on its judgment as to which method best measures progress towards completion on contracts.

        The percentage-of-completion method of accounting involves the use of assumptions and projections, principally relating to future material, labor and overhead costs. As a consequence, there is a risk that total contract costs will exceed those we originally estimated and the margin will decrease. This risk increases if the duration of a contract increases, because there is a higher probability that the circumstances upon which we originally developed estimates will change, resulting in increased costs that we may not recover. Factors that could cause costs to increase include:

•

unanticipated technical problems with equipment supplied or developed by us which may require that we incur additional costs for us to remedy;

•

changes in the cost of components, materials or labor;

•

difficulties in obtaining required governmental permits or approvals;

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•

project modifications creating unanticipated costs;

•

suppliers', subcontractors' or consortium partners' failure to perform;

•

penalties incurred as a result of not completing portions of the project in accordance with agreed upon time limits and

•

delays caused by unexpected conditions or events.

        Changes in our initial assumptions, which we review on a regular basis between balance sheet dates, may result in revisions to estimated costs, current earnings and anticipated earnings. We recognize these changes in the period in which the changes in estimates are determined. By recognizing changes in estimates cumulatively, recorded revenue and costs to date reflect the current estimates of the stage of completion of each project. Additionally, losses on long-term contracts are recognized in the period when they are identified and are based upon the anticipated excess of contract costs over the related contract revenues.

        Short-term construction-type contracts or long-term contracts for which reasonably dependable estimates cannot be made or for which inherent hazards make estimates doubtful are accounted for under the completed-contract method as required by SOP 81-1. Revenues under the completed-contract method are recognized upon substantial completion that is acceptance by the customer, compliance with performance specifications demonstrated in a factory acceptance test or similar event.

        When multiple elements, such as products and services, are contained in a single arrangement or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value or according to the residual method should no evidence for the fair value of the delivered item be available, provided that such element meets the criteria for treatment as a separate unit of accounting. The allocation of the sales price between delivered elements and undelivered elements might affect the amount of revenue recorded in certain periods, but would not change the total revenue recognized on the contract.

        Unless the percentage-of-completion or completed contract method applies, revenues from contracts that contain customer acceptance provisions are deferred, in whole or in part, until customer acceptance occurs, or we have demonstrated the customer-specified objective criteria are satisfied or the contractual acceptance period has lapsed.

        These revenue recognition methods require the collectibility of the revenues recognized to be reasonably assured. When recording the respective accounts receivable, allowances are calculated to estimate those receivables that will not be collected. These reserves assume a level of default based on historical information, as well as knowledge about specific invoices and customers. The risk remains that a different number of defaults will occur than originally estimated. As such, the amount of revenues recognized might exceed or fall below that which will be collected, resulting in a change in earnings in the future. The risk of deterioration is likely to increase during periods of significant negative industry or economic trends.

        As a result of the above policies, judgment in the selection and application of revenue recognition methods must be made.

Contingencies

        As more fully described in the section below entitled "Environmental liabilities", in "Item 8. Financial Information—Legal Proceedings" and in "Note 15 Commitments and contingencies" to our Consolidated Financial Statements, we are subject to proceedings, litigation or threatened litigation and other claims and inquiries related to environmental, labor, product, regulatory and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the provision required, if any, for these

36

contingencies is made after analysis of each individual issue, often with assistance from both internal and external legal counsel and technical experts. The required amount of a provision for a contingency of any type may change in the future due to new developments in the particular matter, including changes in the approach to its resolution.

        We record a provision for our contingent obligations when it is probable that a loss will be incurred and the amount can be reasonably estimated. Any such provision is generally recognized on an undiscounted basis using our best estimate of the amount of loss incurred or at the lower end of an estimated range when a single best estimate is not determinable. In some cases, we may be able to recover a portion of the costs relating to these obligations from insurers or other third parties; however, we record such amounts only when it is probable that they will be collected.

        We provide for anticipated costs for warranties when we recognize revenues on the related products or contracts. Warranty costs include calculated costs arising from imperfections in design, material and workmanship in our products. Although we generally make assessments on an overall, statistical basis, we make individual assessments on contracts with risks resulting from order-specific conditions or guarantees. There is a risk that actual warranty costs may exceed the amounts provided for, which would result in a deterioration of earnings in the future when these actual costs are determined.

        We may have a legal obligation to perform environmental clean-up activities as a result of the normal operation of our business or have other asset retirement obligations in the scope of Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (SFAS 143). In some cases, the timing or the method of settlement, or both are conditional upon a future event that may or may not be within our control, but the underlying obligation itself is unconditional and certain. We recognize a provision for these and other asset retirement obligations when a liability for the retirement or clean-up activity has been incurred and a reasonable estimate of its fair value can be made. These provisions are initially recognized at fair value, and subsequently adjusted for accrued interest and changes in estimates.

Pension and postretirement benefits

        As more fully described in "Note 17 Employee benefits" to our Consolidated Financial Statements, we operate pension plans that cover a large percentage of our employees. We use actuarial valuations to determine our pension and postretirement benefit costs and credits. The amounts calculated depend on a variety of key assumptions, including discount rates, mortality and expected return on plan assets. Under U.S. GAAP, we are required to consider current market conditions in making these assumptions. In particular, the discount rates are reviewed annually based on changes in long-term, highly rated corporate bond yields. Decreases in the discount rates result in an increase in the projected benefit obligation to employees (PBO) and in pension costs. Conversely, an increase in the discount rates results in a decrease in the projected benefit obligation and in pension costs. The mortality assumptions are reviewed annually by the Company. Decreases in mortality rates result in an increase in the projected benefit obligation and in pension costs. Conversely, an increase in mortality rates result in a decrease in the projected benefit obligation and in pension costs.

        Holding all other assumptions constant, a 0.25 percentage point decrease in the discount rate would have increased the PBO related to our pension plans by approximately $210 million, while a 0.25 percentage point increase in the discount rate would have decreased the PBO related to our pension plans by approximately $199 million.

        The expected return on plan assets is reviewed regularly and considered for adjustment annually based on current and expected asset allocations and represents the long-term return expected to be achieved. Decreases in the expected return on plan assets result in an increase to pension costs. An

37

increase or decrease of 0.5 percent in the expected long-term rate of asset return would have decreased or increased, respectively, the net periodic benefit cost in 2008 by approximately $44 million.

        Under U.S. GAAP, we accumulate and amortize over future periods actual results that differ from the assumptions used. Therefore, actual results generally affect our recognized expense for pension and other postretirement benefit obligations in future periods.

        The funded status, which can increase or decrease based on the performance of the financial markets or changes in our assumptions regarding rates, does not represent a mandatory short-term cash obligation. Instead, the funded status of a pension plan is the difference between the PBO and the fair value of the plan assets. The funded status of our pension plans as of December 31, 2008 was $710 underfunded compared to an overfunding as of December 31, 2007, of $22 million. Our other postretirement plans were underfunded by $207 million and $215 million at December 31, 2008 and 2007, respectively.

        We have multiple non-pension postretirement benefit plans. Our health care plans are generally contributory with participants' contributions adjusted annually. For purposes of estimating our health care costs, we have assumed health care cost increases to be 9.82 percent per annum for 2009, gradually declining to 4.97 percent per annum by 2017 and to remain at that level thereafter.

Taxes

        In preparing our Consolidated Financial Statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. We account for deferred taxes by using the asset and liability method. Under this method, we determine deferred tax assets and liabilities based on temporary differences between the financial reporting and the tax bases of assets and liabilities. Deferred taxes are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We recognize a deferred tax asset when it is more likely than not that the asset will be realized. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. To the extent we increase or decrease this allowance in a period, we recognize the change in the allowance within provision for taxes in the Consolidated Income Statements unless the change relates to discontinued operations, in which case the change is recorded in income (loss) from discontinued operations, net of tax. Unforeseen changes in tax rates and tax laws, as well as differences in the projected taxable income as compared to the actual taxable income, may affect these estimates.

        We operate in numerous tax jurisdictions and, as a result, are regularly subject to audit by tax authorities. We provide for tax contingencies, including potential tax audits, on the basis of the technical merits of the contingency, including applicable tax law, Organisation for Economic Co-operation and Development (OECD) guidelines and our best knowledge of the facts and circumstances. Although we believe that our tax estimates are reasonable and that appropriate tax reserves have been made, the final determination of tax audits and any related litigation could be different than that which is reflected in our income tax provisions and accruals.

        Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) requires that an estimated loss from a tax contingency be accrued as a charge to income if it is more likely than not that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. The required amount of provisions for contingencies of any type may change in the future due to new developments.

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Goodwill and other intangible assets

        We review goodwill for impairment annually as of October 1, and additionally whenever events or changes in circumstances indicate the carrying value may not be recoverable in accordance with SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 142 requires that a two-step impairment test be performed on goodwill. In the first step, we compare the fair value of each reporting unit to its carrying value. Our reporting units represent the reportable segments identified in "Note 22 Operating segment and geographic data" to our Consolidated Financial Statements, except in our Power Products and Process Automation divisions where our reporting units are represented by the level below these reportable segments. We use a discounted cash flow model to determine the fair value of reporting units, unless there is a readily determinable fair market value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we perform the second step to determine the implied fair value of the reporting unit's goodwill and compare it to the carrying value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference.

        We review intangible assets in accordance with SFAS 144 and accordingly test for impairment upon the occurrence of certain triggering events, such as a decision to divest a business or projected losses of an entity.

        Cash flow models used in evaluating impairments are dependent on a number of factors including estimates of future cash flows and other variables and require that we make significant estimates and judgments, involving variables such as sales volumes, sales prices, sales growth, production and operating costs, capital expenditures, market conditions and other economic factors. Further, discount rates used in the discounted cash flow model to calculate the fair value require the determination of variables such as the risk free rate and the equity market risk premium. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. Additionally, we consider our market capitalization on the date we perform the analysis.

        We record any related impairment charge in other income (expense), net, in our Consolidated Income Statements, unless it is related to a discontinued operation, in which case the charge is recorded in income (loss) from discontinued operations, net of tax.

NEW ACCOUNTING PRONOUNCEMENTS

        For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our Consolidated Financial Statements, see "Note 2 Significant accounting policies" to our Consolidated Financial Statements.

RESEARCH AND DEVELOPMENT

        Each year, we invest significantly in research and development. Our research and development area focuses on developing and commercializing the core technologies of our businesses that are of strategic importance to our future growth. In 2008, 2007 and 2006, we invested $1,027 million, $871 million and $758 million, respectively, or approximately 2.9 percent, 3.0 percent, and 3.3 percent of annual consolidated revenues, respectively, on research and development activities. We also had expenditures of $214 million, $302 million and $319 million, respectively, or approximately 0.6 percent, 1.0 percent and 1.4 percent, respectively, of annual consolidated revenues in 2008, 2007 and 2006, on order-related development activities. These are customer- and project-specific development efforts that we undertake to develop or adapt equipment and systems to the unique needs of our customers in connection with specific orders or projects. Order-related development amounts are initially recorded in

39

inventories as part of the work in process of a contract and then are reflected in cost of sales at the time revenue is recognized in accordance with our accounting policies.

        In addition to continuous product development, and order-related engineering work, we develop future technology platforms for technology applications in our automation and power businesses in our Group research and development labs, which operate on a global basis. Through active management of our investment in research and development, we seek to maintain a balance between short-term and long-term research and development programs and optimize our return on investment.

        Our research and development strategy focuses on three objectives:

1.

To monitor and develop emerging technologies and create an innovative, sustainable technology base for the Company;



2.

To develop technology platforms that enable efficient product design for our power and automation customers; and



3.

To create the next generation of power and automation products and systems that we believe will be the engines of profitable growth.

        Universities are the incubators of future technology, and a central task of our research and development team is to transform university research into industry-ready technology platforms. We collaborate with a number of universities and research institutions to build research networks and foster new technologies. We believe these collaborations shorten the amount of time required to turn basic ideas into viable products, and they additionally help us recruit and train new personnel. We have built more than 50 university partnerships in the U.S., Europe and Asia, including long-term, strategic relationships with institutions such as Stanford University, the Massachusetts Institute of Technology, Carnegie Mellon University, Cambridge University, ETH Zurich or Imperial College London. Our collaborative projects include research on materials, sensors, micro-engineered mechanical systems, robotics, controls, manufacturing, distributed power and communication.

        Common platforms for power and automation technologies are developed around advanced materials, efficient manufacturing, information technology and data communication, as well as sensor and actuator technology. Common applications of basic power and automation technologies can also be found in power electronics, electrical insulation, and control and optimization. Our power technologies, including our insulation technologies, current interruption and limitation devices, power electronics, flow control and power protection processes, apply as much to large, reliable, blackout-free transmission systems as they do to everyday household needs. Our automation technologies, including our control and optimization processes, power electronics, sensors and microelectronics, mechatronics and wireless communication processes, are designed to improve efficiency in plants and factories around the world—including our own.

        Group research and development is carried out in two global laboratories for power and automation technologies, combining research units in the U.S., Europe and Asia. The cultural diversity and closeness to our customers and the world's best universities create a breeding ground for success. We continue to expand our research and development activities in India and China, reflecting our growth strategy in Asia. Our corporate research center in Bangalore, India focuses on software research and develops platforms for both automation and power technologies. In China, research and development activity is focused on power transmission and distribution, manufacturing and robotics. It is centered in Beijing and Shanghai, where our researchers are in close contact with Chinese universities and customers.

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ACQUISITIONS, INVESTMENTS AND DIVESTITURES

Acquisitions and investments

        During 2008, 2007 and 2006, we invested $653 million, $54 million and $3 million in 12, 14 and 11 new businesses, joint ventures or affiliated companies, respectively.

Acquisitions in 2008

        On August 25, 2008, ABB completed the acquisition of Kuhlman Electric Corporation (Kuhlman), a U.S. based transformer company. The acquisition was integrated into our Power Products division in north America and complements both our product range and geographical presence. Kuhlman manufactures a wide range of high-quality transformers for the industrial and electric utility sectors and has a strong reputation for innovative products and solid, long-term customer relationships. The estimated purchase price, including assumed debt, was $520 million (including $5 million cash acquired). The preliminary purchase price allocation resulted in $114 million intangible assets subject to amortization and $400 million in goodwill, recorded in our Consolidated Balance Sheet at December 31, 2008.

        For more information on our acquisitions, see "Note 3 Acquisitions, divestments and discontinued operations" to our Consolidated Financial Statements.

Divestitures of businesses, joint ventures and affiliated companies

        In 2008, 2007 and 2006, we received cash, net of cash disposed, from sales of businesses, joint ventures and affiliated companies of $46 million, $1,142 million and $27 million, respectively. In relation to transactions included in continuing operations, we recognized gains in 2008, 2007 and 2006, within other income (expense), net, of $24 million, $11 million and $3 million, respectively. We also recognized gain (loss) from dispositions, net of tax in 2008, 2007 and 2006, within income (loss) from discontinued operations, net of tax, of $9 million, $530 million and $(83) million, respectively. The divestment of these businesses is discussed separately below under "Divestitures in 2008", "Divestitures in 2007" and "Divestitures in 2006". All revenues and income reported in the year of sale are through the date of divestment.

Divestitures in 2008

        During the first quarter of 2008, we sold our 50 percent stake in the shares of ABB Powertech Transformers, located in South Africa, to Powertech, a wholly-owned subsidiary of the Altron Group at a gain of $11 million. This business was part of our Power Products division prior to being reclassified to discontinued operations. The Transformer business in South Africa had revenues of $29 million, $167 million and $146 million for the years ended December 31, 2008, 2007 and 2006, respectively. Income for 2008, 2007 and 2006 was $2 million, $15 million and $16 million, respectively, recorded in income (loss) from discontinued operations, net of tax.

Divestitures in 2007

        In November 2007, we completed the sale of Lummus Global (Lummus) to Chicago Bridge & Iron Company (CB&I) and received net cash proceeds of approximately $810 million. Lummus had revenues of $870 million and $985 million for the years ended December 31, 2007 and 2006, respectively. Income for 2007 and 2006 was $9 million in each year and we had a gain on sale of $530 million, all recorded in income (loss) from discontinued operations, net of tax. In 2008, we recorded certain adjustments that reduced the gain on sale by $5 million.

        In April 2007, we completed the sale of our Building Systems business in Germany, which was reported in discontinued operations. The business had revenues of $47 million and $286 million for the

41

years ended December 31, 2007 and 2006, respectively. Losses for 2007 and 2006 were $2 million and $65 million, respectively, recorded in income (loss) from discontinued operations, net of tax. Of the loss reported for 2006, $67 million was an impairment charge based upon the proceeds which were expected from the sale of the business.

        In May 2007, we completed the sale of our stake in Jorf Lasfar Energy Company S.C.A. (Jorf Lasfar), a power plant based in Morocco and our stake in S.T.CMS Electric Company Private Limited (Neyveli), a power plant in India. Our share of the pre-tax earnings of Jorf Lasfar was $21 million and $67 million for the years ended December 31, 2007 and 2006, respectively. Our share of the pre-tax earnings of Neyveli for the years ended December 31, 2007 and 2006 was $4 million and $9 million, respectively. The sale of these investments resulted in a gain of approximately $38 million which was included in continuing operations. In 2008, we recorded adjustments to the gain on sale of $16 million related to the favorable outcome on an outstanding tax case.

        In 2007, we sold our Power Lines businesses in Brazil and Mexico for a sales price of $20 million and a gain of $0 million. These businesses had revenues of $39 million and $80 million and losses of $3 million and $4 million for the years ended December 31, 2007 and 2006, respectively. The losses were recorded in income (loss) from discontinued operations, net of tax.

Divestitures in 2006

        In December 2006, we sold our Cable business in Ireland. The business had revenues of $95 million and losses of $48 million for the year ended December 31, 2006. The loss was recorded in income (loss) from discontinued operations, net of tax. The majority of the $48 million loss reported in 2006 related to the sale of the business.

        In 2006, we sold our Power Lines businesses in Venezuela and South Africa. These businesses had revenues of $8 million and a loss of $1 million for the year ended December 31, 2006. The loss was recorded in income (loss) from discontinued operations, net of tax.

EXCHANGE RATES

        We report our financial results in U.S. dollars. Due to our global operations, a significant amount of our revenues, expenses, assets and liabilities are denominated in other currencies. As a consequence, movements in exchange rates between currencies may affect:

•

our profitability;

•

the comparability of our results between periods and

•

the carrying value of our assets and liabilities.

        We translate non-USD denominated results of operations, assets and liabilities to USD in our Consolidated Financial Statements. Balance sheet items are translated to USD using year-end currency exchange rates. Income statement and cash flow items are translated to USD using the average currency exchange rate over the relevant period.

        Increases and decreases in the value of the USD against other currencies will affect the reported results of operations in our Consolidated Income Statements and the value of certain of our assets and liabilities in our Consolidated Balance Sheets, even if our results of operations or the value of those assets and liabilities have not changed in their original currency. Because of the impact foreign exchange rates have on our reported results of operations and the reported value of our assets and liabilities, changes in foreign exchange rates could significantly affect the comparability of our reported results of operations between periods and result in significant changes to the reported value of our assets, liabilities and shareholders' equity, as has been the case during the period from 2006 through 2008.

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        While we operate globally and report our financial results in USD, because of the location of our significant operations and because our corporate headquarters are in Switzerland, exchange rate movements between the USD and both the euro (EUR) and the Swiss francs (CHF) are of particular importance to us.

        The exchange rates between the USD and the EUR and the USD and the CHF at December 31, 2008, 2007 and 2006, were as follows:

Exchange rates into $	2008		2007		2006
EUR 1.00		1.40		1.47		1.32
CHF 1.00		0.94		0.89		0.82

        The average exchange rates between the USD and the EUR and the USD and the CHF for the years ended December 31, 2008, 2007 and 2006, were as follows:

Exchange rates into $	2008		2007		2006
EUR 1.00		1.47		1.37		1.25
CHF 1.00		0.93		0.84		0.80

        When we incur expenses that are not denominated in the same currency as the related revenues, foreign exchange rate fluctuations could affect our profitability. To mitigate the impact of exchange rate movements on our profitability, it is our policy to enter into forward foreign exchange contracts to manage the foreign exchange transaction risk of our operations.

        In 2008, approximately 88 percent of our consolidated revenues were reported in currencies other than USD. Of that amount, the following percentages were reported in the following currencies:

•

Euro, approximately 29 percent;

•

Chinese renminbi, approximately 9 percent;

•

Swiss francs, approximately 6 percent;

•

Swedish krona, approximately 5 percent and

•

Indian rupee, approximately 4 percent.

        In 2008, approximately 90 percent of our cost of sales and selling, general and administrative expenses were reported in currencies other than USD. Of that amount, the following percentages were reported in the following currencies:

•

Euro, approximately 33 percent;

•

Swiss francs, approximately 10 percent;

•

Swedish krona, approximately 8 percent;

•

Chinese renminbi, approximately 7 percent and

•

Indian rupee, approximately 3 percent.

        We also incur expenses other than cost of sales and selling, general and administrative expenses in various currencies.

        The results of operations and financial position of many of our subsidiaries outside of the United States are reported in the currencies of the countries in which those subsidiaries reside. We refer to these currencies as "local currencies." Local currency financial information is then translated into USD at applicable exchange rates for inclusion in our Consolidated Financial Statements.

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        The discussion of our results of operations below provides certain information with respect to orders, revenues, earnings before interest and taxes and other measures as reported in USD (as well as in local currencies). We measure period-to-period variations in local currency results by using a constant foreign exchange rate for all periods under comparison. Differences in our results of operations in local currencies as compared to our results of operations in USD are caused exclusively by changes in currency exchange rates.

        While we consider our results of operations as measured in local currencies to be a significant indicator of business performance, local currency information should not be relied upon to the exclusion of U.S. GAAP financial measures. Instead, local currencies reflect an additional measure of comparability and provide a means of viewing aspects of our operations that, when viewed together with the U.S. GAAP results and our reconciliations, provide a more complete understanding of factors and trends affecting the business. Because local currency information is not standardized, it may not be possible to compare our local currency information to other companies' financial measures that have the same or a similar title. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

ORDERS

        We book and report an order when a binding contractual agreement has been concluded with the customer covering, at a minimum, the price and scope of products or services to be supplied, the delivery schedule and the payment terms. The reported value of an order corresponds to the undiscounted value of revenues that we expect to recognize following delivery of the goods or services subject to the order, less any trade discounts and excluding any value added or sales tax. The value of orders received during a given period of time represents the sum of the value of all orders received during the period, adjusted to reflect the aggregate value of any changes to the value of orders received during the period and orders existing at the beginning of the period. These adjustments, which may in the aggregate increase or decrease the orders reported during the period, may include changes in the estimated order price up to the date of contractual performance, changes in the scope of products or services ordered and cancellations of orders.

        The undiscounted value of revenues we expect to generate from our orders at any point in time is represented by our order backlog. Approximately 16 percent of the value of total orders we recorded in 2008 were "large orders," which we define as orders from third parties involving a value of at least $15 million for products or services. Approximately 46 percent of the large orders in 2008 were recorded by our Power Systems division and 32 percent in our Process Automation division. The Power Products, Automation Products and Robotics divisions account for the remainder of the total large orders recorded during 2008. The remaining portion of total orders recorded in 2008 was "base orders," which we define as orders from third parties with a value of less than $15 million for products or services.

        The level of orders fluctuates from year to year. Arrangements included in any particular order can be complex and unique to that order. Portions of our business involve orders for long-term projects that can take months or years to complete and many large orders result in revenues in periods after the order is booked. However, the level of large orders and orders generally cannot be used to accurately predict future revenues or operating performance. Orders that have been placed can be cancelled, delayed or modified by the customer. These actions can reduce or delay any future revenues from the order or may result in the elimination of the order.

        The near-term outlook is highly uncertain due to the volatility of key drivers such as economic growth and costs of raw materials. The impact of the slow or declining global economy has caused a decrease in the demand for total orders, particularly in large orders relating to the timing of projects awarded and lack of funding. It is still uncertain how the global economy will develop throughout 2009;

44

however, we believe our portfolio of products and services is well-balanced both geographically and in terms of product diversity. Beyond the near-term market uncertainties, we anticipate the need for more energy efficient products to remain stable in the course of a continued economic downturn as industrial customers address their need for productivity improvements in the face of low-cost competition.

PERFORMANCE MEASURES

        We evaluate the performance of our divisions primarily based on orders received, revenues, earnings before interest and taxes (EBIT) and EBIT as a percentage of revenues (EBIT margin). EBIT is the amount resulting from the subtraction of our cost of sales, selling, general and administrative expenses and other income (expense), net, from our revenues.

ANALYSIS OF RESULTS OF OPERATIONS

        Our consolidated results form operations were as follows:

		Year ended December 31,
		2008			2007			2006
		($ in millions, except per share data in $)
Orders			38,282			34,348			27,048
Order backlog(1)			23,837			22,715			15,829
Revenues			34,912			29,183			23,281
Cost of sales			(23,972	)		(20,215	)		(16,537	)
Gross profit			10,940			8,968			6,744
Selling, general and administrative expenses			(5,822	)		(4,975	)		(4,326	)
Other income (expense), net			(566	)		30			139
Earnings before interest and taxes			4,552			4,023			2,557
Net interest and other finance expenses			(34	)		(13	)		(160	)
Provision for taxes			(1,119	)		(595	)		(686	)
Minority interest			(260	)		(244	)		(179	)
Income from continuing operations			3,139			3,171			1,532
Income (loss) from discontinued operations, net of tax			(21	)		586			(142	)
Net income			3,118			3,757			1,390
Basic earnings (loss) per share:
	Income from continuing operations		1.37			1.40			0.72
	Income (loss) from discontinued operations, net of tax		(0.01	)		0.26			(0.07	)
	Net income		1.36			1.66			0.65
Diluted earnings (loss) per share:
	Income from continuing operations		1.37			1.38			0.69
	Income (loss) from discontinued operations, net of tax		(0.01	)		0.25			(0.06	)
	Net income		1.36			1.63			0.63

⁽¹⁾

At December 31

        A more detailed discussion of the orders, revenues and EBIT for our individual divisions and other businesses follows in the sections below entitled "Power Products," "Power Systems," "Automation Products," "Process Automation," "Robotics" and "Corporate and Other." Orders and revenues of our core divisions include interdivisional transactions which are eliminated in the Corporate and Other line.

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Orders

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Power Products		13,627			11,320			8,572
Power Systems		7,408			7,744			5,733
Automation Products		10,872			9,314			7,706
Process Automation		8,657			7,935			6,550
Robotics		1,658			1,488			1,240
Core divisions		42,222			37,801			29,801
Corporate and Other(1)		(3,940	)		(3,453	)		(2,753	)
Total		38,282			34,348			27,048

⁽¹⁾

Including interdivisional eliminations

        Total orders in 2008 increased by 11 percent (7 percent in local currencies). Demand for power transmission and distribution products and energy-efficient industrial equipment was strong in most markets during the first half of 2008 but weakened in the last few months of the year due to the global economic crisis. Orders in our Power Products division grew 20 percent (15 percent in local currencies), as demand for Transformers, High Voltage (HV) Products and Medium Voltage (MV) Products remained solid particularly in the first half of 2008. Orders in our Power Systems division decreased 4 percent (8 percent in local currencies), primarily the result of a lower volume of large orders in the utilities sector compared to the prior year due to the timing of project awards. Orders in our Automation Products division rose 17 percent (11 percent in local currencies), benefiting from higher investments in the industrial sector as customers in this market looked for energy-efficient technologies to improve productivity. Our Process Automation division recorded an increase in orders of 9 percent (4 percent in local currencies), backed by higher demand in the marine, metal and turbocharging sectors. Orders in our Robotics division increased 11 percent (5 percent in local currencies) reflecting higher demand particularly in the Robot Automation and Systems businesses. In our Power Products and Automation Products divisions, order growth was also driven by sale price increases to offset higher raw material costs.

        Large orders in 2008 increased by 5 percent (flat in local currencies) to $5,984 million, compared to the 57 percent increase (47 percent in local currencies) reported in 2007. The relative share of large orders compared to the total orders decreased from 17 percent in 2007 to 16 percent in 2008.

        Total orders in 2007 increased by 27 percent (19 percent in local currencies). This strong growth was driven by high demand for power products and systems required to install new power infrastructure to expand or refurbish existing facilities in order to improve energy efficiency. Demand for more energy-efficient technologies and the need for capacity expansions to improve productivity also grew in most industrial sectors during 2007. All divisions benefited from favorable market conditions in 2007, resulting in the increase of both base and large orders.

        In 2007, orders in the Power Products division grew 32 percent (25 percent in local currencies), supported by strong demand for Transformers and High Voltage Products and to a lesser extent Medium Voltage Products. Orders in the Power Systems division increased 35 percent (26 percent in local currencies), as it obtained a few very large grid system and substation projects during 2007. Orders in the Automation Products division rose 21 percent (13 percent in local currencies), benefiting from investments by industrial customers in efficiency improvements due to higher raw material and energy costs. The Process Automation division recorded a 21 percent increase (13 percent in local currencies) in orders, backed by strong demand in the metals, minerals and marine sectors. Orders in the Robotics division grew 20 percent (13 percent in local currencies), reflecting the positive trend in general industry, particularly in the electronics, food processing and packaging sectors, amid continued

46

weak demand in the automotive industry. In our Power Products and Automation Products divisions, order growth was also driven by sale price increases to offset higher raw material costs.

        We determine the geographic distribution of our orders based on the location of the customer, which may be different from the ultimate destination of the products' end use. The geographic distribution of our consolidated orders was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	($ in millions)
Europe		16,633		15,655		12,124
The Americas		7,235		6,013		5,064
Asia		10,242		9,186		6,504
Middle East and Africa		4,172		3,494		3,356
Total		38,282		34,348		27,048

        Orders from the Americas increased 20 percent (19 percent in local currencies) backed by strong demand in the U.S., Canada, Mexico, Brazil and Argentina. Orders in this region grew in all divisions except Robotics. Higher investments to install new power infrastructure and increased spending by industrial customers to improve production capacity in growing economies, particularly Korea, China and Singapore, contributed to the increase in orders in the Asian market which reported 11 percent (7 percent in local currencies) growth. Orders in this region increased strongly in all divisions except Power Systems in which orders decreased due to a lower volume of large orders. Orders in Europe increased 6 percent (decreased 1 percent in local currencies). Orders from Finland, Spain, Turkey, Iceland and Sweden were up significantly. However, orders in Germany and United Kingdom were substantially lower. Orders of a similar size as the offshore windfarm project in Germany and the cable order to connect the United Kingdom with the Netherlands with values of approximately $400 million and $350 million, respectively, were not received in 2008. Orders in MEA markets increased 19 percent (17 percent in local currencies) driven by higher investments for new infrastructures in the utility and industrial sectors. A strong increase in orders in the MEA region in 2008 was attributable to the higher demand in Saudi Arabia, United Arab Emirates (UAE), South Africa and the Republic of Congo.

        The share of orders from Europe remained the largest at 43 percent, although lower than the 46 percent share reported last year. The share of orders from Asia is unchanged at 27 percent. The share of orders from the Americas increased by 2 percentage points in 2008 to 19 percent, while MEA increased its share to 11 percent from 10 percent last year.

        In 2007, orders from Europe increased by 29 percent (19 percent in local currencies), boosted by investments in power grid upgrades, interconnection projects and equipment replacement. In particular, we experienced significant increases in Germany, the United Kingdom, Russia and Norway. Orders from the Americas increased by 19 percent (15 percent in local currencies), as demand for refurbishing aging equipment and upgrades in the industrial sector to improve energy efficiency were strong particularly in the United States, Brazil and to a lesser extent, in Chile. Orders from Asia increased by 41 percent (31 percent in local currencies), following higher demand in the utilities and industrial sectors to support rapid economic growth, particularly in China and India. Compared to the very high level of orders received in 2006, orders from MEA increased by 4 percent and were almost flat in local currencies.

        Europe accounted for the largest share of orders and increased to 46 percent in 2007 from 45 percent in 2006, while the share of orders from the Asian market increased from 24 percent to 27 percent during the same period. As compared to 2006, the share of orders from the Americas and MEA decreased by 2 percentage points in 2007 to 17 percent and 10 percent, respectively.

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Order backlog

	December 31,
	2008			2007			2006
	($ in millions)
Power Products		7,977			6,932			4,845
Power Systems		7,704			8,209			5,627
Automation Products		3,863			3,490			2,439
Process Automation		6,111			5,951			3,991
Robotics		545			529			441
Core divisions		26,200			25,111			17,343
Corporate and Other(1)		(2,363	)		(2,396	)		(1,514	)
Total		23,837			22,715			15,829

⁽¹⁾

Including interdivisional eliminations

        Order backlog at the end of 2008 increased by $1,122 million, or 5 percent (14 percent in local currencies), from the end of 2007.

        Order backlog continued to grow in 2008 despite strong revenue growth of 20 percent (16 percent in local currencies), as the amount of orders received during the year, in absolute terms, was 10 percent higher than the amount of revenues. Order backlog increased in all divisions except Power Systems which saw a decline due to a lower volume of large orders received in 2008, compared to 2007.

        Order backlog at the end of 2007 increased by $6,886 million, or 44 percent (32 percent in local currencies), from the end of 2006 due to strong order growth in all divisions.

        Order backlog grew at a high rate in 2007 despite strong revenue growth of 25 percent (18 percent in local currencies), as the amount of orders received during the year, in absolute terms, was 18 percent higher than the amount of revenues. Growth in the order backlog was further increased by a higher volume of large orders with long delivery schedules, particularly in our Power Systems and Process Automation divisions.

Revenues

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Power Products		11,890			9,777			7,275
Power Systems		6,912			5,832			4,544
Automation Products		10,250			8,644			6,837
Process Automation		7,815			6,420			5,448
Robotics		1,642			1,407			1,288
Core divisions		38,509			32,080			25,392
Corporate and Other(1)		(3,597	)		(2,897	)		(2,111	)
Total		34,912			29,183			23,281

⁽¹⁾

Including interdivisional eliminations

        In 2008, revenues increased by $5,729 million or 20 percent (16 percent in local currencies) supported by all divisions, benefiting from high order backlog available at the beginning of the year and high volume of book and bill orders received in the first two quarters of the year. Further, revenue growth was supported by efficiency improvements in the production and order execution processes.

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Revenues in Power Products and Automation Products divisions grew 22 percent (18 percent in local currencies) and 19 percent (13 percent in local currencies), respectively, as these product divisions continued operating at high capacity levels. The increase in revenues in the product divisions was also driven partly by increases in sales prices to compensate the increase of commodity costs. Power Systems and Process Automation divisions reported revenue growth of 19 percent (16 percent in local currencies) and 22 percent (18 percent in local currencies) respectively. The growth of revenues in our Power Systems and Process Automation divisions was primarily driven by progress made in the execution of large orders. High order backlog at the beginning of 2008 was also the main factor contributing to the growth of revenues in the Robotics division, which for this year increased by 17 percent (11 percent in local currencies).

        Revenues in 2007 increased by $5,902 million, or 25 percent (18 percent in local currencies). Growth in revenues in 2007 was primarily driven by a high order backlog at the beginning of the year, an increasing volume of book and bill orders and high utilization of production capacity. The Power Products and Automation Products divisions recorded revenue growth of 34 percent (27 percent in local currencies) and 26 percent (18 percent in local currencies), respectively, as these product divisions benefited from favorable market conditions and sales price increases to compensate for the higher costs of raw materials. Revenue growth was reported at 28 percent (20 percent in local currencies) in our Power Systems division and 18 percent (10 percent in local currencies) in our Process Automation division, in 2007, reflecting further progress achieved in the execution of the large orders received during 2006 and in the first half of 2007. Revenue growth in the Robotics division of 9 percent (3 percent in local currencies) in 2007 was lower than the growth reported by other divisions, due to a relatively small backlog at the beginning of the year.

        We determine the geographic distribution of our revenues based on the location of the customer, which may be different from the ultimate destination of the products' end use. The geographic distribution of our consolidated revenues was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	($ in millions)
Europe		15,815		13,322		10,969
The Americas		6,428		5,247		4,394
Asia		8,967		7,480		5,863
Middle East and Africa		3,702		3,134		2,055
Total		34,912		29,183		23,281

        In 2008, revenues in Europe increased by 19 percent (13 percent in local currencies). In particular, we experienced significant revenue increases in Germany, United Kingdom, Spain, Finland and Turkey. The revenues from Asia, which increased by 20 percent (16 percent in local currencies), were driven mainly by the increases in China, India, Korea and Singapore. Revenues from the Americas increased by 23 percent (22 percent in local currencies), with strong increase in the United States, Canada and Brazil. Strong growth in revenues was reported in Qatar, UAE, South Africa and Saudi Arabia. High revenues in these countries led to the 18 percent (16 percent in local currencies) growth in MEA region. The increase in revenues in all regions was the result of high production efficiency and sound execution of projects from the initial backlog and book and bill orders received during 2008.

        The revenues from Europe contributed 45 percent of the group revenues in 2008. The share of revenues from Asia to the total group revenues was 26 percent while the Americas and MEA reported revenue shares of 18 percent and 11 percent, respectively. The share of revenues in each region in 2008, as a percentage of the total group revenues, was unchanged from the prior year.

        In 2007, revenues in Europe increased by 21 percent (12 percent in local currencies). In particular, we experienced significant revenue increases in Russia, Germany, Italy and Spain. However, as a result

49

of rapid revenue growth in other regions, the relative share of revenues from the European market decreased to 46 percent of our total revenues in 2007, compared to 47 percent in 2006. The revenues from Asia, which increased by 28 percent (20 percent in local currencies), were driven mainly by the increases in China and India and accounted for 25 percent of total revenues, compared to 25 percent in 2006. Revenues from the Americas increased by 19 percent (16 percent in local currencies), mainly contributed by the United States and at December 31, 2007, represented 18 percent of the total revenues, compared to 19 percent in 2006. Revenues from MEA accounted for 11 percent of total revenues, compared to 9 percent in 2006, which represented an increase of 53 percent (47 percent in local currencies), compared to 2006. Revenue growth in this region was particularly strong in Saudi Arabia and Qatar.

Cost of sales

        Cost of sales increased by $3,757 million, or 19 percent (15 percent in local currencies), to $23,972 million in 2008, after an increase of $3,678 million, or 22 percent (15 percent in local currencies), in 2007. The increase in cost of sales in 2008 was attributable to the growth in sales volumes, as well as increases in certain raw material costs, particularly in the product divisions.

        Cost of sales consists primarily of labor, raw materials and components. Cost of sales also includes expenses for warranty, contract losses and project penalties, as well as order-related development expenses incurred in connection with projects for which corresponding revenues were recognized.

        As a percentage of revenues, cost of sales decreased, as reflected in the increase in gross profit margin to 31.3 percent in 2008 from 30.7 percent in 2007 and 29.0 percent in 2006. The higher gross margin in 2008 reflected a continuing trend from 2007, as the operations benefited from increased business volume, higher capacity utilization, better project execution and process improvement programs in the areas of risk management and project cost control. Furthermore, the progress made in the implementation of our cost migration strategy delivered financial benefits through cost savings in 2008.

Selling, general and administrative expenses

        The components of selling, general and administrative expenses for the years ended December 31, 2008, 2007 and 2006 were as follows:

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Selling expenses		(2,943	)		(2,531	)		(2,202	)
Selling expenses as a percentage of orders received		7.7	%		7.4	%		8.1	%
General and administrative expenses		(2,879	)		(2,444	)		(2,124	)
General and administrative expenses as a percentage of revenues		8.2	%		8.4	%		9.1	%
Total selling, general and administrative expenses		(5,822	)		(4,975	)		(4,326	)
Total selling, general and administrative expenses as a percentage of revenues		16.7	%		17.0	%		18.6	%
Total selling, general and administrative expenses as a percentage of the average of orders received and revenues		15.9	%		15.7	%		17.2	%

        Selling, general and administrative expenses increased by $847 million, or 17 percent (12 percent in local currencies), in 2008, after increasing by $649 million, or 15 percent (8 percent in local currencies), in 2007. Total selling, general and administrative expenses, which are related to both orders received and revenues, expressed as a percentage of the average of orders received and revenues, increased in 2008 by 0.2 percentage points to 15.9 percent from 15.7 percent in 2007, after decreasing 1.5 percent from 2006. The slight increase in selling expenses as a percentage of orders received reported in 2008 is mainly the result of lower orders received in the last two quarters of 2008.

50

        Selling expenses in 2008 increased by $412 million, or 16 percent (11 percent in local currencies), from 2007. The increases in selling expenses were primarily due to increasing activities in sales and marketing areas and growth of company sales personnel. Expressed as a percentage of orders received, selling expenses increased by 0.3 percentage points in 2008.

        Selling expenses in 2007 increased by $329 million, or 15 percent (7 percent in local currencies), from 2006. These increases were primarily due to volume-related expenses such as sales commissions, hiring of additional resources employed in the developing markets and more intensified sales programs to expand market shares and enter into new markets. Expressed as a percentage of orders received, selling expenses decreased by 0.7 percentage points in 2007.

        General and administrative expenses increased by $435 million, or 18 percent (13 percent in local currencies), in 2008, primarily related to the growth of business. General and administrative expenses include non-order related R&D, which increased 18 percent (12 percent in local currencies) to $1,027 million in 2008, relative to 2007, reflecting the continued spending on product development activities, particularly in the Power Products, Automation Products and Process Automation divisions. Total general and administrative expenses, as a percentage of revenues, remained at the same level as 2007, despite increased growth during the period. This was partly due to increased focus on the monitoring and controlling of administrative costs both at the corporate and operating unit levels.

        General and administrative expenses increased by $320 million, or 15 percent (8 percent in local currencies), in 2007, which were primarily driven by operational requirements to support the fast growing business. Additional resources and investments were made in that year to improve the business process. General and administrative expenses include non-order related R&D which increased 15 percent (7 percent in local currencies) to $871 million in 2007, relative to 2006, reflecting the continued spending on product development activities, particularly in the Power Products and Automation Products divisions.

        The total selling, general and administrative expenses, as a percentage of revenues, decreased by 1.6 percentage points in 2007. Lower incremental expenses in general and administration expenses in 2007, despite increasing administrative requirements for growing business volumes, were partly due to lower costs associated with the internal control measures to comply with the provisions of the Sarbanes Oxley Act of 2002, higher savings from the group-wide process optimization programs and increased focus on the monitoring and controlling of costs both at the corporate and operating unit levels.

Other income (expense), net

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Restructuring expenses		(5	)		(8	)		3
Capital gains, net		73			95			75
Asset write-downs		(11	)		(66	)		(12	)
Income from licenses, equity accounted companies and other income (expense)		(623	)		9			73
Total		(566	)		30			139

        Other income (expense), net, typically consists of restructuring expenses, gains or losses from the sale of businesses, gains or losses from the sale or disposal of property, plant and equipment, asset write-downs, our share of income or loss from equity accounted companies and license income.

        Restructuring costs are recorded in various lines within the Consolidated Income Statements depending on the nature of the charges. In 2008, restructuring costs reported under other income (expense) amounted to $5 million, incurred for restructuring projects mainly in Power Products,

51

Automation Products and Process Automation. In 2007, restructuring costs reported under other income (expense) amounted to $8 million that primarily consisted of $3 million costs incurred to streamline the operations in the Power Products division, $2 million restructuring costs for capacity expansion in the Power Systems division, $2 million restructuring costs in Real Estate operations and $1 million of costs in the Automation Products division. In 2006, due to a change in the restructuring liability estimate, restructuring costs resulted in an income of $3 million.

        Capital gains, net, during 2008 amounted to $73 million which mainly consisted of $14 million in gains from the sale of shares and participations, $10 million gain from the release of provision from a legal claim settlement related to the sold Air Handling business and $47 million capital gains from the sale of real estate properties, mainly in Switzerland, Brazil, Italy, Norway, United Kingdom, Mexico, and Poland. Additionally, in 2008, we recorded adjustments to the gain on sale of Jorf Lasfar and Neyveli of $16 million related to the favorable outcome on an outstanding tax case.

        Capital gains, net, during 2007 amounted to $95 million which consisted of $49 million in gains from the sale of equity investments, including a $38 million gain from the divestment of our equity investments in Jorf Lasfar and Neyveli, a $41 million gain from the sale of real estate properties mainly in Switzerland, Italy and to a lesser extent in Brazil, Norway and France and a $5 million gain on sale of various machinery and equipment. In 2006, capital gains, net, included approximately $65 million of gains from the sale of land and buildings in Europe.

        Asset write-downs in 2008 mainly related to the Distributed Energy business in Great Britain and other minor impairments. Asset write-downs during 2007 included an impairment charge of $42 million in respect of one of our equity investments, which we intend to divest, as the anticipated market value was less than our book value. Asset write-downs in 2006 included the impairment of long-lived assets of $8 million, primarily in Europe and several minor write-downs on loans and investments.

        In 2008, income from licenses, equity accounted companies and other income (expense) primarily consisted of provisions for the ongoing investigations in the Power Transformer business by the European Commission, the German Federal Cartel Office, as well as the investigations by the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DoJ) which were recorded in Corporate and Other. (See "Note 15 Commitments and contingencies" to our Consolidated Financial Statements.)

        Additionally, income from equity accounted companies in 2008 was generated from our equity ventures investment in Colombia and other investments in Italy, Finland and Germany and license income mainly from Japan. Income from equity accounted companies in 2007 included $36 million, which was primarily related to Jorf Lasfar prior to its sale in the second quarter of 2007. During 2007, this income was also offset by charges towards several businesses that were sold or closed in earlier years. Income in 2006 was mainly derived from Jorf Lasfar and relatively smaller amounts of income were derived from various other equity accounted companies in India and in the United States.

52

Earnings before interest and taxes

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Power Products		2,100			1,596			939
Power Systems		592			489			279
Automation Products		1,908			1,477			1,053
Process Automation		926			683			541
Robotics		9			79			1
Core divisions		5,535			4,324			2,813
Corporate and Other		(983	)		(301	)		(256	)
Total		4,552			4,023			2,557

        EBIT increased by $529 million, or 13 percent (6 percent in local currencies), in 2008, despite the compliance related provisions charged to other income (expense), net and by $1,466 million, or 57 percent (47 percent in local currencies), in 2007.

        The EBIT margins for our core divisions and on a consolidated basis for the years ended December 31, 2008, 2007 and 2006, were as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Power Products		17.7		16.3		12.9
Power Systems		8.6		8.4		6.1
Automation Products		18.6		17.1		15.4
Process Automation		11.8		10.6		9.9
Robotics		0.5		5.6		0.1
Core divisions		14.4		13.5		11.1
Consolidated		13.0		13.8		11.0

        The higher group EBIT and EBIT margin in the core operations were achieved through higher margin contributed by significant volumes of incremental revenues and higher capacity utilization, better execution of large projects and increased sourcing of production capacity, components and materials from emerging markets. The compliance related charges recorded in Corporate and Other negatively impacted the consolidated margin compared to 2007.

Net interest and other finance expense

        Net interest and other finance expense consists of interest and dividend income offset by interest and other finance expense.

        Interest and other finance expense includes interest expense on our debt, the amortization of upfront costs associated with our credit facility and our debt securities, commitment fees on our bank facility and exchange losses on financial items, offset by gains on marketable securities and exchange gains on financial items.

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Interest and dividend income		315			273			147
Interest and other finance expense		(349	)		(286	)		(307	)
Net interest and other finance expense		(34	)		(13	)		(160	)

53

        Interest and dividend income increased in 2008 compared to 2007, reflecting the improvement in our liquidity during the first half of 2008 through cash generated from operations and the change in investment strategy compared to 2007 with more cash placed in time deposits. In the first three quarters of 2007, we invested a significant amount of our excess liquidity in accumulating net asset value money-market funds, where the income is not distributed but is reflected by an increase in value of the funds' shares and is realized upon the sale of such investments. As interest on deposits is recorded in interest and dividend income, while gains on sales of securities are netted against interest and other finance expense, this change in investment strategy explains part of the increase in interest and dividend income in 2008 compared to 2007. However, during the second half of 2008, our interest income was impacted by falling interest rates, our acceptance of lower yields in favor of security in an increasingly difficult market and, despite positive cash flow from operations, a lower excess cash balance as cash was expended for, amongst other, the nominal value reduction, acquisitions and the share buyback program. (See "Liquidity and capital resources" for discussion of our investment strategy.)

        Interest and dividend income increased in 2007 compared to 2006, reflecting the improvement in our liquidity during the year, with the aggregate of the cash and equivalents and marketable securities and short-term investments balances increasing to $8,110 million at December 31, 2007, from $4,726 million at December 31, 2006. Up to the third quarter of 2007, we invested a significant amount of our excess liquidity in accumulating net asset value money-market funds, where the income is not distributed but is reflected by an increase in value of the funds' shares and is realized upon the sale of such investments. However, due to the then turbulence in the financial markets, we decided to realize our gains on such securities and invest the cash in term deposits with banks. As gains on sales of securities are recorded in interest and other finance expense, while interest on deposits is recorded in interest and dividend income, this change in investment strategy compared to 2006, combined with our improved liquidity resulted in an increase in interest income in 2007 of $78 million, compared to 2006.

        Both interest and dividend income and interest and other finance expense in 2007 include a gross-up in the amount of $44 million, related to interest income and expense on certain balance sheet items that were economically related but did not meet the criteria for presentation on a net basis. This should be considered when comparing 2008 figures with 2007 and, similarly, 2007 figures with 2006.

        Interest and other finance expense increased in 2008 compared to 2007, despite a reduction in overall debt levels. This increase was primarily due to two items in 2008. Firstly, we recorded a $20 million other-than-temporary impairment on available-for-sale equity fund securities held by our Captive Insurance business, as we do not expect the market values of these securities to recover to their cost basis in the near term, given current market conditions. (See "Note 2 Significant accounting policies" to our Consolidated Financial Statements.) Secondly, at December 31, 2008, we recorded $102 million in foreign exchange losses on the remeasurement into U.S. dollars of funding (in euros) of our EUR-denominated investment in government bonds designated as available-for-sale securities. The corresponding foreign exchange gain on these securities is part of their change in market value recorded in accumulated other comprehensive loss in equity and will be released to the income statement in the first quarter of 2009, when these securities mature. The loss is the result of the significant move in the EUR/USD exchange rate in the month of December 2008 and the amount of the EUR-denominated funding of these securities (1.06 billion euros).

        Interest and other finance expense was lower in 2007 than in 2006. The reduction was the result of several factors. Firstly, interest and other finance expense in 2006 included $55 million in expenses related to the induced conversion of our $968 million convertible bonds during the second quarter of 2006. Secondly, as a result of the improvement in our liquidity position, we generated approximately $18 million additional net gains on marketable securities in 2007, compared to 2006. While the induced conversion of our $968 million convertible bonds during 2006 and the conversion by bondholders during 2007 of our 1 billion Swiss francs convertible bonds resulted in a significantly lower average debt level during 2007, compared to 2006, the savings in interest expense were partially offset by increases in interest rates (particularly in euros) as all of our remaining outstanding bonds were swapped using interest rate swaps into floating rate obligations.

54

Provision for taxes

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Income from continuing operations, before taxes and minority interest		4,518			4,010			2,397
Provision for taxes		(1,119	)		(595	)		(686	)
Effective tax rate for the year		24.8	%		14.8	%		28.6	%

        The provision for taxes in 2008 was $1,119 million, representing an effective tax rate for the year of 24.8 percent. The provision for taxes in 2008 includes the change in valuation allowance of approximately $414 million on deferred taxes as we determined it was more likely than not that such deferred tax assets would be realized. The change in valuation allowance was predominantly related to our operations in north America with approximately $330 million. In addition, the provision for taxes in 2008 included an expense of approximately $140 million relating to a pending tax dispute in north Europe. Approximately $100 million related to costs of previously disclosed investigations by the U.S. and European authorities into suspect payments and alleged anti-competitive practices that were deducted for financial accounting purposes, but were not tax deductible.

        The provision for taxes in 2007 was $595 million, representing an effective tax rate for the year of 14.8 percent. The provision for taxes in 2007 includes the change in valuation allowance of approximately $698 million on deferred taxes as we determined it was more likely than not that such deferred tax assets would be realized. The change in valuation allowance was predominantly related to our operations in certain countries such as the United States with approximately $490 million, but also including countries such as Canada and the United Kingdom. In addition, the provision for taxes in 2007 included an expense of approximately $35 million relating to the interpretation of tax law and double tax treaty agreements by competent tax authorities in northern Africa and an expense of approximately $45 million relating to a net increase in tax accruals.

        The provision for taxes in 2006 was $686 million, representing an effective tax rate for the year of 28.6 percent. The provision for taxes in 2006 includes an expense of approximately $35 million relating to items that were deducted for financial accounting purposes but not for the purpose of computing taxable income, such as interest expense, state and local taxes on productive activities and other non-deductible expenses. Furthermore, the provision for taxes in 2006 also included an expense of approximately $70 million relating to a net increase in tax accruals.

Income from continuing operations

        Income from continuing operations decreased by $32 million to $3,139 million in 2008, after increasing by $1,639 million to $3,171 million in 2007. The improvement in EBIT in 2008 was largely offset by a lower net interest and other finance expense as well as a higher tax rate discussed above. Income from continuing operations in 2007 benefited from a sharp increase in EBIT as well as a very favorable tax rate compared to 2006.

Income (loss) from discontinued operations, net of tax

        For a detailed discussion of the income (loss) from discontinued operations, net of tax, as well as a detailed discussion of the results of our discontinued operations, see "Discontinued operations," and "Note 3 Acquisitions, divestments and discontinued operations" to our Consolidated Financial Statements.

Net income

        As a result of the factors discussed above, net income decreased by $639 to $3,118 million in 2008 and increased by $2,367 million to $3,757 million in 2007 from $1,390 million in 2006.

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Earnings (loss) per share

		Year ended December 31,
		2008			2007		2006
		($)
Income from continuing operations:
	Basic		1.37			1.40		0.72
	Diluted		1.37			1.38		0.69
Income (loss) from discontinued operations, net of tax:
	Basic		(0.01	)		0.26		(0.07	)
	Diluted		(0.01	)		0.25		(0.06	)
Net income:
	Basic		1.36			1.66		0.65
	Diluted		1.36			1.63		0.63

        Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call options; outstanding options and shares granted subject to market and/or vesting conditions under our share-based payment arrangements and, prior to September 2007, shares issuable in relation to our outstanding convertible bonds. (See "Note 20 Earnings per share" to our Consolidated Financial Statements.)

Divisional analysis

Power Products

        The financial results of our Power Products division were as follows:

	Year ended December 31,
	2008		2007		2006
	($ in millions)
Orders		13,627		11,320		8,572
Order backlog(1)		7,977		6,932		4,845
Revenues		11,890		9,777		7,275
EBIT		2,100		1,596		939

⁽¹⁾

At December 31

Orders

        Orders increased by $2,307 million, or 20 percent (15 percent in local currencies) in 2008 after improving $2,748 million, or 32 percent (25 percent in local currencies) in 2007. These improvements were primarily due to growth in demand for electricity, particularly in emerging markets, and the expansion and improvement of power grid infrastructure, with a focus on environmental sustainability. The increase in orders reflected growth in all businesses, led by Transformers. Base orders, which grew by 18 percent and 30 percent (12 percent and 22 percent in local currencies), made up the vast majority of orders, in 2008 and 2007, respectively. Price increases to cover the increase in the cost of raw materials also contributed to the order increase in 2007.

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        The geographic distribution of orders as a percentage of total orders in 2008, 2007 and 2006 for our Power Products division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		38		39		36
The Americas		24		24		25
Asia		30		30		31
Middle East and Africa		8		7		8
Total		100		100		100

        The share of orders from Europe, which continued to be the largest regional source of orders, decreased marginally. However, it recorded order growth in absolute terms in 2008. This growth was driven by the need to replace aging infrastructure and increased demand for power grid interconnections and renewable energy sources. The share of orders from the Americas remained flat and was considerably influenced by orders from the United States, driven by the need to replace aging infrastructure and to meet existing mandated reliability standards and load growth. The share of orders from Asia remained stable compared to 2007. Demand was driven by the growth in energy needs, particularly in China and India, resulting from increasing levels of industrialization and urbanization. The share of orders from MEA improved in 2008, reflecting increased investment in infrastructure in the region, supported by high oil prices.

Order backlog

        Order backlog in 2008 increased by $1,045 million, or 15 percent (24 percent in local currencies), after increasing by $2,087 million, or 43 percent (32 percent in local currencies) in 2007, due to increased order intake in all businesses, led by Transformers which typically have longer delivery schedules.

Revenues

        Revenues increased by $2,113 million, or 22 percent (18 percent in local currencies) in 2008 as a result of continued order growth and strong opening order backlog in almost all market segments, particularly in transformers.

        Revenues increased by $2,502 million, or 34 percent (27 percent in local currencies), in 2007, as a result of order growth experienced in many market segments, particularly in transformers and sales price increases to cover increased raw material costs.

        The geographic distribution of revenues in 2008, 2007 and 2006, for our Power Products division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		38		39		37
The Americas		24		24		25
Asia		30		30		31
Middle East and Africa		8		7		7
Total		100		100		100

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        The relative share of revenues among geographic regions in 2008 and 2007 remained similar to the distribution of orders, while all regions recorded growth in revenues as compared to the previous year. In Europe the growth in revenues was led by Spain, Switzerland and the United Kingdom. Revenue growth in Asia in 2008 was led by China and India, while revenue growth in the Americas was particularly strong in the United States. In MEA, the revenue increase was mainly driven by Saudi Arabia.

        The growth in European revenues in 2007 was led by Russia and Germany. Revenue growth in Asia in 2007 was led by China and India, while revenue growth in the Americas was particularly strong in the United States. In MEA, the share of revenues remained similar compared to 2006 with the increase in revenues driven by Saudi Arabia.

Earnings before interest and taxes

        EBIT grew by $504 million, or 32 percent (24 percent in local currencies), in 2008, after increasing $657 million, or 70 percent (60 percent in local currencies), in 2007. The EBIT margin for the division was 17.7 percent in 2008, as compared to 16.3 percent in 2007 and 12.9 percent in 2006. EBIT and EBIT margin benefited from higher contribution from increased revenues, improved capacity utilization across all businesses, operational and productivity improvements, supply chain savings and positive impacts from the transformer consolidation program. Total costs related to the transformer consolidation program in 2008 amounted to $46 million ($34 million in 2007)

Fiscal year 2009 outlook

        Uncertainty in the lending environment may contribute to project delays and the general global economic slowdown may result in further weakening of industrial and construction-related demand which may affect our products linked to the distribution sector. However, we currently believe that utilities will continue to invest in equipment replacement and grid upgrades.

Power Systems

        The financial results of our Power Systems division were as follows:

	Year ended December 31,
	2008		2007		2006
	($ in millions)
Orders		7,408		7,744		5,733
Order backlog(1)		7,704		8,209		5,627
Revenues		6,912		5,832		4,544
EBIT		592		489		279

⁽¹⁾

At December 31

Orders

        Order intake in 2008 decreased by $336 million, or 4 percent (8 percent in local currencies) due to a lower volume of large orders, while the base order volume was maintained at the previous year's level. Large projects secured in 2008 included a $233 million order from Hyundai Engineering and Construction (HDEC) of Korea to supply power systems and grid connections for a natural gas and steam turbine (combined-cycle) power plant to be built in Qatar. A $170 million contract was received from Svenska Kraftnät and Fingrid Oyj, the transmission system operators in Sweden and Finland, for two HVDC converter stations for the Fenno-Skan 2 power link. A $150 million order was received from Dutch utility Nuon to provide power systems and grid connections for a new power plant to be built in the Netherlands.

58

        The increase in orders in 2007 compared with 2006 reflected a significant growth of 52 percent (41 percent in local currencies) and 26 percent (18 percent in local currencies), of large and base orders, respectively, as demand for power transmission and distribution systems was strong in most markets. The large orders secured in 2007 included an offshore wind farm project in Germany with an order value of more than $400 million, a $350 million cable order to connect the United Kingdom with the Netherlands and an ultrahigh-voltage power link in China with an order value for the Power Systems division of approximately $270 million.

        The geographic distribution of orders as a percentage of total orders in 2008, 2007 and 2006 for our Power Systems division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		39		46		39
The Americas		16		11		17
Asia		20		21		16
Middle East and Africa		25		22		28
Total		100		100		100

        Europe remained the largest region in terms of order intake in 2008, despite a decrease compared with the prior year. The order decrease in Europe mainly reflected the high volume of large projects received in this region in 2007, which could not be matched in 2008. MEA continued to show significant market growth for the division, as high fuel prices triggered investments in big infrastructure projects. Orders were also strong in the Americas, particularly in the United States, Canada and Brazil, resulting in a higher percentage share for the Americas region as compared to the previous year. The order share from Asia decreased marginally, mainly due to a relatively lower volume of large orders from China. Orders also decreased in India, primarily as the Power Systems division decided to discontinue the rural electrification business due to safety concerns.

        The order growth in Europe in 2007 was fueled by large projects and a double-digit growth in base orders. Europe was the largest regional source of orders and increased its percentage share in 2007. Asia saw strong order growth in 2007 and was helped by a large ultrahigh-voltage project in China and strong base order growth led by India. The share of orders from the Americas and MEA decreased as Europe and Asia recorded significant increases in their respective order volumes and gained higher percentage shares compared to 2006. Base order growth in the Americas was offset by a lower level of large orders, resulting in lower overall order volumes in 2007 compared to 2006. 2007 orders in MEA slightly decreased despite the strong market growth, as the high level of large projects in 2006 did not recur in 2007.

Order backlog

        Order backlog in 2008 decreased by $505 million, or 6 percent (increased 4 percent in local currencies), due mainly to a lower volume of large order intake. The order backlog increased by $2,582 million, or 46 percent (34 percent in local currencies), at December 31, 2007, compared with December 31, 2006, reflecting the growth in large and base orders.

Revenues

        Revenues increased by $1,080 million, or 19 percent (16 percent in local currencies), in 2008 as compared with an increase of $1,288 million, or 28 percent (20 percent in local currencies), in 2007.

59

Revenues in 2008, as in 2007 grew mainly as a result of an increased level of project execution of both backlog and new orders.

        The geographic distribution of revenues in 2008, 2007 and 2006 for our Power Systems division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		42		40		44
The Americas		14		15		16
Asia		18		20		20
Middle East and Africa		26		25		20
Total		100		100		100

        In 2008, all regions led recorded growth in revenues over the previous year with Europe and MEA taking the lead. The higher revenues from Europe in 2008 reflected strong revenue growth particularly from Germany, the United Kingdom and Italy, driven by the execution of large projects booked in 2007 and 2006. The revenue growth from MEA was also largely due to the execution of large orders booked in the region in 2007 and 2006.

        All regions recorded growth in revenues over the previous year in 2007. Europe and the Americas saw a decrease in their respective shares of total revenues as MEA gained a higher share. Growth in Europe, in 2007, was led by central and eastern Europe, with a significant increase in Russia. The higher revenues from the Americas, in 2007, reflected strong revenue growth, particularly from Canada on the execution of the HVDC project booked in 2006 and also from increases in the United States and Brazil. The revenue increase in Asia related primarily to strong growth in India.

Earnings before interest and taxes

        EBIT of the Power Systems division grew by $103 million, or 21 percent (19 percent in local currencies) in 2008, compared with growth of $210 million, or 75 percent (63 percent in local currencies), in 2007, over the previous year. The EBIT margin for the division improved to 8.6 percent in 2008 compared with 8.4 percent and 6.1 percent in 2007 and 2006, respectively.

        The increase in EBIT and EBIT margin in 2008 and 2007 can be attributed mainly to higher revenues and capacity utilization, bidding selectivity, project execution and the cost benefit from expanding engineering resources in emerging markets.

Fiscal year 2009 outlook

        Key market drivers for the Power Systems division are economic growth in emerging markets, upgrades of aging infrastructure, power reliability and quality concerns, increased focus on energy efficiency and environmental issues and the integration of renewable energy sources. Looking ahead, we believe the economic slowdown could result in a reduction of electricity consumption and uncertainties around financing could lead to postponement of large orders in some cases. At the same time, we believe governments may also leverage infrastructure investments in the energy sector, such as transmission interconnections, to stimulate the economy. There are also political commitments in the EU, U.S., and Asia to increase the share of energy from renewable sources, which could spur activity in the sector.

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Automation Products

        The financial results of our Automation Products division were as follows:

	Year ended December 31,
	2008		2007		2006
	($ in millions)
Orders		10,872		9,314		7,706
Order backlog(1)		3,863		3,490		2,439
Revenues		10,250		8,644		6,837
EBIT		1,908		1,477		1,053

⁽¹⁾

At December 31

Orders

        Orders increased by $1,558 million, or 17 percent (11 percent in local currencies), in 2008 and $1,608 million, or 21 percent (13 percent in local currencies), in 2007.

        The increase in 2008 was the result of high demand during the first three quarters of the year for all business units except wiring accessories which experienced a weakening construction market. In the fourth quarter demand for standard industrial and building products declined, reflecting the general global economic downturn. Orders for low-voltage drives, machines and low-voltage systems increased in the last quarter due to orders for energy conservation and renewable energy (mainly wind).

        Demand in 2007 was high as many industrial customers increased their investments in efficiency improvements due to higher raw material and energy costs. Orders received increased for all business units with the highest growth in power electronics and MV drives which received a $110 million order for an advanced railway power converter system in Germany. Also, standard products such as Low Voltage (LV) drives, breakers and switches, LV motors, control products, instrumentation, enclosures and DIN-rail components reached double-digit growth in local currencies.

        The geographic distribution of orders as a percentage of total orders in 2008, 2007 and 2006 for our Automation Products division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		60		63		63
The Americas		11		11		12
Asia		23		21		20
Middle East and Africa		6		5		5
Total		100		100		100

        The share of orders from Europe in 2008 decreased as total orders only grew 13 percent (5 percent in local currencies). The lower growth rate in orders reflected the weak construction market particularly in Germany and Spain. Furthermore, in 2007, we secured a $110 million order for traction converters in Germany which was not repeated. The share of orders in the Americas was stable as high order growth in south America compensated for the weakening construction sector in United States. The share of orders from Asia increased as result of industrial infrastructure investments in China and India.

        In 2007, the share of orders from Europe and MEA remained at the same level compared to 2006, while the share of orders from the Americas slightly decreased due to the increase in the share of

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orders from Asia, as a result of fast growing markets in that region, especially in China and India. Orders in Europe increased, supported by the growth in eastern Europe. Orders in the Americas increased, although north America grew at a lower pace than in 2006 due to slowdown in the United States, which was more than offset by growth in south America, particularly, Brazil. The increase in MEA was mainly the result of continued high investments in the oil and gas sector.

Order backlog

        Order backlog in 2008 increased by $373 million, or 11 percent (18 percent in local currencies), as orders were higher than revenues for most business units, especially in Power Electronics and MV Drives which booked several larger MV drive projects during the last half of the year.

        Order backlog increased by $1,051 million, or 43 percent (31 percent in local currencies), at December 31, 2007, from December 31, 2006. The increase related mainly to growth in orders related to systems and engineered products, which have longer delivery times compared to standard products.

Revenues

        Revenues increased by $1,606 million, or 19 percent (13 percent in local currencies) in 2008, compared with $1,807 million, or 26 percent (18 percent in local currencies), in 2007.

        The increases in 2008 were a result of higher order intake and execution of a strong order backlog. The revenue growth came from higher volumes as only minor price increases were made in 2008.

        During 2007, revenues increased in all business units, such as Machines and Power Electronics and MV Drives, due to the high order backlog, with strong growth in engineered products and systems. The growth was mainly achieved by increased volumes but also by higher prices to compensate for increased raw material costs.

        The geographic distribution of revenues in 2008, 2007 and 2006 for our Automation Products division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		62		61		63
The Americas		11		12		12
Asia		22		22		20
Middle East and Africa		5		5		5
Total		100		100		100

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        All regions achieved double-digit growth in revenues 2008. Europe grew 18 percent supported by a high order backlog. The weakening construction markets in western Europe and north America led to lower growth rates for standard products in these regions. High growth was achieved in Asia mainly as result of good order intake and a high backlog in China and India. Revenues in MEA increased due to improved development of orders in the Gulf area.

        Revenues in 2007 showed double-digit growth in all regions. The share of European orders decreased, although Europe and north America benefited from a high order backlog of engineered products and systems and standard products, which contributed to the growth over 2006. Revenues in south America grew significantly following several company initiatives to add sales and marketing resources in this region. Continued strong growth in orders and the expansion of more local production resources in China and India, resulted in a high growth in Asia and contributed to an increase in the share of total revenues. Revenues in the MEA region grew strongest in Dubai, Egypt and South Africa.

Earnings before interest and taxes

        In 2008, EBIT for the Automation Products division grew by $431 million or 29 percent (21 percent in local currencies) after increasing $424 million or 40 percent (30 percent in local currencies) in 2007. The EBIT margin for the division was 18.6 percent in 2008, compared with 17.1 percent and 15.4 percent in 2007 and 2006, respectively.

        In 2008, EBIT for the Automation Products division grew due to increased revenues and continued operational improvements. All businesses improved EBIT except Wiring Accessories which suffered from lower revenues due to the weakening construction market. The largest margin improvements were made in Power Electronics and MV Drives, Machines, LV Drives and Enclosures and DIN-rail Products due to increased capacity utilization and operational improvements.

        The EBIT increase in 2007 was driven by the revenue growth, continued high capacity utilization and further migration to emerging markets. All businesses increased EBIT with the largest improvements made in Power Electronics, MV Drives, Machines and LV Systems. In addition, EBIT margins on standard products such as LV drives, breakers and switches, LV motors and enclosures and DIN-rail components increased from already high levels.

Fiscal year 2009 outlook

        The outlook in the markets has high uncertainty. We believe the general global economic slowdown may result in further weakening of demand and market conditions in industrial and construction markets. However, in renewable energy and energy efficiency applications we expect continued investments.

Process Automation

        The financial results of our Process Automation division were as follows:

	Year ended December 31,
	2008		2007		2006
	($ in millions)
Orders		8,657		7,935		6,550
Order backlog(1)		6,111		5,951		3,991
Revenues		7,815		6,420		5,448
EBIT		926		683		541

⁽¹⁾

At December 31

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Orders

        Orders increased by $722 million, or 9 percent (4 percent in local currencies), with growth in large orders of 9 percent (1 percent in local currencies). Our Process Automation division also reported an increase in base orders of 9 percent (5 percent in local currencies), in 2008, compared to 2007. Strong orders during the first quarter together with continued high activity in the market during the second quarter contributed to the growth, while in the second half of 2008 the growth noted in products and services was more than offset by lower large orders in the Systems business. The oil, gas and petrochemical, metals, marine and turbocharging sectors recorded the strongest growth while the pulp and paper and minerals sectors recorded lower order intake.

        During the fourth quarter of 2008, the Process Automation division experienced a weakening order intake across most customer segments and regions, especially for large orders. Customer investments were delayed due to reduced commodity prices, limited access to project financing and increased uncertainty regarding future demand.

        Orders increased by $1,385 million, or 21 percent (13 percent in local currencies), with substantial growth in large orders of 45 percent (35 percent in local currencies) and an increase in base orders of 16 percent (8 percent in local currencies), in 2007, compared to 2006. The market was driven by high fuel and commodity prices, leading to expansion investments especially in Asia and MEA regions. This expansion contributed to the strong growth in metals, minerals, marine and turbocharging sectors. Pulp and paper orders were lower, mainly due to high investments in Asia in 2006.

        The geographic distribution of orders as a percentage of total orders in 2008, 2007 and 2006 for our Process Automation division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		40		42		46
The Americas		19		19		16
Asia		29		30		25
Middle East and Africa		12		9		13
Total		100		100		100

        In 2008, European orders continued to lead the share of the total orders for the Process Automation division, followed by Asia, the Americas and MEA. Investments in the marine sector, mainly from the cruise ship builders, contributed to the orders in Europe. Additionally, there were several orders booked from the minerals and metals sectors in this region. The Americas experienced strong growth driven by the Minerals business in Canada and Brazil, the Oil and Gas business in the United States and Mexico and the Service business in the United States. Orders in Asia were also at a high level coming mainly from the Marine and Metals businesses in China, Singapore and Korea. MEA experienced significant growth during 2008 supported by high commodity prices at the beginning of the year which drove industrial investments especially in the oil and gas and minerals sectors.

        European orders showed a slight increase in absolute terms in 2007 but the region's share of the total orders decreased due to higher proportional increases in the Americas and Asia. Europe continued to account for the largest share of orders, mainly driven by the Service business and the demand from the shipbuilding, metals and minerals sectors. The Americas also experienced significant growth driven by the Minerals business in Canada and Brazil, the Oil and Gas business in Chile and the Service business in the United States resulting in an increase in the region's share of total orders. Asia's proportional share of the total orders also increased with strong growth mainly coming from the infrastructure related Metals and Minerals businesses as well as the Marine business. MEA experienced

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growth in the Minerals business, but recorded a decrease in total orders due to two extraordinary large orders from the oil and gas sector from Algeria in 2006, which were not replaced by similarly sized orders in 2007, leading to a decrease in their share.

Order backlog

        Order backlog at December 31, 2008 increased by $160 million, or 3 percent (12 percent in local currencies), compared to December 31, 2007. The growth in the order backlog was driven by large system orders received in the oil and gas, minerals and marine sectors with delivery schedules extending into 2010 and beyond.

Revenues

        Revenues increased by $1,395 million, or 22 percent (18 percent in local currencies), in 2008 compared with an increase of $972 million, or 18 percent (10 percent in local currencies), in 2007.

        Revenues increased strongly as a result of the execution of the large order backlog in the Systems business as well as strong revenues in both Service and Products businesses. All regions and sectors recorded strong revenues but the highest growth was noted in our Marine, Metals, Minerals, Oil and Gas and Turbocharging businesses. Overall revenues were up across the Systems business with 19 percent, the Products business with 18 percent and the Service business with 14 percent growth.

        Revenues in 2007 increased in all sectors with significant growth reported in our Minerals, Metals, Marine and Turbocharging businesses. The revenue growth was mainly a result of the large order backlog and growth in the Turbocharging products business.

        The geographic distribution of revenues in 2008, 2007 and 2006 for our Process Automation division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		44		46		46
The Americas		19		17		19
Asia		27		26		26
Middle East and Africa		10		11		9
Total		100		100		100

        In 2008, revenues increased in all regions with Americas, Asia and Europe showing strong growth. Europe experienced an increase in revenues driven by projects executed in Germany, Finland, Norway, the United Kingdom and Italy. The increase in revenues in the Americas was driven by the United States, Brazil, Canada and Mexico. Revenues in Asia were driven by Korea, China, Japan and Singapore.

        Revenues increased in all regions with Asia, Europe and MEA showing strong growth in 2007. Europe experienced an increase in revenues, driven primarily by the OEM and Service business, which allowed the region to maintain the largest share of total revenues, with a share of total revenues similar to that in 2006. Revenues in the Americas were mainly driven by the Service business, but as the other regions grew faster, the Americas' share of the total revenues declined. Revenues in Asia were driven by the strong order backlog from previous periods especially within the Marine and Metals businesses, however, the share of total revenues remained at the same level as it did in 2006. The MEA share of total revenues increased mainly from the large oil and gas projects in Algeria as well as the booming Minerals business.

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Earnings before interest and taxes

        EBIT for our Process Automation division grew by $243 million, or 36 percent (33 percent in local currencies), in 2008 compared with an increase of $142 million, or 26 percent (18 percent in local currencies), in 2007. The EBIT margin increased to 11.8 percent from 10.6 percent in 2007 after improving from 9.9 percent in 2006. Increased contribution from higher revenues, focus on project execution and cost migration projects contributed to the improvement in EBIT and EBIT margin.

Fiscal year 2009 outlook

        The momentum in the market during 2007 and the first nine months of 2008 was followed by a significant slow-down during the fourth quarter of 2008. The market is still driven by cost savings and energy/production efficiency requirements. However, these market drivers have become less important with the recent development of commodity prices. Large scale investments have been delayed as a result of two main drivers: limited access to capital and the increased uncertainty of future demand.

Robotics

        The financial results of our Robotics division were as follows:

	Year ended December 31,
	2008		2007		2006
	($ in millions)
Orders		1,658		1,488		1,240
Order backlog(1)		545		529		441
Revenues		1,642		1,407		1,288
EBIT		9		79		1

⁽¹⁾

At December 31

Orders

        Orders increased by $170 million or 11 percent (5 percent in local currencies) as an overall growth in general industry offset the accelerated downturn in the automotive industry in the second half of the year. In 2007, orders increased by $248 million, or 20 percent (13 percent in local currencies), as order increases in general industry, such as packaging, electronics and food processing continued. Demand also increased in the Service business and the Paint Systems business in the automotive sector.

        The geographic distribution of orders as a percentage of total orders in 2008, 2007 and 2006 for our Robotics division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		58		56		58
The Americas		20		24		25
Asia		21		20		17
Middle East and Africa		1		—		—
Total		100		100		100

        In 2008, European orders increased as a proportion of total division orders due to continuous order growth in both western and eastern Europe. Orders in the Americas decreased, driven mainly by the downturn in the north American automotive industry, which could not be offset by the order

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increase in south America. Orders in Asia continued to increase especially in markets such as India, Malaysia, Thailand and Singapore. The domestic market in China showed a stable development.

        In 2007, orders grew in all regions, while the share of total division orders derived from Europe and the Americas decreased due to an increase in the share of orders derived from Asia resulting from significant growth in that region compared to 2006. European orders increased in absolute terms, benefiting from the demand growth in general industry, such as packaging, electronics and food processing and the Systems business in western Europe. Orders in the Americas in 2007 increased, as a result of regaining a share of the automotive industry compared to 2006. Increased orders in Japan and China due to higher demand in General industry and the Automotive industry contributed to the growth in Asia in 2007. Total orders in MEA, which are not significant to the total division orders, also increased in 2007.

Order backlog

        Order backlog in 2008 increased by $16 million, or 3 percent (6 percent in local currencies), mainly reflecting an increase in orders in the Systems business.

        Order backlog increased by $88 million, or 20 percent (12 percent in local currencies), at December 31, 2007, from December 31, 2006, reflecting primarily the increased orders from general industry.

Revenues

        Revenues increased by $235 million, or 17 percent (11 percent in local currencies), in 2008 compared to an increase of $119 million, or 9 percent (3 percent in local currencies), in 2007.

        The increase in revenues in 2008 was driven by a strong order backlog and strong order growth in general industry especially during the first three quarters of 2008. The increase in revenues in 2007 followed the trend in orders led by the Systems business.

        The geographic distribution of revenues in 2008, 2007 and 2006 for our Robotics division was approximately as follows:

	Year ended December 31,
	2008		2007		2006
	(%)
Europe		58		58		57
The Americas		21		23		25
Asia		20		18		18
Middle East and Africa		1		1		—
Total		100		100		100

        Revenues increased in Europe mainly due to a strong order backlog as well as sales to general industry both in western and eastern Europe. The Americas recorded lower revenues as a result of the weakening automotive sector in north America, which is reflected in the lower share of revenues in the Americas. The share of revenues in Asia continued to grow due to increased local presence, adapted products and solutions as well as favorable market conditions, gaining more importance for the division.

        In 2007, revenues increased in all regions reflecting the upward trend in orders. Revenues in Europe increased due to continued improvement in general industry which also resulted in a slight increase in the region's share of total revenues compared to 2006. America's share of total revenues decreased as the total revenues from this region remained stable as a result of the increased sales in

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general industry offset by the slower development in the automotive sector. Revenues from Asia grew, led by growth in China which allowed Asia to maintain its share of total revenues compared to 2006.

Earnings before interest and taxes

        Our Robotics division took further actions to improve its competitive position by accelerating the move of manufacturing and engineering capacities to low cost countries. EBIT for our Robotics division decreased by $70 million to $9 million in 2008, mostly as a result of these restructuring related charges, after increasing by $78 million in 2007 to $79 million. The EBIT margin for the division decreased to 0.5 percent in 2008, down from 5.6 percent in 2007.

        Higher revenues especially increased sales in general industry, margin improvements in the Systems business and increased sourcing of materials in emerging markets contributed to the EBIT improvement in 2007.

Fiscal year 2009 outlook

        The current downturn in the worldwide automotive industry also affects general industry segments. We believe it will continue to stress the competitive situation in the robotics market during 2009 and lead to increased pressure on prices and margins within OEMs and their related suppliers.

Corporate and Other

        Corporate and Other comprises corporate headquarters and stewardship, corporate R&D, corporate real estate, equity investments primarily in Colombia, Ivory Coast and South Africa that are being considered for sale as well as other activities. EBIT for Corporate and Other over the three year period was as follows:

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Corporate headquarters and stewardship		(277	)		(202	)		(224	)
Corporate research and development		(118	)		(98	)		(89	)
Corporate real estate		49			43			34
Equity ventures		(1	)		10			61
Other		(636	)		(54	)		(38	)
Total Corporate and Other		(983	)		(301	)		(256	)

        Corporate headquarters and stewardship costs in 2008 were higher due mainly to higher pension and insurance costs and specific costs incurred related to programs such as brand promotion. Corporate headquarters and stewardship operating results improved in both 2007 and 2006 as a result of the continued focus on reducing corporate costs in the Company's operations throughout the world and in corporate headquarters in Zurich. Improved corporate headquarters and stewardship results in 2007 as compared to 2006 were partly due to lower costs associated with the internal control measures to comply with the provisions of the Sarbanes Oxley Act of 2002. Headquarters and stewardship results in 2007 also included a $17 million contribution made to the Jürgen Dormann Foundation and some minor gains from businesses sold during the period.

        Corporate R&D increased due to higher activities in the research and development areas in 2008. Corporate R&D increased slightly in 2007, primarily due to the appreciation of the local currencies relative to the U.S. dollar.

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        Corporate real estate consisted primarily of rental income from intragroup real estate agreements which are eliminated in the calculation of our total consolidated orders and revenues. EBIT of real estate operations in 2008 included $33 million gain from the sale of properties mainly in Switzerland, Brazil, Italy, Mexico and Poland. In 2007, EBIT in real estate operations were mainly from the gain on the sale of real estate properties in Switzerland, Norway, Brazil and Australia.

        EBIT from equity investments decreased in 2008 as most investments were sold in previous years. In 2007, EBIT from equity investments were generated mainly from equity investments in Jorf Lasfar and Neyveli which were sold mid 2007. The gain on sale of these equity investments of $38 million was more than offset by a $42 million impairment charge in respect of another equity investment which we intend to divest. In 2006, our equity investments contributed $61 million primarily representing income from Jorf Lasfar and Neyveli.

        EBIT from Other in 2008 was mainly caused by provisions related to the Power Transformer investigations and disclosures to the SEC and DoJ on suspect payments (see "Note 15 Commitments and contingencies" in our Consolidated Financial statements). It also included the costs of our Group Treasury Operations, which are part of our corporate finance function of $10 million in 2008 and 2007. Further, Other included $7 million in losses mainly related to the write-down of assets of our Distributed Energy business in Great Britain, and in 2007, losses related to projects in Building Systems and other businesses.

Discontinued operations

        The income (loss) from discontinued operations, net of tax for the years ended December 31, 2008, 2007 and 2006 is broken down as follows:

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Downstream Oil and Gas business		(5	)		539			9
Building Systems business Germany		—			(2	)		(65	)
Transformer business South Africa		13			15			16
Cable business Ireland		—			(1	)		(48	)
Upstream Oil, Gas and Petrochemicals		—			21			15
Asbestos		(31	)		—			(70	)
Others		2			14			1
Total		(21	)		586			(142	)

        Tax expense, net, in discontinued operations represented an expense (benefit) of $(36) million, $36 million and ($7) million in 2008, 2007 and 2006, respectively.

        For further discussion on the discontinued operations, see "Acquisitions, investments and divestitures", "Item 4. Information on the Company—Discontinued Operations", "Note 3 Acquisitions, divestments and discontinued operations", and "Note 15 Commitments and contingencies" to our Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Principal sources of funding

        In 2008, 2007 and 2006, we met our liquidity needs principally using cash from operations and bank borrowings.

        During 2008, 2007 and 2006, our financial position was strengthened by the positive cash flow from operating activities of $3,958 million, $3,054 million and $1,939 million, respectively. The cash

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generated in 2008 allowed us to make the nominal value reduction in share capital, launch and execute part of our share buyback program (see "Note 19 Stockholders' equity" to our Consolidated Financial Statements) and acquire businesses (see "Note 3 Acquisitions, divestments and discontinued operations" to our Consolidated Financial Statements). The cash generated in 2007 and 2006 enabled us to reduce the level of our securitization programs and to restructure or repurchase debt (see "Note 12 Debt" to our Consolidated Financial Statements).

        Our financial position at December 31, 2008 and 2007 is demonstrated in the table below:

	December 31,
	2008			2007
	($ in millions)
Cash and equivalents		6,399			4,650
Marketable securities and short-term investments		1,407			3,460
Short-term debt and current maturities of long-term debt		(354	)		(536	)
Long-term debt		(2,009	)		(2,138	)
Net cash (defined as the sum of the above lines)		5,443			5,436

        Net cash at December 31, 2008, was comparable to the balance at December 31, 2007, despite the cash generated by operations during 2008 of $3,958 million. See "Financial Position", "Net cash provided by (used in) investing activities" and "Net cash used in financing activities" for further details.

        Our Group Treasury Operations is responsible for providing a range of treasury management services to our group companies and is also responsible for investing cash in excess of current business requirements. At December 31, 2008 and 2007, the proportion of our aggregate cash and equivalents and marketable securities and short-term investments managed by our Group Treasury Operations amounted to 73 percent and 71 percent, respectively. At December 31, 2007, denomination of the investments by our Group Treasury Operations was split approximately equally between euros and U.S. dollars. However, during 2008, with the significant fall in short-term U.S. dollar interest rates and our aim of maximizing the return on excess cash, we reduced the weighting of U.S. dollar investments significantly and, rather than swapping funds received into U.S. dollars or euros, the investments have been placed in the currency of their origination. Consequently, at December 31, 2008, of the excess cash invested by our Group Treasury Operations, approximately 47 percent has been placed in euros, 32 percent in Swiss francs, 10 percent in Swedish krona, 6 percent in Norwegian krona, 4 percent in U.S. dollars and the remainder in other currencies.

        We actively monitor credit risk in our investment portfolio and hedging activities. Credit risk exposures are controlled in accordance with policies approved by our senior management to identify, measure, monitor and control credit risks. We will continue to closely monitor ongoing developments in the credit markets and make appropriate changes to our investment policy as deemed necessary.

        At December 31, 2007, excess cash invested by our Group Treasury Operations was placed in bank time deposits. During 2008, in view of the deepening financial market turmoil, we took a number of actions in order to safeguard our liquidity. Firstly, we shortened the tenor of our deposits with banks, despite the fact that we already had a minimum requirement of A rating for our banking counterparts. Secondly, we diversified the investment of excess cash away from the banking sector into corporate commercial paper with original maturities at date of purchase of up to 2 months (classified as cash and equivalents in our Consolidated Balance Sheet). Until late November, we required a minimum short-term A-2/P-2 rating for investments in such paper but as the financial crisis deepened, we became more restrictive and increased the minimum required rating to A-1/P-1. In addition to rating criteria, we have specific investment criteria and restrictions on the sectors we invest in. These parameters are closely monitored on an ongoing basis and amended as we consider necessary. At December 31, 2008, approximately $532 million was invested in such corporate papers, down from $1,444 million at

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September 30, 2008, reflecting our increasingly restrictive investment criteria in the fourth quarter of 2008. Thirdly, as the financial market crisis deepened in the fourth quarter of 2008, we further diversified the investment of our excess cash into AAA-rated Government bonds with original maturities at date of purchase of up to a maximum of 6 months. These papers are classified as available-for-sale and included in cash and equivalents ($550 million) and marketable securities ($934 million) in the balance sheet at December 31, 2008. Our current objective is to maintain diversification in our investment portfolio and have a mix of government securities, highly-rated corporate short-dated commercial paper and time deposits of short duration with banks.

        We believe the cash flows generated from our business are sufficient to support business operations, capital expenditures, the payment of dividends to shareholders and contributions to pension plans. Due to the nature of our operations, our cash flow from operations generally tends to be weaker in the first half of the year than in the second half of the year. Despite the current credit environment, we have the ability to supplement this near-term liquidity, if necessary, through access to the capital markets (including short-term commercial paper) and credit facilities. Consequently, we believe that our ability to obtain funding from these sources will continue to provide the cash flows necessary to satisfy our working capital and capital expenditure requirements, as well as meet our debt repayments and other financial commitments for the next 12 months. (See "Contractual obligations".)

Debt and interest rates

        At December 31, 2008 and 2007, total outstanding debt amounted to $2,363 million and $2,674 million, respectively, as shown in the table below:

		December 31,
		2008		2007
		($ in millions)
Short-term debt including current maturities of long-term debt (including bonds)			354		536
Long-term debt
	—bonds		1,856		1,983
	—other long-term debt		153		155
Total debt			2,363		2,674

        The decrease in debt in 2008 was primarily due to the maturity of bonds and other debt in the year and to a lesser extent due to exchange rate movements.

        Our debt has been obtained in a range of currencies and maturities and on various interest rate terms. We use derivatives to reduce the interest rate and/or foreign currency exposures arising on our debt. For example, we use interest rate swaps to effectively convert fixed rate debt into floating rate liabilities and we use cross currency swaps to effectively convert certain foreign currency denominated bonds into U.S. dollar liabilities.

        After considering the effects of interest rate swaps, the effective average interest rate on our floating rate long-term debt (including current maturities) of $2,124 million and our fixed rate long-term debt (including current maturities) of $80 million was 5.8 percent and 4.8 percent, respectively. This compares with an effective rate of 6.8 percent for floating rate long-term debt of $2,398 million and 6.4 percent for fixed-rate long-term debt of $147 million at December 31, 2007.

        For a discussion of our use of derivatives to modify the characteristics of our individual bond issuances, see "Note 12 Debt" to our Consolidated Financial Statements.

Credit facilities

        In 2005, we put in place a five-year, $2 billion multicurrency revolving credit facility. During 2007, we amended the facility to reduce the costs associated with it and to remove the sole remaining

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financial covenant which was related to maximum net leverage. For further details of this credit facility, see "Note 12 Debt" to our Consolidated Financial Statements.

        No amount was drawn under the facility at December 31, 2008 and 2007. The facility is for general corporate purposes and will serve as a back-stop facility to our commercial paper programs in the event that we issue commercial paper under the programs described below. The facility contains cross-default clauses whereby an event of default would occur if we were to default on indebtedness, as defined in the facility, at or above a specified threshold.

Commercial paper

        In 2007, we established a $1 billion commercial paper program for the private placement of USD denominated commercial paper in the United States and a $1 billion Euro-commercial paper program for the issuance of commercial paper in a variety of currencies. These programs are in addition to the existing 5 billion Swedish krona program (equivalent to approximately $641 million, using December 31, 2008 exchange rates), allowing us to issue short-term commercial paper in either Swedish krona or euro.

        At December 31, 2008 and 2007, no amounts had been issued or were outstanding under these commercial paper programs.

Medium Term Note Program (MTN)

        We have in place a MTN Program that allows us to issue up to the equivalent of $5,250 million in certain debt instruments. At December 31, 2008 and 2007, $1,918 million and $2,094 million, respectively, of our total debt outstanding, were debt issuances under the MTN Program. The terms of the MTN Program do not obligate any third party to extend credit to us and the terms and availability of financings under the MTN Program are determined with respect to, and as of the date of issuance of, each debt instrument.

Credit ratings

        Credit ratings are assessments by the rating agencies of the credit risk associated with our company and are based on information provided by us or other sources that the rating agencies consider reliable. Higher ratings generally result in lower borrowing costs and increased access to capital markets. Since April 2006, our ratings are of "investment grade" which is defined as Baa3 (or above) from Moody's and BBB- (or above) from Standard & Poor's.

        At December 31, 2007, our long-term company ratings were Baa1 and A-, from Moody's and Standard & Poor's, respectively, as were our long-term unsecured debt ratings. On January 21, 2008, Moody's announced an upgrade in our long-term ratings from Baa1 to A3. Our ratings have remained unchanged during the remainder of 2008 and to date.

Limitations on transfers of funds

        Currency and other local regulatory limitations exist related to the transfer of funds in a number of countries where we operate, including China, Egypt, India, Korea, Malaysia, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and Venezuela. Funds, other than regular dividends, fees or loan repayments, cannot be readily transferred offshore from these countries and are therefore deposited and used for working capital needs locally. In addition, there are certain countries where, for tax reasons, it is not considered optimal to transfer the cash offshore. As a consequence, these funds are not available within our Group Treasury Operations to meet short-term cash obligations outside the relevant country. The above described funds are reported as cash in our Consolidated Balance Sheets, but we do not consider these funds immediately available for the repayment of debt outside the respective countries where the cash is situated, including those described above. At December 31, 2008

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and 2007, the balance of cash and equivalents and marketable securities and other short-term investments under such limitations (either regulatory or sub-optimal from a tax perspective) totaled approximately $1,490 million and $1,451 million, respectively. In view of the deepening crisis in the banking sector during 2008, we took several steps to safeguard our cash positions in these countries. Countries were directed to place such cash with our core banks or investment grade banks and consequently cash placed with non-rated or sub-investment grade banks has been reduced to less than 10 percent of cash outside of our Group Treasury Operations. We closely monitor the situation to ensure bank counterparty risks are minimized.

FINANCIAL POSITION

Balance sheet

        Current assets at the end of 2008 and 2007 consisted of the following:

	December 31,
Current assets	2008		2007
	($ in millions)
Cash and equivalents		6,399		4,650
Marketable securities and short-term investments		1,407		3,460
Receivables, net		9,245		8,582
Inventories, net		5,306		4,863
Prepaid expenses		237		307
Deferred taxes		1,020		783
Other current assets		733		368
Assets held for sale and in discontinued operations		—		132
Total current assets		24,347		23,145

        Our total current assets at December 31, 2008, increased by 5 percent, as compared to total current assets at December 31, 2007.

        At December 31, 2008 and 2007, we had cash and equivalents as well as marketable securities and short-term investments totaling $7,806 million and $8,110 million, respectively. At December 31, 2008 and 2007, the proportion of our aggregate cash and equivalents and marketable securities and short-term investments invested by our Group Treasury Operations amounted to 73 percent and 71 percent, respectively.

        At December 31, 2007, the investments by our Group Treasury Operations were denominated primarily in U.S. dollars and euro. At December 31, 2008, the investments were denominated primarily in euro and Swiss francs, but also a number of other currencies, as we reduced the weighting of U.S. dollar investments significantly after the fall in short-term U.S. dollar interest rates and placed our investments in the currency of their origin. At December 31, 2007, excess cash invested by our Group Treasury Operations was placed in bank deposits. At December 31, 2008, our investment portfolio was a mix of government securities, highly-rated corporate short-dated commercial paper and time deposits of short duration with banks, reflecting our restrictive investment criteria and our objective to maintain diversification. See "Liquidity and capital resources—Principal sources of funding" for further details.

        Further amounts, totaling approximately $1,490 million and $1,451 million, at December 31, 2008 and 2007, respectively, were deposited locally in countries where currency or other local regulatory limitations exist or where, for tax reasons, it is not considered optimal to transfer the cash offshore, see "Liquidity and capital resources—Limitations on transfers of funds" for further details.            Balances not remitted to Group Treasury Operations are primarily denominated in the currency of the respective country holding the balance.

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        We invest surplus cash available in time deposits and marketable securities with varied maturities based on defined investment guidelines taking into account the prevailing market environment and the liquidity requirements of the business. Investments which have maturities of three months or less at the time of acquisition are classified as part of cash and equivalents and those that have maturities of more than three months at the time of acquisition are classified as part of marketable securities and short-term investments. The balance of marketable securities and short-term investments fluctuate depending on the timing of these investments. (See "Liquidity and capital resources".)

        Receivables, net, as at the end of December 2008, increased from the end of 2007 by approximately 8 percent. Excluding the effect of the depreciation of local currencies relative to the U.S. dollar, the increase was approximately 16 percent. The double-digit increase in revenues during the year from all of the core divisions contributed to the increase in receivables, net.

        Inventories, net, increased by 9 percent compared to the level at the end of 2007. Excluding the effect of the depreciation of local currencies relative to the U.S. dollar, the increase was approximately 18 percent. The increase in inventories was particularly high in our Power Products and Automation Products divisions reflecting the increased order backlog. (See "Note 16 Taxes" to our Consolidated Financial Statements for a discussion on deferred taxes.)

        Other current assets mainly include derivative and embedded derivative assets. Assets held for sale and in discontinued operations decreased to zero following the sale of ABB Powertech in South Africa during the first quarter of 2008.

	December 31,
Current liabilities	2008		2007
	($ in millions)
Accounts payable, trade		4,451		4,167
Billings in excess of sales		1,224		829
Accounts payable, other		1,292		1,289
Short-term debt and current maturities of long-term debt		354		536
Advances from customers		2,014		2,045
Deferred taxes		528		371
Provisions for warranties		1,105		1,121
Provisions and other		3,467		2,322
Accrued expenses		1,569		1,737
Liabilities held for sale and in discontinued operations		—		62
Total current liabilities		16,004		14,479

        Total current liabilities at December 31, 2008, increased by 11 percent compared to December 31, 2007. In local currencies, the increase was 19 percent. The increases in business volume and compliance related provisions were the main factors contributing to the increase in current liabilities.

        Total accounts payable and billings in excess of sales at December 31, 2008, increased compared to December 31, 2007, due primarily to an increase in business volume in all of the core divisions. Short-term debt and current maturities of long-term debt were lower than 2007, as several debt obligations were paid back at maturity.

        Provisions for potential costs related to investigations by the U.S. and European authorities into suspect payments and alleged anti-competitive practices, higher derivative liabilities due to changes in the market value of outstanding derivatives and higher income taxes to be paid as a result of increased profitability are major drivers behind the increase in provisions and other. These increases were offset by a decrease in asbestos obligations and work due provisions. (See "Contingencies and retained

74

liabilities".) Liabilities held for sale and in discontinued operations decreased to zero following the sale of ABB Powertech in South Africa during the first quarter of 2008.

	December 31,
Non-current assets	2008		2007
	($ in millions)
Financing receivables, net		445		487
Property, plant and equipment, net		3,562		3,246
Goodwill		2,817		2,421
Other intangible assets, net		411		270
Prepaid pension and other employee benefits		73		380
Investments in equity method companies		68		63
Deferred taxes		1,190		862
Other non-current assets		268		127
Total non-current assets		8,834		7,856

        Total non-current assets at December 31, 2008, increased by 12 percent compared to December 31, 2007.

        Property, plant and equipment, net, increased by 10 percent (16 percent in local currencies) between December 31, 2007 and December 31, 2008. All of our core divisions except Process Automation raised their investment levels to further optimize our global production footprint and remove production bottlenecks. The major capital expenditures during 2008 were investments in machinery and equipment in China, Germany, Switzerland, Sweden and India.

        The increase in goodwill and other intangible assets was mainly due to the acquisition of Kuhlman in the United States as well as other intangible assets capitalized of $135 million. (See "Note 3 Acquisitions, divestments and discontinued operations" and "Note 10 Goodwill and other intangible assets" to our Consolidated Financial Statements.) The decrease in prepaid pension and other employee benefits reflects the change in the funded status of our pension plans from a slightly overfunded position at the end of 2007 to an underfunded position of more than $700 million at the end of 2008. (See "Note 17 Employee benefits" to our Consolidated Financial Statements.)

        The increase in deferred taxes mainly reflects the recognition of tax assets on net operating losses carried forward and other items, which previously did not meet the more likely than not standard of being realized. Other non-current assets mainly include derivative and embedded derivative assets.

	December 31,
Non-current liabilities	2008		2007
	($ in millions)
Long-term debt		2,009		2,138
Pension and other employee benefits		1,071		631
Deferred taxes		425		407
Other liabilities		1,902		1,797
Total non-current liabilities		5,407		4,973

        Total non-current liabilities at December 31, 2008, increased by 9 percent compared to December 31, 2007.

        During 2008, our long-term debt was reduced through the reclassification of a portion of our long-term debt to short-term debt and current maturities of long-term debt and on account of foreign exchange movements of outstanding bonds. (See "Liquidity and capital resources—Debt and interest rates".) Our gearing ratio (calculated as total debt divided by the sum of total debt plus total stockholders' equity and minority interest), excluding borrowings in discontinued operations, was 17 percent at December 31, 2008, as compared to 19 percent at December 31, 2007.

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        The increase in pension and other employee benefits reflects the change in the funded status of our pension plans from a slightly overfunded position at the end of 2007 to an underfunded position of more than $700 million at the end of 2008 which is primarily related to a reduction in the value of our pension assets, see "Note 17 Employee benefits" to our Consolidated Financial Statements.

        Other liabilities increased slightly, mainly on account of higher non-current tax provisions. Other liabilities further included non-current deposit liabilities of $298 million and $298 million, deferred income of $89 million and $113 million, non-current derivative liabilities of $180 million and $162 million, management incentive plan provisions of $3 million and $71 million and other non-current liabilities of $390 million and $352 million at December 31, 2008 and 2007, respectively. Other liabilities also includes provisions for the estimated environmental remediation costs related to our former Nuclear Technology business of $241 million and $245 million at December 31, 2008 and 2007, respectively. (See "Environmental liabilities" and "Note 15 Commitments and contingencies" and "Note 13 Provisions and other and non-current other liabilities" to our Consolidated Financial Statements.)

Cash flows

        In the Consolidated Statements of Cash Flows, the effects of discontinued operations are not segregated, as permitted by SFAS No. 95, Statement of Cash Flows (SFAS 95).

        The Consolidated Statements of Cash Flows can be summarized as follows:

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Net cash provided by operating activities		3,958			3,054			1,939
Net cash provided by (used in) investing activities		114			(2,291	)		(694	)
Net cash used in financing activities		(2,119	)		(625	)		(392	)
Effects of exchange rate changes on cash and equivalents		(230	)		275			184
Adjustment for the net change in cash and equivalents in assets held for sale and in discontinued operations		26			39			25
Net change in cash and equivalents—continuing operations		1,749			452			1,062

Net cash provided by operating activities

        Operating activities provided net cash of $3,958 million in 2008. Cash effective earnings of $4,729 million (defined as net income after adding back non-cash and non-operating expenses) were partly offset by $771 million cash outflows towards operating assets and liabilities. The increased business volume led to a cash outflow, especially associated with higher receivables and inventories. The latter was a result of high factory loading and material procurements to support the execution of the high order backlog.

        Net cash provided by operating activities were particularly high in our Power Products and Automation Products divisions on account of high cash effective earnings.

        Net cash provided by operating activities in 2008 included $100 million of asbestos payments. (See "Contingencies and retained liabilities".) In 2007, $382 million of asbestos payments were made, of which $204 million was paid upon the sale of Lummus.

        Operating activities provided net cash of $3,054 million in 2007, substantially up by $1,115 million from the prior year. This increase was driven primarily by significantly higher cash effective earnings compared to the prior year as well as by comparatively lower cash outflows towards operating assets and liabilities. Cash outflows arising from the changes in operating assets and liabilities were

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$267 million during 2007, compared to $571 million in 2006. This improvement was a result of an improved focus on working capital management, particularly with respect to inventories and trade payables.

        In 2007, net cash provided by operating activities increased in all of our core divisions where higher cash outflow requirements for working capital, as a result of the significant increase in the volume of operations, were more than offset by the significant increase in cash effective earnings. The Power Systems division contributed to net cash provided by operating activities, the majority of which was as a result of high advances from customers on major projects and closer management of trade payables. In the Power Products division, working capital improvements were driven by improved inventory management.

        Due to the improved liquidity situation of the Group we terminated the securitization activities in the United States during the third quarter of 2007. This termination had an impact on the 2007 full year cash flows from operations of $178 million. Approximately 50 percent of this impact was in our Power Products division.

Net cash provided by (used in) investing activities

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Changes in financing receivables		7			56			67
Purchases of marketable securities (other than trading) and short-term investments		(3,626	)		(10,115	)		(4,743	)
Purchases of property, plant and equipment and intangible assets		(1,171	)		(756	)		(536	)
Acquisitions of businesses (net of cash acquired)		(653	)		(54	)		(3	)
Proceeds from sales of marketable securities (other than trading) and short-term investments		5,417			7,361			4,366
Proceeds from sales of property, plant and equipment		94			75			128
Proceeds from sales of businesses and equity accounted companies (net of cash disposed)		46			1,142			27
Net cash provided by (used in) investing activities		114			(2,291	)		(694	)

        Investing activities include accounts receivable from leases and third party loans (financing receivables); net investments in marketable securities that are not held for trading purposes; asset purchases, net of disposals and acquisitions of, investments in and divestitures of businesses.

        Net cash flow provided by investing activities during 2008 was $114 million. Purchases of marketable securities and short-term investments amounted to $3,626 million in 2008. During the first half of 2008, we invested a lower amount of our excess liquidity in time deposits with a maturity of more than three months (given the prevailing volatility in financial markets) and instead invested in time deposits with maturities less than three months, classified as cash and equivalents. In the second half of 2008, we invested part of our excess cash in AAA-rated Government bonds of which the majority had an original maturity of more than 3 months.

        Total cash disbursements for the purchase of property, plant and equipment and intangibles amounted to $1,171 million, reflecting high capital expenditures due to new growth projects and increasing capacity requirements. Capital expenditures in 2008 included $308 million for the purchase of machinery and equipment, $78 million for the purchase of land and buildings, $134 million for the purchase of intangible assets, mainly software, and $651 million capital expenditures for construction in progress.

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        Acquisitions and divestments, net, for the year ended December 31, 2008, mainly included the acquisition of Kuhlman in the United States. The preliminary purchase price for Kuhlman was $520 million including assumed debt.

        Proceeds from sales of marketable securities and short-term investments during 2008 amounted to $5,417 million as compared with $7,361 million for 2007. The decrease reflects the change in investment strategy discussed under "Liquidity and capital resources".

        Cash received from the sale of property, plant and equipment during 2008 included $78 million proceeds from the sale of real estate properties, mainly in Switzerland, Italy, Mexico and Poland and $15 million from the sale of machinery and equipment in various locations.

        Net cash inflows from the sale of businesses and equity accounted companies amounted to $46 million in 2008. This net inflow included approximately $14 million net proceeds from the sale of the distributed energy business in Germany, $16 million net proceeds from the sale of the ABB Powertech Transformer business in South Africa, as well as $11 million net proceeds from two businesses in Norway, $10 million net proceeds from the sale of the Lighting business in the United Kingdom, and approximately $15 million net proceeds from the sale of other minor businesses during 2008. These inflows were partly offset by approximately $20 million claim settlement payment related to the former Air-Handling business that was sold in 2002.

        Net cash provided by (used in) investing activities during 2007 were $2,291 million. Net cash inflows from the sale of businesses and equity accounted companies amounted to $1,142 million in 2007. This net inflow included approximately $810 million net proceeds from the sale of Lummus, as well as $483 million net proceeds from the sale of our interests in Jorf Lasfar and Neyveli. These inflows were offset by a cash outflow of $173 million related to the sale of Building Systems in Germany. Net cash outflows for acquisitions amounted to $54 million in 2007, including $26 million for the acquisition of Raman Boards Ltd in India.

        Total cash disbursement for the purchase of property, plant and equipment and intangibles, net of disposals, in 2007 increased by approximately $270 million, reflecting higher capital expenditures due to new growth projects and increasing capacity requirements. Capital expenditure payments during the year amounted to $756 million, which included $457 million towards the purchase of machinery and equipment, $128 million for land and buildings, $84 million for the purchase of intangible assets, mainly software and $87 million for projects which are under construction. Cash received from the sale of property, plant and equipment during 2007 included $58 million proceeds from the sale of real estate properties, mainly in Italy and France and $16 million from the sale of machinery and equipment in various locations.

        The substantial increase in net purchases of marketable securities and short-term investments from $377 million in 2006, to $2,754 million in 2007, reflects the investment of the increased liquidity generated by the group. Other outflows of marketable securities and short-term investments in 2007 include $49 million in purchases of marketable securities to contribute to the pension funds in Germany and $30 million in additional net cash invested by our captive insurance company.

        Acquisitions and divestments, net, for the year ended December 31, 2006, mainly included the proceeds received from the sale of our Power Lines businesses in Venezuela and South Africa as well as the sale of our Cable business in Ireland.

        In 2006, as a consequence of the increase in the volume of orders and continued high capacity utilization, cash outflows for the purchase of property, plant and equipment increased. Total cash disbursed for capital expenditures during 2006 was $536 million. Of this amount $308 million was spent on machinery and equipment, $111 million on land and buildings, $45 million on intangibles, mainly software and $72 million on projects which are under construction, the majority of which relates to

78

machinery and equipment. In the same year, there was $108 million in proceeds on the sale of land and buildings, primarily in Europe and $20 million from the sale of machinery and equipment.

        Cash outflows from all other investing activities, net, in 2006, were $310 million, including the purchase of marketable securities of $449 million which were contributed to the pension funds in Germany. These purchases of marketable securities were partially offset by the cash inflows and outflows related to other marketable securities.

Net cash used in financing activities

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Net changes in debt with maturities of 90 days or less		10			(19	)		(26	)
Increase in debt		458			210			151
Repayment of debt		(786	)		(247	)		(189	)
Issuance of shares		49			241			47
Purchase of treasury shares		(621	)		(199	)		—
Nominal value reduction/dividends paid		(1,060	)		(449	)		(203	)
Dividends paid to minority shareholders		(152	)		(117	)		(94	)
Payments made upon induced bond conversion		—			—			(72	)
Payments made upon bond exchange		—			—			(111	)
Other		3			(45	)		105
Net cash used in financing activities		(2,119	)		(625	)		(392	)

        Our financing activities primarily include debt, both from the issuance of debt securities and borrowings directly from banks, capital and treasury stock transactions and dividends paid.

        The cash inflow from increases in debt in 2008 primarily relates to short-term borrowings.

        During 2008, $786 million in bonds and other debt were repaid at maturity. This amount included the repayment of the remaining 9.5% EUR Instruments, due 2008, that had not been exchanged by bondholders in 2006, as well as the repayment of several private placements and short-term debt upon maturity. The increase in repayments compared to 2007 reflects also the increases in short-term debt compared to 2007.

        The cash inflow of $49 million from the issuance of shares, represented the exercise of call options by a bank. These call options (with strike prices of CHF 7.00 and CHF 7.50) had been issued at fair value during 2003 and 2004. As a result of the exercise approximately 6.8 million shares were issued.

        During 2008, we purchased 22.675 million ABB shares at a cost of $621 million in connection with the share buyback program launched in 2008 to repurchase shares up to a maximum value of 2.2 billion Swiss francs (equivalent to $2.1 billion at December 31, 2008 exchange rates). On February 12, 2009, we announced that given the market uncertainty, we are not actively pursuing new purchases under the program.

        Dividends paid in 2008 of $1,060 million represented the nominal value reduction of CHF 0.48 per share, approved at our Annual General Meeting in May 2008, which reduced the nominal value of our shares from CHF 2.50 each to CHF 2.02 each. Dividends paid to minority shareholders amounted to $152 million in 2008.

        The issuance of shares in 2007, resulting in a cash inflow of $241 million, represented the exercise of call options by a bank as well as the issuance of shares to employees in connection with our Employee Share Acquisition Plan (ESAP). The call options held by the bank (and related to our

79

management incentive plan launches in 2001, 2003 and 2004) had been issued by us at fair value with strike prices ranging from CHF 7.00 to CHF 13.49. The exercise by the bank resulted in the issuance of approximately 19.6 million shares and net proceeds of $181 million. The exercise by employees of the options they held under the ESAP resulted in the issuance of 3.7 million shares and net proceeds of $60 million.

        During 2007, we purchased, on the open market, 10 million of our own shares for use in connection with our employee incentive plans, resulting in a cash outflow of $199 million and the corresponding increase in treasury stock.

        Dividends paid in 2007 of $449 million represented a dividend of CHF 0.24 per share, while dividends paid to minority shareholders amounted to $117 million.

        During 2006, the capital increase resulting from the issuance of shares under our ESAP led to a net cash inflow of $47 million. During 2006, we paid a dividend of CHF 0.12 per share which resulted in an outflow of $203 million while dividends paid to minority shareholders amounted to $94 million. Net cash used in financing activities in 2006 also included $72 million payments made in relation to the induced conversion of our 4.625% USD Convertible Bonds, due 2007, and $111 million payments in connection with the exchange of our 10% GBP Instruments, due 2009 and the 9.5% EUR Instruments, due 2008 which were partly offset by cash inflows from certain financial derivative transactions.

Disclosures about contractual obligations and commitments

        The contractual obligations presented in the table below represent our estimates of future payments under fixed contractual obligations and commitments. The amounts in the table may differ from those reported on our Consolidated Balance Sheets at December 31, 2008. Changes in our business needs, cancellation provisions and changes in interest rates, as well as actions by third parties and other factors, may cause these estimates to change. Therefore, our actual payments in future periods may vary from those presented in the table. The following table summarizes certain of our contractual obligations and principal and interest payments under our debt instruments, leases and purchase obligations at December 31, 2008:

Payments due by period	Total		Less than 1 year		1–3 years		3–5 years		More than 5 years
	($ in millions)
Long-term debt obligations		2,204		195		954		955		100
Interest payments related to long-term debt obligations		545		125		233		111		76
Operating lease obligations		1,957		372		593		441		551
Capital lease obligations(1)		249		40		52		32		125
Purchase obligations		4,565		3,917		511		107		30
Total		9,520		4,649		2,343		1,646		882

(1)

Capital lease obligations represent the total cash payments to be made in the future and include interest expense of $117 million and executory cost of $5 million.

        We have determined the interest payments related to long-term debt obligations by reference to the payments due under the terms of our debt obligations at the time such obligations were incurred. However, we use interest rate swaps to modify the characteristics of certain of our debt obligations. The net effect of these swaps may be to increase or decrease the actual amount of our cash interest payment obligations, which may differ from those stated in the above table. For further details on our debt obligations and the related hedges, see "Note 12 Debt" to our Consolidated Financial Statements.

        Of the total of $715 million unrecognized tax benefits at December 31, 2008, it is expected that $14 million will be paid within less than a year, however, we cannot make a reasonably reliable

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estimate as to the related future payments for the remaining amount of $701 million. (See "Note 16 Taxes" to our Consolidated Financial Statements.)

Off-balance sheet arrangements
Commercial commitments

        Certain guarantees issued or modified after December 31, 2002 are accounted for in accordance with FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). Upon issuance of certain guarantees, a liability, equal to the fair value of the guarantee, is recorded.

        FIN 45 requires that we disclose the "maximum potential exposure" of certain guarantees, as well as possible recourse provisions that may allow us to recover from third parties amounts paid out under such guarantees. The "maximum potential exposure" as defined by FIN 45 does not allow any discounting of our assessment of actual exposure under the guarantees. The information below reflects our maximum potential exposure under the guarantees, which is higher than our assessment of the expected exposure.

Guarantees

        The following table provides quantitative data regarding our third-party guarantees. The maximum potential payments represent a "worst-case scenario," and do not reflect our expected results.

        The carrying amount of liabilities recorded in the Consolidated Balance Sheets reflects our best estimate of future payments, which we may incur as part of fulfilling our guarantee obligations.

	December 31,
	2008				2007
	Maximum potential payments		Carrying amount of liabilities		Maximum potential payments		Carrying amount of liabilities
	($ in millions)				($ in millions)
Performance guarantees		413		1		957		9
Financial guarantees		95		—		131		—
Indemnification guarantees		277		2		328		1
Total		785		3		1,416		10

        For additional descriptions of our performance, financial and indemnification guarantees see "Note 15 Commitments and contingencies" to our Consolidated Financial Statements.

Variable interests

        We are a party to certain off-balance sheet arrangements including variable interests in unconsolidated entities. (See "Note 11 Investments in equity method accounted companies" to our Consolidated Financial Statements.)

ENVIRONMENTAL LIABILITIES

        We are engaged in environmental clean-up activities at certain sites principally in the United States of America, arising under various United States (U.S.) and other environmental protection laws and under certain agreements with third parties. In some cases, these environmental remediation actions are subject to legal proceedings, investigations or claims, and it is uncertain to which extent the Company is actually obligated to perform. Provisions for these unresolved matters have been set up if it is probable that the Company has incurred a liability and the amount of loss can be reasonably

81

estimated. If a provision has been recognized for any of these matters we record an asset when it is probable that we will recover a portion of the costs expected to be incurred to settle them. We are of the opinion, based upon information presently available, that the resolution of any such obligation and non-collection of recoverable costs would not have a further material adverse effect on our Consolidated Financial Statements.

Contingencies related to former Nuclear Technology business

        We retain liabilities for certain specific environmental remediation costs at two sites in the United States that were operated by our former subsidiary, ABB CE-Nuclear Power Inc., which we sold to British Nuclear Fuels PLC (BNFL) in 2000.

        We established a provision of $300 million in income (loss) from discontinued operations in 2000 for our estimated share of the remediation costs for these sites. At December 31, 2008 and 2007, we have recorded in current and non-current other liabilities provisions of $241 million and $245 million, respectively, net of payments from inception of $54 million and $50 million, respectively. Expenditures charged against the provision were $4 million, $3 million and $4 million during 2008, 2007 and 2006, respectively. We have estimated that during 2009 we will charge expenditures of approximately $27 million to the provision.

        For a detailed description of these and other contingencies see "Note 15 Commitments and contingencies" to our Consolidated Financial Statements.

Item 6.    Directors, Senior Management and Employees

Principles of Corporate Governance

General Principles

        ABB is committed to the highest international standards of corporate governance, and supports the general principles as set forth in the Swiss Code of Best Practice for Corporate Governance, as well as those of the capital markets where its shares are listed and traded.

        In addition to the provisions of the Swiss Code of Obligations, ABB's key principles and rules on corporate governance are laid down in ABB's Articles of Incorporation, the ABB Ltd Board Regulations, the regulations of ABB's board committees, the ABB Ltd Related Party Transaction Policy, and the ABB Code of Conduct. It is the duty of ABB's Board of Directors (the Board) to review and amend or propose amendments to those documents from time to time to reflect the most recent developments and practices, as well as to ensure compliance with applicable laws and regulations.

        This section of the Annual Report is based on the Directive on Information Relating to Corporate Governance published by the SIX Swiss Exchange. Where an item listed in the directive is not addressed in this report, it is either inapplicable to, or immaterial for, ABB.

        In accordance with the requirements of the New York Stock Exchange (NYSE), a comparison of how the corporate governance practices followed by ABB differ from those required under the NYSE is included in "Item 16G. Corporate Governance" or can be found in the corporate governance section at: www.abb.com/investorrelations.

Duties of Directors and Officers

        The directors and officers of a Swiss corporation are bound, as specified in the Swiss Code of Obligations, to perform their duties with all due care, to safeguard the interests of the corporation in good faith and to extend equal treatment to shareholders in like circumstances.

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        The Swiss Code of Obligations does not specify what standard of due care is required of the directors of a corporate board. However, it is generally held by Swiss legal scholars and jurisprudence that the directors must have the requisite capability and skill to fulfill their function, and must devote the necessary time to the discharge of their duties. Moreover, the directors must exercise all due care that a prudent and diligent director would have taken in like circumstances. Finally, the directors are required to take actions in the best interests of the corporation and may not take any actions that may be harmful to the corporation.

Exercise of Powers

        Directors, as well as other persons authorized to act on behalf of a Swiss corporation, may perform all legal acts on behalf of the corporation which the business purpose, as set forth in the articles of incorporation of the corporation, may entail. Pursuant to court practice, such directors and officers can take any action that is not explicitly excluded by the business purpose of the corporation. In so doing, however, the directors and officers must still pursue the duty of due care and the duty of loyalty described above and must extend equal treatment to the corporation's shareholders in like circumstances. ABB's Articles of Incorporation do not contain provisions concerning a director's power, in the absence of an independent quorum, to vote on the compensation to themselves or any members of their body.

Conflicts of Interest

        Swiss law does not have a general provision on conflicts of interest and our Articles of Incorporation do not limit our directors' power to vote on a proposal, arrangement or contract in which the director or officer is materially interested. However, the Swiss Code of Obligations requires directors and officers to safeguard the interests of the corporation and, in this connection, imposes a duty of care and loyalty on directors and officers. This rule is generally understood and so recommended by the Swiss Code of Best Practice for Corporate Governance as disqualifying directors and officers from participating in decisions, other than in the shareholders' meeting, that directly affect them.

Confidentiality

        Confidential information obtained by directors and officers of a Swiss corporation acting in such capacity must be kept confidential during and after their term of office.

Sanctions

        If directors and officers transact business on behalf of the corporation with bona fide third parties in violation of their statutory duties, the transaction is nevertheless valid, as long as it is not explicitly excluded by the corporation's business purpose as set forth in its articles of incorporation. Directors and officers acting in violation of their statutory duties—whether transacting business with bona fide third parties or performing any other acts on behalf of the company—may, however, become liable to the corporation, its shareholders and its creditors for damages. The liability is joint and several, but the courts may apportion the liability among the directors and officers in accordance with their degree of culpability.

        In addition, Swiss law contains a provision under which payments made to a shareholder or a director or any person(s) associated therewith, other than at arm's length, must be repaid to the company if the shareholder or director or any person associated therewith was acting in bad faith.

        If the board of directors has lawfully delegated the power to carry out day-to-day management to a different corporate body, e.g. the executive committee, it is not liable for the acts of the members of

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that different corporate body. Instead, the directors can be held liable only for their failure to properly select, instruct and supervise the members of that different corporate body.

Board of Directors

Responsibilities and organization

        The Board defines the ultimate direction of the business of ABB and issues the necessary instructions. It determines the organization of the ABB Group and appoints, removes and supervises the persons entrusted with the management and representation of ABB.

        The internal organizational structure and the definition of the areas of responsibility of the Board, as well as the information and control instruments vis-à-vis the Group Executive Committee, are set forth in the ABB Ltd Board Regulations, a copy of which can be found in the corporate governance section at: www.abb.com/investorrelations.

        The Board meets as frequently as needed but at least four times per annual Board term. Board meetings are convened by the chairman or upon request by a director or the chief executive officer (CEO). Written documentation covering the various items of the agenda for each Board meeting is sent out in advance to each Board member in order to allow each member time to study the covered matters prior to the meetings. Decisions made at the Board meetings are recorded in written minutes of the meetings.

        The CEO shall regularly, and whenever extraordinary circumstances so require, report to the Board about ABB's overall business and affairs. Further, Board members are entitled to information concerning ABB's business and affairs. Additional details are set forth in section 6 of the ABB Ltd Board Regulations.

Term and Members

        The members of the Board are elected individually at the ordinary general meeting of the shareholders for a term of one year; re-election is possible. Our Articles of Incorporation, a copy of which can be found in the corporate governance section at www.abb.com/investorrelations, do not provide for the retirement of directors based on their age. However, an age limit for members of the Board is set forth in the ABB Ltd Board Regulations, a copy of which can be found in the corporate governance section at: www.abb.com/investorrelations.

        As at December 31, 2008, all Board members were non-executive and independent directors.

        As at December 31, 2008, the members of the Board (Board term—May 2008 to May 2009) were:

Hubertus von Grünberg has been a member and chairman of ABB's Board of Directors since May 3, 2007. He is chairman of the supervisory board of Continental AG (Germany). He is a member of the supervisory boards of Allianz Versicherungs AG and Deutsche Telekom AG (both Germany). He is a member of the board of directors of Schindler Holding (Switzerland). Mr. von Grünberg was born in 1942 and is a German citizen.

Roger Agnelli has been a member of ABB's Board of Directors since March 12, 2002. He is the president and chief executive officer of Companhia Vale do Rio Doce (Brazil). Mr. Agnelli was born in 1959 and is a Brazilian citizen.

Louis R. Hughes has been a member of ABB's Board of Directors since May 16, 2003. Mr. Hughes is the chairman and chief executive officer of GBS Laboratories (U.S.). He is the former chairman of Out Performance Inc. (U.S.). He is also a member of the boards of directors of Akzo Nobel (The Netherlands), Alcatel Lucent (France) and Sulzer (Switzerland). Mr. Hughes was born in 1949 and is an American citizen.

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Hans Ulrich Märki has been a member of ABB's Board of Directors since March 12, 2002. He is the retired chairman of IBM Europe, Middle East and Africa (France), and a member of the board of directors of Mettler-Toledo International (U.S.) and SwissRe and Menuhin Festival Gstaad AG (both Switzerland). He is also a member of the foundation board of Schulthess Klinik, Zurich (Switzerland) andthe board of trustees of the Hermitage Museum, St. Petersburg (Russia). Mr. Märki was born in 1946 and is a Swiss citizen.

Michel de Rosen has been a member of ABB's Board of Directors since March 12, 2002. He is the chief executive officer of Groupe SGD (France) and the former chairman of ViroPharma (U.S.). Mr. de Rosen was born in 1951 and is a French citizen.

Michael Treschow has been a member of ABB's Board of Directors since May 16, 2003. He is the chairman of the boards of directors of Ericsson (Sweden), Unilever NV (The Netherlands), and Unilever PLC (U.K.). He is also a member of board of directors of the Knut and Alice Wallenberg Foundation (Sweden). Mr. Treschow was born in 1943 and is a Swedish citizen.

Bernd W. Voss has been a member of ABB's Board of Directors since March 12, 2002. He is a member of the supervisory board of Dresdner Bank (Germany). He is also a member of the boards of directors of Continental AG, Hapag-Lloyd, and Wacker Chemie (all Germany). Mr. Voss was born in 1939 and is a German citizen.

Jacob Wallenberg has been a member of ABB's Board of Directors since June 26, 1999. From March 1999 to June 1999, he served as a member of the board of directors of ABB Asea Brown Boveri Ltd, the former parent company of the ABB Group. He is the chairman of the board of directors of Investor AB (Sweden). He is vice chairman of SEB Skandinaviska Enskilda Banken, Atlas Copco AB and SAS AB (all Sweden). He is also a member of the boards of directors of the Knut and Alice Wallenberg Foundation, the Nobel Foundation and the Stockholm School of Economics (all Sweden), and Coca Cola Company (U.S.). Mr. Wallenberg was born in 1956 and is a Swedish citizen.

        As of December 31, 2008, none of ABB's Board members held any official functions or political posts. Further information on ABB's Board members can be found in the corporate governance section at: www.abb.com/investorrelations.

Board Committees

        From among its members, the Board has appointed two Board committees: the Governance, Nomination and Compensation Committee (GNCC) and the Finance, Audit and Compliance Committee (FACC). The duties and objectives of the Board committees are set forth in regulations issued or approved by the Board, copies of which can be found in the corporate governance section at: www.abb.com/investorrelations. These committees assist the Board in its tasks and report regularly to the Board. The members of the Board committees are required to be independent.

Governance, Nomination and Compensation Committee

        The GNCC is responsible for (1) overseeing corporate governance practices within ABB, (2) selecting candidates for the Board, the Board committees, the role of CEO and other positions on the Group Executive Committee, and (3) succession planning, employment and compensation matters relating to the Board and the Group Executive Committee. The GNCC is also responsible for maintaining an orientation program for new Board members and an ongoing education program for existing Board members.

        The GNCC must comprise three or more independent directors. The chairman of the Board and, upon invitation by the committee's chairman, the CEO or other members of the Group Executive Committee may participate in the committee meetings, provided that any potential conflict of interest is avoided and confidentiality of the discussions is maintained.

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        As at December 31, 2008, the members of the GNCC were:

Hans Ulrich Märki (chairman)
Michel de Rosen
Roger Agnelli

Finance, Audit and Compliance Committee

        The FACC is responsible for overseeing (1) the integrity of ABB's financial statements, (2) ABB's compliance with legal and regulatory requirements, (3) the independent auditors' qualifications and independence, and (4) the performance of ABB's internal audit function and external auditors.

        The FACC must comprise three or more independent directors who have a thorough understanding of finance and accounting. The chairman of the Board and, upon invitation by the committee's chairman, the CEO or other members of the Group Executive Committee may participate in the committee meetings, provided that any potential conflict of interest is avoided and confidentiality of the discussions is maintained. In addition, the Chief Compliance Officer, the Head of Internal Audit and the external auditors participate in the meetings as appropriate. As required by the U.S. Securities and Exchange Commission (SEC), the Board has determined that Bernd W. Voss is an audit committee financial expert.

        As at December 31, 2008, the members of the FACC were:

Bernd W. Voss (chairman)
Jacob Wallenberg
Louis R. Hughes

Meetings and Attendance

        The table below shows the number of meetings held during 2008 by the Board and its committees, their average duration, as well as the attendance of the individual Board members. In addition, members of the Board and the Group Executive Committee participated in a two-day strategic retreat.

Meetings and attendance

	Board of Directors		Governance, Nomination and Compensation Committee		Finance, Audit and Compliance Committee
Average duration (hrs.)		7		3.5		3
Number of meetings		5		5		7
Meetings attended:
Hubertus von Grünberg		5		—		—
Roger Agnelli		4		4		—
Louis R. Hughes		4		—		7
Hans Ulrich Märki		5		5		—
Michel de Rosen		5		5		—
Michael Treschow		5		—		—
Bernd W. Voss		5		—		7
Jacob Wallenberg		5		—		7

Secretary to the Board

        Diane de Saint Victor is the secretary to the Board.

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Group Executive Committee

Responsibilities and Organization

        The Board has delegated the executive management of ABB to the CEO and the other members of the Group Executive Committee. The CEO and under his direction the other members of the Group Executive Committee are responsible for ABB's overall business and affairs and day-to-day management. The CEO reports to the Board regularly, and whenever extraordinary circumstances so require, on the course of ABB's business and financial performance and on all organizational and personnel matters, transactions and other issues relevant to the Group.

        Each member of the Group Executive Committee is appointed and discharged by the Board.

Members of the Group Executive Committee

        As at December 31, 2008, the members of the Group Executive Committee were:

Joe Hogan joined ABB as Chief Executive Officer in September 2008. Before joining ABB, Mr. Hogan was the CEO and President of General Electric's GE Healthcare unit from 2000 to 2008. From 1985 to 2000, Mr. Hogan held various positions at General Electric. Mr. Hogan was born in 1957 and is an American citizen.

Michel Demaré joined ABB as Chief Financial Officer in January 2005, and was appointed interim CEO in addition to his duties as CFO from February 2008 to August 2008. In October 2008, Mr Demaré also assumed responsibilities as Head of Global Markets. From 2002 until 2004 Mr. Demaré was vice president and chief financial officer of Baxter Europe. From 1984 until 2002, he held various positions within Dow Chemical (U.S.). Mr. Demaré was born in 1956 and is a Belgian citizen.

Ulrich Spiesshofer joined ABB as head of Corporate Development in November 2005. From 2002 until he joined ABB, he was senior partner, global head of operations practice at Roland Berger AG. Prior to 2002, he held various positions with A.T. Kearney Pty. Ltd. and its affiliates. Mr. Spiesshofer was born in 1964 and is a German citizen.

Gary Steel joined ABB as head of Human Resources in January 2003. Mr. Steel is a member of the board of directors of Harman International Industries Inc. (U.S.). In 2002, he was the human resources director, group finance at Royal Dutch Shell (The Netherlands). Between 1976 and 2002, he held several human resources and employee relations positions at Royal Dutch Shell. Mr. Steel was born in 1952 and is a British citizen.

Diane de Saint Victor joined ABB as General Counsel in January 2007. From 2004 to 2006, she was general counsel of European Aeronautic Defence and Space, EADS (France/Germany). From 2003 to 2004, she was general counsel of SCA Hygiene Products (Germany). From 1993 to 2003, she held various legal positions with Honeywell International (France/Belgium). From 1988 to 1993, she held various legal positions with General Electric (U.S.). Ms. de Saint Victor was born in 1955 and is a French citizen.

Bernhard Jucker was appointed Executive Committee member responsible for our Power Products division in January 2006. From 2003 to 2005, he was ABB's country manager for Germany. From 1980 to 2003 he held various positions in ABB. Mr. Jucker was born in 1954 and is a Swiss citizen.

Peter Leupp was appointed Executive Committee member responsible for the Power Systems division in January 2007. From 2005 to 2006, he was ABB's regional manager for North Asia and from 2001 to 2006 he was ABB's country manager for China. From 1989 to 2001, he held various positions in ABB. Mr. Leupp was born in 1951 and is a Swiss citizen.

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Tom Sjökvist was appointed Executive Committee member responsible for the Automation Products division in January 2006. From 2003 to 2005, he was the head of the Automation Products business area. From 1972 to 2003, he held several positions with ABB. Mr. Sjökvist was born in 1947 and is a Swedish citizen.

Veli-Matti Reinikkala was appointed Executive Committee member responsible for the Process Automation division in January 2006. He is a member of the board of directors of UPM-Kymmene (Finland). In 2005, he was the head of the Process Automation business area. From 1993 to 2005, he held several positions with ABB. Mr. Reinikkala was born in 1957 and is a Finnish citizen.

Anders Jonsson was appointed Executive Committee member responsible for the Robotics division in January 2006. In 2005, he was the head of the former Automation Technologies division in China. From 1976 to 2004, he held various positions with ABB. Mr. Jonsson was born in 1950 and is a Swedish citizen.

        Further information about the members of the Group Executive Committee can be found in the corporate governance section at: www.abb.com/investorrelations.

Management Contracts

        There are no management contracts between ABB and companies or natural persons not belonging to the ABB Group.

Compensation

Principles and details of Board compensation

        The compensation levels of members of the Board are as follows:

Amounts in CHF	Board Term 2008 - 2009		Board Term 2007 - 2008
Chairman		1,200,000		1,200,000
Member of the Board and Committee chairman		400,000		400,000
Member of the Board		300,000		300,000

        Board compensation is payable in semi-annual installments in arrear. The first payment is made in November, for the period of Board membership from election at the annual general meeting to October of that year. The second payment is made in May of the following year for the period of Board membership from November to the end of that Board term.

        Board members elect to receive either 50 percent or 100 percent of their compensation in ABB shares. The reference price for the shares to be delivered (and hence the calculation of the number of shares to be delivered) is the average closing price of the ABB share during a defined 30-day period, which is different for each installment. The ABB shares are kept in a blocked account for three years after the date of original delivery and may only be disposed of earlier if the respective person shall have left the Board and shall not have agreed otherwise to the shares remaining blocked for the original three-year period. In addition, all shares that were in the blocked account at the beginning of May 2007 are blocked until May 2010 and may be disposed of earlier only if the respective Board member shall have left the Board before 2010 and shall not have agreed to the shares remaining blocked until 2010.

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Details of Board compensation

        The compensation amounts per individual are listed in the table below.

		Paid in 2008										Paid in 2007
		November Board term 2008/2009				May Board term 2007/2008						November Board term 2007/2008
Name	Function	Settled in cash(1)		Settled in shares- number of shares received(2)		Settled in cash(1)		Settled in shares- number of shares received(2)		Compensation Paid 2008 Total(3)		Settled in cash(1)		Settled in shares— number of shares received(2)		Compensation Paid 2007 Total(4)
		CHF								CHF		CHF				CHF
Hubertus von Grünberg	Chairman of the Board		300,000		10,139		300,000		7,919		1,200,000		300,000		6,779		600,000
Roger Agnelli(5)	Member of the Board		75,000		2,514		75,000		1,968		300,000		75,000		1,677		150,000
Louis R. Hughes(6)	Member of the Board		75,000		2,514		75,000		1,968		300,000		75,000		1,677		150,000
Hans Ulrich Märki	Member of the Board and Chairman of the Governance, Nomination and Compensation Committee		—		9,204		—		7,199		400,000		—		6,149		200,000
Michel de Rosen(5)	Member of the Board		75,000		2,514		75,000		1,968		300,000		75,000		1,677		150,000
Michael Treschow	Member of the Board		75,000		2,543		75,000		1,971		300,000		75,000		1,677		150,000
Bernd W. Voss	Member of the Board and Chairman of the Finance, Audit and Compliance Committee		100,000		3,387		100,000		2,644		400,000		100,000		2,273		200,000
Jacob Wallenberg(6)	Member of the Board		75,000		2,514		—		3,936		300,000		—		3,354		150,000
Total			775,000		35,329		700,000		29,573		3,500,000		700,000		25,263		1,750,000

1)

Represents gross amounts paid, prior to deductions for social security, withholding tax etc.

2)

Number of shares per Board member is calculated based on net amount due after deductions for social security, withholding tax etc.

3)

In addition to the board remuneration stated in the above table, the Company paid in 2008 CHF 223,267 in employee social security payments. For the 2008-2009 Board term, all members have elected to receive 50% of their gross compensation in the form of ABB shares, except for Hans Ulrich Märki who elected to receive 100%.

4)

Effective as of 2007 Board compensation became payable in semi-annual installments in arrear and therefore there was only one payment in 2007. For the 2007-2008 Board term, all members elected to receive 50% of their gross compensation in the form of ABB shares, except for Hans Ulrich Märki and Jacob Wallenberg who elected to receive 100%.

5)

Member of the Governance, Nomination and Compensation Committee.

6)

Member of the Finance, Audit and Compliance Committee.

        Board members do not receive pension benefits and are not eligible to participate in any of our employee incentive programs.

Principles of Group Executive Committee Compensation

        The GNCC has structured the compensation for the members of the Group Executive Committee into three principal components (1) an annual base salary, (2) a short term incentive and (3) a long-term incentive. In deciding the level of these components for each of the Group Executive Committee members, the GNCC reviews the components against pan-European benchmarks, and in the case of Veli-Matti Reinikkala, against U.S. top executive benchmarks provided by the Hay Group.

        Short term incentives for members of the Group Executive Committee are their annual bonuses. To align the performance expectations of these members with the development of ABB, these bonuses depend at least 50 percent on ABB's business performance during the preceding financial year. Resulting bonuses are paid in March each year after full-year results are announced. The CEO has a maximum bonus opportunity of 150 percent of his base salary. All other current Group Executive Committee members have a maximum bonus opportunity of 100 percent of their base salary.

        ABB aligns the performance of the members of the Group Executive Committee with that of ABB on a longer term basis by offering them the opportunity to participate in the Long-term Incentive Plan

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(LTIP). Some members of the Group Executive Committee have participated in the earlier launches of the Management Incentive Plan (MIP) and those who did so, were not eligible to participate in an LTIP launch for the same period.

        Members of the Group Executive Committee also receive pension benefits. All members are insured in Switzerland in the ABB Pension Fund, the ABB Supplementary Insurance Plan, the Tödi Plan and the Tödi Foundation—TEDC Plan (the regulations are available under www.abbvorsorge.ch), with the exception of Veli-Matti Reinikkala, who was insured under comparable plans in Finland for the first half of the year and then in comparable plans in the U.S. The members receive pension contributions from ABB in accordance with the terms of their pension plans.

        Group Executive Committee members receive customary additional benefits such as a company car, and accident, life, unemployment, social and health insurance compensation. In some cases, members receive contributions to children's education. Members are also eligible to participate in ESAP.

Details of Group Executive Committee Compensation

        On September 1, 2008, Joe Hogan joined ABB as Chief Executive Officer. His base salary for 2008 was CHF 1.9 million pro-rated for the four months he was employed. In connection with his joining ABB, he received (1) a sign-on bonus in the amount of CHF 3,000,000 and (2) sign-on grants of ABB shares with a value of CHF 10 million (based on the average ABB share price in the 20 trading days preceding his start date)—50% to vest in 3 years and 50% to vest in 5 years from the date he commenced employment with ABB, provided he does not elect to leave ABB before those dates and that he is not terminated for cause prior to those dates. These sign-on amounts were to compensate him for certain forfeited benefits from his previous employer. Mr. Hogan, like other members of the Group Executive Committee, also received conditional grants under the 2008 launch of ABB's Long-Term Incentive Plan as well as the right to participate in the co-investment portion of that plan. In addition, he received customary additional benefits including pension contributions, relocation compensation, car, schooling for children, health insurance and other miscellaneous benefits. In 2009, he will be entitled to receive an annual bonus up to 150% of his pro-rated base salary in 2008. His compensation, together with the compensation of the other members of the Group Executive Committee, is detailed further in the remainder of this section.

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        The total compensation of each member of the Group Executive Committee is displayed in two parts: (1) total salary and other non share-based compensation and (2) total share-based compensation. The total salary and other non share-based compensation includes base salary, bonuses, pension contributions and certain other items as described more fully in the salary and other non share-compensation table later in this Item 6. The total share-based compensation includes all share-related grants to individuals. The valuation is based on the market price of the ABB Ltd share at the time of grant and for the LTIP grants assumes 100 percent vesting, although less than 100 percent may actually vest. Share-based compensation is described more fully in the share-based compensation table later in this Item 6. The total compensation includes only compensation received by an individual in connection with his or her role as a member of the Group Executive Committee. The total compensation of members of the Group Executive Committee in 2008 is summarized in the table below:

Group Executive Committee total compensation

Name	Function	Total salary and other non share- based compensation		Total share-based compensation(1)		Total
		CHF		CHF		CHF
Joe Hogan(2)	Chief Executive Officer		4,119,134		15,084,279		19,203,413
Michel Demaré	Chief Financial Officer		3,330,059		3,963,209		7,293,268
Gary Steel	Human Resources responsible		2,352,667		2,082,413		4,435,080
Ulrich Spiesshofer	Corporate Development responsible		2,077,822		1,978,285		4,056,107
Diane de Saint Victor	General Counsel		1,903,921		1,973,985		3,877,906
Bernhard Jucker	Power Products Division responsible		2,077,401		2,469,149		4,546,550
Peter Leupp	Power Systems Division responsible		1,980,773		2,081,199		4,061,972
Tom Sjökvist	Automation Products Division responsible		1,974,501		1,906,201		3,880,702
Veli-Matti Reinikkala	Process Automation Division responsible		1,863,471		1,765,876		3,629,347
Anders Jonsson	Robotics Division responsible		1,458,202		1,652,547		3,110,749
Total current executive committee members			23,137,951		34,957,143		58,095,094
Fred Kindle	President and Chief Executive Officer until February 13, 2008		8,660,961		—		8,660,961
Ravi Uppal	President Global Markets from July 1, 2007 to October 31, 2008		4,264,595		1,936,379		6,200,974
Total former executive committee members			12,925,556		1,936,379		14,861,935
Total			36,063,507		36,893,522		72,957,029

(1)

The total share-based compensation amounts have been calculated using the market value of the ABB share on the day of grant and assume 100 percent vesting, although less than 100 percent may actually vest.

(2)

Joe Hogan's total compensation for 2008 included CHF 13 million of sign-on bonus to compensate him for certain forfeited benefits from his previous employer.

        The table below shows the gross payments (i.e. compensation before deduction of employee social insurance and pension contributions) that were made to, or on behalf of, the members of the Group Executive Committee in 2008, but excludes share-based compensation, which is shown in a separate table below.

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Group Executive Committee salary and other non share-based compensation

									Costs of company car leasing						Employer's social security payments
	Base salary				Additional compensation		Employers' pension contributions				Costs of health insurance		Costs of children's education
			Bonus(1)														Total
Name
	CHF		CHF		CHF		CHF		CHF		CHF		CHF		CHF		CHF
Joe Hogan(2)		633,335		—		3,150,000		85,055		2,666		3,153		4,500		240,425		4,119,134
Michel Demaré(3)		1,190,043		832,832		325,706		242,710		26,575		8,644		31,320		672,229		3,330,059
Gary Steel		765,004		685,462		706		257,484		26,574		9,622		27,000		580,815		2,352,667
Ulrich Spiesshofer		723,337		659,640		706		210,850		28,460		7,820		—		447,009		2,077,822
Diane de Saint Victor(4)		725,005		649,250		4,900		232,079		—		8,632				284,055		1,903,921
Bernhard Jucker		904,999		773,145		706		252,640		29,963		8,412		—		107,536		2,077,401
Peter Leupp(5)		758,338		682,500		73,706		262,232		27,278		9,622		—		167,097		1,980,773
Tom Sjökvist(6)		761,672		702,000		96,466		275,866		29,368		9,031		—		100,098		1,974,501
Veli-Matti Reinikkala(7)		702,123		582,337		77,929		419,312		25,488		9,458		—		46,824		1,863,471
Anders Jonsson		608,333		493,350		706		248,210		27,080		9,224		—		71,299		1,458,202
Total current executive committee members		7,772,189		6,060,516		3,731,531		2,486,438		223,452		83,618		62,820		2,717,387		23,137,951
Fred Kindle(8)		2,325,250		2,480,426		1,483,022		185,088		34,881		6,281		—		2,146,013		8,660,961
Ravi Uppal(9)		1,211,669		1,317,119		1,172,020		213,203		25,496		8,064		—		317,024		4,264,595
Total former executive committee members		3,536,919		3,797,545		2,655,042		398,291		60,377		14,345		0		2,463,037		12,925,556
Total		11,309,108		9,858,061		6,386,573		2,884,729		283,829		97,963		62,820,		5,180,424		36,063,507

(1)

The table above provides compensation amounts with respect to 2008 on a cash basis. Consequently, the table shows bonuses relating to 2007, paid in 2008, except for Fred Kindle, who received a proportional bonus for the period January to September 2008. The CEO has a maximum bonus opportunity of 150 percent of his base salary. All other executive committee members have a maximum bonus opportunity of 100 percent of their base salary, except Michel Demaré who, for the time served as interim CEO, had a maximum bonus opportunity of 150 percent of his base salary. Total accrued bonus at December 31, 2008, amounted to CHF 9,052,622, including CHF 1,632,825 representing a one-off cash award conditional upon certain performance criteria. Bonus payments will be made in March 2009, after the financial results are published.

(2)

Additional compensation for Joe Hogan includes a CHF 3,000,000 sign-on bonus and CHF 150,000 as compensation for relocation expenses.

(3)

The base salary of Michel Demaré includes an additional amount of CHF 178,375 for the period he was interim CEO. His additional compensation figure includes a one-time cash payment of CHF 325,000.

(4)

Additional compensation for Diane de Saint Victor includes CHF 4,900 for annual train transportation in lieu of receiving a company car.

(5)

Peter Leupp received a cash payment of CHF 73,000 to cover expenses incurred as a result of his relocation to Switzerland, which are included in additional compensation above.

(6)

Tom Sjökvist received CHF 95,760 cash compensation for foregone pension benefits as a result of him continuing to work for the Company after the age of 60, included in additional compensation above.

(7)

Veli-Matti Reinikkala received 50 percent of his base salary in USD and 50 percent in EUR at a fixed exchange rate. The USD expense related to the salary was converted into Swiss francs using a rate of 1.062 per U.S. dollar. For the period January to June 2008 the employer's pension contributions and social security payments for Veli-Matti Reinikkala were paid in EUR and converted in the table above into Swiss francs at a rate of 1.607 per EUR. Since July 2008 such payments have been paid in USD and converted into Swiss francs at a rate of 1.062. His additional compensation includes a cash reimbursement of CHF 71,026 for taxes incurred on benefits and CHF 6,903 for financial counseling. His employer's pension contributions include a one-time pension contribution of CHF 216,837 related to pension obligations for 2006 and 2007.

(8)

In February 2008, Fred Kindle left the Company. He received payment of salary, bonus and other benefits for the period up to February 28, 2009 (including pension contributions and the payout of unused vacation days) amounting to a total CHF 8,660,961. This amount included a final payment of CHF 1,483,022.

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(9)

Ravi Uppal left the Company on October 31, 2008. He received payment of salary, bonus and other benefits for the period up to August 31, 2009, totaling CHF 4,264,595. His base salary includes an amount of CHF 608,333 covering his notice period up to August 31, 2009. His bonus includes CHF 329,490 for the year 2007 and CHF 987,630 for the period January 1, 2008 until August 31, 2009. His additional compensation includes a one-time payment of CHF 1,169,000 in settlement of all contractual obligations of the Company.

        Share-based compensation granted to members of the Group Executive Committee during 2008 is summarized in the table below. The vesting dates of the respective awards are listed in the footnotes to the table.

Group Executive Committee share-based compensation

Name	Number of conditionally granted shares under the performance component of the 2008 launch of LTIP(1)		Number of conditionally granted shares under the co-investment component of the 2008 launch of LTIP(1)		Total fair value LTIP 2008(2)		Number of shares granted in respect of sign-on bonus(3)		Fair value of shares in respect of sign-on bonus(2)		Number of shares granted in respect of special bonus(4)		Fair value of shares in respect of special bonus(2)		Total fair value of share-based awards granted in 2008
			CHF		CHF						CHF		CHF		CHF
Joe Hogan		145,039		26,923		4,704,880		379,364		10,379,399		—		—		15,084,279
Michel Demaré		71,880		10,490		2,703,383		—		—		44,643		1,259,825		3,963,209
Gary Steel		29,390		8,634		1,247,948		—		—		29,570		834,465		2,082,413
Ulrich Spiesshofer		27,863		8,309		1,187,165		—		—		28,034		791,119		1,978,285
Diane de Saint Victor		27,863		8,178		1,182,866		—		—		28,034		791,119		1,973,985
Bernhard Jucker		35,115		9,739		1,472,108		—		—		35,331		997,041		2,469,149
Peter Leupp		29,390		8,597		1,246,733		—		—		29,570		834,465		2,081,199
Tom Sjökvist		29,390		8,842		1,254,774		—		—		29,570		651,427		1,906,201
Veli-Matti Reinikkala		23,902		6,866		1,009,806		—		—		26,792		756,070		1,765,876
Anders Jonsson		23,665		6,214		980,629		—		—		23,810		671,918		1,652,547
Total current executive committee members		443,497		102,792		16,990,292		379,364		10,379,399		275,354		7,587,452		34,957,143
Fred Kindle(5)		—		—		—		—		—		—		—		—
Ravi Uppal(6)		27,863		6,800		1,137,640		—		—		28,304		798,739		1,936,379
Total former executive committee members		27,863		6,800		1,137,640		0		0		28,304		798,739		1,936,379
Total		471,360		109,592		18,127,932		379,364		10,379,399		303,658		8,386,190		36,893,522

(1)

Vesting date March 15, 2011.

(2)

Fair value represents market value of the shares as per grant date of the respective award.

(3)

189,682 shares vest on each of September 1, 2011 and September 1, 2013.

(4)

Vesting date March 1, 2010, except for Tom Sjökvist for whom 14,785 shares vest on each of March 1, 2009 and March 1, 2010.

(5)

Fred Kindle left the Company in February 2008 and therefore was not granted any awards. Upon leaving the Company he received 547,309 ABB shares, which had been granted on previous launches.

(6)

Ravi Uppal left the Company on October 31, 2008. He received a pro rata allocation of 3,306 shares related to the co-investment component of LTIP 2008 and 21,026 shares related to the special bonus share grant 2008.

        In addition to the above awards, all members of the Group Executive Committee (as well as the spouse of one of the members who is an employee in one of the Company's subsidiaries) participated in the fifth launch of ESAP, which allows them to save over a 12-month period and, in November 2009,

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use their savings to acquire up to a maximum number of 650 or 700 shares (depending on the savings currency) at an exercise price of CHF 15.30 or USD 12.98 (depending on the savings currency).

Additional Fees and Remuneration

        Other than as disclosed herein, in 2008 ABB did not pay any additional fees or remuneration to the members of the Board or the Group Executive Committee for services rendered to ABB. Also, in 2008, ABB did not pay any additional fees or remuneration, other than on market terms, to persons closely linked to a member of the Board or the Group Executive Committee for services rendered to ABB. "Persons closely linked" is understood to mean: (1) an individual's spouse, (2) an individual's children below the age of 18, (3) any persons living in the same household as an individual for at least 12 months, (4) any legal entities that are under the control of an individual or any of the person's mentioned under (1) to (3) above, and (5) any legal or natural person acting as an individual's fiduciary or the fiduciary of any of the persons mentioned under (1) to (4) above.

Loans and Guarantees Granted to Members of the Board or Group Executive Committee

        In 2008, ABB did not grant any loans or guarantees to its Board members or members of the Group Executive Committee or to persons closely linked to any of those members.

Severance provisions

        Employment contracts for Group Executive Committee members contain notice periods of 12 months or less, during which they are entitled to running salaries and bonuses. In addition, if the Company terminates the employment of a member of the Group Executive Committee and that member does not find alternative employment within their notice period that pays at least 70 percent of such member's annual compensation, then the Company will continue to pay compensation to that member for up to 12 additional months.

Compensation to Former Members of the Board and the Group Executive Committee

        In 2008, except as disclosed above, ABB did not make any payments to a former member of the Board or the Group Executive Committee in connection with such member's role, or departure from the role, as a member of the Board or the Group Executive Committee.

Employee Participation Programs

Incentive Plans Linked to ABB Shares

        In order to align its employees' interests with the business goals and financial results of the Company, ABB operates a number of incentive plans, linked to ABB's shares, which are summarized below (for additional information on each incentive plan, please refer to "Note 18 Share-based payment arrangements" to ABB's Consolidated Financial Statements contained elsewhere in this report).

ESAP

        The Employee Share Acquisition Plan (ESAP) is an employee stock-option plan with a savings feature. Employees save over a 12-month period, by way of monthly salary deductions. The maximum monthly savings amount is the lower of 10 percent of gross monthly salary or the local currency equivalent of CHF 750. At the end of the savings period, employees choose whether to exercise their stock options to buy ABB shares (ADS in the case of employees in the U.S.) at the exercise price set at the grant date, or have their savings returned with interest. The savings are accumulated in a bank account held by a third-party trustee on behalf of the participants and earn interest.

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        The maximum number of shares that each employee can purchase has been determined based on the exercise price and the aggregate savings for the 12-month period, increased by 10 percent to allow for currency fluctuations. If, at the exercise date, the balance of savings plus interest exceeds the maximum amount of cash the employee must pay to fully exercise their stock options, the excess funds will be returned to the employee. If the balance of savings and interest is insufficient to permit the employee to fully exercise their stock options, the employee has the choice, but not the obligation, to make an additional payment so that they may fully exercise their stock options.

        If an employee ceases to be employed by ABB, the accumulated savings as of the date of cessation of employment will be returned to the employee and the employee's right to exercise their stock options will be forfeited. Employees can withdraw from the ESAP at any time during the savings period and will be entitled to a refund of their accumulated savings.

        The exercise price per share and ADS of CHF 15.30 and USD 12.98, respectively, for the 2008 grant, were determined using the closing price of the ABB share on the SIX Swiss Exchange (SWX Europe) and ADS on the New York Stock Exchange on the grant date.

MIP

        Under the MIP, ABB offers physically-settled warrants, cash-settled warrant appreciation rights (WARs) and, as of the May 2007 launch, options, to key employees for no consideration.

        The warrants and options granted under the MIP allow participants to purchase shares of ABB at predetermined prices. Participants may sell the warrants and options rather than exercise the right to purchase shares. Equivalent warrants are listed by a third-party bank on the SIX Swiss Exchange, which facilitates pricing and transferability of warrants granted under the MIP. The options entitle the holder to request that a third-party bank purchase such options at the market price of equivalent listed warrants related to that MIP launch. If the participant elects to sell the warrants or options, the instruments will then be held by a third party and, consequently, ABB's obligation to deliver shares will be to this third party. Each WAR gives the participant the right to receive, in cash, the market price of the equivalent listed warrant on the date of exercise of the WAR. The WARs are non transferable.

        Participants may exercise or sell warrants and options and exercise WARs after the vesting period, which is three years from the date of grant. Vesting restrictions can be waived in certain circumstances, such as death or disability. All warrants, options and WARs expire six years from the date of grant.

        The details of the various unexpired grants as at December 31, 2008, are as follows:

Grant	Warrant/Option exercise price in CHF		Subscription ratio
December 2003		7.00		5:1
December 2004		7.50		5:1
February 2006		15.30		5:1
May 2007		26.00		5:1
May 2008		36.40		5:1

LTIP

        ABB has an LTIP for members of its Group Executive Committee and certain other executives (each an eligible participant). The LTIP involves annual conditional grants of ABB's stock and contains a co-investment component.

        Under the share-price performance component, the value of the number of shares conditionally granted equals a certain percentage of the eligible participant's base salary at the date of grant. For

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members of the Group Executive Committee, these percentages for the 2008 grant were 100 percent for all members except Joe Hogan and Michel Demaré for whom the percentages were 200 percent and 150 percent, respectively. The number of shares granted usually is adjusted downward for individuals who become eligible participants after the initial grant date. The actual number of shares that each eligible participant will receive free of charge at a future date is dependent on (1) the performance of ABB shares during a defined period (evaluation period) compared to those of a selected peer group of publicly listed multinational companies and (2) the term of service of the respective eligible participants in that capacity during the evaluation period. The actual number of shares received after the evaluation period cannot exceed 100 percent of the conditional grant.

        The performance of ABB compared to its peers over the evaluation period will be measured as the sum, in percentage terms, of the average percentage price development of the ABB share price over the evaluation period and an average annual dividend yield percentage (ABB's performance).

        In order for shares to vest, ABB's performance over the evaluation period must be positive and equal to or better than half of the defined peers. The actual number of shares to be delivered by ABB will be dependent on ABB's ranking in comparison with the defined peers. The full amount of the conditional grant will vest if ABB's performance is better than three-quarters of the defined peers.

        Under the co-investment component of the LTIP, each eligible participant is invited to deposit a number of ABB shares, up to an individually defined maximum number of shares. If at the end of the evaluation period the individual remains an eligible participant and the owner of such shares, then ABB will deliver free-of-charge to the eligible participant a matching number of shares.

        The details of the various unexpired launches as at December 31, 2008, are as follows:

Launch year	Evaluation period	Reference price (in CHF)
2006	March 15, 2006, to March 15, 2009		15.48
2007	March 15, 2007, to March 15, 2010		21.08
2008	March 15, 2008, to March 15, 2011		26.20

        The exact number of shares to be received for the 2006, the 2007 and the 2008 launches will be known only in March 2009, 2010 and 2011, respectively.

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ABB Shareholdings of members of the Board and the Group Executive Committee

Board ownership of ABB Shares and Options

        The table below shows the number of ABB shares held by each Board member:

Board shareholdings

	Total number of shares held at December 31, 2008(1)		Total number of shares held at December 31, 2007(1)
Hubertus von Grünberg		30,037		6,779
Roger Agnelli		138,964		134,482
Louis R. Hughes		64,233		59,751
Hans Ulrich Märki		330,454		304,051
Michel de Rosen		96,148		90,115
Michael Treschow		75,521		71,007
Bernd W. Voss		143,838		137,807
Jacob Wallenberg(2)		153,174		146,724
Total		1,032,369		950,716

(1)

Includes as of December 31, 2008 and 2007, respectively, a total of 879,559 and 814,657 shares paid as compensation to Board members in current and prior years and currently blocked in accordance with the terms of the Board compensation.



(2)

Share amounts provided in this table do not include the shares beneficially owned by Investor AB, of which Mr. Wallenberg is chairman.

        As of December 31, 2008, and December 31, 2007, no member of the Board and no person closely linked to a member of the Board held any shares of ABB or options in ABB shares other than those listed above.

Group Executive Committee ownership of ABB Shares and Options

        As of December 31, 2008, the members of the Group Executive Committee held the following numbers of shares (or ADSs representing such shares), the conditional rights to receive ABB shares

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under the LTIP, warrants or options (either vested or unvested as indicated) under the MIP and unvested shares in respect of bonus and/or pension arrangements:

Group Executive Committee shareholdings, warrant holdings and option holdings

			Unvested at December 31, 2008
					Number of matching shares deliverable under the 2006 co-investment portion of LTIP (vesting 2009)				Number of matching shares deliverable under the 2007 co-investment portion of LTIP (vesting 2010)				Number of matching shares deliverable under the 2008 co-investment portion of LTIP (vesting 2011)
			Number of conditionally granted shares under the 2006 launch of the LTIP (vesting 2009)				Number of conditionally granted shares under the 2007 launch of the LTIP (vesting 2010)				Number of conditionally granted shares under the 2008 launch of the LTIP (vesting 2011)
																									Number of shares granted in respect of sign-on bonus(3) (Vesting 2011 and 2013)
															Number of warrants held under the MIP(2)						Shares in respect of special bonus 2008 (vesting 2010)
	Total number of shares held(1)																						Shares in lieu of pension arrangements
Name															2006 Grant (vesting 2009)		2007 Grant (vesting 2010)		2008 Grant (vesting 2011)
Joe Hogan		26,923		—		—		—		—		145,039		26,923		—		—		—		—		—		379,364
Michel Demaré(4)		224,304		51,680		15,014		41,746		11,843		71,880		10,490		—		—		—		44,643		80,840		—
Gary Steel		97,974		46,512		13,416		35,105		10,243		29,390		8,634		—		—		—		29,570		55,703		—
Ulrich Spiesshofer		83,285		41,990		13,372		32,733		9,650		27,863		8,309		—		—		—		28,034		—		—
Diane de Saint Victor		82,850		33,287		8,239		33,207		8,219		27,863		8,178		—		—		—		28,034		—		—
Bernhard Jucker		31,375		48,450		8,595		39,374		11,295		35,115		9,739		—		—		—		35,331		—		—
Peter Leupp		40,488		33,287		8,239		33,207		8,219		29,390		8,597		—		—		—		29,570		—		—
Tom Sjökvist(5)		40,011		45,220		12,451		34,156		10,789		29,390		8,842		—		—		—		29,570		—		—
Veli-Matti Reinikkala		38,738		43,001		5,680		33,022		9,414		23,902		6,866		—		—		—		26,792		—		—
Anders Jonsson(6)		73,505		33,592		3,603		26,092		5,007		23,665		6,214		100,000		96,300		138,000		23,810		—		—
Total		739,453		377,019		88,609		308,642		84,679		443,497		102,792		100,000		96,300		138,000		275,354		136,543		379,364

(1)

Includes shares deposited as match for the co-investment portion of the LTIP. These shares may be sold/transferred but then the corresponding number co-investment shares would be forfeited.

(2)

Warrants/options may be sold or exercised/converted into shares at the ratio of 5 warrants/options for 1 share.

(3)

189,682 shares vest in each of 2011 and 2013.

(4)

Total number of shares held includes 4,500 shares held jointly with spouse.

(5)

Total number of shares held includes 7,560 shares held by spouse or child. 14,785 shares in respect of bonus 2008 vest in each of 2009 and 2010.

(6)

Total number of shares held includes 55,529 shares held by or jointly with spouse. The warrants vesting in 2009, 2010 and 2011 were received by Anders Jonsson's spouse in connection with her role as an ABB employee.

        Furthermore, as of December 31, 2008, the following members of the Group Executive Committee held WARs that, when exercised, entitle the holder to receive in cash the market value of the equivalent listed warrant at the time of exercise.

Group Executive Committee Warrant Appreciation Rights holdings

			Number of unvested WARs held under the MIP
	Number of fully vested WARs held under the MIP
			2006 Grant (vesting 2009)
	2004 Grant
Bernhard Jucker		—		375,000
Peter Leupp		—		375,000
Tom Sjökvist		—		375,000
Veli-Matti Reinikkala		200,000		375,000
Anders Jonsson		—		375,000
Total		200,000		1,875,000

        As of December 31, 2008, no member of the Group Executive Committee and no person closely linked to a member of the Group Executive Committee held any shares of ABB or options in ABB shares other than those listed above.

Total Shareholdings of ABB Shares and Options

        As of December 31, 2008, the members of our Board and Group Executive Committee owned less than 1 percent of the Company's total shares outstanding.

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Change of Control Provisions

        None of ABB's Board members, Group Executive Committee members or members of senior management receive "golden parachutes" or other special benefits in the event of a change of control.

EMPLOYEES

        A breakdown of our employees by geographic region for the years ended December 31, 2008, 2007 and 2006, is as follows:

	At December 31,
Region	2008		2007		2006
Europe		64,900		61,600		60,700
The Americas		20,100		18,800		18,700
Asia		28,900		25,200		22,300
Middle East and Africa		5,700		6,300		6,500
Total		119,600		111,900		108,200

        The proportion of our employees that are represented by labor unions or are the subject of collective bargaining agreements varies based on the labor practices of each country in which we operate.

Item 7.    Major Shareholders and Related Party Transactions

MAJOR SHAREHOLDERS

        Investor AB, Sweden, held 166,330,142 ABB shares as of December 31, 2008, representing approximately 7.2 percent of ABB's total share capital and voting rights as registered in the Commercial Register on that date. The number of shares held by Investor AB does not include shares held by Mr. Jacob Wallenberg, the chairman of Investor AB, in his individual capacity.

        To the best of ABB's knowledge, no other shareholder held 3 percent or more of ABB's total share capital and voting rights as registered in the Commercial Register on December 31, 2008.

        Under ABB's Articles of Incorporation, each registered share represents one vote. Major shareholders do not have different voting rights.

        To our knowledge, we are not directly or indirectly owned or controlled by any government or by any other corporation or person.

        At December 31, 2008, we had approximately 480,000 shareholders. Approximately 216,000 were U.S. holders, of which approximately 760 were record holders. Based on the share register, U.S. holders (including holders of ADSs) held approximately 14 percent of the total number of shares issued, including treasury shares, at that date.

RELATED PARTY TRANSACTIONS

Affiliates and associates

        In the normal course of our business, we purchase products from, sell products to and engage in other transactions with entities in which we hold an equity interest. The amounts involved in these transactions are not material to ABB Ltd. Also, in the normal course of our business, we engage in transactions with businesses that we have divested. We believe that the terms of the transactions we conduct with these companies are negotiated on an arm's length basis.

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Key management personnel

        The section describes important business relationships between ABB and its Board members, or companies and organizations represented by them.

        Companhia Vale do Rio Doce and its subsidiaries (Vale) and ABB have entered into a framework agreement to establish general terms and conditions for the supply of products, systems and services among their respective group subsidiaries. ABB supplies Vale primarily with process automation products for mineral systems. The total revenues recorded by ABB in 2008 relating to its contracts with Vale were approximately $110 million. Roger Agnelli is president and CEO of Vale.

        In 2008, ABB recorded revenues of approximately $50 million from Atlas Copco AB and its subsidiaries (Atlas Copco), primarily for automation products such as motors and drives. Jacob Wallenberg is the vice chairman of Atlas Copco.

        During 2008, ABB recorded approximately $125 million of revenues from Sulzer AG (Sulzer), primarily for various automation products. Louis R. Hughes is a member of Sulzer's board of directors.

        On July 4, 2005, ABB entered into an unsecured syndicated $2-billion, five-year revolving credit facility, which became available in July 2005 and which was amended and restated on June 27, 2007. As of December 31, 2008, SEB Skandinaviska Enskilda Banken AB (publ) (SEB) has committed to $120 million out of the $2 billion total and Dresdner Bank AG has committed to $105 million out of the $2 billion total. Jacob Wallenberg is the vice chairman of SEB and Bernd W. Voss is a member of Dresdner's supervisory board.

        In 2003, ABB entered into a 10-year agreement with IBM pursuant to which IBM took over the operation and support of ABB's information systems infrastructure. The total value of the infrastructure and related operational services to be provided under this agreement is expected to approach $1.7 billion. Hans Ulrich Märki is the retired chairman of IBM Europe, Middle East and Africa.

        After comparing the revenues generated from ABB's business with Vale, Atlas Copco, Sulzer, SEB, and Dresdner to the total annual revenues of ABB and of those companies, and after reviewing the infrastructure and operational services arrangement with IBM and the banking commitments of SEB and Dresdner, the Board has determined that ABB's business relationships with those companies do not constitute material business relationships and that all members of the Board are considered to be independent directors. This determination was made in accordance with ABB Ltd's Related Party Transaction Policy which was prepared based on the Swiss Code of Best Practice of Corporate Governance and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange.

Item 8.    Financial Information

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

        See "Item 18. Financial Statements" for a list of financial statements contained in this report.

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LEGAL PROCEEDINGS

Antitrust

        In May 2004, we announced that we had undertaken an internal investigation which uncovered that certain of our employees—together with employees of other companies active in the Gas Insulated Switchgear business—were involved in anti-competitive practices. We reported promptly such practices to the appropriate authorities including the European Commission. The European Commission announced its decision on January 24, 2007 and granted ABB full immunity from fines under the European Commission's leniency program.

        The Company continues to cooperate with other antitrust authorities in several locations globally, including Brazil, which are investigating anti-competitive practices related to gas insulated switchgear. At this stage of the proceedings, no reliable estimate of the amount of potential fines, if any, can be made.

        In addition, ABB may face private claims by customers and other third parties alleging harm with regard to the Gas Insulated Switchgear cartel cases. One such claim has been made by National Grid Electricity Transmission plc in the United Kingdom. An informed judgment about the merits of these claims or the amount of potential loss for the Company, if any, that may result from any such claims or proceedings, cannot be made at this stage.

        In February 2007, the European Commission conducted dawn raids at the premises of an ABB unit in Bad Honnef, Germany, as part of its investigation into alleged anti-competitive practices of certain manufacturers of power transformers. The German Antitrust Authority (Bundeskartellamt) and other antitrust authorities are also reviewing those alleged practices which relate to the German market and other markets. Management is cooperating fully with the authorities in their investigations. We anticipate an unfavorable outcome with respect to these alleged anti-competitive practices and expect that fines will be imposed.

        In February 2009, ABB confirmed that its cables business is under investigation for alleged anti-competitive practices. Management is cooperating fully with the antitrust authorities in their investigations. An informed judgment about the outcome of these investigations or the amount of potential loss for the Company, if any, relating to these investigations cannot be made at this stage.

Suspect Payments

        In June 2004, we disclosed to the SEC and the Italian authorities the preliminary results of our inquiry conducted with the assistance of outside counsel and forensic accountants. Those results showed that from the first quarter of 1998 through the first quarter of 2004, the medium voltage business of our Power Products division overstated its earnings before interest and taxes (operating income) and net income through the early recognition of certain revenue from incomplete projects, improper capitalization of costs on certain projects, unrecorded liabilities and borrowings, and other improper journal entries. As a result, the financial statements and certain financial data were restated in September 2004. The inquiry also uncovered improper payments to an employee of an Italian power generation company. The Company has reported this matter to the Italian authorities, who have initiated formal criminal proceedings, as well as to the SEC and the U.S. Department of Justice (the DoJ). The Company cannot reasonably predict the outcome of the criminal proceedings or what action, if any, the SEC or the DoJ may take.

        In April 2005, we made the first of a series of voluntary disclosures to the DoJ and the SEC of certain suspect payments made by employees of ABB. The first disclosure concerned our U.S.-based network management business unit. Subsequently, we made additional voluntary disclosures regarding suspect payments by employees in several countries, including countries in the Middle East, Asia, South America, and Europe. These suspect payments were discovered as a result of our internal audit and

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compliance program. These payments may be in violation of the FCPA or other applicable laws. If we are found to have violated any of these laws, we could be liable for penalties and other costs and the violations could otherwise negatively impact our business. We are cooperating on these issues with the relevant authorities and are continuing our internal investigations and compliance reviews.

        On October 27, 2005, the United Nations Independent Inquiry Committee issued its final report on the United Nations Oil-for-Food Program. This report alleges that certain ABB subsidiaries made illicit payments to the Iraqi government under contracts for humanitarian goods. We are cooperating on a voluntary basis with the SEC in its ongoing investigation of the matters raised in the report.

        In August 2007, we made a voluntary disclosure to the SEC and the DoJ about suspect payments made by employees of ABB's recently divested Lummus Global business. These suspect payments were discovered as a result of our internal audit and compliance program. These payments may be in violation of the FCPA or other applicable laws. In connection with ABB's sale of the Lummus Global business, ABB retained certain liabilities, including for potential fines and penalties relating to these suspect payments. We are cooperating on these issues with the relevant authorities.

        In connection with these suspect payment matters we anticipate an unfavorable outcome and expect that fines will be imposed.

General

        In addition, the Company is subject to other various legal proceedings, investigations, and claims that have not yet been resolved. With respect to the above-referenced legal proceedings ABB will bear the costs of the continuing investigations and any related legal proceedings.

        As of December 31, 2008, ABB had accrued aggregate liabilities of approximately $795 million for all of such contingencies. As it is not possible to make an informed judgment on the outcome of certain matters and as it is not possible based on information currently available to management to estimate the maximum potential liability, there could be material adverse outcomes beyond such accrued liabilities.

DIVIDENDS AND DIVIDEND POLICY

        See "Item 3. Key Information—Dividends and Dividend Policy."

SIGNIFICANT CHANGES

        Except as otherwise described in this report, there has been no significant change in our financial position since December 31, 2008.

        In February 2009, the Board of Directors announced that a proposal will be put to the Annual General Meeting in May 2009 to reduce the nominal value of the shares from CHF 2.02 to CHF 1.54 and distribute CHF 0.48 per share.

Item 9.    The Offer and Listing

MARKETS

        The shares of ABB Ltd are principally traded on the SIX Swiss Exchange (SWX Europe) (under the symbol "ABBN") and on the NASDAQ OMX Stockholm Exchange (under the symbol "ABB"). ADSs of ABB Ltd have been traded on the New York Stock Exchange under the symbol "ABB" since April 6, 2001. ABB Ltd's ADSs are issued under the Amended and Restated Deposit Agreement, dated May 7, 2001, with Citibank, N.A. as depositary. Each ADS represents one share.

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TRADING HISTORY

        No suspension in the trading of our shares occurred in the years ended December 31, 2008, 2007 and 2006.

        The table below sets forth, for the periods indicated, the reported high and low closing sale prices for the shares on SWX Europe (formerly virt-x) and the NASDAQ OMX Stockholm Exchange and for the ADSs on the New York Stock Exchange.

	SWX Europe				NASDAQ OMX Stockholm Exchange				New York Stock Exchange
	High		Low		High		Low		High		Low
	(CHF)				(SEK)				($)
Annual highs and lows
2004		8.18		6.20		48.00		36.10		6.70		4.93
2005		12.95		6.35		77.75		37.30		9.79		5.42
2006		21.85		12.75		122.75		77.00		17.98		9.72
2007		36.52		19.65		202.00		113.75		31.81		15.96
2008		35.04		11.92		198.50		80.75		32.95		9.12
Quarterly highs and lows
2007
First Quarter		23.45		19.65		131.75		113.75		19.13		15.96
Second Quarter		27.85		20.80		157.50		121.50		22.60		17.28
Third Quarter		30.66		25.75		170.00		148.00		26.23		21.28
Fourth Quarter		36.52		29.00		202.00		164.00		31.81		26.06
2008
First Quarter		31.14		23.74		182.50		142.00		28.64		22.93
Second Quarter		35.04		26.36		198.50		157.50		32.95		26.38
Third Quarter		30.22		20.42		175.50		125.75		28.69		17.97
Fourth Quarter		21.02		11.92		129.50		80.75		19.00		9.12
Monthly highs and lows
2008
September		27.76		20.42		163.00		125.75		24.70		17.97
October		21.02		11.95		129.50		83.50		19.00		10.00
November		16.20		11.92		107.00		80.75		13.96		9.12
December		16.42		13.83		116.00		95.25		15.21		11.53
2009
January		16.95		13.53		118.50		98.50		15.25		11.69
February		16.85		13.30		116.75		100.00		14.43		10.99

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Item 10.    Additional Information

DESCRIPTION OF SHARE CAPITAL AND ARTICLES OF INCORPORATION

        This section summarizes the material provisions of ABB Ltd's Articles of Incorporation and the Swiss Code of Obligations relating to the shares of ABB Ltd. The description is only a summary and is qualified in its entirety by ABB Ltd's Articles of Incorporation, a copy of which has been filed as Exhibit 1.1 to this report, the commercial registry of the Canton of Zurich (Switzerland) and Swiss statutory law.

Registration and Business Purpose

        ABB Ltd was registered as a corporation (Aktiengesellschaft) in the commercial register of the Canton of Zurich (Switzerland) on March 5, 1999, under the name of "New ABB Ltd" and its name was subsequently changed to "ABB Ltd." Its commercial registry number is CH-020.3.021.615-2.

        ABB Ltd's purpose, as set forth in Article 2 of its Articles of Incorporation, is to hold interests in business enterprises, particularly in enterprises active in the areas of industry, trade and services. It may acquire, encumber, exploit or sell real estate and intellectual property rights in Switzerland and abroad and may also finance other companies. It may engage in all types of transactions and may take all measures that appear appropriate to promote, or that are related to, its purpose.

Our Shares

        ABB Ltd's shares are registered shares (Namenaktien) with a par value of CHF 2.02 each following the dividend distribution in 2008 of CHF 0.48 per share by way of a reduction in the par value of the shares, which originally was CHF 2.50 per share. The shares are fully paid and non-assessable. The shares rank pari passu in all respects with each other, including in respect of entitlements to dividends, to a share of the liquidation proceeds in the case of a liquidation of ABB Ltd, to advance subscription rights and to pre-emptive rights.

        Each share carries one vote in ABB Ltd's general shareholders' meeting. Voting rights may be exercised only after a shareholder has been recorded in ABB Ltd's share register (Aktienbuch) as a shareholder with voting rights, or with VPC in Sweden, which maintains a subregister of ABB Ltd's share register. VPC is an authorized central securities depository under the Swedish Act on Registration of Financial Instruments and carries out, among other things, the duties of registrar for Swedish companies listed on the NASDAQ OMX Stockholm Exchange. Registration with voting rights is subject to the restrictions described in "Transfer of Shares."

        The shares are not issued in certificated form and are held in collective custody at SIS SegaInterSettle AG. Shareholders do not have the right to request printing and delivery of share certificates (aufgehobener Titeldruck), but may at any time request ABB Ltd to issue a confirmation of the number of registered shares held.

Capital Structure

Issued Shares:

        On December 31, 2008, and February 28, 2009, ABB's ordinary share capital (including treasury shares) amounted to CHF 4,692,041,526.40 divided into 2,322,792,835 fully paid registered shares with a par value of CHF 2.02 per share.

        In February 2009, the Board of Directors announced that a proposal will be put to the Annual General Meeting to reduce the nominal value of the shares from CHF 2.02 to CHF 1.54 and distribute CHF 0.48 per share.

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Contingent Share Capital

        As at December 31, 2008, ABB's share capital may be increased by an amount not to exceed CHF 404,000,000 through the issuance of up to 200,000,000 fully paid registered shares with a par value of CHF 2.02 per share through the exercise of conversion rights and/or warrants granted in connection with the issuance on national or international capital markets of newly or already issued bonds or other financial market instruments.

        As at December 31, 2008, ABB's share capital may be increased by an amount not to exceed CHF 20,200,000 through the issuance of up to 10,000,000 fully paid registered shares with a par value of CHF 2.02 per share through the exercise of warrant rights granted to its shareholders. The Board may grant warrant rights not taken up by shareholders for other purposes in the interest of ABB.

        The pre-emptive rights of the shareholders are excluded in connection with the issuance of convertible or warrant bearing bonds or other financial market instruments or the grant of warrant rights. The then-current owners of conversion rights and/or warrants will be entitled to subscribe for new shares. The conditions of the warrants will be determined by the Board.

        The acquisition of shares through the exercise of warrants and each subsequent transfer of the shares will be subject to the restrictions of ABB's Articles of Incorporation.

        In connection with the issuance of convertible or warrant-bearing bonds or other financial market instruments, the Board is authorized to restrict or deny the advance subscription rights of shareholders if such bonds or other financial market instruments are for the purpose of financing or refinancing the acquisition of an enterprise, parts of an enterprise, participations or new investments or an issuance on national or international capital markets. If the Board denies advance subscription rights, the convertible or warrant-bearing bonds or other financial market instruments will be issued at the relevant market conditions and the new shares will be issued pursuant to the relevant market conditions taking into account the share price and/or other comparable instruments having a market price. Conversion rights may be exercised during a maximum ten year period, and warrants may be exercised during a maximum seven-year period, in each case from the date of the respective issuance. The advance subscription rights of the shareholders may be granted indirectly.

        In addition as at December 31, 2008, ABB's share capital may be increased by an amount not to exceed CHF 75,794,278.40 through the issuance of up to 37,521,920 fully paid shares with a par value of CHF 2.02 per share to employees. The pre-emptive and advance subscription rights of ABB's shareholders are excluded. The shares or rights to subscribe for shares will be issued to employees pursuant to one or more regulations to be issued by the Board, taking into account performance, functions, level of responsibility and profitability criteria. ABB may issue shares or subscription rights to employees at a price lower than that quoted on the stock exchange. The acquisition of shares within the context of employee share ownership and each subsequent transfer of the shares will be subject to the restrictions of ABB's Articles of Incorporation.

Authorized Share Capital

        As at February 28, 2009, ABB's share capital may be increased by an amount not to exceed CHF 404,000,000 through the issuance of up to 200,000,000 fully paid shares with a par value of CHF 2.02 per share out of authorized share capital. The authorized shares are valid until May 3, 2009. The Board is authorized to determine the date of issue of new shares, the issue price, the type of payment, the condition for the exercise of the pre-emption rights, and the beginning date for dividend entitlement. This represented the total authorized share capital available to ABB on December 31, 2008. The Board may permit pre-emptive rights that have not been exercised by shareholders to expire or it may place these rights and/or shares as to which pre-emptive rights have been granted but not exercised at market conditions or use them for other purposes in the interest of the Company.

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Furthermore, the Board is authorized to restrict or deny the pre-emptive rights of shareholders and allocate such rights to third parties if the shares are used (i) for the acquisition of an enterprise, parts of an enterprise, or participations, or for new investments, or in case of a share placement, for the financing or refinancing of such transactions; or (ii) for the purpose of broadening the shareholder constituency in connection with a listing of shares on domestic or foreign stock exchanges.

        In February 2009, ABB's board of directors decided to recommend that shareholders approve new authorized share capital in the amount of 200 million shares at ABB's annual general meeting in May 2009 to replace the authorized share capital expiring on May 3, 2009.

        The subscription and the acquisition of the new shares, as well as each subsequent transfer of the shares, will be subject to the restrictions of ABB's Articles of Incorporation.

Transfer of Shares

        The transfer of shares is effected by corresponding entry in the books of a bank or depository institution following an assignment in writing by the selling shareholder and notification of such assignment to ABB Ltd by the bank or depository institution. The transfer of shares also requires that the purchaser file a share registration form in order to be registered in ABB Ltd's share register (Aktienbuch) as a shareholder with voting rights. Failing such registration, the purchaser will not be able to participate in or vote at shareholders' meetings, but will be entitled to dividends, pre-emptive and advanced subscription rights, and liquidation proceeds. Shares and associated pecuniary rights may only be pledged to the depository institution that administers the book entries of those shares for the account of the shareholder.

        A purchaser of shares will be recorded in ABB Ltd's share register with voting rights upon disclosure of its name and address. However, ABB Ltd may decline a registration with voting rights if the shareholder does not declare that it has acquired the shares in its own name and for its own account. If the shareholder refuses to make such declaration, it will be registered as a shareholder without voting rights. If persons fail to expressly declare in their registration application that they hold the shares for their own accounts (nominees), the board of directors may still enter such persons in the share register with the right to vote, provided that the nominee has entered into an agreement with the board of directors concerning his status, and further provided the nominee is subject to recognized bank or financial market supervision.

        After having given the registered shareholder or nominee the right to be heard, the board of directors may cancel registrations in the share register retroactive to the date of registration if such registrations were made on the basis of incorrect information. The relevant shareholder or nominee will be informed promptly as to the cancellation. The board of directors will oversee the details and issue the instructions necessary for compliance with the preceding regulations. In special cases, it may grant exemptions from the rule concerning nominees.

        Acquirors of registered shares who have chosen to have their shares registered in the share register with VPC do not have to present any written assignment from the selling shareholder nor may they be requested to file a share registration form or declare that they have acquired the shares in their own name and for their own account in order to be registered as a shareholder with voting rights. However, in order to be entitled to vote at a shareholders' meeting those acquirors need to be entered in the VPC share register in their own name no later than ten calendar days prior to the shareholders' meeting. Uncertificated shares registered with VPC may be pledged in accordance with Swedish law.

        Except as described in this subsection, neither the Swiss Code of Obligations nor our Articles of Incorporation limit any right to own our shares, or any rights of non-resident or foreign shareholders to exercise voting rights of our shares.

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Shareholders' Meetings

        Under Swiss law, the Annual General Meeting of shareholders must be held within six months after the end of ABB Ltd's fiscal year. Annual General Meetings of shareholders are convened by the board of directors, liquidators or representatives of bondholders or, if necessary, by the statutory auditors. The board of directors is further required to convene an extraordinary general meeting of shareholders if so resolved by the shareholders in a general meeting of shareholders or if so requested by one or more shareholders holding in aggregate at least 10 percent of ABB Ltd's share capital. A general meeting of shareholders is convened by publishing a notice in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt) at least 20 days prior to the meeting date. Holders of VPC-registered shares are able to attend shareholders' meetings in respect of such shares. Notices of shareholders' meetings are published in at least three national Swedish daily newspapers, as well as on ABB Ltd's Internet website. Such notices contain information as to procedures to be followed by shareholders in order to participate and exercise voting rights at the shareholders' meetings.

        One or more shareholders whose combined holdings represent an aggregate par value of at least CHF 808,000 may request in writing 40 calendar days prior to a general meeting of shareholders that specific items and proposals be included on the agenda and voted on at the next general meeting of shareholders.

        The following powers are vested exclusively in the general meeting of the shareholders:

•

Adoption and amendment of the articles of incorporation;

•

Election of members of the board of directors and the auditors;

•

Approval of the annual report and the Consolidated Financial Statements;

•

Approval of the annual financial statements and decision on the allocation of profits shown on the balance sheet, in particular with regard to dividends;

•

Granting discharge to the members of the board of directors and the persons entrusted with management; and

•

Passing resolutions as to all matters reserved to the authority of the shareholders' meeting by law or under the articles of incorporation or that are submitted to the shareholders' meeting by the board of directors to the extent permitted by law.

        There is no provision in ABB Ltd's Articles of Incorporation requiring a quorum for the holding of shareholders' meetings.

        Resolutions and elections usually require the approval of an "absolute majority" of the shares represented at a shareholders' meeting (i.e., a majority of the shares represented at the shareholders' meeting with abstentions having the effect of votes against the resolution). If the first ballot fails to result in an election and more than one candidate is standing for election, the presiding officer will order a second ballot in which a relative majority (i.e. a majority of the votes) shall be decisive.

        A resolution passed with a qualified majority (at least two-thirds) of the shares represented at a shareholders' meeting is required for:

•

A modification of the purpose of ABB Ltd;

•

The creation of shares with increased voting powers;

•

Restrictions on the transfer of registered shares and the removal of those restrictions;

•

Restrictions on the exercise of the right to vote and the removal of those restrictions;

•

An authorized or conditional increase in share capital;

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•

An increase in share capital through the conversion of capital surplus, through an in-kind contribution or in exchange for an acquisition of property, and the grant of special benefits;

•

The restriction or denial of pre-emptive rights;

•

A transfer of ABB Ltd's place of incorporation; and

•

ABB Ltd's dissolution.

        In addition, the introduction of any provision in the articles of incorporation providing for a qualified majority must be resolved in accordance with such qualified majority voting requirements.

        Pursuant to the Swiss Federal Merger Act, special quorum rules apply by law to a merger (Fusion) (including a possible squeeze-out merger), de-merger (Spaltung), or conversion (Umwandlung) of ABB Ltd.

        At shareholders' meetings, shareholders can be represented by proxy, but only by their legal representative, another shareholder with the right to vote, a proxy nominated by ABB Ltd (Organvertreter), an independent proxy designated by ABB Ltd (unabhängiger Stimmrechtsvertreter) or a depository institution (Depotvertreter). All shares held by one shareholder may be represented by only one representative. Votes are taken on a show of hands unless a secret ballot is required by the general meeting of shareholders or the presiding officer. The presiding officer may arrange for resolutions and elections to be carried out by electronic means. As a result, resolutions and elections carried out by electronic means will be deemed to have the same effect as secret ballots. The presiding officer may at any time order that a resolution or election decided by a show of hands be repeated through a secret ballot if, in his view, the results of the vote are in doubt. In this case, the preceding decision by a show of hands shall be deemed to have not occurred.

        Only shareholders registered in ABB Ltd's share register with the right to vote are entitled to participate at shareholders' meetings. See "—Transfer of Shares." For practical reasons, shareholders must be registered in the share register with the right to vote no later than ten calendar days prior to a shareholders' meeting in order to be entitled to participate and vote at such shareholders' meeting.

        Holders of VPC-registered shares are provided with financial and other information on ABB Ltd in the Swedish language in accordance with regulatory requirements and market practice. For shares that are registered in the VPC system in the name of a nominee, such information is to be provided by the nominee.

Net Profits and Dividends

        Swiss law requires that ABB Ltd retain at least 5 percent of its annual net profits as legal reserves for so long as these reserves amount to less than 20 percent of ABB Ltd's share capital. Any net profits remaining in excess of those reserves are at the disposal of the shareholders' meeting.

        Under Swiss law, ABB Ltd may pay dividends only if it has sufficient distributable profits from previous fiscal years, or if its reserves are sufficient to allow distribution of a dividend. In either event, dividends may be paid out only after approval at the shareholders' meeting. The board of directors may propose that a dividend be paid out, but cannot itself set the dividend. The auditors must confirm that the dividend proposal of the board of directors conforms with statutory law. In practice, the shareholders' meeting usually approves the dividend proposal of the board of directors.

        Dividends are usually due and payable after the shareholders' resolution relating to the allocation of profits has been passed by the shareholders' meeting. Under Swiss law, the statute of limitations to claim payment of an approved dividend is five years. Dividends not collected within five years after their due date accrue to ABB Ltd and will be allocated to ABB Ltd's other reserves.

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        Payment of dividends on VPC-registered shares is administered by VPC and paid out to the holder that is registered with VPC on the record date. Through the dividend access facility, shareholders with tax residence in Sweden will be entitled to receive, through the VPC system, a dividend in Swedish kronor equivalent to the dividend paid in Swiss francs without deduction of Swiss withholding tax. For further information, see "—Taxation."

Pre-emptive Rights

        Shareholders of a Swiss corporation have certain pre-emptive rights to subscribe for new shares issued in connection with capital increases in proportion to the nominal amount of their shares held. A resolution adopted at a shareholders' meeting with a supermajority of two-thirds of the shares represented may, however, repeal, limit or suspend (or authorize the board of directors to repeal, limit or suspend) pre-emptive rights for cause. Cause includes an acquisition of a business or a part thereof, an acquisition of a participation in a company or the grant of shares to employees. In addition, based on Article 4^bis para. 1 and para. 4 of the Articles of Incorporation of ABB Ltd, pre-emptive rights of the shareholders are excluded in connection with the issuance of convertible or warrant-bearing bonds or other financial market instruments, shares to employees of ABB issued out of ABB Ltd's contingent share capital or the grant of warrant rights to shareholders, or may be restricted or denied by the board of directors of ABB Ltd under certain circumstances as set forth in Article 4^ter of ABB Ltd's Articles of Incorporation. See "—Capital Structure."

Advance Subscription Rights

        Shareholders of a Swiss corporation may have an advance subscription right with respect to bonds and other instruments issued in connection with options or conversion rights for shares if such option or conversion rights are based on the corporation's conditional capital. However, the shareholders' meeting can, with a supermajority of two-thirds of the shares represented at the meeting, exclude or restrict (or authorize the board of directors to exclude or restrict) such advance subscription rights for cause. See "—Capital Structure—Contingent Share Capital."

Borrowing Power

        Neither Swiss law nor ABB Ltd's Articles of Incorporation restrict in any way ABB Ltd's power to borrow and raise funds. The decision to borrow funds is taken by or under the direction of the board of directors or the executive committee, and no shareholders' resolution is required. The Articles of Incorporation of ABB Ltd do not contain provisions concerning borrowing powers exercisable by its directors or how such borrowings could be varied.

Repurchase of Shares

        Swiss law limits a corporation's ability to repurchase or hold its own shares. ABB Ltd and its subsidiaries may only repurchase shares if ABB Ltd has sufficient freely distributable reserves to pay the purchase price, and the aggregate nominal value of such shares does not exceed 10 percent of ABB Ltd's total share capital. Furthermore, ABB Ltd must create a special reserve on its balance sheet in the amount of the purchase price of the acquired shares. Such shares held by ABB Ltd or its subsidiaries do not carry any rights to vote at shareholders' meetings, but are entitled to the economic benefits applicable to the shares generally and are considered to be "outstanding" under Swiss law.

Notices

        Written communication by ABB Ltd to its shareholders will be sent by ordinary mail to the last address of the shareholder or authorized recipient entered in the share register. To the extent that

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personal notification is not mandated by law, all communications to the shareholders are validly made by publication in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt).

        Notices required under the Listing Rules of the SIX Swiss Exchange will be published in two Swiss newspapers in German and French. ABB Ltd or the SIX Swiss Exchange may also disseminate the relevant information on the online exchange information systems. Notices required under the listing rules of the Stockholm Stock Exchange will be published in three national daily Swedish newspapers, as well as on ABB Ltd's website.

Duration, Liquidation and Merger

        The duration of ABB Ltd as a legal entity is unlimited. It may be dissolved at any time by a shareholders' resolution which must be approved by a supermajority of two-thirds of the shares represented at the general meeting of shareholders (this supermajority requirement applies in the event of a dissolution by way of liquidation or a merger where ABB Ltd is not the surviving entity). Dissolution by court order is possible if it becomes bankrupt or if holders of at least 10 percent of its share capital registered in the commercial register can establish cause for dissolution.

        Under Swiss law, any surplus arising out of a liquidation of a corporation (after the settlement of all claims of all creditors) is distributed to the shareholders in proportion to the paid-up par value of shares held, but this surplus is subject to Swiss withholding tax of 35 percent (see "—Taxation).

Disclosure of Major Shareholders

        Under the Swiss Stock Exchange Act, shareholders and groups of shareholders acting in concert who directly or indirectly acquire or sell shares of a listed Swiss corporation or rights based thereon and thereby reach, exceed or fall below the thresholds of 3 percent, 5 percent, 10 percent, 15 percent, 20 percent, 25 percent, 33¹/3 percent, 50 percent or 66²/3 percent of the voting rights of the corporation must notify the corporation and the exchange(s) in Switzerland on which such shares are listed of such holdings in writing within four trading days, whether or not the voting rights can be exercised. Following receipt of such a notification, the corporation must inform the public within two trading days.

        An additional disclosure requirement exists under the Swiss Code of Obligations, according to which ABB Ltd must disclose individual shareholders and groups of shareholders acting in concert and their shareholdings if they hold more than 5 percent of all voting rights and ABB Ltd knows or has reason to know of such major shareholders. Such disclosures must be made once a year in the notes to the financial statements as published in its annual report. For a list of our major shareholders, see "Item 7. Major Shareholders and Related Party Transactions—Major Shareholders."

Mandatory Offering Rules

        Under the Swiss Stock Exchange Act, shareholders and groups of shareholders acting in concert who acquire more than 33¹/3 percent of the voting rights (whether exercisable or not) of a listed Swiss company have to submit a takeover bid to all remaining shareholders unless the Articles of Incorporation of the Company provide for an alteration of this obligation. ABB Ltd's Articles of Incorporation do not provide for any alterations of the bidder's obligations under the Swiss Stock Exchange Act. The mandatory offer obligation may be waived under certain circumstances, for example if another shareholder owns a higher percentage of voting rights than the acquiror. A waiver from the mandatory bid rules may be granted by the Swiss Takeover Board or the Swiss Federal Banking Commission. If no waiver is granted, the mandatory takeover bid must be made pursuant to the procedural rules set forth in the Swiss Stock Exchange Act and the implementing ordinances.

        Other than the rules discussed in this section and in the section above entitled "—Duration, Liquidation and Merger" and "—Shareholder's Meetings" (which reflect mandatory provisions of Swiss

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law), no provision of ABB Ltd's Articles of Incorporation would operate only with respect to a merger, acquisition or corporate restructuring of ABB (or any of our subsidiaries) and have the effect of delaying, deferring or preventing a change in control of ABB.

Cancellation of Remaining Equity Securities

        Under Swiss law, any offeror who has made a tender offer for the shares of a Swiss target company and who, as a result of such offer, holds more than 98 percent of the voting rights of the target company, may petition the court to cancel the remaining equity securities. The corresponding petition must be filed against the target company within three months after the lapse of the offer period. The remaining shareholders may join in the proceedings. If the court orders cancellation of the remaining equity securities, the target company will reissue the equity securities and deliver such securities to the offeror against performance of the offer for the benefit of the holders of the cancelled equity securities.

Directors and Officers

        For further information regarding the material provisions of ABB Ltd's Articles of Incorporation and the Swiss Code of Obligations regarding directors and officers, see "Item 6. Directors, Senior Management and Employees—Corporate Governance—Duties of Directors and Officers."

Auditors

        The auditors are subject to confirmation by the shareholders at the annual general meeting on an annual basis. Ernst & Young AG, with its registered head office at Bleicherweg 21, CH-8002 Zurich, Switzerland, has been the independent auditor of ABB Ltd and the ABB Group for the years ended December 31, 2008, 2007 and 2006.

        Ernst & Young AG assumed the existing auditing mandate as auditor of the ABB Group in 1994. The head auditor responsible for the mandate, Nigel Jones, took over the mandate in 2008. He succeeded Charles Barone, who had served in this function since May 2003.

        Ernst & Young AG periodically reads the approved minutes of meetings of our board of directors. Ernst & Young AG is present for parts of the FACC meetings where audit planning is discussed and the results of our internal audit department's audit procedures are presented. Ernst & Young AG also periodically meets with the FACC to discuss the results of its audit procedures.

        See "Item 16C. Principal Accountant Fees and Services" for information regarding the fees paid to Ernst & Young AG.

MATERIAL CONTRACTS

        The following descriptions of the material provisions of the referenced agreements do not purport to be complete and are subject to, and qualified in their entirety by reference to, the agreements which have been filed as exhibits to this report.

Revolving Credit Facility

        On June 27, 2007, we entered into an amendment and restatement of a $2 billion revolving credit facility which was originally entered into on July 4, 2005. For a description of the facility, see "Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities" and "Note 12 Debt" to the Consolidated Financial Statements. See Exhibit 4.3 to this report.

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Medium Term Note Program

        One of our subsidiaries, ABB Capital B.V. is an issuer under a medium term note program (MTN Program) under which it is authorized to issue up to $5,250 million in certain debt instruments. The terms of the MTN Program do not obligate any third party to extend credit to us, and the terms and availability of financings under the MTN Program are determined with respect to, and at the date of issuance of, each debt instrument. As a result, we may be unable to access capital through the MTN Program on terms favorable to us, if at all. As at December 31, 2008, the aggregate amount outstanding under the MTN Program was approximately $1.9 billion from separate issuances of debt instruments. See Exhibits 2.3, 2.4, and 2.5 to this report.

ALSTOM Settlement

        Pursuant to a Share Purchase and Settlement Agreement, dated as of March 31, 2000, among ABB Ltd, ALSTOM and ABB ALSTOM POWER, as amended by the Amendment to Share Purchase and Settlement Agreement, dated as of May 11, 2000 (which we refer to collectively as the Settlement Agreement), ALSTOM purchased our 50 percent interest in the joint venture ABB ALSTOM POWER for a cash payment of €1.25 billion. The Settlement Agreement provided for the termination of various joint venture agreements, the execution of various releases, the settlement of certain disputed items in relation to the joint venture, the unwinding of various financial arrangements between ABB ALSTOM POWER and the ABB Group, the prospective transfer to the joint venture of various assets and liabilities required to have been transferred to the joint venture under the original joint venture agreements, the transfer to us of certain subsidiaries of the joint venture, various payments among members of the ALSTOM group and the ABB Group in connection with the foregoing transactions (separate from the purchase price mentioned above), indemnification and the execution of various ancillary documents. The transaction was consummated on May 11, 2000. See Exhibit 4.1 to this report.

Sale Agreement for Nuclear Business

        On December 21, 1999, our subsidiary, ABB Handels-und Verwaltungs AG, entered into an agreement to sell our nuclear business to BNFL for $485 million. Under the agreement, we have undertaken not to compete with the divested business during a seven-year period that ended on April 28, 2007. We have agreed to indemnify BNFL against, among other things, certain environmental and other liabilities arising from specific sites operated by the nuclear business and certain tax liabilities of the nuclear business. These potential liabilities are described in "Item 3. Key Information—Risk Factors" and "Item 5. Operating and Financial Review and Prospects—Environmental Liabilities". The transaction was consummated on April 28, 2000. See Exhibit 4.2 to this report.

Sale Agreement for Part of the Oil, Gas and Petrochemicals Business

        On January 16, 2004 we announced that our subsidiary, ABB Handels-und Verwaltungs AG, had entered into an agreement to sell the upstream part of our Oil, Gas and Petrochemicals business to Laradew Limited, a new company formed by a private equity consortium consisting of Candover Partners, JP Morgan Partners and 3i Group. The sale includes our U.S.-based Vetco Gray unit and our Norway- based Offshore Systems business. In July 2004, the Company completed the sale of the Upstream business for an initial purchase price of $925 million. Net cash proceeds from the sale were approximately $800 million, reflecting the initial purchase price adjusted for unfunded pension liabilities and changes in net working capital. On February 9, 2005, the purchasers and we entered into a Settlement Agreement and Amendment finalizing the sales price. As part of the sale, we have agreed, among other things, to terminate certain securitization programs and operational leases, to indemnify the purchaser against certain pre-existing environmental and tax liabilities, to reimburse the purchaser against financial losses that may be incurred on certain ongoing projects of the business. See Exhibits 4.4 and 4.5 to this report.

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CE Asbestos Settlement

        On April 20, 2006 ABB Ltd and certain of its subsidiaries entered into certain agreements relating to the settlement of its Combustion Engineering subsidiary's asbestos liabilities. For further details regarding this settlement see Exhibits 4.10 and 4.11 hereto.

Share Sale and Purchase Agreement relating to the Lummus Global Business

        On August 24, 2007, ABB Asea Brown Boveri Ltd and certain of its subsidiaries entered into an agreement to sell Lummus to CB&I for a purchase price of $950 million. The transaction closed in November 2007. As part of the sale we have agreed to retain certain liabilities, including for potential fines and penalties connected with suspect payments made prior the completion of the sale (for further information see "Note 3 Acquisitions, divestments and discontinued operations" to our Consolidated Financial Statements). See Exhibit 4.12 to this report.

EXCHANGE CONTROLS

        Other than in connection with government sanctions imposed on Belarus, Cote d'Ivoire, the Democratic Republic of the Congo, Iran, Iraq, Lebanon, Liberia, Myanmar, North Korea, Sierra Leone, Sudan, Uzbekistan, Zimbabwe, certain persons from the former Federal Republic of Yugoslavia and persons and organizations with connection to Osama bin Laden, the "al Qaeda" group or the Taliban and certain persons connected with the assassination of Rafik Hariri, there are currently no laws, decrees or regulations in Switzerland that restrict the export or import of capital, including, but not limited to, Swiss foreign exchange controls on payment of dividends, interest or liquidation proceeds, if any, to non-Swiss resident holders of shares. In addition, there are no limitations imposed by Swiss law or our Articles of Incorporation on the rights of non-Swiss residents or non-Swiss citizens to hold or vote our shares.

TAXATION

Swiss Taxation

Withholding Tax on Dividends and Distributions

        Dividends paid and similar cash or in-kind distributions that we make to a holder of shares or ADSs (including dividends on liquidation proceeds and stock dividends and taxable income resulting from partial liquidation) are subject to a Swiss federal withholding tax at a rate of 35 percent. A repurchase of shares by us for the purpose of a capital reduction is defined as a partial liquidation of the Company. In this case, the difference between the nominal value of the shares and their repurchase price is qualified as taxable income. The same would be true upon a repurchase of shares if we were not to dispose of the repurchased shares within six years after the repurchase, or if 10% of outstanding shares were exceeded. We must withhold the tax from the gross distribution and pay it to the Swiss Federal Tax Administration. A reduction of the shares' nominal value by means of a capital reduction does not represent a dividend or similar distribution for purposes of Swiss withholding tax.

Obtaining a Refund of Swiss Withholding Tax for U.S. Residents

        The Convention between the Swiss Confederation and the United States of America for the Avoidance of Double Taxation with Respect to Taxes on Income, which entered into force on December 19, 1997 and which we will refer to in the following discussion as the Treaty, allows U.S. resident individuals or U.S. corporations to seek a refund of the Swiss withholding tax paid on dividends in respect of our shares or ADSs if they qualify for benefits under the Treaty. U.S. resident individuals and U.S. corporations holding less than 10 percent of the voting rights in respect of our shares or ADSs are entitled to seek a refund of withholding tax to the extent the tax withheld exceeds

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15 percent of the gross dividend. U.S. corporations holding 10 percent or more of the voting rights of our shares or ADSs are entitled to seek a refund of withholding tax to the extent the tax withheld exceeds 5 percent of the gross dividend.

        Claims for refunds must be filed with the Swiss Federal Tax Administration, Eigerstrasse 65, 3003 Bern, Switzerland no later than December 31 of the third year following the calendar year in which the dividend or similar distribution became payable. The form used for obtaining a refund is Swiss Tax Form 82 (82C for companies; 82E for other entities; 82I for individuals; 82R for regulated investment companies (RICs)). This form may be obtained from any Swiss Consulate General in the United States or from the Swiss Federal Tax Administration at the address above. The form must be filled out in triplicate with each copy duly completed and signed before a notary public in the United States. The form must be accompanied by evidence of the deduction of withholding tax withheld at the source.

Stamp Duties upon Transfer of Securities

        The sale of shares or ADSs, whether by Swiss resident or non-resident holders, may be subject to a Swiss securities transfer stamp duty of up to 0.15 percent calculated on the sale proceeds if it occurs through or with a Swiss bank or other Swiss securities dealer as defined in the Swiss Federal Stamp Tax Act. In addition to the stamp duty, the sale of shares or ADSs by or through a member of the SIX Swiss Exchange may be subject to a stock exchange levy.

United States Taxes

        The following is a summary of the material U.S. federal income tax consequences of the ownership by U.S. holders (defined below) of shares or ADSs. This summary does not purport to address all of the tax considerations that may be relevant to a decision to purchase, own or dispose of shares or ADSs. This summary assumes that U.S. holders hold shares or ADSs as capital assets for U.S. federal income tax purposes. This summary does not address tax considerations applicable to holders that may be subject to special tax rules, such as U.S. expatriates, dealers or traders in securities or currencies, partnerships owning shares or ADSs, tax-exempt entities, banks and other financial institutions, regulated investment companies, traders in securities that elect to apply a mark to market method of accounting, insurance companies, holders that own (or are deemed to own) at least 10 percent or more (by voting power or value) of the stock of ABB, investors whose functional currency is not the U.S. dollar, persons subject to the alternative minimum tax, and persons that will hold shares or ADSs as part of a position in a straddle or as part of a hedging or conversion transaction for U.S. tax purposes and persons who are not U.S. holders. This discussion does not address aspects of U.S. taxation other than U.S. federal income taxation, nor does it address state, local or foreign tax consequences of an investment in shares or ADSs.

        This summary is based (1) on the Internal Revenue Code of 1986, as amended, U.S. Treasury Regulations and judicial and administrative interpretations thereof, in each case as in effect and available on the date of this registration statement and (2) in part, on representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms. The U.S. tax laws and the interpretation thereof are subject to change, which change could apply retroactively and could affect the tax consequences described below.

        For purposes of this summary, a U.S. holder is a beneficial owner of shares or ADSs that, for U.S. federal income tax purposes, is:

•

A citizen or resident of the United States;

•

A corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state, including the District of Columbia;

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•

An estate if its income is subject to U.S. federal income taxation regardless of its source; or

•

A trust if such trust validly has elected to be treated as a U.S. person for U.S. federal income tax purposes or if (1) a U.S. court can exercise primary supervision over its administration and (2) one or more U.S. persons have the authority to control all of its substantial decisions.

        If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares or ADSs the treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership that holds shares or ADSs you should consult your tax advisor.

        Each prospective purchaser should consult the purchaser's tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, owning or disposing of shares or ADSs.

Ownership of ADSs in General

        For U.S. federal income tax purposes, a holder of ADSs generally will be treated as the owner of the shares represented by the ADSs.

        The U.S. Treasury Department has expressed concern that depositaries for American depositary receipts, or other intermediaries between the holders of shares of an issuer and the issuer, may be taking actions that are inconsistent with the claiming of U.S. foreign tax credits by U.S. holders of those receipts or shares. Accordingly, the analysis regarding the availability of a U.S. foreign tax credit for Swiss taxes and sourcing rules described below could be affected by future actions that may be taken by the U.S. Treasury Department.

Distributions

        In general, for U.S. federal income tax purposes, the gross amount of any distribution (other than certain distributions, if any, of shares distributed to all shareholders of ABB, including holders of ADSs) made to you with respect to shares or ADSs, including the amount of any Swiss taxes withheld from the distribution, will constitute dividends to the extent of ABB's current and accumulated earnings and profits (as determined under U.S. federal income tax principles).

        Non-corporate U.S. holders generally will be taxed on such distributions at the lower rates applicable to long-term capital gains (i.e., gains from the sale of capital assets held for more than one year) with respect to distributions received on or before January 1, 2011, provided that the U.S. holder meets certain holding period and other requirements and provided that such distributions constitute "qualified dividends" for U.S. federal income tax purposes. Distributions treated as dividends will not be treated as "qualified dividends" if we were to be treated as a "passive foreign investment company" (a "PFIC) for U.S. federal income tax purposes in the year that the dividend is paid or in the year prior to the year that the dividend is paid. Based on certain estimates of its gross income and gross assets and the nature of its business, ABB believes that it will not be classified as a PFIC for the taxable year ending December 31, 2008. ABB's status in future years will depend on its assets and activities in those years. ABB has no reason to believe that its assets or activities will change in a manner that would cause it to be classified as a PFIC. However, as PFIC status is a factual matter that must be determined annually at the close of each taxable year, there can be no certainty regarding ABB's PFIC status in any particular year until the end of that year. U.S. holders are urged to consult their own tax advisors regarding the availability to them of the reduced dividend rate in light of their own particular circumstances and the consequences to them if ABB were to be treated as a PFIC with respect to any taxable year.

        Dividends paid to U.S. corporate holders will not be eligible for the dividends received deduction generally allowed to corporate U.S. holders.

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        If you are a U.S. holder and distributions with respect to shares or ADSs exceed ABB's current and accumulated earnings and profits as determined under U.S. federal income tax principles, then the excess generally would be treated first as a tax-free return of capital to the extent of your adjusted tax basis in the shares or ADSs. Any amount in excess of the amount of the dividend and the return of capital generally would be treated as capital gain. ABB does not maintain calculations of its earnings and profits under U.S. federal income tax principles.

        If you are a U.S. holder, then dividends paid in Swiss francs, including the amount of any Swiss taxes withheld from the dividends, will be included in your gross income in an amount equal to the U.S. dollar value of the Swiss francs calculated by reference to the spot exchange rate in effect on the day the dividends are includible in income. In the case of ADSs, dividends generally are includible in income on the date they are received by the depositary, regardless of whether the payment is in fact converted into U.S. dollars at that time. If dividends paid in Swiss francs are converted into U.S. dollars on the day they are includible in income, then you generally should not be required to recognize foreign currency gain or loss with respect to the conversion. However, any gains or losses resulting from the conversion of Swiss francs between the time of the receipt of dividends paid in Swiss francs and the time the Swiss francs are converted into U.S. dollars will be treated as ordinary income or loss to you, as the case may be. The amount of any distribution of property other than cash will be the fair market value of the property on the date of distribution.

        If you are a U.S. holder, then you will have a basis in any Swiss francs received as a refund of Swiss withholding taxes equal to a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt of the dividend on which the tax was withheld. (See "—Swiss Taxation—Obtaining a Refund of Swiss Withholding Tax for U.S. Residents" above.)

        If you are a U.S. holder, then dividends received by you with respect to shares or ADSs will be treated as foreign source income, which may be relevant in calculating your foreign tax credit limitation. Subject to certain conditions and limitations, Swiss tax withheld on dividends may be deducted from your taxable income or credited against your U.S. federal income tax liability. However, to the extent that you would be entitled to a refund of Swiss withholding taxes pursuant to the U.S.—Switzerland tax treaty, you may not be eligible for a U.S. foreign tax credit with respect to the amount of such withholding taxes which may be refunded, even if you fail to claim the refund. See "—Swiss Taxation—Obtaining a Refund of Swiss Withholding Tax for U.S. Residents." The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by ABB generally will constitute passive income, or, in the case of certain U.S. holders, financial services income. The rules relating to the determination of the U.S. foreign tax credit are complex, and you should consult your tax advisor to determine whether and to what extent you would be entitled to this credit.

Sale or Exchange of Shares or ADSs

        If you are a U.S. holder that holds shares or ADSs as capital assets, then you generally will recognize capital gain or loss for U.S. federal income tax purposes upon a sale or exchange of your shares or ADSs in an amount equal to the difference between your adjusted tax basis in the shares or ADSs and the amount realized on their disposition. If you are a non-corporate U.S. holder, the maximum marginal U.S. federal income tax rate applicable to the gain is generally lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income (other than certain dividends) if your holding period for the shares or ADSs exceeds one year (i.e., long-term capital gains). If you are a U.S. holder, then the gain or loss, if any, recognized by you generally will be treated as U.S. source income or loss, as the case may be, for U.S. foreign tax credit purposes.

        If you are a U.S. holder and you receive any foreign currency on the sale of shares or ADSs, then you may recognize U.S. source ordinary income or loss as a result of currency fluctuations between the

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date of the sale of the shares or ADS, as the case may be, and the date the sales proceeds are converted into U.S. dollars.

Backup Withholding and Information Reporting

        U.S. backup withholding tax and information reporting requirements generally apply to certain payments to certain noncorporate holders of stock. Information reporting generally will apply to payments of dividends on, and to proceeds from the sale or redemption of, shares or ADSs made within the United States to a holder of shares or ADSs (other than an exempt recipient, including a corporation, a payee that is not a U.S. holder that provides an appropriate certification, and certain other persons).

        A payor will be required to withhold backup withholding tax from any payments of dividends on, or the proceeds from the sale or redemption of, shares or ADSs within the United States to you, unless you are an exempt recipient, if you fail to furnish your correct taxpayer identification number or otherwise fail to establish an exception from backup withholding tax requirements or otherwise fail to establish an exception from backup withholding. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is furnished to the U.S. Internal Revenue Service. The current backup withholding tax rate is 28 percent.

THE ABOVE SUMMARIES ARE NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE OWNERSHIP OF SHARES OR ADSs. PROSPECTIVE PURCHASERS OF SHARES OR ADSs SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS.

DOCUMENTS ON DISPLAY

        We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports and other information with the SEC. These materials, including this report and the exhibits thereto, may be inspected and copied at prescribed rates at the Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Further information on the operation of the public reference room may be obtained by calling the Commission at 1-800-SEC-0330. The Commission also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the Commission. Our annual reports and some of the other information we submit to the Commission may be accessed through this web site. In addition, material that we file can be inspected at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005.

Item 11.    Quantitative and Qualitative Disclosures About Market Risk

Market Risk Disclosure

        The continuously evolving financial markets and the dynamic business environment expose us to changes in foreign exchange, interest rate and other market price risks. We have developed and implemented comprehensive policies, procedures, and controls to identify, mitigate, and monitor financial risk on a firm-wide basis. To efficiently aggregate and manage financial risk that could impact our financial performance, we operate a Group Treasury function. Our Group Treasury function provides an efficient source of liquidity, financing, risk management, and other global financial services to the ABB Group companies. We do not permit proprietary trading activities. The market risk management activities are focused on mitigating material financial risks resulting from our global operating and financing activities.

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        The Group Treasury function maintains risk management control systems to monitor foreign exchange and interest rate risks and exposures arising from our underlying business, as well as the associated hedge positions. Such exposures are governed by written policies. Financial risks are monitored using a number of analytical techniques including market value and sensitivity analysis. The following quantitative analyses are based on sensitivity analysis tests, which assume parallel shifts of interest rate yield curves, and foreign exchange rates and equity prices.

Currency Fluctuations and Foreign Exchange Risk

        It is our policy to identify and manage all transactional foreign exchange exposures to minimize risk. With the exception of certain financing subsidiaries, and to the extent certain operating subsidiaries are domiciled in high inflation environments, the functional currency of each of our companies is considered to be its local currency. Our policies require our subsidiaries to hedge all contracted foreign exchange exposures, as well as a portion of their forecast exposures, against their local currency. These transactions are undertaken mainly with our Group Treasury function.

        We have foreign exchange transaction exposures related to our global operating and financing activities in currencies other than the functional currency in which our entities operate. Specifically, we are exposed to foreign exchange risk related to future earnings, assets or liabilities denominated in foreign currencies. The most significant currency exposures relate to operations in Germany, Sweden and Switzerland. In addition, we are exposed to currency risk associated with translating our functional currency financial statements into our reporting currency, which is the U.S. dollar.

        Our operating companies are responsible for identifying their foreign currency exposures and entering into intercompany hedge contracts with the Group Treasury function, where legally possible, or external transactions to hedge this risk. The intercompany transactions have the effect of transferring the operating companies' currency risk to the Group Treasury function, but create no additional market risk to our consolidated results. The Group Treasury function then manages this risk by entering into offsetting transactions with third party financial institutions. According to our policy, material net currency exposures are hedged. Exposures are primarily hedged with forward foreign exchange contracts. The majority of the foreign exchange hedge instruments have, on average, a maturity of less than twelve months. The Group Treasury function also hedges currency risks associated with their financing of other ABB companies. For certain third party non-U.S. dollar denominated debt, we use cross currency swaps to hedge the currency risk and effectively convert the debt into U.S. dollar obligations. These swap contracts have maturity dates that exactly match the associated debt.

        As of December 31, 2008 and 2007, the net fair value of financial instruments with exposure to foreign currency rate movements was $1,946 million and $593 million, respectively. The potential loss in fair value of such financial instruments from a hypothetical 10 percent move in foreign exchange rates against our position would be approximately $579 million and $108 million for December 31, 2008 and 2007, respectively. The analysis reflects the aggregate adverse foreign exchange impact associated with transaction exposures, as well as translation exposures where appropriate. Our sensitivity analysis assumes a simultaneous shift in exchange rates against our positions exposed to foreign exchange risk and as such assumes an unlikely adverse case scenario. Exchange rates rarely move in the same direction. Therefore, the assumption of a simultaneous shift may overstate the impact of changing rates on assets and liabilities denominated in foreign currencies. The underlying trade-related transaction exposures of the industrial companies are not included in the quantitative analysis. If these underlying transaction exposures were included, they would tend to have an offsetting effect on the potential loss in fair value detailed above.

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Interest Rate Risk

        We are exposed to interest rate risk due to our financing, investing, and liquidity management activities. Our operating companies primarily invest excess cash with, and receive funding from, our Group Treasury function on an arm's length basis. It is our policy that the primary third-party funding and investing activities, as well as the monitoring and management of the resulting interest rate risk, are the responsibility of the Group Treasury function. The Group Treasury function adjusts the duration of the overall funding portfolio through derivative instruments in order to better match underlying assets and liabilities, as well as minimize the cost of capital.

        As of December 31, 2008 and 2007, the potential reduction in earnings from a 100 basis points downward shift in interest rates on an interest bearing net asset position of $5,495 million and $5,791 million, respectively, was $55 million and $58 million, respectively.

        Leases are not included as part of the sensitivity analysis. This represents a limitation of the analysis. While sensitivity analysis includes the interest rate sensitivity of the funding of the lease portfolio, a corresponding change in the lease portfolio was not considered in the sensitivity model.

Equity Risk

        Certain of our entities have equity investments that expose us to equity price risk. As of December 31, 2008 and 2007, the net fair value of equity risk sensitive instruments was $90 million and $337 million, respectively. The potential loss in fair value of such financial instruments from a hypothetical 10 percent move in equity prices against our position would be approximately $9 million and $53 million, for December 31, 2008 and 2007, respectively. Included in the net fair value and potential loss in fair value figures for equity risk are derivative instruments held by us and designated as hedges of warrant appreciation rights granted to employees under our management incentive plans (see "Note 4 Cash and equivalents and marketable securities and short-term investments" and "Note 18 Share-based payment arrangements" to the Consolidated Financial Statements). As of December 31, 2008 and 2007, the amount of such instruments included in the total net fair value of equity risk sensitive instruments was $53 million and $220 million, respectively, and the corresponding amount of potential loss in fair value was $6 million and $41 million, respectively. The liabilities relating to the warrant appreciation rights are not included as part of the sensitivity analysis. If such liabilities being hedged were included, they would tend to have an offsetting effect on the potential loss in fair value.

Commodity Risk

        We enter into commodity derivatives to hedge certain of our raw material exposures. As of December 31, 2008 and 2007, the net fair value of commodity derivatives was $(173) million and $(19) million, respectively. The potential loss in fair value for such commodity hedging derivatives from a hypothetical adverse 10 percent move against our position in commodity prices would be approximately $15 million and $34 million for December 31, 2008 and 2007, respectively. A significant proportion of our commodity derivatives are denominated in euros. The foreign exchange risk arising on such contracts has been excluded from the calculation of the potential loss in fair value from a hypothetical 10 percent move in commodity prices as disclosed above.

Item 12.    Description of Securities Other than Equity Securities

        Not applicable.

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PART II

Item 13.    Defaults, Dividend Arrearages and delinquencies

        Not applicable.

Item 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds

        Not applicable.

Item 15.    Controls and Procedures

(a)

Disclosure controls and procedures.

        We maintain controls and procedures designed to provide reasonable assurance that the information required to be disclosed in our filings under the Securities Exchange Act of 1934 (the Exchange Act, Rule 13a-15(e)) is recorded, processed, summarized and reported on a timely basis. Our Chief Executive Officer, Joe Hogan, and Chief Financial Officer, Michel Demaré, with the participation of key corporate senior management and management of key corporate functions, performed an evaluation of our disclosure controls and procedures as of December 31, 2008. Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, has concluded that, as of December 31, 2008, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Exchange Act has been recorded, processed, summarized and reported within the time period specified in the rules and forms of the SEC and that such information has been accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

(b)

Management's annual report on internal controls over financial reporting.

        The Board of Directors and management of the ABB Group are responsible for establishing and maintaining adequate internal controls over financial reporting. The ABB Group's internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of the published Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America.

        Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

        Management conducted an assessment of the effectiveness of internal controls over financial reporting based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO). Based on this assessment, management has concluded that internal control over financial reporting was effective as of December 31, 2008.

        Ernst & Young AG, an independent registered public accounting firm, has issued an opinion on the effectiveness of the ABB Group's internal control over financial reporting as of December 31, 2008 which is included in Item 18: Financial Statements.

(c)

Changes in internal control

        During the year ended December 31, 2008, the ABB Group continued to standardize and consolidate its financial accounting and reporting processes through the integration of its various ERP systems into country-wide ERP's in a number of specific countries. A significant portion of these

120

remaining system integrations are planned for 2009 and 2010. These activities strengthen the overall design and operational effectiveness of the ABB Group's internal control over financial reporting and are part of the ABB Group's continuous improvement of its internal control environment.

Item 15T.    Controls and Procedures

        Not applicable.

Item 16A.    Audit Committee Financial Expert

        Our board of directors has determined that Bernd W. Voss, who serves on our audit committee, is independent, as that term is defined in the listing standards promulgated by the New York Stock Exchange, and is an audit committee financial expert.

Item 16B.    Code of Ethics

        Our chief executive officer, chief financial officer, principal accounting officer and persons performing similar functions are bound to adhere to our Code of Conduct, which applies to all employees of all companies in the ABB Group. Our Code of Conduct is available on our web site in the corporate governance section at www.abb.com/investorrelations.

Item 16C.    Principal Accountant Fees and Services

Audit Fees

        Fees for audit services provided by Ernst & Young totaled approximately $29 million and $26 million in 2008 and 2007, respectively. Audit fees include the standard audit work performed each fiscal year necessary to allow the auditor to issue an opinion on our Consolidated Financial Statements and to issue an opinion on the local statutory financial statements of ABB Ltd and its subsidiaries. Audit fees also include services that can be provided only by the ABB Group auditor such as assistance with the application of new accounting policies, pre-issuance reviews of quarterly financial results and comfort letters delivered to underwriters in connection with debt and equity offerings. Included in the 2008 audit fees were no amounts related to the 2007 audit. Included in the 2007 audit fees were no amounts related to the 2006 audit.

Audit-Related Fees

        Fees for audit-related services provided by Ernst & Young totaled approximately $2 million and $8 million in 2008 and 2007, respectively, consisting primarily of accounting consultations and audits in connection with divestments, audits of pension and benefit plans and accounting advisory services.

Tax Fees

        Fees for tax services provided by Ernst & Young totaled approximately $3 million and $2 million in 2008 and 2007, respectively, representing tax compliance fees as well as tax advice and planning fees.

All Other Fees

        Fees for other services provided not included in the above three categories by Ernst & Young totaled approximately 0.1 million in 2008 and 2007, respectively.

Pre-Approval Procedures and Policies

        In accordance with the requirements of the U.S. Sarbanes-Oxley Act of 2002 and rules issued by the SEC, we utilize a procedure for the review and pre-approval of any services performed by Ernst &

121

Young. The procedure requires that all proposed engagements of Ernst & Young for audit and permitted non-audit services are submitted to the FACC for approval prior to the beginning of any such services. In accordance with this policy, all services performed by and fees paid to Ernst & Young in 2007 and 2008, as discussed above in this Item 16C, were approved by the FACC.

Item 16D.    Exemptions from the Listing Standards for Audit Committees

        None.

Item 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers

        On February 13, 2008, the Company announced a share buyback program up to a maximum value of CHF 2.2 billion (equivalent to approximately USD 2 billion at then-current exchange rates), with the intention of completing the buyback program prior to the Annual General Meeting of Shareholders in 2010 and proposing the cancellation of the shares at that meeting.

        During the year ended December 31, 2008, purchases under the program were made by or on behalf of ABB Ltd. or any "affiliated purchaser", as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as follows:

Period	Total number of shares purchased(1)		Average price paid per share(2)		Total number of shares purchased as part of publicly announced program		Approximate USD equivalent amount of shares that may yet be purchased under the program(3)
February 25 – February 29, 2008		5,000,000	$	25.97		5,000,000	$	1,973,289,530
March 03 – March 12, 2008		4,370,000	$	25.73		4,370,000	$	1,961,871,920
April 28 – April 30, 2008		600,000	$	29.96		600,000	$	1,857,429,535
May 05 – May 30, 2008		4,100,000	$	32.30		4,100,000	$	1,706,469,612
June 02 – June 10, 2008		2,805,000	$	31.95		2,805,000	$	1,667,518,544
August 15 – August 19, 2008		3,800,000	$	23.97		3,800,000	$	1,458,463,299
September 08, 2008		2,000,000	$	22.71		2,000,000	$	1,405,850,267

⁽¹⁾

Outside the share buyback program, no repurchases of shares were made in 2008 and through February 28, 2009.

⁽²⁾

Represents average prices in CHF translated into USD using weighted average rates.

⁽³⁾

Represents CHF amount of shares that may yet be purchased, translated at month-end spot rates.

        As of December 31, 2008, CHF 1,548,754,947 (equivalent to $1,451,096,174 at the year-end exchange rate of CHF 1.0673 per 1 USD) was available for further purchases under the program. On February 12, 2009, the Company stated that given the market uncertainty, the Company is not actively pursuing new purchases under the program.

Item 16F.    Change in Registrant's Certifying Accountant

        Not yet applicable.

Item 16G.    Corporate Governance

        According to the New York Stock Exchange's corporate governance standards (the Standards), ABB is required to disclose significant ways in which its corporate governance practices differ from the Standards. ABB has reviewed the Standards and concluded that its corporate governance practices are generally consistent with the Standards, with the following significant exceptions:

1.

Swiss law requires that our external auditors be appointed by our shareholders at our annual general meeting rather than by the finance and audit committee or the board of directors.

122

2.

The Standards require that all equity compensation plans and material revisions thereto be approved by the shareholders. Consistent with Swiss law such matters are decided by our board of directors. However, the shareholders decide about the creation of new share capital that can be used in connection with equity compensation plans.

PART III

Item 17.    Financial Statements

        We have elected to provide financial statements and the related information pursuant to Item 18.

Item 18.    Financial Statements

        See pages F-1 to F-74, which are incorporated herein by reference. All schedules are omitted as the required information is inapplicable or the information is presented in the Consolidated Financial Statements or notes thereto.

Item 19.    Exhibits

1.1	Articles of Incorporation of ABB Ltd as amended to date.
2.1	Form of Amended and Restated Deposit Agreement, by and among ABB Ltd, Citibank, N.A., as Depositary, and the holders and beneficial owners from time to time of the American Depositary Shares issued thereunder (including as an exhibit the form of American Depositary Receipt). Incorporated by reference to Exhibit (a) to Form F-6EF (File No. 333-147488) filed by ABB Ltd on November 19, 2007.
2.2	Form of American Depositary Receipt (included in Exhibit 2.1).
2.3	EMTN Fiscal Agency Agreement, dated December 17, 2008, between ABB Capital B.V., Fortis Banque Luxembourg S.A. and Fortis Banque (Suisse) S.A.
2.4	EMTNDealership Agreement, dated December 17, 2008, between ABB Capital B.V., ABB Ltd and Morgan Stanley & Co. International Limited.
2.5	EMTN Deed of Covenant, dated December 17, 2008, by ABB Capital B.V.
	The total amount of long-term debt securities of ABB Ltd authorized under any other instrument does not exceed 10 percent of the total assets of the ABB Group on a consolidated basis. ABB Ltd hereby agrees to furnish to the Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of ABB Ltd or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
4.1	Share Purchase and Settlement Agreement dated as of March 31, 2000 among ABB Ltd, ALSTOM and ABB ALSTOM POWER N.V., as amended. Incorporated by reference to Exhibit 4.1 to the Annual Report on Form 20-F filed by ABB Ltd on June 27, 2002.
4.2	Purchase Agreement, dated as of December 21, 1999, between ABB Handels-und Verwaltungs AG, as Seller, and British Nuclear Fuels plc, as Purchaser, as amended. Incorporated by reference to Exhibit 4.2 to the Annual Report on Form 20-F filed by ABB Ltd on June 27, 2002.

123

4.3	$2,000,000,000 Multicurrency Revolving Credit Agreement, dated as of July 4, 2005, as amended and restated on June 27, 2007, between ABB Ltd, certain subsidiaries of ABB Ltd as borrowers and guarantors, Barclays Capital, Bayerische Hypo-und Vereinsbank AG, BNP Paribas, Citigroup Global Markets Limited, Commerzbank Aktiengesellschaft, Credit Suisse, Deutsche Bank AG, Dresdner Kleinwort Wasserstein, Handelsbanken Capital Markets, Svenska Handelsbanken AB (publ), HSBC Bank plc, Nordea Bank (AB) and SEB Merchant Banking, Skandinaviska Enskilda Banken, AB (publ), as mandated lead arrangers, Credit Suisse, as facility agent, dollar swingline agent and euro swingline agent, and SEB Merchant Banking, Skandinaviska Enskilda Banken, AB (publ), as SEK swingline agent. Incorporated by reference to Exhibit 4.3 to the Annual Report on Form 20-F filed by ABB on March 19, 2008.
4.4	Stock and Asset Purchase Agreement, dated January 16, 2004, between ABB Handels-und Verwaltungs AG and Laradew Limited. Incorporated by reference to Exhibit 4.6 to the Annual Report on Form 20-F filed by ABB on April 9, 2004.
4.5	Settlement Agreement and Amendment, dated as of February 9, 2005, between ABB Handels-und Verwaltungs AG and Vetco Limited (formerly known as Laradew Limited), relating to the Stock and Asset Purchase Agreement dated as of January 16, 2004, between Handels-und Verwaltungs AG and Laradew Limited. Incorporated by reference to Exhibit 4.8 to the Annual Report on Form 20-F filed by ABB on May 27, 2005.
4.6	Employment Agreement of Gary Steel, dated August 27, 2002. Incorporated by reference to Exhibit 4.11 to the Annual Report on Form 20-F filed by ABB on June 30, 2003.
4.7	Employment Agreement of Fred Kindle, dated February 21, 2004. Incorporated by reference to Exhibit 4.16 to the Annual Report on Form 20-F filed by ABB on May 27, 2005.
4.8	Employment Agreement of Michel Demaré, dated October 28, 2004. Incorporated by reference to Exhibit 4.17 to the Annual Report on Form 20-F filed by ABB on May 27, 2005.
4.9	Employment Agreement of Ulrich Spiesshofer, dated September 5, 2005. Incorporated by reference to Exhibit 4.15 to the annual report on Form 20-F filed by ABB on April 19, 2006.
4.10	Contribution Agreement dated as of April 20, 2006 by and among ABB Ltd, ABB Asea Brown Boveri Ltd, ABB Holdings Inc., ABB Inc. and ABB Lummus Global Inc., Combustion Engineering 524(g) Asbestos PI Trust and, solely for certain provisions contained therein, ABB Treasury Center (USA) Inc. Incorporated by reference to Exhibit 4.13 to the Annual Report on From 20-F filed by ABB on April 18, 2007.
4.11	Promissory Note dated April 20, 2006 between ABB Inc. and ABB Ltd, as makers and Combustion Engineering 524(g) Asbestos PI Trust, as payee, for the principal amount of up to $350,000,000. Incorporated by reference to Exhibit 4.14 to Annual Report on From 20-F filed by ABB on April 18, 2007.
4.12	Share Sale and Purchase Agreement dated 24 August 2007 among ABB Holdings Inc., ABB Holdings B.V., ABB Asea Brown Boveri Ltd, Chicago Bridge & Iron Company, Chicago Bridge & Iron Company B.V., and Chicago Bridge & Iron Company N.V. Incorporated by reference to Exhibit 4.14 to the Annual Report on Form 20-F filed by ABB on March 19, 2008.
8.1	Subsidiaries of ABB Ltd as of February 28, 2008.
12.1	Certification of the chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2	Certification of the chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

124

13.1	Certification by the chief executive officer of ABB Ltd pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
13.2	Certification by the chief financial officer of ABB Ltd pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
15.1	Consent of Independent Registered Public Accounting Firm

*

This document is being furnished in accordance with SEC Release Nos. 33-8212 and 34-74551.

125

SIGNATURES

        The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

ABB LTD
By:	/s/ MICHEL DEMARÉ Name:  Michel Demaré Title:     Executive Vice President and Chief               Financial Officer
By:	/s/ RICHARD A. BROWN Name:  Richard A. Brown Title:     Group Senior Vice President and Chief               Counsel, Corporate & Finance

Date: March 10, 2009.

126

Index to Consolidated Financial Statements and Schedules

Consolidated Financial Statements:
Report of management on internal control over financial reporting	F-2
Reports of Independent Registered Public Accounting Firm	F-3
Consolidated Income Statements for the years ended December 31, 2008, 2007 and 2006	F-5
Consolidated Balance Sheets as of December 31, 2008 and 2007	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006	F-7
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2008, 2007 and 2006	F-8
Notes to the Consolidated Financial Statements	F-9

F-1

Report of management on internal control over financial reporting

        The Board of Directors and management of the Group are responsible for establishing and maintaining adequate internal controls over financial reporting. The Group's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of the published Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America.

        Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

        Management conducted an assessment of the effectiveness of internal controls over financial reporting based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO). Based on this assessment, management has concluded that internal control over financial reporting was effective as of December 31, 2008.

        Ernst & Young AG, an independent registered public accounting firm, has issued an opinion on the effectiveness of the Group's internal control over financial reporting as of December 31, 2008, which is included on page F-4 of the Group's Form 20-F.

/s/ JOE HOGAN  

Chief Executive Officer

/s/ MICHEL DEMARÉ  

Chief Financial Officer

Zurich, March 9, 2009

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of ABB Ltd:

        We have audited the accompanying consolidated balance sheets of ABB Ltd as of December 31, 2008 and 2007, and the related consolidated income statements, statements of cash flows, and statements of changes in stockholders' equity for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company's Board of Directors and management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ABB Ltd at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

        As discussed in Note 2 to the consolidated financial statements in 2008, effective January 1, 2007, the Company adopted FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No.109". As also discussed in Note 17 to the consolidated financial statements, effective December 31, 2006, the company adopted Statement of Financial Accounting Standards No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)."

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ABB Ltd's internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 9, 2009, expressed an unqualified opinion thereon.

/s/ Ernst & Young AG

Zürich, Switzerland
March 9, 2009

F-3

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of ABB Ltd:

        We have audited ABB Ltd's internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). ABB Ltd's Board of Directors and management are responsible for maintaining effective internal control over financial reporting, and management is responsible for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on internal control over financial reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, ABB Ltd maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2008 consolidated financial statements of ABB Ltd and our report dated March 9, 2009 expressed an unqualified opinion thereon.

/s/ Ernst & Young AG

Zürich, Switzerland
March 9, 2009

F-4

ABB Ltd

Consolidated Income Statements

Year ended December 31 (in millions, except per share data)

	2008			2007			2006
Sales of products	$	29,705		$	24,816		$	19,503
Sales of services		5,207			4,367			3,778
Total revenues		34,912			29,183			23,281
Cost of products		(20,506	)		(17,292	)		(13,967	)
Cost of services		(3,466	)		(2,923	)		(2,570	)
Total cost of sales		(23,972	)		(20,215	)		(16,537	)
Gross profit		10,940			8,968			6,744
Selling, general and administrative expenses		(5,822	)		(4,975	)		(4,326	)
Other income (expense), net		(566	)		30			139
Earnings before interest and taxes		4,552			4,023			2,557
Interest and dividend income		315			273			147
Interest and other finance expense		(349	)		(286	)		(307	)
Income from continuing operations before taxes and minority interest		4,518			4,010			2,397
Provision for taxes		(1,119	)		(595	)		(686	)
Minority interest		(260	)		(244	)		(179	)
Income from continuing operations		3,139			3,171			1,532
Income (loss) from discontinued operations, net of tax		(21	)		586			(142	)
Net income	$	3,118		$	3,757		$	1,390
Basic earnings (loss) per share
Income from continuing operations	$	1.37		$	1.40		$	0.72
Income (loss) from discontinued operations, net of tax	$	(0.01	)	$	0.26		$	(0.07	)
Net income	$	1.36		$	1.66		$	0.65
Diluted earnings (loss) per share
Income from continuing operations	$	1.37		$	1.38		$	0.69
Income (loss) from discontinued operations, net of tax	$	(0.01	)	$	0.25		$	(0.06	)
Net income	$	1.36		$	1.63		$	0.63

See accompanying Notes to the Consolidated Financial Statements.

F-5

ABB Ltd

Consolidated Balance Sheets

December 31 (in millions, except share data)

		2008			2007
Cash and equivalents		$	6,399		$	4,650
Marketable securities and short-term investments			1,407			3,460
Receivables, net			9,245			8,582
Inventories, net			5,306			4,863
Prepaid expenses			237			307
Deferred taxes			1,020			783
Other current assets			733			368
Assets held for sale and in discontinued operations			—			132
Total current assets			24,347			23,145
Financing receivables, net			445			487
Property, plant and equipment, net			3,562			3,246
Goodwill			2,817			2,421
Other intangible assets, net			411			270
Prepaid pension and other employee benefits			73			380
Investments in equity method companies			68			63
Deferred taxes			1,190			862
Other non-current assets			268			127
Total assets		$	33,181		$	31,001
Accounts payable, trade		$	4,451		$	4,167
Billings in excess of sales			1,224			829
Accounts payable, other			1,292			1,289
Short-term debt and current maturities of long-term debt			354			536
Advances from customers			2,014			2,045
Deferred taxes			528			371
Provisions for warranties			1,105			1,121
Provisions and other			3,467			2,322
Accrued expenses			1,569			1,737
Liabilities held for sale and in discontinued operations			—			62
Total current liabilities			16,004			14,479
Long-term debt			2,009			2,138
Pension and other employee benefits			1,071			631
Deferred taxes			425			407
Other liabilities			1,902			1,797
Total liabilities			21,411			19,452
Commitments and contingencies
Minority interest			612			592
Stockholders' equity:
	Capital stock and additional paid-in capital (2,322,792,835 and 2,316,015,102 issued shares at December 31, 2008 and 2007, respectively)		4,695			5,634
	Retained earnings		10,073			6,955
	Accumulated other comprehensive loss		(2,710	)		(1,330	)
	Less: Treasury stock, at cost (40,108,014 and 18,725,475 shares at December 31, 2008 and 2007, respectively)		(900	)		(302	)
Total stockholders' equity			11,158			10,957
Total liabilities and stockholders' equity		$	33,181		$	31,001

See accompanying Notes to the Consolidated Financial Statements.

F-6

ABB Ltd

Consolidated Statements of Cash Flows

Year ended December 31 (in millions)

			2008			2007			2006
Operating activities
Net income			$	3,118		$	3,757		$	1,390
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			661			602			570
	Pension and postretirement benefits			43			(61	)		(4	)
	Deferred taxes			(199	)		(351	)		113
	Net gain from sale of property, plant and equipment			(49	)		(46	)		(76	)
	Income from equity accounted companies			(15	)		(55	)		(95	)
	Minority interest			261			246			179
	Gain on sale of discontinued operations			—			(541	)		—
	Other			232			132			190
	Changes in operating assets and liabilities:
		Receivables, net		(1,266	)		(1,323	)		(698	)
		Inventories		(800	)		(551	)		(512	)
		Accounts payable, trade		522			530			256
		Billings in excess of sales		539			374			132
		Provisions, net		677			(362	)		243
		Advances from customers		130			411			461
		Other assets and liabilities, net		104			292			(210	)
Net cash provided by operating activities				3,958			3,054			1,939
Investing activities
Changes in financing receivables				7			56			67
Purchases of marketable securities (other than trading) and short-term investments				(3,626	)		(10,115	)		(4,743	)
Purchases of property, plant and equipment and intangible assets				(1,171	)		(756	)		(536	)
Acquisition of businesses (net of cash acquired)				(653	)		(54	)		(3	)
Proceeds from sales of marketable securities (other than trading) and short-term investments				5,417			7,361			4,366
Proceeds from sales of property, plant and equipment				94			75			128
Proceeds from sales of businesses and equity accounted companies (net of cash disposed)				46			1,142			27
Net cash provided by (used in) investing activities				114			(2,291	)		(694	)
Financing activities
Net changes in debt with maturities of 90 days or less				(10	)		(19	)		(26	)
Increase in debt				458			210			151
Repayment of debt				(786	)		(247	)		(189	)
Issuance of shares				49			241			47
Purchase of treasury shares				(621	)		(199	)		—
Nominal value reduction / dividends paid				(1,060	)		(449	)		(203	)
Dividends paid to minority shareholders				(152	)		(117	)		(94	)
Payments made upon induced bond conversion				—			—			(72	)
Payments made upon bond exchange				—			—			(111	)
Other				3			(45	)		105
Net cash used in financing activities				(2,119	)		(625	)		(392	)
Effects of exchange rate changes on cash and equivalents				(230	)		275			184
Adjustment for the net change in cash and equivalents in assets held for sale and in discontinued operations				26			39			25
Net change in cash and equivalents—continuing operations				1,749			452			1,062
Cash and equivalents beginning of period				4,650			4,198			3,136
Cash and equivalents end of period			$	6,399		$	4,650		$	4,198
Supplementary disclosure of cash flow information
Interest paid			$	244		$	246		$	274
Taxes paid			$	1,065		$	780		$	594
Carrying value of debt and accrued interest converted into capital stock			$	—		$	843		$	953

See accompanying Notes to the Consolidated Financial Statements.

F-7

ABB Ltd
Consolidated Statements of Changes in Stockholders' Equity
For the years ended December 31, 2008, 2007 and 2006 (in millions)

								Accumulated other comprehensive loss
		Capital stock and additional paid-in capital			Retained earnings			Foreign currency translation adjustment			Unrealized gain (loss) on available- for-sale securities			Pension and other post retirement plan adjustments			Unrealized gain (loss) on cash flow hedge derivatives			Total accumulated other comprehensive loss			Treasury stock			Total stockholders' equity
Balance at January 1, 2006		$	3,121		$	2,460		$	(1,756	)	$	1		$	(214	)	$	7		$	(1,962	)	$	(136	)	$	3,483
Comprehensive income:
	Net income		—			1,390			—			—			—			—			—			—			1,390
	Foreign currency translation adjustments		—			—			294			—			—			—			294			—			294
	Effect of change in fair value of available-for-sale securities (net of tax of ($1))		—			—			—			(3	)		—			—			(3	)		—			(3	)
	Minimum pension liability adjustments (net of tax of ($15))		—			—			—			—			11			—			11			—			11
	Change in derivatives qualifying as cash flow hedges (net of tax of ($21))		—			—			—			—			—			67			67			—			67
	Total comprehensive income								—			—			—			—			—						1,759
Adjustment upon adoption of SFAS 158 (net of tax of $6)			—			—			—			—			(426	)		—			(426	)		—			(426	)
Shares issued to Asbestos PI Trust (CE Settlement Shares)			407			—			—			—			—			—			—			—			407
Treasury share transactions			(1	)		—			—			—			—			—			—			1			—
Dividends paid			—			(203	)		—			—			—			—			—			—			(203	)
Conversion of convertible bonds			903			—			—			—			—			—			—			25			928
Issuance of shares			47			—			—			—			—			—			—			—			47
Share-based payment arrangements			21			—			—			—			—			—			—			6			27
Call options			16			—			—			—			—			—			—			—			16
Balance at December 31, 2006		$	4,514		$	3,647		$	(1,462	)	$	(2	)	$	(629	)	$	74		$	(2,019	)	$	(104	)	$	6,038
Comprehensive income:
	Net income		—			3,757			—			—			—			—			—			—			3,757
	Foreign currency translation adjustments		—			—			505			—			—			—			505			—			505
	Foreign currency translation adjustments related to divestments of businesses		—			—			51			—			—			—			51			—			51
	Effect of change in fair value of available-for-sale securities (net of tax of $0)		—			—			—			9			—			—			9			—			9
	Unrecognized income related to pensions and other postretirement plans (net of tax of ($5))		—			—			—			—			59			—			59			—			59
	Adjustments related to pensions and other postretirement plans allocated to divestments of businesses (net of tax of $0)		—			—			—			—			84			—			84			—			84
	Change in derivatives qualifying as cash flow hedges (net of tax of $4)		—			—			—			—			—			(19	)		(19	)		—			(19	)
	Total comprehensive income																										4,446
Treasury share transactions			(1	)		—			—			—			—			—			—			(198	)		(199	)
Dividends paid			—			(449	)		—			—			—			—			—			—			(449	)
Conversion of convertible bonds			830			—			—			—			—			—			—			—			830
Issuance of shares			241			—			—			—			—			—			—			—			241
Share-based payment arrangements			45			—			—			—			—			—			—			—			45
Call options			5			—			—			—			—			—			—			—			5
Balance at December 31, 2007		$	5,634		$	6,955		$	(906	)	$	7		$	(486	)	$	55		$	(1,330	)	$	(302	)	$	10,957
Comprehensive income:
	Net income		—			3,118			—			—			—			—			—			—			3,118
	Foreign currency translation adjustments		—			—			(754	)		—			—			—			(754	)		—			(754	)
	Foreign currency translation adjustments related to divestments of businesses		—			—			6			—			—			—			6			—			6
	Effect of change in fair value of available-for-sale securities (net of tax of ($26))		—			—			—			76			—			—			76			—			76
	Unrecognized income (expense) related to pensions and other postretirement plans (net of tax of $212)		—			—			—			—			(492	)		—			(492	)		—			(492	)
	Change in derivatives qualifying as cash flow hedges (net of tax of $53)		—			—			—			—			—			(216	)		(216	)		—			(216	)
	Total comprehensive income																										1,738
Shares repurchased under buyback program			—			—			—			—			—			—			—			(619	)		(619	)
Treasury share transactions			(21	)		—			—			—			—			—			—			21			—
Dividends paid in the form of nominal value reduction			(1,060	)		—			—			—			—			—			—			—			(1,060	)
Issuance of shares			49			—			—			—			—			—			—			—			49
Share-based payment arrangements			63			—			—			—			—			—			—			—			63
Call options			30			—			—			—			—			—			—			—			30
Balance at December 31, 2008		$	4,695		$	10,073		$	(1,654	)	$	83		$	(978	)	$	(161	)	$	(2,710	)	$	(900	)	$	11,158

See accompanying Notes to the Consolidated Financial Statements.

F-8

ABB Ltd

Notes to the Consolidated Financial Statements

(U.S. dollar amounts in millions, except per share amounts)

Note 1—The Company

        ABB Ltd and its subsidiaries (collectively, the Company) together form a leading global company specializing in power and automation technologies that improve the performance of utility and industry customers, while lowering environmental impact. The Company works with customers to engineer and install networks, facilities and plants with particular emphasis on enhancing efficiency, reliability and productivity for customers who generate, convert, transmit, distribute and consume energy.

        The Company has a global integrated risk management process. Once a year, the board of directors of ABB Ltd performs a risk assessment in accordance with the Company's risk management processes and discusses appropriate actions, if necessary.

Note 2—Significant accounting policies

        The following is a summary of significant accounting policies followed in the preparation of these Consolidated Financial Statements.

Basis of presentation

        The Consolidated Financial Statements are prepared in accordance with United States of America (United States or U.S.) generally accepted accounting principles (U.S. GAAP) and are presented in United States dollars ($ or USD) unless otherwise stated. Par value of capital stock is denominated in Swiss francs.

Scope of consolidation

        The Consolidated Financial Statements include the accounts of ABB Ltd and companies which are directly or indirectly controlled by ABB Ltd. Additionally, the Company consolidates variable interest entities (VIEs) if it has determined that it is the primary beneficiary. Intercompany accounts and transactions have been eliminated. Investments in joint ventures and affiliated companies in which the Company has the ability to exercise significant influence over operating and financial policies (generally through direct or indirect ownership of 20 percent to 50 percent of the voting rights), are recorded in the Consolidated Financial Statements using the equity method of accounting.

Reclassifications

        Amounts reported for prior years in the Consolidated Financial Statements and Notes have been reclassified to conform to the current year's presentation, primarily related to the separate presentation of warranty provisions and the inclusion of asbestos obligations in accrued expenses in the Company's Consolidated Balance Sheets. Additionally, the Company reclassified certain prior year amounts within changes in operating assets and liabilities in the Company's Consolidated Statements of Cash Flows to conform to the current year's presentation.

Operating cycle

        A portion of the Company's operating cycle, including long-term construction activities, exceeds one year. For classification of current assets and liabilities related to these types of construction activities, the Company elected to use the duration of the individual contracts as its operating cycle.

F-9

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

Accordingly, there are accounts receivable, inventories and provisions related to these contracts which will not be realized within one year that have been classified as current.

Use of estimates

        The preparation of financial statements in conformity with U.S. GAAP requires management to make assumptions and estimates that directly affect the amounts reported in the Consolidated Financial Statements and the accompanying Notes. The accounting estimates that require the Company's most significant, difficult and subjective judgments include:

•

Assumptions and projections, principally related to future material, labor and project-related overhead costs, used in determining the percentage-of-completion on projects

•

Estimates of loss contingencies associated with litigation or threatened litigation and other claims and inquires, environmental damages, product warranties, regulatory and other proceedings

•

Assumptions used in the calculation of pension and postretirement benefits

•

Recognition and measurement of current and deferred income tax assets and liabilities (including the measurement of uncertain tax positions)

•

Growth rates, discount rates and other assumptions used in the Company's annual goodwill impairment test

        The actual results and outcomes may differ from the Company's estimates and assumptions.

Cash and equivalents

        Cash and equivalents include highly liquid investments with maturities of three months or less at the date of acquisition.

        Currency and other local regulatory limitations exist related to the transfer of funds in a number of countries where the Company operates. Funds, other than regular dividends, fees or loan repayments, cannot be readily transferred offshore from these countries and are therefore deposited and used for working capital needs locally. These funds are included in cash and equivalents as they are not considered restricted.

Marketable securities and short-term investments

        Management determines the appropriate classification of held-to-maturity and available-for-sale securities at the time of purchase. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for accretion of discounts to maturity computed under the effective interest method. Such accretion is included in interest and dividend income. Marketable debt and equity securities not classified as held-to-maturity are classified as available-for-sale.

        Marketable debt and equity securities classified as available-for-sale at the time of purchase are reported at fair value. Unrealized gains and losses on available-for-sale securities are excluded from the determination of earnings and are instead recognized in the accumulated other comprehensive loss

F-10

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

component of stockholders' equity, net of tax, (accumulated other comprehensive loss) until realized. Realized gains and losses on available-for-sale securities are computed based upon the historical cost of these securities using the specific identification method.

        The Company performs a periodic review of its debt and equity securities to determine whether an other-than-temporary impairment has occurred. Generally, when an individual security has been in an unrealized loss position for an extended period of time, the Company evaluates whether an impairment has occurred. The evaluation is based on specific facts and circumstances at the time of assessment, which include general market conditions, the duration and extent to which the fair value is below cost and the Company's intent and ability to hold the security for a sufficient period of time to allow for recovery in value. In addition, for equity securities, the Company assesses whether the cost value will recover within the near-term. If an other-than-temporary impairment is identified, the security is written down to its fair value. Impairment charges are recorded in interest and other finance expense.

        Marketable debt securities are classified as either cash and equivalents or marketable securities and short-term investments according to their maturity at the time of acquisition.

Accounts receivable and allowance for doubtful accounts

        Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and customer economic data. The Company reviews the allowance for doubtful accounts regularly and past due balances are reviewed for collectibility. Account balances are charged off against the allowance when the Company believes that the amount will not be recovered.

Concentrations of credit risk

        The Company sells a broad range of products, systems and services to a wide range of industrial, commercial and utility customers as well as various government agencies and quasi-governmental agencies throughout the world. Concentrations of credit risk with respect to accounts receivable are limited, as the Company's customer base is comprised of a large number of individual customers. Ongoing credit evaluations of customers' financial positions are performed and generally, no collateral is required. The Company maintains reserves for potential credit losses as discussed above in Accounts receivable and allowance for doubtful accounts. Such losses, in the aggregate, are in line with the Company's expectations.

        It is the Company's policy to invest cash in deposits with banks throughout the world with certain minimum credit ratings and in high quality, low risk, liquid investments. The Company actively manages its credit risk by routinely reviewing the creditworthiness of the banks and the investments held, as well as maintaining such investments in time deposits or other liquid investments. The Company has not incurred significant credit losses related to such investments.

        The Company's exposure to credit risk on derivative financial instruments is the risk that the counterparty will fail to meet its obligations. To reduce this risk, the Company has credit policies that require the establishment and periodic review of credit limits for individual counterparties. In addition, the Company has entered into close-out netting agreements with most counterparties. Close-out netting

F-11

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

agreements provide for the termination, valuation and net settlement of some or all outstanding transactions between two counterparties on the occurrence of one or more pre-defined trigger events. However, in the Consolidated Financial Statements derivative transactions are presented on a gross basis.

Revenue recognition

        The Company generally recognizes revenues when persuasive evidence of an arrangement exists, the price is fixed or determinable, collectibility is reasonably assured and upon transfer of title, including the risks and rewards of ownership to the customer, or upon the rendering of services.

        Revenues under long-term contracts are recognized using the percentage-of-completion method of accounting pursuant to Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP 81-1). The Company principally uses the cost-to-cost or delivery events method to measure progress towards completion on contracts. Management determines the method used by type of contract based on its judgment as to which method best measures progress towards completion on contracts. Short-term construction-type contracts, or long-term contracts for which reasonably dependable estimates cannot be made or for which inherent hazards make estimates difficult, are accounted for under the completed-contract method as required by SOP 81-1. Revenues under the completed-contract method are recognized upon substantial completion that is acceptance by the customer, compliance with performance specifications demonstrated in a factory acceptance test or similar event. These criteria are consistently applied by the Company for all contracts accounted for under the completed-contract method.

        Revenues from service transactions are recognized as services are performed. For long-term service contracts, revenues are recognized on a straight-line basis over the term of the contract or, if the performance pattern is other than straight-line, as the services are provided. Service revenues reflect revenues earned from the Company's activities in providing services to customers primarily subsequent to the sale and delivery of a product or complete system; such revenues consist principally of maintenance-type contracts.

        In accordance with Emerging Issues Task Force No. 00-21, Revenue Arrangements with Multiple Deliverables, when multiple elements such as products and services are contained in a single arrangement or in related arrangements with the same customer, the Company allocates revenues to each element based on its relative fair value or according to the residual method should no evidence for the fair value of the delivered item be available, provided that such element meets the criteria for treatment as a separate unit of accounting.

        Unless the percentage-of-completion or completed contract method applies, revenues from contracts that contain customer acceptance provisions are deferred until customer acceptance occurs, or the Company has demonstrated the customer-specified objective criteria, or the contractual acceptance period has lapsed.

        Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between the Company and its customers, such as sales, use, value-added and some excise taxes are presented on a net basis (excluded from revenues).

F-12

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

Product-related expenses and contract loss provisions

        Losses on product and maintenance-type contracts are recognized in the period when they are identified and are based upon the anticipated excess of contract costs over the related contract revenues. Shipping and handling costs are recorded as a component of cost of sales.

Inventories

        Inventories are stated at the lower of cost (determined using either the first-in, first-out or the weighted-average cost method) or market. Inventoried costs are stated at acquisition cost or actual production cost, including direct material and labor and applicable manufacturing overheads, reduced by amounts recognized in cost of sales.

Impairment of long-lived assets and accounting for discontinued operations

        Long-lived assets that are held and used are assessed for impairment when events or circumstances indicate that the carrying amount of the asset may not be recoverable. If the asset's net carrying value exceeds the asset's net undiscounted cash flows expected to be generated over its remaining useful life including net proceeds expected from disposition of the asset, if any, the carrying amount of the asset is reduced to its estimated fair value, pursuant to the measurement criteria of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). Estimated fair value is determined based on discounted cash flows or appraised values depending on the nature of the assets.

        In accordance with SFAS 144, assets and liabilities that meet certain criteria with respect to the Company's plans for their sale or abandonment are included in assets and liabilities held for sale and in discontinued operations. Depreciation and amortization cease when the assets meet the criteria to be classified as held for sale. Results from discontinued operations are recognized in the period in which they occur. Assets and liabilities classified as held for sale are measured at the lower of carrying amount or fair value, less cost to sell. Assets and liabilities related to discontinued operations that are retained are not reclassified into assets or liabilities held for sale and in discontinued operations in our Consolidated Balance Sheets; future adjustments of such balances are recorded through income (loss) from discontinued operations, net of tax, in the Consolidated Income Statements. In the Consolidated Statements of Cash Flows, the amounts related to businesses with assets and liabilities held for sale and in discontinued operations are not segregated, as permitted by Statement of Financial Accounting Standards No. 95, Statement of Cash Flows.

Goodwill and other intangible assets

        In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, goodwill is tested for impairment annually or more frequently if impairment indicators arise. The Company performs its annual impairment assessment on October 1. A fair value approach is used to identify potential goodwill impairment and, when necessary, measure the amount of impairment. The Company uses a discounted cash flow model to determine the fair value of reporting units, unless there is a readily determinable fair market value.

F-13

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

        The cost of acquired intangible assets is amortized using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up. The amortization periods typically range from 1 to 10 years. Intangible assets are tested for impairment in accordance with SFAS 144, upon the occurrence of certain triggering events.

Capitalized software costs

        Capitalized costs of software for internal use are accounted for in accordance with Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. Costs incurred in the application development stage until the software is substantially complete are capitalized and are amortized on a straight-line basis over the estimated useful life of the software, typically ranging from 3 to 5 years. Capitalized costs of a software product to be sold are accounted for in accordance with Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed. Costs incurred after the software has demonstrated its technological feasibility until the product is available for general release to the customers are capitalized and are amortized on a straight-line basis over the estimated life of the product. The Company periodically performs an evaluation to determine that the unamortized cost of software to be sold does not exceed the net realizable value.

Property, plant and equipment

        Property, plant and equipment is stated at cost, less accumulated depreciation and is depreciated using the straight-line method. The estimated useful lives of the assets are generally as follows:

Factories and office buildings: 30 to 40 years

Other facilities: 15 years

Machinery and equipment: 3 to 15 years

Furniture and office equipment: 3 to 8 years

Derivative financial instruments and hedging activities

        The Company uses derivative financial instruments to manage currency, commodity and interest rate exposures, arising from its global operating, financing and investing activities. The Company accounts for its derivative financial instruments in accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted (SFAS 133).

        Due to the global nature of its operations, the Company is exposed to foreign currency risks in the ordinary course of business. The Company's policies require that its industrial entities economically hedge their foreign currency exposures from binding contracts denominated in foreign currencies, as well as at least fifty percent of the anticipated foreign currency denominated sales volume of standard products and related foreign currency purchases over the next twelve months. Additionally, due to the nature of its products, the Company is exposed to commodity price risks in the ordinary course of business. The Company's policies require that its industrial entities economically hedge their commodity

F-14

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

price risks from binding contracts for the purchase of certain commodities, as well as at least fifty percent of the anticipated purchases of those commodities over the next twelve months.

        To reduce its interest rate and currency exposure arising from its borrowing activities, the Company uses interest rate and currency swaps. Where interest rate swaps are designated as fair value hedges, changes in the fair value of the swaps are recognized in interest and other finance expense, as are the changes in the fair value of the risk component of the underlying debt being hedged. Consequently where such interest rate swaps do not qualify for the short cut method as defined under SFAS 133, any ineffectiveness is included in interest and other finance expense.

        SFAS 133 requires the Company to recognize all derivatives, other than certain derivatives indexed to the Company's own stock, at fair value in the Consolidated Balance Sheets. Derivatives that are not designated as hedging instruments are reported at fair value with derivative gains and losses reported through earnings and classified consistent with the nature of the underlying transaction. If the derivatives are designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives will either be offset against the change in fair value of the hedged item through earnings or recognized in accumulated other comprehensive loss until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized in earnings consistent with the classification of the hedged item.

        Forward foreign exchange contracts and foreign exchange swaps are the primary instruments used to manage foreign currency risks. Where these foreign exchange contracts are designated as cash flow hedges under SFAS 133, changes in their fair value are recorded in accumulated other comprehensive loss until the hedged item is recognized in earnings. The Company also enters into forward foreign exchange contracts that serve as economic hedges of existing assets and liabilities and certain forecasted transactions. Where these contracts do not qualify for hedge accounting under SFAS 133, changes in their fair value are reported in earnings, consistent with the classification of the hedged item.

        If an underlying hedged transaction is terminated early, the hedging derivative instrument is treated as if terminated simultaneously, with any gain or loss on termination of the derivative immediately recognized in earnings. Where derivative financial instruments have been designated as hedges of forecasted transactions and such forecasted transactions are no longer probable of occurring, hedge accounting is discontinued and any derivative gain or loss previously included in accumulated other comprehensive loss is reclassified into earnings consistent with the nature of the original forecasted transaction.

        Certain commercial contracts may grant rights to the Company or the counterparties, or contain other provisions that are considered to be derivatives under SFAS 133. Such embedded derivatives are assessed at inception of the contract and depending on their characteristics, accounted for as separate derivative instruments pursuant to SFAS 133.

        Derivatives are classified in the Consolidated Statements of Cash Flows in the same section as the underlying item, primarily within cash flows from operating activities.

Sale-leasebacks

        The Company occasionally enters into transactions accounted for as sale-leasebacks, in which fixed assets, generally real estate and/or equipment, are sold to a third party and then leased for use by the

F-15

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

Company. Under certain circumstances, the necessary criteria to recognize a sale of the assets may not occur and the transaction is reflected as a financing transaction, with the proceeds received from the transaction reflected as a borrowing or deposit liability. When the necessary criteria have been met to recognize a sale, gains or losses on the sale of the assets are generally deferred and amortized over the term of the transaction, except in certain limited instances when a portion of the gain or loss may be recognized upon inception. The lease of the asset is accounted for as either an operating lease or a capital lease, depending upon its specific terms, as required by Statement of Financial Accounting Standards No. 13, Accounting for Leases.

Translation of foreign currencies and foreign exchange transactions

        The functional currency for most of the Company's subsidiaries is the applicable local currency. The translation from the applicable functional currencies into the Company's reporting currency is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for income statement accounts using average exchange rates prevailing during the year. The resulting translation adjustments are excluded from the determination of earnings and are recognized in accumulated other comprehensive loss until the subsidiary is sold, substantially liquidated or evaluated for impairment in anticipation of disposal.

        Foreign currency exchange gains and losses, such as those resulting from foreign currency denominated receivables or payables, are included in the determination of earnings, except as they relate to intercompany loans that are equity-like in nature with no reasonable expectation of repayment, which are recognized in accumulated other comprehensive loss. Exchange gains and losses recognized in earnings are included in sales, cost of sales, selling, general and administrative expense or interest and other finance expense consistent with the nature of the underlying item.

Taxes

        The Company uses the asset and liability method to account for deferred taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. For financial statement purposes, the Company records a deferred tax asset when it determines that it is more likely than not that the deduction will be sustained based upon the deduction's technical merit. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized.

        Generally, deferred taxes are not provided on the unremitted earnings of subsidiaries to the extent it is expected that these earnings are permanently reinvested in accordance with Accounting Principles Board Opinion No. 23, Accounting for Income Taxes—Special Areas (APB 23). Such earnings may become taxable upon the sale or liquidation of these subsidiaries or upon the remittance of dividends. Deferred taxes are provided in situations where the Company's subsidiaries plan to make future dividend distributions.

        The Company operates in numerous tax jurisdictions and, as a result, is regularly subject to audit by tax authorities. The Company provides for tax contingencies on the basis of their technical merits, including relative tax law and Organisation for Economic Co-operation and Development (OECD)

F-16

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

guidelines, as well as on items relating to potential audits by tax authorities based upon its best estimate of the facts and circumstances as of each reporting period. Changes in the facts and circumstances could result in a material change to the tax accruals. The Company provides for contingencies whenever it is deemed more likely than not that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws.

        In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 requires applying a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50 percent likely of being realized upon ultimate settlement. The Company adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 led to the reclassification of certain income tax-related liabilities in the Consolidated Balance Sheet, but the adjustment to opening retained earnings was immaterial. As required by FIN 48, prior periods were not restated.

        Expense related to tax penalties is classified in the Consolidated Financial Statements as provision for taxes. Interest is classified in the Consolidated Financial Statements as interest and other finance expense.

Research and development

        Research and development costs are expensed as incurred. Research and development expense included in selling, general and administrative expenses was $1,027 million, $871 million and $758 million in 2008, 2007 and 2006, respectively.

Earnings per share

        Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call options, outstanding options and shares granted subject to market and/or vesting conditions under the Company's share-based payment arrangements and, prior to September 2007, shares issuable in relation to outstanding convertible bonds. See further discussion related to earnings per share in Note 20 and further discussion of the potentially dilutive securities in Notes 12 and 18.

Share-based payment arrangements

        The Company has various share-based payment arrangements, which are described more fully in Note 18. Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123R), using the modified-prospective transition method. SFAS 123R requires employee equity awards to be accounted for under

F-17

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

the fair value method. Accordingly, share-based compensation is measured at the grant date, based on the fair value of the award.

Fair value of financial instruments

        The Company uses the fair value measurement principle to record certain of its financial instruments and to determine fair value disclosures. The Company's financial instruments which are recorded at fair value on a recurring basis include foreign currency, commodity and interest rate derivatives and available-for-sale securities.

        The Company adopted the provisions of Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), effective January 1, 2008, for fair value measurements of its financial assets and financial liabilities. SFAS 157 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and enhances disclosure requirements for fair value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date.

        In determining fair value, the Company applies various valuation techniques including market and income approaches. SFAS 157 establishes a three-level hierarchy for inputs used in measuring assets and liabilities recorded at fair value, based on the reliability of those inputs. The Company has categorized its financial instruments measured at fair value within this hierarchy based on whether the inputs to the valuation technique are observable or unobservable. An observable input is based on market data obtained from independent sources, while an unobservable input reflects the Company's assumptions about market data.

•

Level 1: Valuation inputs consist of (unadjusted) quoted prices in an active market for identical assets or liabilities (observable quoted prices). Assets and liabilities using Level 1 inputs include exchange-traded equity securities, listed derivatives which are actively traded such as foreign exchange futures and most U.S. government securities.

•

Level 2: Valuation inputs consist of other observable inputs such as actively quoted prices for similar assets, quoted prices in inactive markets and inputs other than quoted prices such as interest rate yield curves, credit spreads, or inputs derived from other observable data by interpolation, correlation, regression or other means. Sometimes, the adjustments applied to quoted prices or the inputs used in valuation models may be both observable and unobservable. In these cases, the fair value measurement is classified as Level 2 unless the unobservable portion of the adjustment or the unobservable input to the valuation model is significant in which case the fair value measurement would be classified as Level 3. Assets and liabilities using Level 2 inputs include interest rate swaps, cross-currency swaps and commodity swaps as well as foreign exchange forward contracts and foreign exchange swaps.

•

Level 3: Valuation inputs are based on the Company's assumptions of relevant market data (unobservable input).

        Whenever quoted prices involve bid-ask spreads, we ordinarily determine fair values based on mid-market quotes. The only exception is cash-settled call options serving as hedges of the Company's management incentive plan (MIP), for which bid prices are used.

F-18

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

        At December 31, 2008, 14 percent of the Company's net assets, or $1,680 million, consisted of financial instruments recorded at fair value on a recurring basis. Approximately 12 percent and 88 percent, respectively of these financial instruments used valuation methodologies based on Level 1 and 2 inputs, respectively to measure fair value. At December 31, 2008, the Company did not use any valuation methodologies based on level 3 inputs to measure the fair value of its financial instruments. The Company's assets and liabilities measured at fair value are described more fully in Note 5.

Contingencies and asset retirement obligations

        The Company is subject to proceedings, litigation or threatened litigation and other claims and inquiries, related to environmental, labor, product, regulatory and other matters and is required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the provision required, if any, for these contingencies is made after analysis of each individual issue, often with assistance from both internal and external legal counsel and technical experts. The required amount of a provision for a contingency of any type may change in the future due to new developments in the particular matter, including changes in the approach to its resolution.

        The Company records a provision for its contingent obligations when it is probable that a loss will be incurred and the amount can be reasonably estimated. Any such provision is generally recognized on an undiscounted basis using the Company's best estimate of the amount of loss incurred or at the lower end of an estimated range when a single best estimate is not determinable. In some cases, the Company may be able to recover a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts only when it is probable that they will be collected.

        The Company provides for anticipated costs for warranties when it recognizes revenues on the related products or contracts. Warranty costs include calculated costs arising from imperfections in design, material and workmanship in the Company's products. The Company makes individual assessments on contracts with risks resulting from order-specific conditions or guarantees and assessments on an overall, statistical basis for similar products sold in larger quantities. There is a risk that actual warranty costs may exceed the amounts provided for, which would result in a deterioration of earnings in the future when these actual costs are determined.

        The Company may have a legal obligation to perform environmental clean-up activities as a result of the normal operation of its business or have other asset retirement obligations in the scope of Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (SFAS 143). In some cases, the timing or the method of settlement, or both are conditional upon a future event that may or may not be within the control of the Company, but the underlying obligation itself is unconditional and certain. The Company recognizes a provision for these and other asset retirement obligations when a liability for the retirement or clean-up activity has been incurred and a reasonable estimate of its fair value can be made. These provisions are initially recognized at fair value, and subsequently adjusted for accrued interest and changes in estimates.

F-19

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

Pensions and other postretirement benefits

        The Company recognizes an asset for a plan's overfunded status or a liability for a plan's underfunded status in its Consolidated Balance Sheets in accordance with Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106 and 132(R) (SFAS 158). Additionally, the Company measures a plan's assets and obligations that determine its funded status as of the end of the year and recognizes the changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. Those changes are reported in accumulated other comprehensive loss and as a separate component of stockholders' equity.

        The Company uses actuarial valuations to determine its pension and postretirement benefit costs and credits. The amounts calculated depend on a variety of key assumptions, including discount rates and expected return on plan assets. The Company is required to consider current market conditions in selecting these assumptions. See Note 17 for further discussion of SFAS 158 and the Company's employee benefit plans.

New accounting pronouncements

        On December 30, 2008, the Financial Accounting Standards Board issued FASB Staff Position Financial Accounting Standards No. 132(R)-1, Employer's Disclosures about Postretirement Benefit Plan Assets (FSP FAS 132R-1). FSP FAS 132R-1 amends Statement of Financial Accounting Standards No. 132 (Revised 2003), Employers' Disclosures about Pensions and Other Postretirement Benefits, to provide guidance on an employer's disclosures about plan assets of a defined benefit pension or other postretirement plan. The required disclosures include a description of our investment policies and strategies; the fair value of each major category of plan assets; the inputs and valuation techniques used to measure the fair value of plan assets; the effect of fair value measurements using significant unobservable inputs on changes in plan assets; and the significant concentrations of risk within plan assets. FSP FAS 132R-1 does not change the accounting treatment for postretirement benefits plans. FSP FAS 132R-1 is effective for the Company in 2009.

        In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161 amends and expands the disclosure requirements of SFAS 133 and requires additional qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and credit-risk-related contingent features in derivative agreements. SFAS 161 does not change the accounting treatment for derivative instruments. SFAS 161 will be effective for the Company in 2009. The Statement encourages but does not require disclosures for earlier periods presented for comparative purposes at initial adoption.

        In February 2008, the Financial Accounting Standards Board issued FASB Staff Position Financial Accounting Standard No. 157-2, Effective date of FASB Statement No. 157 (FSP FAS 157-2), which delays the effective date of SFAS 157 for all nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP FAS 157-2 delays the effective date of SFAS 157 for certain items until January 1, 2009. The major categories of assets and liabilities that are recognized or disclosed at fair value for which the Company

F-20

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 2—Significant accounting policies (Continued)

has not yet applied the provisions of SFAS 157 comprise asset retirement obligations within the scope of SFAS 143, guarantees within the scope of Financial Accounting Standards Board Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees and impaired tangible assets or intangible assets, including goodwill. The Company does not believe that FSP FAS 157-2 will have a material impact on its Consolidated Financial Statements.

        In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (SFAS 160). SFAS 160 changes the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. SFAS 160 will be applied prospectively upon adoption in 2009, with the exception of the presentation and disclosure requirements which will be made on a retrospective basis, to all noncontrolling interests. After adoption, noncontrolling interests of $612 million and $592 million in 2008 and 2007, respectively, will be classified as a part of stockholders' equity. Income attributable to noncontrolling interests of $260 million, and $244 million in 2008 and 2007, respectively, will be included in net income, although such income will continue to be deducted to calculate earnings per share. Future purchases and sales of noncontrolling interests will be reported in equity.

        In December 2007, the Financial Accounting Standards Board issued revised Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141R). Under SFAS 141R an entity is required to recognize the assets acquired, liabilities assumed, contractual contingencies and contingent consideration at their fair value on the acquisition date. It further requires that acquisition-related costs are recognized separately from the acquisition and expensed as incurred, restructuring costs generally are expensed in periods subsequent to the acquisition date. Further SFAS 141R requires that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense in periods subsequent to the acquisition date. In addition, acquired in-process research and development is capitalized as an intangible asset and amortized over its estimated useful life. The adoption of SFAS 141R will change the Company's accounting treatment for business combinations on a prospective basis beginning in 2009.

        In May 2008, the Financial Accounting Standards Board issued FASB Staff Position on APB 14-a Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (including Partial Cash Settlement) (FSP APB 14-a). FSP APB 14-a requires the issuer to separately account for the liability and equity components of the convertible instrument in a manner that reflects the issuer's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-a requires bifurcation of a component of the debt, classification of that component in equity, and then accretion of the resulting discount on the debt as part of interest expense being reflected in the income statement. As of December 31, 2008 and 2007, the Company did not have any debt instruments outstanding which contained the features outlined in this guidance. However, in 2009, the Company will be required to implement the guidance on a retroactive basis to 2007 as it relates to the CHF 1 billion convertible bonds converted in 2007, resulting in a cumulative effect adjustment to stockholders' equity as of January 1, 2007 and the recording in the Company's Consolidated Income Statement in 2007 of a gain (loss) on conversion of the bonds. The Company is currently quantifying the impact from the implementation FSP APB 14-a.

F-21

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 3—Acquisitions, divestments and discontinued operations

Acquisitions

        During 2008, 2007 and 2006, the Company invested $653 million, $54 million and $3 million, in 12, 14 and 11 new businesses, joint ventures or affiliated companies, respectively. Acquisitions of controlling interests have been accounted for under the purchase method and have been included in the Company's Consolidated Financial Statements since the date of acquisition. The aggregate excess of the purchase price over the fair value of net assets acquired totaled $456 million, $23 million and $2 million in 2008, 2007 and 2006, respectively, and was recorded as goodwill. The Company has not presented the pro forma results of operations of the acquired businesses as the results are not material to the Consolidated Financial Statements.

        On August 25, 2008, the Company completed the acquisition of the U.S. transformer company Kuhlman Electric Corporation (Kuhlman). Kuhlman manufactures a wide range of transformers for the industrial and electric utility sectors and was integrated into the Company's Power Products division. The preliminary purchase price, including assumed debt, amounted to $520 million (including $5 million cash acquired). Based on the preliminary purchase price allocation, $114 million was allocated to intangible assets subject to amortization and $400 million to goodwill. Of the $114 million intangible assets, $63 million related to customer relationships with a weighted average useful life of 6 years, $20 million related to order backlog with a useful life of less than 1 year, $16 million related to trademarks and tradenames with a weighted average useful life of 10 years and $15 million related to technology with a weighted average useful life of 4 years. The Company is in final negotiations with the seller on remaining closing adjustments and therefore has not yet finalized the purchase price allocation however completion is expected by the middle of 2009.

Divestments

        In addition to the sold businesses described under discontinued operations below, the Company has divested businesses and investments not considered by management to be aligned with its focus on power and automation technologies as described in Note 1. Since these divestments did not meet the requirements of SFAS 144 for classification as discontinued operations, the results of operations of these divested businesses are included in the Company's Consolidated Income Statements in the respective line items of income from continuing operations, through the date of divestment.

        In May 2007, the Company completed the sale of its 50 percent stake in Jorf Lasfar Energy Company S.C.A. (Jorf Lasfar), a power plant based in Morocco and its 50 percent stake in S.T.CMS Electric Company Private Limited (Neyveli), a power plant in India, to Taqa, the Abu Dhabi National Energy Company. The Company's share of the pre-tax earnings of Jorf Lasfar was $21 million and $67 million for the years ended December 31, 2007 and 2006, respectively. The Company's share of the pre-tax earnings of Neyveli for the years ended December 31, 2007 and 2006 was $4 million and $9 million, respectively. The sale of these investments resulted in a gain of approximately $38 million, which was included in continuing operations and was part of the Company's Corporate and Other division. During 2008, the Company recorded an additional gain of $16 million related to the favorable outcome on an outstanding tax case.

        During 2008, 2007 and 2006, the Company sold several operating units and investments, excluding the divestments disclosed above or below in discontinued operations, for total proceeds of $27 million, $27 million and $9 million, respectively, and recognized net gains on disposal of $24 million,

F-22

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 3—Acquisitions, divestments and discontinued operations (Continued)

$11 million and $3 million, respectively, which are included in other income (expense), net. Revenues and income from these businesses and investments were not significant in 2008, 2007 or 2006.

Discontinued operations

        The Company's Consolidated Financial Statements were impacted by activities related to the divestment of a number of businesses. The following completed disposals met the SFAS 144 criteria for presentation as held for sale and/or in discontinued operations in the reporting periods. The revenue and operating results of the divested business, discussed below, during the year of disposition reflects the results through the date of disposition.

Transformer business in South Africa

        During 2008, the Company sold its 50 percent stake in the shares of ABB Powertech Transformers, located in South Africa, to Powertech, a wholly-owned subsidiary of the Altron Group at a gain of $11 million. This business was part of the Company's Power Products division prior to being reclassified to discontinued operations. The transformer business in South Africa had revenues of $29 million, $167 million and $146 million for the years ended December 31, 2008, 2007 and 2006, respectively. Income for 2008, 2007 and 2006 was $2 million, $15 million and $16 million, respectively, recorded in income (loss) from discontinued operations, net of tax.

Downstream oil and gas business

        During the first quarter of 2007, the Company reclassified its downstream oil and gas business, Lummus Global (Lummus), to discontinued operations based on management's decision to sell that business. This business was part of the Company's Corporate and Other division prior to being reclassified to discontinued operations. In November 2007, the Company completed the sale of Lummus to Chicago Bridge & Iron (CB&I) and received net cash proceeds of approximately $810 million. The sale triggered an accelerated payment of $204 million by the Company to the CE Asbestos PI Trust, a trust set up to cover asbestos liabilities of Combustion Engineering. The payment to the trust was executed on November 14, 2007. The Company retained certain liabilities including those for potential fines and penalties connected with suspect payments made prior to completion of the sale (see Note 15).

        The Lummus business had revenues of $870 million and $985 million for the years ended December 31, 2007 and 2006, respectively. Income recorded for 2007 and 2006 was $9 million in each year, recorded in income (loss) from discontinued operations, net of tax. In addition, the Company recorded a gain on the sale of Lummus of $530 million in income (loss) from discontinued operations, net of tax. In 2008, the Company recorded certain adjustments that reduced the gain on sale by $5 million.

Building Systems business in Germany

        In April 2007, the Company completed the sale of its Building Systems business in Germany to the WISAG Group. This business was part of the Company's Corporate and Other division prior to being reclassified to discontinued operations. The business had revenues of $47 million and $286 million for the years ended December 31, 2007 and 2006, respectively. Losses for 2007 and 2006 were $2 million

F-23

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 3—Acquisitions, divestments and discontinued operations (Continued)

and $65 million, respectively, recorded in income (loss) from discontinued operations, net of tax. Of the loss reported for 2006, $67 million was an impairment charge based upon the proceeds which were expected from the sale of the business.

Power Lines business

        In February 2007, the Company sold its Power Lines businesses in Brazil and Mexico for a sales price of $20 million and no gain or loss. These businesses had revenues of $39 million and $80 million and losses of $3 million and $4 million for the years ended December 31, 2007 and 2006, respectively, which was recorded in income (loss) from discontinued operations, net of tax.

        In 2006, the Company disposed of its Power Lines businesses in Venezuela and South Africa. These businesses had revenues of $8 million and a loss of $1 million for the year ended December 31, 2006 recorded in income (loss) from discontinued operations, net of tax.

        All Power Lines businesses were part of the Company's Power Systems division prior to being reclassified to discontinued operations.

Cable business

        In 2006, the Company sold its cable business in Ireland to Longford Cable Ltd, based in the United Kingdom. This business was part of the Company's Power Products division prior to being reclassified to discontinued operations. Up to the divestment date in 2006, the business recorded revenues of $95 million and a loss of $48 million in income (loss) from discontinued operations, net of tax. The majority of the loss recorded in 2006 related to the sale of the business.

Upstream oil and gas business

        In 2006, the Company and the buyer of the upstream oil and gas business entered into an agreement to settle certain items which were disputed by the buyer after the closing of the transaction in 2004. In 2007 and 2006, the Company recorded income in connection with the release of certain provisions, amounting to approximately $21 million and $15 million, respectively, in income (loss) from discontinued operations, net of tax, related to the divestment.

Other

        In addition, the Company also reflected certain other operations as held for sale and in discontinued operations, as appropriate.

        Income (loss) from discontinued operations, net of tax, also included costs related to the Company's asbestos obligations of approximately $31 million, $0 million and $70 million for the years ended December 31, 2008, 2007 and 2006, respectively, (see Note 15).

F-24

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 3—Acquisitions, divestments and discontinued operations (Continued)

        Operating results of the Company's discontinued operations are summarized as follows:

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Revenues		32			1,123			1,602
Costs and expenses, finance loss		(82	)		(1,047	)		(1,668	)
Operating income (loss) before taxes		(50	)		76			(66	)
Tax (expense) benefit		20			(20	)		7
Operating income (loss) from discontinued operations		(30	)		56			(59	)
Gain (loss) from dispositions, net of tax		9			530			(83	)
Income (loss) from discontinued operations, net of tax		(21	)		586			(142	)

        At December 31, 2008, there were no amounts included in assets and liabilities held for sale and in discontinued operations. At December 31, 2007, the amounts included in assets and liabilities held for sale and in discontinued operations primarily consisted of cash and equivalents, marketable securities, short-term investments, receivables, inventories, accounts payable and advances from customers. These balances related to the Company's transformer business in South Africa, which was sold in 2008.

Note 4—Cash and equivalents and marketable securities and short-term investments

        At December 31, 2008 and 2007, cash and equivalents and marketable securities and short-term investments consisted of the following:

		December 31, 2008
		Cost basis		Gross unrealized gains		Gross unrealized losses			Fair value		Cash and equivalents		Marketable securities and short-term investments
		($ in millions)
Cash			1,736							1,736		1,736		—
Time deposits			3,674							3,674		3,581		93
Cash-settled call options(1)			63		19		(29	)		53		—		53
Securities held-to-maturity:
	Corporate commercial papers		532		—		—			532		532		—
Debt securities available-for-sale:
	U.S. government obligations		92		8		—			100		—		100
	European government obligations		1,397		117		(13	)		1,501		550		951
	Other government obligations		10		—		(2	)		8		—		8
	Corporate		132		4		(7	)		129		—		129
	Other		33		2		—			35		—		35
Equity securities available-for-sale			40		—		(2	)		38		—		38
Total			7,709		150		(53	)		7,806		6,399		1,407

⁽¹⁾

Serving as hedges of the Company's MIP (see Note 18).

F-25

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 4—Cash and equivalents and marketable securities and short-term investments (Continued)

		December 31, 2007
		Cost basis		Gross unrealized gains		Gross unrealized losses			Fair value		Cash and equivalents		Marketable securities and short-term investments
		($ in millions)
Cash			1,741							1,741		1,741		—
Time deposits			5,798							5,798		2,909		2,889
Cash-settled call options(1)			34		186		—			220		—		220
Debt securities available-for-sale:
	U.S. government obligations		86		2		—			88		—		88
	European government obligations		20		—		(1	)		19		—		19
	Other government obligations		13		—		—			13		—		13
	Corporate		132		2		(2	)		132		—		132
	Other		35		—		(1	)		34		—		34
Equity securities available-for-sale			58		8		(1	)		65		—		65
Total			7,917		198		(5	)		8,110		4,650		3,460

⁽¹⁾

Serving as hedges of the Company's MIP (see Note 18)

        To hedge its exposure to fluctuations in fair value of the Company's warrant appreciation rights (WARs) issued under the Company's MIP, the Company purchases cash-settled call options, which entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs. In accordance with EITF No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock (EITF 00-19) and SFAS 133, the cash-settled call options have been recorded as assets measured at fair value with subsequent changes in fair value recorded in accumulated other comprehensive loss and released to earnings to the extent that they offset the change in fair value of the liability for the WARs. Changes in the fair value of the cash-settled call options included in accumulated other comprehensive loss amounted to $21 million loss at December 31, 2008 and $36 million gain at December 31, 2007.

        At December 31, 2008, contractual maturities of available-for-sale debt securities consisted of the following:

	Cost basis		Fair value
	($ in millions)
Less than one year		1,403		1,507
One to five years		143		147
Six to ten years		86		85
Due after ten years		32		34
Total		1,664		1,773

        Gross realized gains on available-for-sale securities were $1 million, $130 million and $96 million in 2008, 2007 and 2006, respectively. Gross realized losses on available-for-sale securities were not significant in 2008, 2007 or 2006. Such gains and losses were included in interest and other finance expense.

F-26

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 4—Cash and equivalents and marketable securities and short-term investments (Continued)

        At December 31, 2008, the Company recognized in interest and other finance expense an other-than-temporary impairment of $20 million on its available-for-sale equity securities and adjusted the cost base of these securities accordingly.

        At December 31, 2008, the gross unrealized losses on those available-for-sale securities that have been in a continuous unrealized loss position were as follows:

		Less than 12 months					12 months or more
		Unrealized losses			Fair value		Unrealized losses			Fair value
		($ in millions)
Debt securities:
	European government obligations		(13	)		247		—			—
	Other government obligations		—			—		(2	)		3
	Corporate		(2	)		26		(5	)		37
Total securities in a continuous unrealized loss position			(15	)		273		(7	)		40

        Although fair values of certain of the Company's debt securities have declined as of December 31, 2008, the Company still expects to collect all principal and interest amounts due according to the contractual terms of the investment. The Company has the ability and intent to hold those investments until a recovery of fair value, which may be maturity, and therefore does not consider those investments to be other-than-temporarily impaired at December 31, 2008.

        At December 31, 2007, the gross unrealized losses on those available-for-sale securities that have been in a continuous unrealized loss position were not significant.

        During 2008, the Company changed its intent and sold an individual security (with an amortized cost of $50 million at the time of sale) that had been classified upon purchase as held-to-maturity. The sale took place based on evidence of a significant deterioration in the issuer's creditworthiness. The Company recorded an insignificant gain on the sale.

        At December 31, 2008 and 2007, the Company pledged $62 million and $65 million, respectively, of marketable securities as collateral for issued letters of credit and other security arrangements.

Note 5—Financial instruments

Cash flow hedges

        The Company enters into forward foreign exchange contracts to manage the foreign exchange risk of its operations. The Company also uses commodity contracts to manage its commodity risks. Where such instruments are designated and qualify as cash flow hedges, the effective portion of the changes in their fair value is recorded in accumulated other comprehensive loss, until the hedged item is recognized in earnings. At such time, the respective amount in accumulated other comprehensive loss is released to earnings and is shown in either revenues or cost of sales consistent with the classification of the earnings impact of the underlying transaction being hedged.

F-27

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 5—Financial instruments (Continued)

        The amount of derivative financial instrument gains or losses, net of tax reclassified from accumulated other comprehensive loss to earnings was a net gain of $49 million, $79 million and $95 million in 2008, 2007 and 2006, respectively.

        At December 31, 2008, accumulated other comprehensive loss included $161 million of unrealized losses on cash flow hedge derivatives. Of this amount $21 million losses related to cash-settled call options purchased to hedge the Company's exposure to fluctuations in the fair value of outstanding WARs under the MIP. Of the $161 million of unrealized losses, $140 million is expected to be reclassified to earnings in 2009 and $21 million is expected to be reclassified to earnings in 2010 through 2011.

        During 2008 and 2007, a net gain of $6 million and a net loss of $2 million, respectively, was reclassified into earnings as a result of the discontinuance of cash flow hedge accounting because it became probable that the originally forecasted transactions would not occur. A net loss of $4 million and $2 million in 2008 and 2007, respectively, was included in earnings due to ineffectiveness.

Fair value hedges

        To reduce its interest rate and foreign currency exposures arising primarily from its borrowing activities, the Company uses interest rate and cross-currency swaps. Where such instruments are designated as fair value hedges, the changes in fair value of these instruments, as well as the changes in fair value of the risk component of the underlying debt being hedged, are recorded as offsetting gains and losses in interest and other finance expense. The hedge ineffectiveness in 2008, 2007 and 2006, resulted in a (loss) gain of ($3) million, $0 million and $3 million, respectively, included in earnings.

F-28

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 5—Financial instruments (Continued)

Disclosure about financial instruments carried at fair value:

        The following table shows the fair value of financial assets and liabilities measured at fair value on a recurring basis:

	December 31, 2008											December 31, 2007
	Level 1			Level 2			Level 3		Total fair value			Fair value
	($ in millions)											($ in millions)
Assets
Available-for-sale securities in cash and equivalents		—			550			—		550			—
Available-for-sale securities in marketable securities and short-term investments		202			1,059			—		1,261			351
Cash-settled call options(1)		—			53			—		53			220
Derivative assets—current		5			597			—		602			295
Derivative assets—non-current		—			190			—		190			83
Liabilities
Derivative liabilities—current		(7	)		(789	)		—		(796	)		(243	)
Derivative liabilities—non-current		—			(180	)		—		(180	)		(162	)
Net assets and liabilities measured at fair value		200			1,480			—		1,680			544

⁽¹⁾

serving as hedges of the Company's MIP (see Note 18)

        The Company uses the following methods and assumptions in estimating fair values of assets and liabilities measured at fair value on a recurring basis:

Cash and equivalents, marketable securities and short-term investments

        Cash and equivalents include available-for-sale marketable securities, such as treasury bills, which are measured at fair value as well as held-to-maturity marketable securities, such as commercial papers, which are carried at amortized cost and disclosed at fair value. If quoted market prices in active markets for identical assets or liabilities are available, these are considered Level 1 inputs.

        If such quoted market prices are not available, fair value is determined based on net asset value (NAV) or using present value techniques and applying an appropriate risk-free interest rate adjusted for nonperformance risk. The inputs used in present value techniques are observable for these instruments and fall into the Level 2 category.

        Marketable securities and short-term investments include cash-settled call options serving as hedges of the Company's MIP and treasury bills and other marketable securities, such as fund investments.

        Cash-settled call options and marketable securities classified as available-for-sale are re-measured at fair value on a recurring basis based on quoted bid and mid-market prices, respectively.

        In addition, for fund investments the NAV is generally used as the basis for fair value measurement. Where NAV quotes are available with sufficient frequency and are supported by sufficient trading activity, the NAV constitutes a Level 1 input. For publicly traded closed-end funds

F-29

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 5—Financial instruments (Continued)

with listed shares traded on secondary markets with sufficient frequency, the quote for the fund's listed shares is the basis for measuring fair value and is considered Level 2, unless significant adjustments based on unobservable inputs are required.

Derivative instruments

        The fair values of derivative instruments are determined using quoted prices if available. If quoted prices are not available price quotes for similar instruments, appropriately adjusted, were used, or a discounted cash flow methodology based on available market data or option pricing models. The fair values obtained using price quotes for similar instruments or valuation techniques represent a Level 2 input unless significant unobservable inputs are used.

        Although the Company is party to some master netting arrangements, the fair values of the Company's derivative instruments are reported on a gross basis in the Consolidated Balance Sheets. Current derivative assets are recorded in other current assets and non-current derivative assets are recorded in other non-current assets. Current derivative liabilities are recorded in provisions and other and non-current derivative liabilities are recorded in other liabilities.

Disclosure about financial instruments carried on a cost basis:

Cash and equivalents, receivables, accounts payable, short-term debt and current maturities of long-term debt

        The carrying amounts approximate the fair values as the items are short-term in nature.

Marketable securities and short-term investments

        The carrying amounts of short-term investments, including time deposits, approximate their fair values.

Financing receivables and loans (non-current portion)

        Financing receivables and loans are carried at amortized cost, less an allowance for credit losses, if required. Fair values are determined using a discounted cash flow methodology based upon loan rates of similar instruments and reflecting appropriate adjustments for non-performance risk.

        The carrying values and estimated fair values of long-term loans granted at December 31, 2008, were $99 million and $99 million, respectively and at December 31, 2007, were $104 million and $102 million, respectively.

Long-term debt (non-current portion)

        Fair values of public bond issues are based on quoted market prices. The fair values of other debt are based on the present value of future cash flows, discounted at estimated borrowing rates for similar debt instruments, or in the case of private placement bond or note issuances, using the relevant borrowing rates derived from interest rate swap curves. The carrying values and estimated fair values of long-term debt at December 31, 2008, were $2,009 million and $2,014 million, respectively and at December 31, 2007, were $2,138 million and $2,300 million, respectively.

F-30

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 6—Receivables, net

        Receivables, net consisted of the following:

		December 31,
		2008			2007
		($ in millions)
Trade receivables			7,028			6,734
Other receivables			604			602
Allowance			(232	)		(224	)
			7,400			7,112
Unbilled receivables, net:
	Costs and estimated profits in excess of billings		2,638			3,370
	Advance payments consumed		(793	)		(1,900	)
			1,845			1,470
Total			9,245			8,582

        Trade receivables include contractual retention amounts billed to customers of $262 million and $250 million at December 31, 2008 and 2007, respectively. Management expects that the majority of related contracts will be completed and the majority of the billed amounts retained by the customer will be collected within one year of the respective balance sheet date. Other receivables consisted of value added tax, claims, rental deposits and other non-trade receivables.

        Costs and estimated profits in excess of billings represent revenues earned and recognized for contracts under the percentage of completion or completed contract method of accounting. Management expects that the majority of the amounts will be collected within one year of the respective balance sheet date.

        The reconciliation of changes in the allowance for doubtful accounts is as follows:

	December 31,
	2008			2007			2006
	($ in millions)
Balance at the beginning of the year		224			174			192
Additions		126			130			75
Deductions		(106	)		(143	)		(71	)
Exchange rate differences		(12	)		63			(22	)
Balance at the end of the year		232			224			174

F-31

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 7—Inventories, net

        Inventories, net, consisted of the following:

	December 31,
	2008			2007
	($ in millions)
Raw materials		1,934			1,879
Work in process		2,106			2,240
Finished goods		1,340			981
Advances to suppliers		350			240
		5,730			5,340
Advance payments consumed		(424	)		(477	)
Total		5,306			4,863

        Work in process contains inventoried costs relating to long-term contracts of $366 million and $356 million at December 31, 2008 and 2007, respectively. Advance payments consumed relate to contractual advances received from customers on work in process.

Note 8—Financing receivables, net

        Financing receivables, net consisted of the following:

	December 31,
	2008		2007
	($ in millions)
Loans receivable		99		104
Pledged financial assets		298		298
Other		48		85
Total		445		487

        Loans receivable primarily represent financing arrangements provided to customers related to products manufactured by the Company. Loans receivable are reported in the balance sheet at outstanding principal amount less any write-offs or allowance for uncollectible loans. The Company determines the loan losses based on historical experience and ongoing credit evaluation of the borrower's financial position.

        The Company entered into tax-advantaged leasing transactions with U.S. investors prior to 1999. The prepaid rents relating to these transactions are reflected as pledged financial assets, with an offsetting non-current deposit liability, which is included in other liabilities (see Note 13). Net gains on these transactions are being recognized over the lease terms, which expire by 2021.

F-32

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 9—Property, plant and equipment, net

        Property, plant and equipment, net, consisted of the following:

	December 31,
	2008			2007
	($ in millions)
Land and buildings		2,817			2,789
Machinery and equipment		5,345			5,500
Construction in progress		534			285
		8,696			8,574
Accumulated depreciation		(5,134	)		(5,328	)
Total		3,562			3,246

        In 2008, 2007 and 2006, depreciation expense including amortization of capital leases was $506 million, $437 million and $399 million, respectively. At December 31, 2008 and 2007, capital leases represented $63 million and $71 million of land and buildings and $48 million and $53 million of machinery and equipment. Total accumulated depreciation associated with assets under capital leases was $56 million and $58 million at December 31, 2008 and 2007, respectively.

Note 10—Goodwill and other intangible assets

        The changes in the carrying amount of goodwill for the year ended December 31, 2008 and 2007 were as follows:

	Power Products			Power Systems			Automation Products			Process Automation			Robotics			Corporate and Other			Total
	($ in millions)
Balance at January 1, 2007		129			434			723			947			108			28			2,369
Goodwill acquired during the year		21			—			2			—			—			—			23
Impairment losses		—			—			—			—			—			(7	)		(7	)
Other		—			(11	)		(9	)		(52	)		—			—			(72	)
Exchange rate differences		8			5			56			25			10			4			108
Balance at December 31, 2007		158			428			772			920			118			25			2,421
Goodwill acquired during the year		406			—			11			39			—			—			456
Other		—			(2	)		—			—			1			—			(1	)
Exchange rate differences		(10	)		(6	)		(27	)		(11	)		(4	)		(1	)		(59	)
Balance at December 31, 2008		554			420			756			948			115			24			2,817

        Amounts in the line item other in 2007 principally relate to goodwill adjustments in connection with the release of valuation allowances related to deferred tax assets of acquired entities. These valuation allowances were initially recorded when the businesses were acquired.

F-33

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 10—Goodwill and other intangible assets (Continued)

        Intangible assets other than goodwill consisted of the following:

	December 31, 2008							December 31, 2007
	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
	($ in millions)							($ in millions)
Capitalized software for internal use		564		(369	)		195		557		(438	)		119
Capitalized software for sale		377		(316	)		61		402		(311	)		91
Other		255		(100	)		155		495		(435	)		60
Total		1,196		(785	)		411		1,454		(1,184	)		270

        For the years ended December 31, 2008 and 2007, the Company capitalized intangible assets of $135 million and $89 million, respectively. Of these amounts $130 million, $2 million and $3 million related to software for internal use, software for sale and other, respectively in 2008 and $80 million, $5 million and $4 million related to software for internal use, software for sale and other, respectively in 2007.

        Additionally, during 2008, the Company capitalized $176 million in other related to business combinations with a weighted average useful life of approximately 6 years (see Note 3).

        Amortization expense of capitalized software for internal use for 2008, 2007 and 2006, recorded in selling, general and administrative expenses, amounted to $54 million, $40 million and $39 million, respectively. Amortization expense of capitalized software for sale for 2008, 2007 and 2006, recorded in cost of sales, amounted to $40 million, $40 million and $51 million, respectively. Amortization expense of other for 2008, 2007 and 2006, recorded in other income (expense), net, amounted to $61 million, $45 million and $44 million, respectively.

        The Company recorded insignificant impairment charges to intangible assets in 2008, 2007 and 2006. These charges are included in other income (expense), net, in the Consolidated Income Statements.

        Other primarily includes intangibles created through business combinations, such as trademarks, customer relationships, technology and patents.

        At December 31, 2008, amortization expense of intangible assets other than goodwill is estimated to be as follows:

	($ in millions)
2009		136
2010		94
2011		78
2012		47
2013		32
Thereafter		24
Total		411

F-34

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 11—Investments in equity method accounted companies

        The Company recorded pre-tax earnings of investees accounted for under the equity method of accounting of $15 million, $36 million and $83 million in 2008, 2007 and 2006, respectively, in other income (expense), net. The income tax expense related to those earnings was ($4) million, ($11) million and ($22) million, respectively. The investment balance of these investees amounted to $68 million and $63 million at December 31, 2008 and 2007, respectively.

        At December 31, 2008, the principal investments accounted for using the equity method of accounting were two VIEs that were established as consortia to develop and operate power plants. At December 31, 2008 and 2007, the Company maintained a combined equity and financing interest in these VIEs of approximately $84 million and $82 million, respectively of which approximately $56 million in each year was recognized as financing receivables. The Company's total interest in the VIEs is in the form of equity and subordinated debt. The Company determined that it is not the primary beneficiary of these VIEs as defined by Financial Accounting Standards Board Interpretation No. 46R Consolidation of Variable Interest Entities (revised 2003)—an interpretation of ARB No. 51 by determining that the Company's total equity and financing interest in the VIEs is less than the total equity and financing interest of certain other parties involved in the VIEs and consequently these entities have not been consolidated.

        The Company's involvement with these VIEs began in 1995 and 1998 at the dates of inception of the VIEs. The purpose of the VIEs is to contract the engineering, procurement, commissioning and financing of the power plants and to operate the plants using intermediaries once construction has been completed. As of and for the years ended December 31, 2008 and 2007, these VIEs reported combined total revenues of $103 million and $133 million, respectively, and earnings before interest and taxes of $18 million and $32 million, respectively. The maximum exposure to loss as a result of involvement with the VIEs is limited to the Company's combined equity and financing interests.

        In 2007 and 2006, the principal company in addition to the investments disclosed above accounted for using the equity method of accounting was Jorf Lasfar. The Company sold its 50 percent stake in Jorf Lasfar, as well as its 50 percent stake in Neyveli, a power plant in India, in May 2007 (see Note 3). The Company's share of earnings related to Jorf Lasfar was $21 million and $67 million for the years ended December 31, 2007 and 2006, respectively. At December 31, 2007, the pre-tax earnings of investees accounted for under the equity method of accounting included a gain of approximately $38 million on the sale of the Company's investments in Jorf Lasfar and Neyveli. This gain was offset by an impairment charge of $42 million in respect of one of the Company's equity investments, which it intends to divest, as the anticipated market value was less than its book value. During 2008, the Company recorded adjustments to this gain of $16 million related to a favorable outcome on an outstanding tax case. These equity investments were included in the Company's Corporate and Other division.

Note 12—Debt

        The Company's total debt at December 31, 2008 and 2007 amounted to $2,363 million and $2,674 million, respectively.

F-35

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 12—Debt (Continued)

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

        The Company's short-term debt and current maturities of long-term debt consisted of the following:

	December 31,
	2008		2007
	($ in millions)
Short-term debt (weighted-average interest rate of 12.6% and 8.6%)		159		129
Current maturities of long-term debt (weighted-average nominal interest rate of 4.5% and 4.4%)		195		407
Total		354		536

        Short-term debt primarily represents short-term loans from various banks.

        At December 31, 2008 and 2007, the Company had in place three commercial paper programs: a $1 billion commercial paper program for the private placement of U.S. dollar-denominated commercial paper in the United States; a $1 billion Euro-commercial paper program for the issuance of commercial paper in a variety of currencies and a 5 billion Swedish krona commercial paper program for the issuance of Swedish krona- and euro-denominated commercial paper. No amounts were outstanding under any of these programs at December 31, 2008 and 2007.

        In addition, the Company had in place a $2 billion multicurrency revolving credit facility, maturing 2010. Interest costs on drawings under the facility are LIBOR, STIBOR or EURIBOR (depending on the currency of the drawings) plus a margin of 0.175%, while commitment fees (payable on the unused portion of the facility) amount to 0.0525%, and utilization fees (payable on drawings greater than half of the facility) amount to 0.05%. No amount was drawn under the facility at December 31, 2008 and 2007. The facility contains cross-default clauses whereby an event of default would occur if the Company were to default on indebtedness as defined in the facility, at or above a specified threshold.

Long-term debt

        The Company utilizes a variety of derivative instruments to modify the characteristics of its long-term debt. The Company uses interest rate swaps to effectively convert certain fixed-rate long-term debt into floating rate obligations. For certain non-U.S. dollar denominated debt, the Company utilizes cross-currency swaps to effectively convert the debt into a U.S. dollar obligation. As required by SFAS 133, the carrying value of debt, designated as being hedged by fair value hedges, is adjusted for changes in the fair value of the risk component of the debt being hedged.

F-36

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 12—Debt (Continued)

        The following table summarizes the Company's long-term debt considering the effect of interest rate and currency swaps. Consequently, a fixed-rate debt subject to a fixed-to-floating interest rate swap is included as a floating rate debt in the table below:

	December 31, 2008									December 31, 2007
	($ in millions, except % data)									($ in millions, except % data)
	Balance			Nominal rate			Effective rate			Balance			Nominal rate			Effective rate
Floating rate		2,124			5.7	%		5.8	%		2,398			5.8	%		6.8	%
Fixed rate		80			4.8	%		4.8	%		147			2.4	%		6.4	%
		2,204									2,545
Current portion of long-term debt		(195	)		4.5	%		3.5	%		(407	)		4.4	%		6.1	%
Total		2,009									2,138

        At December 31, 2008, maturities of long-term debt were as follows:

	($ in millions)
Due in 2009		195
Due in 2010		25
Due in 2011		929
Due in 2012		8
Due in 2013		947
Thereafter		100
Total		2,204

        Details of the Company's outstanding bonds are as follows:

	December 31, 2008					December 31, 2007
		Nominal outstanding		Carrying value(1)			Nominal outstanding		Carrying value(1)
	(in millions)						(in millions)
Public bonds:
9.5% EUR Instruments, due 2008	EUR		—	$	—	EUR		77	$	113
10% GBP Instruments, due 2009	GBP		20		30	GBP		20		40
3.75% CHF Bonds, due 2009	CHF		108		102	CHF		108		94
6.5% EUR Instruments, due 2011	EUR		650		915	EUR		650		910
4.625% EUR Instruments, due 2013	EUR		700		941	EUR		700		912
Private placements					33					207
Total outstanding bonds				$	2,021				$	2,276

⁽¹⁾

USD carrying value is net of bond discounts and includes adjustments for fair value hedge accounting, where appropriate.

        All of the public bonds outstanding at December 31, 2008 and 2007, in the table above have been swapped into floating rate obligations through the use of interest rate or cross-currency swaps and consequently are shown as floating rate debt in the table of long-term debt above.

F-37

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 12—Debt (Continued)

        The 10% GBP Instruments, due 2009, contain certain clauses linking the interest paid on the bonds to the credit rating assigned to the bonds. If the rating assigned to these bonds by both Moody's and Standard & Poor's remains at or above Baa3 and BBB-, respectively, then the interest rate on the bonds remains at the level at issuance, that is 10 percent. In line with the Company's policy of reducing its interest and currency exposure, a cross-currency swap has been used to modify the characteristics of the 10% GBP Instruments, due 2009. After considering the impact of the cross-currency swaps, the 10% GBP Instruments, due 2009, effectively became a floating rate U.S. dollar obligation.

        The 3.75% CHF Bonds, due 2009, pay interest annually at a fixed annual rate of 3.75 percent.

        The 6.5% EUR Instruments, due 2011, pay interest semi-annually in arrears at a fixed annual rate of 6.5 percent. In the event of a change of control of the Company, the terms of these bonds require the Company to offer to repurchase the bonds at 101 percent of the principal amount thereof, plus any accrued interest.

        The Company has entered into interest rate swaps to hedge its interest obligations on the 3.75% CHF bonds, due 2009 and the 6.5% EUR Instruments, due 2011. After considering the impact of these interest rate swaps, the 3.75% CHF Bonds, due 2009, effectively became a floating rate Swiss franc obligation, while the 6.5% EUR Instruments, due 2011, effectively became a floating rate euro obligation.

        The 4.625% EUR Instruments, due 2013, pay interest annually in arrears at a fixed annual rate of 4.625 percent. The Company has the option to redeem the bonds early at any time from June 6, 2010, in accordance with the terms of the bonds. In the event of a change of control, a bondholder can require the Company to repurchase or redeem the bonds, in accordance with the terms of the bonds. The Company has entered into interest rate swaps to hedge its interest obligations on the 4.625% EUR Instruments, due 2013. As a result of these swaps, the 4.625% EUR Instruments, due 2013, effectively became a floating rate euro obligation.

        Substantially all of the Company's publicly traded bonds contain cross-default clauses which would allow the bondholders to demand repayment if the Company were to default on any borrowing at or above a specified threshold. Furthermore, all such bonds constitute unsecured obligations of the Company and rank pari passu with other debt obligations.

Bond conversions

        During 2007, holders of the total aggregate principle amount of 1 billion Swiss francs of the Company's 3.5% CHF Convertible Bonds, due 2010, converted their bonds into shares. The conversions resulted in the issuance of approximately 105 million shares out of contingent capital. Total debt decreased by approximately $825 million as a result of the conversion of the bonds, while capital stock and additional paid-in capital increased by approximately $830 million, representing the carrying value of debt and accrued interest converted into shares, net of certain charges in connection with the share issuance.

        During 2006, the Company announced an offer to holders of its outstanding 4.625% USD Convertible Bonds, due 2007, that contained certain incentives to induce the bondholders to convert their bonds into the Company's American Depositary Shares (ADSs). As a result of the induced

F-38

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 12—Debt (Continued)

conversion and the Company's subsequent call of those bonds whose holders had not accepted the Company's offer to convert, a total of approximately 107 million ADSs were issued to bondholders. In connection with this conversion offer, the Company incurred expenses related to the write-off of unamortized debt issuance costs, inducement payments to bondholders and transaction costs, totaling approximately $55 million, which are included in interest and other finance expense. The impact on equity (capital stock and additional paid-in capital and treasury stock) was an increase of approximately $928 million, after consideration of certain net charges in connection with the share issuance.

Other debt

        In addition to the bonds described above, included in long-term debt at December 31, 2008 and 2007, are lease obligations, bank borrowings of subsidiaries and other long-term debt, none of which is individually significant.

Note 13—Provisions and other and non-current other liabilities

        Provisions and other current liabilities consisted of the following:

	December 31,
	2008		2007
	($ in millions)
Contract related provisions		508		594
Provisions for contractual penalties and compliance and litigation matters		858		197
Derivatives (see Note 5)		796		243
Pension and other employee benefits (see Note 17)		66		73
Taxes payable		582		451
Income tax related liabilities		14		68
WAR liabilities		42		99
Other		601		597
Total		3,467		2,322

        Non-current other liabilities consisted of the following:

	December 31,
	2008		2007
	($ in millions)
Nuclear technology environmental provisions (see Note 15)		241		245
Non-current deposit liabilities (see Note 8)		298		298
Deferred income		89		113
Non-current derivative liabilities (see Note 5)		180		162
WAR liabilities		3		71
Income tax related liabilities		701		556
Other non-current liabilities		390		352
Total		1,902		1,797

F-39

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 14—Leases

Lease obligations

        The Company's lease obligations primarily relate to real estate and office equipment. In the normal course of business, management expects most leases to be renewed or replaced by other leases. Rent expense was $458 million, $387 million and $365 million in 2008, 2007 and 2006, respectively. Sublease income received on leased assets by the Company was $42 million, $44 million and $40 million 2008, 2007 and 2006, respectively.

        At December 31, 2008, future net minimum lease payments for operating leases, having initial or remaining non-cancelable lease terms in excess of one year, consisted of the following:

	($ in millions)
2009		372
2010		325
2011		268
2012		228
2013		213
Thereafter		551
		1,957
Sublease income		(133	)
Total		1,824

        At December 31, 2008, the future net minimum lease payments for capital leases and the present value of the net minimum lease payments consisted of the following:

	($ in millions)
2009		40
2010		32
2011		20
2012		17
2013		15
Thereafter		125
Total minimum lease payments		249
Less amount representing estimated executory costs included in total minimum lease payments		(5	)
Net minimum lease payments		244
Less amount representing interest		(117	)
Present value of minimum lease payments		127

        Minimum lease payments have not been reduced by minimum sublease rentals of $4 million due in the future under noncancelable subleases. The present value of minimum lease payments is presented in short-term debt and current maturities of long-term debt or long-term debt in the Consolidated Balance Sheets.

F-40

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies

Contingencies—Environmental

        The Company is engaged in environmental clean-up activities at certain sites arising under various United States and other environmental protection laws and under certain agreements with third parties. In some cases, these environmental remediation actions are subject to legal proceedings, investigations or claims, and it is uncertain to what extent the Company is actually obligated to perform. Provisions for these unresolved matters have been set up if it is probable that the Company has incurred a liability and the amount of loss can be reasonably estimated. If a provision has been recognized for any of these matters the Company records an asset when it is probable that it will recover a portion of the costs expected to be incurred to settle them. Management is of the opinion, based upon information presently available, that the resolution of any such obligation and non-collection of recoverable costs would not have a further material adverse effect on the Company's Consolidated Financial Statements.

Contingencies related to former Nuclear Technology business

        The Company retains liabilities for certain specific environmental remediation costs at two sites in the United States that were operated by its former subsidiary, ABB CE-Nuclear Power Inc., which the Company sold to British Nuclear Fuels PLC (BNFL) in 2000. Pursuant to the sale agreement with BNFL, the Company has retained the environmental liabilities associated with its Combustion Engineering, Inc. subsidiary's Windsor, Connecticut, facility and agreed to reimburse BNFL for a share of the costs that BNFL incurs for environmental liabilities associated with its former Hematite, Missouri, facility. The primary environmental liabilities associated with these sites relate to the costs of remediating radiological and chemical contamination. Such costs are not incurred until a facility is taken out of use and generally are incurred over a number of years. Although it is difficult to predict with accuracy the amount of time it may take to remediate radiological and chemical contamination at the Hematite site, based on information that BNFL has made available, the Company believes that it may take until 2015. With respect to the Windsor site, the Company believes the remediation may take until 2012.

        Under the terms of the sale agreement, BNFL is responsible to have the remediation of the Hematite site performed in a cost efficient manner and pursue recovery of remediation costs from other potentially responsible parties as conditions for obtaining cost sharing contributions from the Company. Westinghouse Electric Company LLC (Westinghouse), BNFL's former subsidiary, now oversees remediation activities at the Hematite site. Westinghouse was acquired during 2006 by a consortium led by Toshiba Corporation, Japan. Westinghouse brought legal action against the former owners/operators of the Hematite site and the U.S. Government under the Comprehensive Environmental Response Compensation and Liability Act to recover past and future remediation costs. The defendants contested Westinghouse's claims. During 2006, an arbitration ruling, related to indemnification of the former owners/operators contained in the Combustion Engineering purchase agreement for the site, was unfavorable to Westinghouse's claims, potentially increasing the Westinghouse costs subject to the cost sharing agreement. Separately, based on the publicly available draft Remedial Investigation Report and Decommissioning Plan prepared by Westinghouse and other site related data, the Company was able to re-estimate its share of the expected total remediation costs for the Hematite site. The unfavorable outcome of the arbitration was largely offset by a lower site

F-41

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies (Continued)

remediation cost estimate. During 2008 and 2007, Westinghouse's efforts were focused on modifying, finalizing and obtaining regulatory approval of its draft decommissioning plan for the Hematite site.

        During 2007, the Company reached an agreement with U.S. government agencies to transfer oversight of the remediation of the portion of the Windsor site under the U.S. Government's Formerly Utilized Sites Remedial Action Program from the U.S. Army Corps of Engineers to the Nuclear Regulatory Commission which has oversight responsibility for the remaining radiological areas of that site and the Company's radiological license for the site. Management believes this could result in cost efficiencies as well as expedited completion of the remediation activities at the site.

        The Company established a provision of $300 million in income (loss) from discontinued operations in 2000 for its estimated share of the remediation costs for these sites. At December 31, 2008 and 2007, the Company has recorded in non-current other liabilities provisions of $241 million and $245 million, net of payments from inception of $54 million and $50 million, respectively. Expenditures charged against the provision were $4 million, $3 million and $4 million during 2008, 2007 and 2006, respectively. The Company has estimated that during 2009 it will charge expenditures of approximately $27 million to the provision.

Contingencies related to other present and former facilities primarily in north America

        The Company is involved in the remediation of environmental contamination at present or former facilities, primarily in the United States. The clean up of these sites involves primarily soil and groundwater contamination. At December 31, 2008 and 2007, the Company has recorded in current and non-current other liabilities reserves totaling $52 million and $32 million, respectively. The increase for 2008 reflects environmental reserves of an acquired company. Substantially all of the acquired entity's remediation liability is indemnified by a prior owner. Accordingly, an asset equal to this increase in the remediation liability is included in other non-current assets. Charges to earnings, including $1 million, $7 million and $6 million in income (loss) from discontinued operations in 2008, 2007 and 2006, were $4 million, $14 million and $9 million for the years ended December 31, 2008, 2007 and 2006, respectively. Expenditures for the years ended December 31, 2008, 2007 and 2006 were $8 million, $4 million and $4 million, respectively. The Company has estimated that during 2009 expenditures on these projects will be approximately $12 million.

Asbestos obligations

        The Company's Combustion Engineering, Inc. subsidiary (CE) was a co-defendant in a large number of lawsuits claiming damage for personal injury resulting from exposure to asbestos. A smaller number of claims were also brought against the Company's former Lummus subsidiary as well as against other entities of the Company. Separate plans of reorganization for CE and Lummus, as amended, were filed under Chapter 11 of the U.S. Bankruptcy Code. The CE plan of reorganization and the Lummus plan of reorganization (collectively, the Plans) became effective on April 21, 2006 and August 31, 2006, respectively.

        Under the Plans, separate personal injury trusts were created and funded to settle future asbestos related claims against CE and Lummus and on the respective Plan effective dates, channeling injunctions were issued pursuant to Section 524(g) of the U.S. Bankruptcy Code under which all

F-42

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies (Continued)

present and future asbestos-related personal injury claims filed against the Company and its affiliates and certain other entities that relate to the operations of CE and Lummus are channeled to the CE Asbestos PI Trust or the Lummus Asbestos PI Trust, respectively.

        Funding of the CE Asbestos PI Trust has been made on certain scheduled payment dates. In addition, $204 million was paid to this Trust on November 14, 2007, as required in conjunction with the sale of Lummus which occurred on November 16, 2007. Funding of the Lummus Asbestos PI Trust was completed on May 2, 2007 upon the payment to that Trust of $28 million.

        From time to time, other entities of the Company have been named as defendants in asbestos-related claims. At December 31, 2008 and 2007, there were approximately 7,500 and 9,500, respectively, asbestos-related claims outstanding against ABB entities other than CE and Lummus. ABB entities that are subject to such claims will continue to resolve them in the tort system, or otherwise. The Company generally seeks dismissals from claims where there is no apparent linkage between the plaintiff's claimed exposure and a product of the Company. To date, resolving asbestos-related claims against the Company's entities other than CE and Lummus has not had a material impact on the Company's consolidated financial position, results of operations or cash flows.

        The effect of asbestos obligations on the Company's Consolidated Income Statements was as follows:

	Year ended December 31,
	2008			2007		2006
	($ in millions)
Income (loss) from discontinued operations, net of tax (see Note 3)		(31	)		—		(70	)

        The effect of asbestos obligations on the Company's Consolidated Statements of Cash Flows was as follows:

	Year ended December 31,
	2008		2007		2006
	($ in millions)
Cash payments to:
CE Asbestos PI Trust		100		354		70
Lummus Asbestos PI Trust		—		28		9
Fees and other costs		—		—		20
		100		382		99

F-43

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies (Continued)

        The effect of asbestos obligations on the Company's Consolidated Balance Sheets was as follows:

	December 31,
	2008		2007		2006
	($ in millions)
CE Plan (Face value $100 million at December 31, 2007)—current		—		97		146
Other asbestos obligations—current		4		4		4
Asbestos liabilities included in liabilities held for sale and in discontinued operations		—		—		29
Total current liabilities		4		101		179
CE Plan non-current liabilities		50		—		282
Total non-current liabilities		50		—		282

        The asbestos obligations relating to the CE Plan as reflected in the Company's Consolidated Financial Statements were payable pursuant to a non-interest bearing promissory note (the ABB Promissory Note). The Company is also liable on a contingent basis under the ABB Promissory Note for two additional payments of $25 million each. One additional payment of $25 million is payable in 2010 or 2011 if the Company attains an earnings before interest and taxes (EBIT) margin of 9% for 2009 or 14% in 2010. The other additional payment of $25 million is payable in 2011 if the Company attains an EBIT margin of 9.5% in 2010. During 2008, the Company recorded both of these contingent payment obligations as, based on forecasted financial results, it expects to achieve the target EBIT margins in 2009 and 2010. If the Company is found by the U.S. Bankruptcy Court (the Bankruptcy Court) to have defaulted on its payment obligations under the ABB Promissory Note, the CE Asbestos PI Trust may petition the Bankruptcy Court to terminate the CE channeling injunction and the protections afforded by that injunction to the Company and other ABB entities as well as certain other entities, including Alstom SA (Alstom).

Contingencies—Regulatory, Compliance and Legal

Gas Insulated Switchgear business

        In May 2004, the Company announced that it had undertaken an internal investigation which uncovered that certain of its employees together with employees of other companies active in the Gas Insulated Switchgear business were involved in anti-competitive practices. The Company has reported such practices upon identification to the appropriate antitrust authorities, including the European Commission. The European Commission announced its decision on January 24, 2007 and granted ABB full immunity from fines assessed to the Company of euro 215 million under the European Commission's leniency program.

        The Company continues to cooperate with other antitrust authorities in several locations globally, including Brazil, which are investigating anti-competitive practices related to Gas Insulated Switchgear. At this stage of the proceedings, no reliable estimate of the amount of potential fines, if any, can be made.

        In addition, the Company is aware of proceedings issued against it and others in respect of private claims by customers and other third parties alleging harm with regard to the Gas Insulated Switchgear

F-44

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies (Continued)

cartel cases. However, an informed judgment about the merits of these claims or the amount of potential loss for the Company, if any, resulting from these proceedings cannot be made at this stage and as such the Company has made no provision at December 31, 2008, for any of these cases.

Power Transformers business

        In February 2007, the European Commission conducted dawn raids at the premises of an ABB unit in Bad Honnef, Germany, as part of its investigation into alleged anti-competitive practices of certain manufacturers of power transformers. The German Antitrust Authority (Bundeskartellamt) and other antitrust authorities are also reviewing those alleged practices which relate to the German market and other markets. Management is cooperating fully with the authorities in their investigations. The Company anticipates an unfavorable outcome with respect to these alleged anti-competitive practices and expects that fines will be imposed.

Cables business

        ABB's cables business is under investigation for alleged anti-competitive practices. Management is cooperating fully with the antitrust authorities in their investigations. An informed judgment about the outcome of these investigations or the amount of potential loss for the Company, if any, relating to these investigations cannot be made at this stage.

Suspect payments

        In April 2005, the Company voluntarily disclosed to the United States Department of Justice (DoJ) and the United States Securities and Exchange Commission (SEC) certain suspect payments in its network management unit in the United States. Subsequently, the Company made additional voluntary disclosures to the DoJ and the SEC regarding suspect payments made by other Company subsidiaries in a number of countries in the Middle East, Asia, South America and Europe as well as by its former Lummus business. These payments were discovered by the Company as a result of the Company's internal audit program and compliance reviews. The payments may be in violation of the Foreign Corrupt Practices Act or other applicable laws. The Company is cooperating with the relevant authorities regarding these issues and is continuing its internal investigations and compliance reviews. The Company anticipates an unfavorable outcome with respect to the investigation of these suspect payments and expects that fines will be imposed.

Earnings overstatement in an Italian subsidiary

        In September 2004, the Company restated its Consolidated Financial Statements for all prior periods as a result of earnings overstatements by a business unit of the Company's Power Products division (part of the former Power Technologies division) in Italy. The restatement followed an internal investigation by the Company which revealed that the business unit had overstated earnings before interest and taxes and net income, as well as that certain employees had participated in arranging improper payments to an employee of an Italian power generation company in order to obtain a contract. The Company has reported this matter to the Italian authorities, who have initiated formal criminal proceedings, as well as to the SEC and the DoJ. The Company cannot reasonably predict the outcome of the criminal proceedings or what action, if any, the SEC or the DoJ may take.

F-45

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies (Continued)

General

        In addition, the Company is subject to other various legal proceedings, investigations, and claims that have not yet been resolved. With respect to the above-mentioned regulatory matters and commercial litigation contingencies, the Company will bear the costs of the continuing investigations and any related legal proceedings.

        At December 31, 2008 and 2007, the Company accrued aggregate liabilities of approximately $795 million and $140 million, respectively, included in provisions for contractual penalties and compliance and litigation matters and other non-current liabilities (see Note 13) for the above regulatory, compliance and legal contingencies. As it is not possible to make an informed judgement on the outcome of certain matters and as it is not possible based on information currently available to management to estimate the maximum potential liability on other matters, there could be material adverse outcomes beyond the accrued liabilities.

Guarantees—general

        The following table provides quantitative data regarding the Company's third-party guarantees. The maximum potential payments represent a "worst-case scenario" and do not reflect management's expected results.

        The carrying amounts of liabilities recorded in the Consolidated Balance Sheets reflect management's best estimate of future payments it may incur as part of fulfilling its guarantee obligations.

	December 31, 2008				December 31, 2007
	Maximum potential payments		Carrying amount of liabilities		Maximum potential payments		Carrying amount of liabilities
	($ in millions)				($ in millions)
Performance guarantees		413		1		957		9
Financial guarantees		95		—		131		—
Indemnification guarantees		277		2		328		1
Total		785		3		1,416		10

Guarantees—performance

        Performance guarantees represent obligations where the Company guarantees the performance of a third party's product or service according to the terms of a contract. Such guarantees may include guarantees that a project will be completed within a specified time. If the third party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. Performance guarantees include surety bonds, advance payment guarantees and performance standby letters of credit.

        The Company retained obligations for guarantees related to the Power Generation business contributed in mid-1999 to the former ABB Alstom Power NV joint venture (Alstom Power NV). The guarantees primarily consist of performance guarantees, advance payment guarantees and other miscellaneous guarantees under certain contracts such as indemnification for personal injuries and

F-46

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies (Continued)

property damages, taxes and compliance with labor laws, environmental laws and patents. The guarantees are related to projects which are expected to be completed by 2013 but in some cases have no definite expiration date. In May 2000, the Company sold its interest in Alstom Power NV to Alstom. As a result, Alstom and its subsidiaries have primary responsibility for performing the obligations that are the subject of the guarantees. Further, Alstom, the parent company and Alstom Power NV, have undertaken jointly and severally to fully indemnify and hold harmless the Company against any claims arising under such guarantees. Management's best estimate of the total maximum potential exposure of quantifiable guarantees issued by the Company on behalf of its former Power Generation business was approximately $120 million and $171 million at December 31, 2008 and 2007, respectively. The Company has not experienced any losses related to guarantees issued on behalf of the former Power Generation business.

        The Company retained obligations for guarantees related to the Upstream Oil and Gas business sold in 2004. The guarantees primarily consist of performance guarantees, advance payment guarantees and other miscellaneous guarantees. The guarantees have original maturity dates ranging from one to seven years. The maximum amount payable under the guarantees was approximately $239 million and $393 million at December 31, 2008 and 2007, respectively. The Company has the ability to recover potential payments under these guarantees through certain backstop guarantees. The maximum potential recovery under these backstop guarantees was approximately $16 million at December 31, 2008 and 2007.

        At December 31, 2008, the Company no longer has any retained obligations for performance guarantees related to the Lummus business sold in 2007. At December 31, 2007, the maximum amount payable under these obligations was $301 million. All performance guarantees remaining at year end 2007 were officially released during 2008.

        The Company retained obligations for guarantees related to the Building Systems business in Germany sold in 2007. The guarantees primarily consist of performance guarantees. The guarantees have original maturity dates ranging from one to thirteen years. The maximum amount payable under the guarantees was approximately $54 million and $92 million at December 31, 2008 and 2007, respectively.

Guarantees—financial

        Financial guarantees represent irrevocable assurances that the Company will make payment to a beneficiary in the event that a third party fails to fulfill its financial obligations and the beneficiary under the guarantee incurs a loss due to that failure.

        At December 31, 2008 and 2007, the Company had $95 million and $131 million, respectively, of financial guarantees outstanding. Of those amounts, $22 million and $56 million, respectively, were issued on behalf of companies in which the Company currently has or formerly had an equity interest. The guarantees have various maturity dates. The majority of the durations run to 2013 with the longest expiring in 2021.

F-47

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies (Continued)

Guarantees—indemnification

        The Company has indemnified certain purchasers of divested businesses for potential claims arising from the operations of the divested businesses. To the extent the maximum loss related to such indemnifications could not be calculated, no amounts have been included under maximum potential payments in the table above. Indemnifications for which maximum losses could not be calculated include indemnifications for legal claims.

        The Company delivered to the purchasers of Lummus guarantees related to assets and liabilities divested in 2007. The maximum liability at December 31, 2008 and 2007, of $50 million, relating to this business will reduce over time, pursuant to the sales agreements.

        The Company delivered to the purchasers of its interest in Jorf Lasfar guarantees related to assets and liabilities divested in 2007. The maximum liability at December 31, 2008 and 2007, of $143 million and $189 million, respectively, relating to this business will reduce over time, pursuant to the sales agreements.

        The Company delivered to the purchaser of the Reinsurance business guarantees related to assets and liabilities divested in 2004. The maximum liability at December 31, 2008 and 2007, of approximately $84 million and $89 million, respectively, relating to this business will reduce over time, pursuant to the sales agreement.

        With respect to the sale of Lummus, the Company retained certain liabilities, including for potential fines and penalties connected with suspect payments made prior to completion of the sale. The Company has disclosed these suspect payments to the SEC and DoJ. The Company believes that an unfavorable outcome is likely and has recorded a provision as discussed in more detail in the suspect payment disclosures section above.

Product and order related contingencies

        The Company calculates its provision for product warranties based on historical claims experience and specific review of certain contracts.

        Reconciliation of the provision for warranties, including guarantees of product performance is as follows:

	December 31,
	2008			2007
	($ in millions)
Balance at the beginning of year		1,121			998
Claims paid in cash or in kind		(173	)		(243	)
Net increase to provision for changes in estimates, warranties issued and warranties expired		203			267
Exchange rate differences		(46	)		99
Balance at the end of year		1,105			1,121

F-48

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 15—Commitments and contingencies (Continued)

IBM Outsourcing Agreement

        In 2003, the Company entered into a 10-year global framework agreement with International Business Machines Corporation (IBM) to outsource the Company's information systems infrastructure services to IBM. The global framework agreement includes an obligation for IBM to lease new personal computers and other IT equipment to the Company as older equipment is retired. The Company accounts for these items as capital leases or operating leases based on the terms of the leases.

        Further, pursuant to the global framework agreement, IBM will receive monthly payments from the Company's subsidiaries in the respective countries related to information systems infrastructure services. Annual costs during 2008, 2007 and 2006 were $285 million, $251 million and $236 million, respectively, reflecting the current level of usage of the services.

Related party transactions

        The Company conducts business with companies where members of the Company's Board of Directors act as directors or board members. This includes the IBM global frame agreement, the Company's banking relationships with Skandinaviska Enskilda Banken AB (Publ) and Dresdner Bank AG and various sales of products and services. The Company's Board of Directors has determined that the Company's business relationships with those companies do not constitute material business relationships. This determination was made in accordance with the Company's related party transaction policy which was prepared based on the Swiss Code of Best Practice and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange.

Note 16—Taxes

Provision for taxes consisted of the following:

	Year ended December 31,
	2008			2007			2006
	($ in millions)
Current taxes on income		1,282			939			564
Deferred taxes		(163	)		(344	)		122
Tax expense from continuing operations		1,119			595			686
Tax expense (benefit) from discontinued operations		(36	)		36			(7	)

        The weighted average tax rate results from applying each subsidiary's statutory income tax rate to the income from continuing operations before taxes and minority interest. The Company operates in countries that have differing tax laws and rates. Consequently, the consolidated weighted average

F-49

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 16—Taxes (Continued)

effective rate will vary from year to year according to the source of earnings or losses by country and the change in applicable tax rates.

	Year ended December 31,
	2008			2007			2006
	($ in millions, except % data)
Reconciliation of taxes:
Income from continuing operations before taxes and minority interest		4,518			4,010			2,397
Weighted average tax rate		28.1	%		29.7	%		29.7	%
Taxes at weighted average tax rate		1,270			1,189			712
Items taxed at rates other than the weighted average tax rate		3			4			(55	)
Changes in valuation allowance		(414	)		(698	)		(60	)
Changes in tax laws and enacted tax rates		(19	)		(15	)		(3	)
Other, net		279			115			92
Tax expense from continuing operations		1,119			595			686
Effective tax rate for the year		24.8	%		14.8	%		28.6	%

        The reconciliation of taxes for 2008, 2007 and 2006 included changes in the valuation allowance recorded in certain jurisdictions in respect of deferred tax assets that were recognized for net operating losses and timing differences incurred in those jurisdictions. The change in valuation allowance was required as the Company determined that it was more likely than not that such deferred tax assets would be realized. In 2008 the change in valuation allowance was predominantly related to the Company's operations in north America with approximately $330 million. In 2007 the change in valuation allowance was predominantly related to the Company's operations in north America with approximately $550 million.

        In 2008, the reconciling item other, net included an expense of approximately $140 million related to a pending tax dispute in north Europe. In addition, other, net included an expense of approximately $100 million relating to costs of previously disclosed investigations by U.S. and European authorities into suspect payments and alleged anti-competitive practices, respectively, that were deducted for financial accounting purposes, but were not tax deductible. The line item also included a reduction of expense of approximately $53 million related to the court decision in north Europe concerning certain sale and leaseback transactions as well as to the favorable outcome related to the interpretation of tax law and double tax treaty agreements by competent tax authorities in north Africa. The line item also included an expense of approximately $50 million relating to items that were deducted for financial accounting purposes, but were not tax deductible such as interest expense, state and local taxes on productive activities, disallowed meals and entertainment expenses and other similar items. Further, other, net included an additional expense of approximately $40 million relating to a net increase in tax accruals. The Company's policy for such accruals is outlined in Note 2.

F-50

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 16—Taxes (Continued)

        In 2007, the reconciling item other, net included an expense of approximately $35 million related to the interpretation of tax law and double tax treaty agreements by competent tax authorities in north Africa. Further, other, net included an additional expense of approximately $45 million relating to a net increase in tax accruals. The Company's policy for such accruals is outlined in Note 2. In addition, other, net included an expense of approximately $35 million relating to items that were deducted for financial accounting purposes, but were not tax deductible such as interest expense, state and local taxes on productive activities, disallowed meals and entertainment expenses and other similar items.

        In 2006, the reconciling item other, net included an expense of approximately $70 million relating to a net increase in tax accruals. Further, other, net included an expense of approximately $35 million relating to items that were deducted for financial accounting purposes, but were not tax deductible such as interest expense, state and local taxes on productive activities, disallowed meals and entertainment expenses and other similar items.

        Deferred income tax assets and liabilities consisted of the following:

	December 31,
	2008			2007
	($ in millions)
Deferred tax assets:
Pension and other accrued liabilities		988			770
Unused tax losses and credits		1,234			1,443
Inventories		245			180
Other		231			212
Total deferred tax asset		2,698			2,605
Valuation allowance		(488	)		(960	)
Deferred tax asset, net of valuation allowance		2,210			1,645
Deferred tax liabilities:
Property, plant and equipment		(221	)		(220	)
Pension and other accrued liabilities		(291	)		(221	)
Inventories		(170	)		(140	)
Other		(271	)		(197	)
Total deferred tax liability		(953	)		(778	)
Net deferred tax asset		1,257			867

        At December 31, 2008 and 2007, the line item other in total deferred tax asset included approximately $100 million and $90 million, respectively, related to property, plant and equipment.

        Certain entities have deferred tax assets related to net operating loss carry-forwards and other items. Because recognition of these assets did not meet the more likely than not standard, valuation allowances of $488 million and $960 million had been established at December 31, 2008 and 2007, respectively. At December 31, 2008, the line item unused tax losses and credits included approximately $300 million which, due to limitations imposed by the relevant tax law, the Company has determined

F-51

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 16—Taxes (Continued)

that it is more likely than not that such deferred tax assets would not be realized. The Company has therefore established a full valuation allowance for this matter.

        At December 31, 2008, net operating loss carry-forwards of $3,440 million and tax credits of $124 million were available to reduce future taxes of certain subsidiaries, of which $2,336 million loss carry-forwards and $95 million tax credits which will expire in varying amounts through 2028. These carry-forwards were predominantly related to the Company's U.S. operations.

        At December 31, 2008 and 2007, the line item other in total deferred tax liability included approximately $100 million and $85 million, respectively, related to the recognition of deferred taxes under APB 23.

        Unrecognized tax benefits consisted of the following:

	Unrecognized tax benefits			Penalties and interest related to unrecognized tax benefits			Total
	($ in millions)
Classification as unrecognized tax items on January 1, 2007		524			107			631
Increase relating to prior year tax positions		101			48			149
Decrease relating to prior year tax positions		(128	)		(7	)		(135	)
Increase relating to current year tax positions		76			2			78
Decrease related to current year tax positions		(4	)		—			(4	)
Decrease due to settlements with taxing authorities		(30	)		(16	)		(46	)
Decrease as a result of the applicable statute of limitations		(37	)		(10	)		(47	)
Exchange difference average		16			5			21
Balance at December 31, 2007 which would, if recognized, affect the effective tax rate		518			129			647
Net change due to acquisitions and divestments		6			1			7
Increase relating to prior year tax positions		189			75			264
Decrease relating to prior year tax positions		(20	)		(1	)		(21	)
Increase relating to current year tax positions		93			1			94
Decrease related to current year tax positions		(17	)		(1	)		(18	)
Decrease due to settlements with taxing authorities		(127	)		(55	)		(182	)
Decrease as a result of the applicable statute of limitations		(25	)		(5	)		(30	)
Exchange difference average		(19	)		(5	)		(24	)
Balance at December 31, 2008 which would, if recognized, affect the effective tax rate		598			139			737

        In 2008, the reconciling item increase relating to prior year tax positions included an expense of approximately $85 million in taxes and approximately $50 million in penalties and interest relating to a pending tax dispute in north Europe. Further, it included an increase of provision of approximately $33 million in taxes relating to a pending assessment by competent tax authorities in central Europe.

F-52

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 16—Taxes (Continued)

        In 2008, the reconciling item decrease due to settlements with taxing authorities included the release of provisions of approximately $53 million in taxes and approximately $48 million in penalties and interest relating to court cases in north Europe concerning certain sale and leaseback transactions as well as to the favorable outcome in north Africa relating to the interpretation of tax law and double tax treaty agreements by competent tax authorities. Further, it included the release of provision of approximately $33 million in taxes relating to the favorable outcome of an assessment by competent tax authorities in central Europe.

        In 2007, the reconciling item decrease relating to prior year positions included approximately $100 million related to the outcome of a court decision in north Europe where the Company had claimed in its tax return a divestment loss that had not met the technical merits for recognition under FIN 48 accounting principles. Neither penalty nor interest were due as a result of this court decision.

        The Company expected the resolution of uncertain tax positions related to pending court cases amounting to be approximately $180 million for taxes, penalties and interest within the next twelve months. Otherwise, the Company had not identified any significant changes which were expected to occur reasonably possible within the next twelve months.

        At December 31, 2008, the earliest significant open tax years that remained subject to examination were the following:

Region	Year
Central Europe		2002
Mediterranean		2004
Middle East & Africa		2006
North America		2005
North Asia		2001
North Europe		2003
South America		2004
South Asia		2002

Note 17—Employee benefits

        The Company operates pension plans, including defined benefit, defined contribution and termination indemnity plans in accordance with local regulations and practices. These plans cover a large portion of the Company's employees and provide benefits to employees in the event of death, disability, retirement, or termination of employment. Certain of these plans are multi-employer plans. The Company also operates other postretirement benefit plans in certain countries.

        Some of these plans require employees to make contributions and enable employees to earn matching or other contributions from the Company. The funding policies of the Company's plans are consistent with the local government and tax requirements. The Company has several pension plans that are not required to be funded pursuant to local government and tax requirements. The Company uses a December 31 measurement date for its plans.

        On December 31, 2006, the Company adopted SFAS 158, which requires the Company to recognize in its Consolidated Balance Sheets the funded status of its defined benefit pension and

F-53

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 17—Employee benefits (Continued)

postretirement plans, measured as the difference between the fair value of the plan assets and the benefit obligation. This resulted in a charge to ending accumulated other comprehensive loss at December 31, 2006, of $426 million, net of tax.

Obligations and funded status

        The following tables set forth the change in benefit obligations, the change in plan assets and the funded status recognized in the Consolidated Balance Sheets at December 31, 2008 and 2007, for the Company's benefit plans:

	December 31,						December 31,
	2008			2007			2008			2007
	Pension benefits						Other benefits
	($ in millions)						($ in millions)
Benefit obligation at the beginning of the year		8,884			8,278			215			222
Service cost		204			189			2			1
Interest cost		438			361			13			12
Contributions by plan participants		45			38			—			—
Benefit payments		(525	)		(538	)		(16	)		(12	)
Benefit obligations of businesses disposed and acquired		31			(5	)		2			—
Actuarial (gain) loss		(619	)		(78	)		(5	)		(11	)
Plan amendments and other		(243	)		23			(1	)		—
Exchange rate differences		(454	)		616			(3	)		3
Benefit obligation at the end of the year		7,761			8,884			207			215
Fair value of plan assets at the beginning of the year		8,906			8,163			—			—
Actual return on plan assets		(1,053	)		370			—			—
Contributions by employer		300			297			16			12
Contributions by plan participants		45			38			—			—
Benefit payments		(525	)		(538	)		(16	)		(12	)
Plan assets of businesses disposed and acquired		28			—			—			—
Plan amendments and other		(253	)		(16	)		—			—
Exchange rate differences		(397	)		592			—			—
Fair value of plan assets at the end of the year		7,051			8,906			—			—
Funded status—under/(overfunded)		710			(22	)		207			215

F-54

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 17—Employee benefits (Continued)

        The amounts recognized in accumulated other comprehensive loss related to continuing operations in 2008 and 2007 consisted of:

	December 31,						December 31,
	2008			2007			2008			2007
	Pension benefits						Other benefits
	($ in millions)						($ in millions)
Transition liability		—			—			(3	)		(4	)
Net actuarial loss		(1,239	)		(530	)		(76	)		(86	)
Prior service cost		(40	)		(47	)		79			90
Amount recognized in accumulated other comprehensive loss		(1,279	)		(577	)		—			—
Taxes associated with amount recognized in accumulated other comprehensive loss		301			91			—			—
Total amount recognized in accumulated other comprehensive loss, net of tax		(978	)		(486	)		—			—

        The following amounts related to continuing operations have been recognized in the Company's Consolidated Balance Sheets at December 31, 2008 and 2007:

	December 31,						December 31,
	2008			2007			2008		2007
	Pension benefits						Other benefits
	($ in millions)						($ in millions)
Overfunded plans		(72	)		(379	)		—		—
Accrued pension cost current		22			22			18		18
Accrued pension cost non-current		760			335			189		197
Funded status		710			(22	)		207		215

	December 31,
	2008			2007
	($ in millions)
Non-current assets
Overfunded pension plans non-current		(72	)		(379	)
Other employee related benefits that do not meet the SFAS 87 criteria		(1	)		(1	)
Prepaid pension and other employee benefits		(73	)		(380	)

F-55

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 17—Employee benefits (Continued)

	December 31,
	2008		2007
	($ in millions)
Current liabilities
Underfunded pension plans current		22		22
Underfunded other benefit plans current		18		18
Employee related benefit costs that do not meet the SFAS 87 criteria		26		33
Total other current pension and other employee benefit liability		66		73

	December 31,
	2008		2007
	($ in millions)
Non-current liabilities
Underfunded pension plans non-current		760		335
Underfunded other benefit plans non-current		189		197
Other employee related benefits that do not meet the SFAS 87 criteria		122		99
Total other non-current pension and other employee benefit liability		1,071		631

        The funded status, calculated by the projected benefit obligation (PBO) and fair value of plan assets, for pension plans with a PBO in excess of fair value of plan assets or fair value of plan assets in excess of PBO, respectively, was:

	December 31, 2008							December 31, 2007
	PBO		Assets		Difference			PBO		Assets		Difference
	($ in millions)							($ in millions)
Underfunded plans		7,035		6,253		782			2,383		2,026		357
Overfunded plans		726		798		(72	)		6,501		6,880		(379	)
Total		7,761		7,051		710			8,884		8,906		(22	)

        The accumulated benefit obligation (ABO) for all defined benefit pension plans was $7,522 million and $8,573 million at December 31, 2008 and 2007, respectively. The funded status, calculated by the ABO and fair value of plan assets for pension plans with ABO in excess of fair value of plan assets or fair value of plan assets in excess of ABO, respectively was:

	December 31, 2008							December 31, 2007
	ABO		Assets		Difference			ABO		Assets		Difference
	($ in millions)							($ in millions)
ABO exceeds assets		6,654		6,039		615			347		56		291
Assets exceed ABO		868		1,012		(144	)		8,226		8,850		(624	)
Total		7,522		7,051		471			8,573		8,906		(333	)

        All of the Company's other postretirement benefit plans are unfunded.

F-56

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 17—Employee benefits (Continued)

Components of net periodic benefit cost and other amounts recognized in accumulated other comprehensive loss

        For the years ended December 31, 2008, 2007 and 2006, net periodic benefit cost consisted of the following:

	Year ended December 31,									Year ended December 31,
	2008			2007			2006			2008			2007			2006
	Pension benefits ($ in millions)									Other benefits ($ in millions)
Service cost		204			189			180			2			1			2
Interest cost		438			361			329			13			12			12
Expected return on plan assets		(471	)		(400	)		(353	)		—			—			—
Amortization transition liability		—			—			—			1			1			1
Amortization prior service cost		14			4			4			(11	)		(11	)		(11	)
Amortization of net actuarial loss		13			31			39			5			7			8
Curtailments, settlements and special termination benefits		38			21			7			—			—			—
Other		—			3			1			—			1			1
Net periodic benefit cost		236			209			207			10			11			13

        The net actuarial loss and prior service cost for the defined benefit pension plans that is estimated to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year are $70 million and $14 million, respectively.

        The estimated net actuarial loss, transition cost and prior service cost for the defined benefit non-pension postretirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year are $5 million, $2 million and $(11) million, respectively.

Assumptions

        The following weighted-average assumptions were used to determine benefit obligations at December 31, 2008 and 2007:

	December 31,				December 31,
	2008		2007		2008		2007
	Pension benefits				Other benefits
	(%)				(%)
Discount rate		5.63		5.16		6.30		6.17
Rate of compensation increase		2.22		2.35		—		—
Pension increase assumption		1.49		1.49		—		—

        The discount rate assumptions reflect the rates at which the benefit obligations could effectively be settled. The principal assumption was that the relevant fixed income securities are AA rated corporate

F-57

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 17—Employee benefits (Continued)

bonds. In those countries with sufficient liquidity in corporate bonds, the Company used the current market long-term corporate bond rates and matched the bond duration with the average duration of the pension liabilities. In those countries where the liquidity of the AA corporate bonds was deemed to be insufficient, the Company determined the discount rate by adding the credit spread derived from a AA corporate bond index in another relevant liquid market, as adjusted for interest rate differentials, to the domestic government bond curve or interest rate swap curve.

        The following weighted-average assumptions were used to determine the net periodic benefit cost for years ended December 31, 2008, 2007 and 2006:

	Year ended December 31,						Year ended December 31,
	2008		2007		2006		2008		2007		2006
	Pension benefits						Other benefits
	(%)						(%)
Discount rate		5.16		4.39		4.29		6.17		5.70		5.50
Expected long-term return on plan assets		5.55		5.00		4.92		—		—		—
Rate of compensation increase		2.35		2.32		2.35		—		—		—

        The expected long-term rate of return on plan assets assumption is derived from the current and projected asset allocation, the current and projected types of investments in each asset category and the long-term historical returns for each investment type.

        The Company maintains non-pension postretirement benefit plans, which are generally contributory with participants' contributions adjusted annually.

	December 31,
	2008			2007
Health care cost trend rate assumed for next year		9.82	%		10.72	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.97	%		4.96	%
Year that the rate reaches the ultimate trend rate		2017			2017

        A one-percentage-point change in assumed health care cost trend rates would have the following effects at December 31, 2008:

	1-percentage- point increase		1-percentage- point decrease
	($ in millions)
Effect on total of service and interest cost		1		(1	)
Effect on postretirement benefit obligation		13		(12	)

F-58

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 17—Employee benefits (Continued)

Plan assets

        The Company's pension plan weighted-average asset allocations at December 31, 2008 and 2007 and approximate long-term target allocations are as follows:

	December 31,				December 31,
	2008		2007		2008
	Plan assets				Long-term target allocation
	(%)
					(%)
Asset category:
Equity securities		25		32		20 – 40
Debt securities		58		55		50 – 70
Real estate		9		7		0 – 15
Other		8		6		0 – 15
Total		100		100

        The pension plan assets for each individual plan are invested in accordance with statutory regulations, pension plan rules and decisions of the pension fund trustees. The investment allocation strategy is expected to remain consistent with historical averages.

        The Company periodically reviews the asset allocation in light of the duration of its pension liabilities and analysis trends and events that may affect assets values in order to initiate appropriate measures at an early stage.

        The Company does not expect any plan assets to be returned to the employer during the 12-month period ending December 31, 2009.

        At December 31, 2008 and 2007, the plan assets included approximately 769,000 shares and 623,000 shares of the Company's capital stock with a total value of $11 million and $18 million, respectively.

Contributions

        The Company made non-cash contributions of $89 million of available-for-sale debt securities to certain of the Company's pension plans in Finland, Germany and in the U.S. in 2008. The Company made non-cash contributions of $49 million of available-for-sale debt securities to certain of the Company's pension plans in Germany in 2007. The Company also made cash contributions of $211 million and $248 million to other pension plans and $16 million and $12 million to other benefit plans during 2008 and 2007, respectively.

        The Company expects to contribute approximately $221 million to its pension plans and $18 million to its other postretirement benefit plans in 2009.

        The Company also maintains several defined contribution plans. The expense for these plans was $65 million, $68 million and $55 million in 2008, 2007 and 2006, respectively. The Company also

F-59

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 17—Employee benefits (Continued)

contributed $22 million, $20 million and $19 million to multi-employer plans in 2008, 2007 and 2006, respectively.

Estimated future benefit payments

        The expected future cash flows to be paid by the Company in respect of pension and other postretirement benefit plans at December 31, 2008 are as follows:

			Other postretirement benefits
	Pension benefits		Benefit payments		Medicare subsidies
	($ in millions)
2009		538		19		(1	)
2010		559		20		(1	)
2011		568		20		(1	)
2012		584		19		(1	)
2013		594		19		(1	)
Years 2014 – 2018		3,090		98		(7	)

        The Medicare subsidies column represents payments estimated to be received from the United States government as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. The United States government began making the subsidy payments for employers in 2006.

Note 18—Share-based payment arrangements

        The Company has three share-based payment plans, as more fully described in the respective sections below.

        Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R, using the modified-prospective transition method. Under that transition method, compensation cost recognized in 2006 includes i) compensation cost for all share-based payment arrangements granted prior to, but not yet vested as of, January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123, and ii) compensation cost for all share-based payment arrangements granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. In 2008 and 2007, the Company recorded a total charge of $63 million and $32 million, respectively, for equity awards. In 2006, as a result of adopting SFAS 123R, the Company recorded a total charge of $18 million in respect of equity awards. The tax benefits in 2008, 2007 and 2006 were insignificant. Charges recorded in respect of share-based liabilities are disclosed in the WAR section of this note.

        In May 2007, the Company repurchased, in two transactions, a total of 10 million of its shares for use in connection with share-based payment arrangements. At December 31, 2008, the Company had the ability to issue up to approximately 38 million new shares out of contingent capital in connection with share-based payment arrangements.

F-60

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 18—Share-based payment arrangements (Continued)

        As the primary trading market for the shares of ABB Ltd is the SIX Swiss Exchange, on which the shares are traded in Swiss francs, certain data disclosed below related to the instruments granted under share-based payment arrangements are presented in Swiss francs.

MIP

        Under the MIP, the Company offers physically-settled warrants, cash-settled warrant appreciations rights (WARs) and, as of the May 2007 launch, options, to key employees for no consideration.

        The warrants and options granted under the MIP allow participants to purchase shares of ABB Ltd at predetermined prices. Participants may sell the warrants and options rather than exercise the right to purchase shares. Equivalent warrants are listed by a third-party bank on the SIX Swiss Exchange, which facilitates pricing and transferability of warrants granted under this plan. The options entitle the holder to request that a third-party bank purchase such options at the market price of equivalent listed warrants related to that MIP launch. If the participant elects to sell the warrants or options, the instruments will thereafter be held by a third party and, consequently, the Company's obligation to deliver shares will be toward this third party. Each WAR gives the participant the right to receive, in cash, the market price of an equivalent listed warrant on the date of exercise of the WAR. The WARs are non-transferable.

        Participants may exercise or sell warrants and options and exercise WARs after the vesting period, which is three years from the date of grant. Vesting restrictions can be waived in certain circumstances such as death or disability. All warrants, options and WARs expire six years from the date of grant.

Warrants and options

        The fair value of each warrant and option is estimated on the date of grant using a lattice model that uses the assumptions noted in the table below. Expected volatilities are based on implied volatilities from equivalent listed warrants on ABB Ltd shares. The expected term of the warrants and options granted has been assumed to be the contractual six-year life of each warrant and option, based on the fact that after the vesting period, a participant can elect to sell the warrant or option rather than exercise the right to purchase shares, thereby realizing the time value of the warrants and options. The risk-free rate is based on a six-year Swiss franc interest rate, reflecting the six-year contractual life of the warrants and options. In estimating forfeitures, the Company has used the data from previous comparable MIP launches.

	2008 grant			2007 grant			2006 grant
Expected volatility		36	%		27	%		28	%
Dividend yield		1.42	%		1.14	%		1.06	%
Expected term		6 years			6 years			6 years
Risk-free interest rate		3.36	%		3.00	%		2.30	%

F-61

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 18—Share-based payment arrangements (Continued)

        Presented below is a summary of the activity related to warrants and options for the year ended December 31, 2008:

	Number of instruments			Number of shares(1)			Weighted- average exercise price (in Swiss francs)(2)		Weighted- average remaining contractual term (in years)		Aggregate intrinsic value (in millions of Swiss francs)(3)
Outstanding at January 1, 2008		57,675,275			11,535,055			17.97
Granted		29,941,875			5,988,375			36.40
Exercised(4)		(12,758,585	)		(2,551,717	)		7.35
Forfeited		(932,475	)		(186,495	)		28.07
Outstanding at December 31, 2008		73,926,090			14,785,218			27.14		4.4		10
Vested and expected to vest at December 31, 2008		68,710,131			13,742,026			26.88		4.4		10
Exercisable at December 31, 2008		9,093,515			1,818,703			13.48		2.6		9

⁽¹⁾

Information presented reflects the number of shares of ABB Ltd that can be received upon exercise, as warrants and options have a conversion ratio of 5:1.

⁽²⁾

Information presented reflects the exercise price per share of ABB Ltd.

⁽³⁾

Computed using the closing price, in Swiss francs, of ABB Ltd shares on the SIX Swiss Exchange and the exercise price per share of ABB Ltd.

⁽⁴⁾

The cash received upon exercise amounted to $18 million. The shares were issued out of contingent capital.

        Of the outstanding instruments at December 31, 2008, 2007 and 2006, 3.0 million, 9.5 million and 14.4 million, respectively, have been sold to a third-party by participants, representing 0.6 million, 1.9 million and 3.5 million shares, respectively.

        At December 31, 2008, there was $60 million of total unrecognized compensation cost related to non-vested warrants and options granted under the MIP. That cost is expected to be recognized over a weighted-average period of 2.2 years. The weighted-average grant-date fair value of warrants and options granted during 2008, 2007 and 2006 was 2.32 Swiss francs, 1.35 Swiss francs and 0.73 Swiss francs, respectively. In 2008 and 2007, the aggregate intrinsic value (on the days of exercise) was 57 million Swiss francs and 117 million Swiss francs, respectively. There were no exercises in 2006.

F-62

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 18—Share-based payment arrangements (Continued)

        Presented below is a summary, by launch, related to instruments outstanding at December 31, 2008:

Exercise price(1) (in Swiss francs)	Number of instruments		Number of shares(2)		Weighted- average remaining contractual term (in years)
7.00		1,680,500		336,100		0.9
7.50		3,819,165		763,833		1.9
15.30		11,367,500		2,273,500		3.1
26.00		27,367,050		5,473,410		4.4
36.40		29,691,875		5,938,375		5.4
Total number of instruments and shares		73,926,090		14,785,218		4.4

⁽¹⁾

Information presented reflects the exercise price per share of ABB Ltd.



⁽²⁾

Information presented reflects the number of shares of ABB Ltd that can be received upon exercise.

WARs

        As each WAR gives the holder the right to receive cash equal to the market price of an equivalent listed warrant on date of exercise, the Company records a liability based upon the fair value of outstanding WARs at each period end, accreted on a straight-line basis over the three-year vesting period. In selling, general and administrative expenses, the Company recorded income of $83 million and expense of $142 million and $106 million for 2008, 2007 and 2006, respectively, as a result of changes in both the fair value and vested portion of the outstanding WARs. To hedge its exposure to fluctuations in the fair value of outstanding WARs, the Company purchased cash-settled call options, which entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs. In accordance with EITF 00-19 and SFAS 133, the cash-settled call options have been recorded as assets measured at fair value (see Note 4), with subsequent changes in fair value recorded through earnings to the extent that they offset the change in fair value of the liability for the WARs. In 2008, 2007 and 2006, the Company recognized expense of $98 million and income of $132 million and $97 million, respectively, in selling, general and administrative expenses related to the cash-settled call options.

        The aggregate fair value of outstanding WARs was $53 million and $220 million at December 31, 2008 and 2007, respectively. The fair value of WARs was determined based upon the trading price of equivalent warrants listed on the SIX Swiss Exchange.

F-63

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 18—Share-based payment arrangements (Continued)

        Presented below is a summary of activity of WARs granted to participants for the year ended December 31, 2008:

	Number of WARs
Outstanding at January 1, 2008		58,879,135
Granted		15,111,815
Exercised		(13,482,730	)
Forfeited		(836,790	)
Outstanding at December 31, 2008		59,671,430
Exercisable at December 31, 2008		10,910,165

        The aggregate fair value at date of grant of WARs granted in 2008, 2007 and 2006 was $33 million, $7 million and $19 million, respectively. In 2008, 2007 and 2006, share-based liabilities of $53 million, $106 million and $18 million, respectively, were paid upon exercise of WARs by participants.

ESAP

        The employee share acquisition plan (ESAP) is an employee stock-option plan with a savings feature. Employees save over a twelve-month period, by way of monthly salary deductions. At the end of the savings period, employees choose whether to exercise their stock options using their savings plus interest to buy ABB Ltd shares (American Depositary Shares (ADS) in the case of employees in the United States—each ADS representing one registered share of the Company) at the exercise price set at the grant date, or have their savings returned with interest. The savings are accumulated in a bank account held by a third-party trustee on behalf of the participants and earn interest. Employees can withdraw from the ESAP at any time during the savings period and will be entitled to a refund of their accumulated savings.

        The fair value of each option is estimated on the date of grant using the same option valuation model as described under the MIP, using the assumptions noted in the table below. The expected term of the option granted has been determined to be the contractual one-year life of each option, at the end of which the options vest and the participants are required to decide whether to exercise their options or have their savings returned with interest. The risk-free rate is based on one-year Swiss franc interest rates, reflecting the one year contractual life of the options. In estimating forfeitures, the Company has used the data from previous ESAP launches.

	2008 grant			2007 grant			2006 grant
Expected volatility		57	%		34	%		30	%
Dividend yield		2.61	%		0.89	%		0.81	%
Expected term		1 year			1 year			1 year
Risk-free interest rate		1.44	%		2.82	%		2.13	%

F-64

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 18—Share-based payment arrangements (Continued)

        Presented below is a summary of activity under the ESAP during the year ended December 31, 2008:

	Number of shares(1)			Weighted-average exercise price (in Swiss francs)(2)		Weighted-average remaining contractual term (in years)		Aggregate intrinsic value (in millions of Swiss francs)(2)(3)
Outstanding at January 1, 2008		2,772,670			34.98
Granted		6,261,920			15.30
Forfeited		(141,400	)		34.98
Not exercised (savings returned plus interest)		(2,631,270	)		34.98
Outstanding at December 31, 2008		6,261,920			15.30		0.8		1.8
Vested and expected to vest at December 31, 2008		5,992,657			15.30		0.8		1.7
Exercisable at December 31, 2008		—			—		—		—

⁽¹⁾

Includes shares represented by ADS.

⁽²⁾

Information presented for ADS is based on equivalent Swiss franc denominated awards.

⁽³⁾

Computed using the closing price, in Swiss francs, of ABB Ltd shares on the SIX Swiss Exchange and the exercise price of each option in Swiss francs.

        The exercise prices per ABB Ltd share and per ADS of 15.30 Swiss francs and $12.98, respectively, for the 2008 grant, 34.98 Swiss francs and $29.78, respectively, for the 2007 grant and 18.55 Swiss francs and $14.75, respectively, for the 2006 grant were determined using the closing price of the ABB Ltd share on SIX Swiss Exchange and ADS on the New York Stock Exchange on the respective grant dates.

        At December 31, 2008, there was $16 million of total unrecognized compensation cost related to non-vested options granted under the ESAP. That cost will be recognized over the first ten months of 2009. The weighted-average grant-date fair value of options granted during 2008, 2007 and 2006, was 3.34 Swiss francs, 4.93 Swiss francs and 2.32 Swiss francs, respectively. The total intrinsic value (on the day of exercise) of options exercised in 2007 and 2006 was 61 million Swiss francs and 50 million Swiss francs, respectively. No options were exercised in 2008.

LTIP

        The Company has a long-term incentive plan (LTIP) for members of its Executive Committee and other executives (Eligible Participants), as defined in the terms of the LTIP and determined by the Company's Governance, Nomination and Compensation Committee. The LTIP involves annual grants (subject to market and vesting conditions) of the Company's stock and, as of the 2006 launch, contains a co-investment component, in addition to the share-price performance component existing in the previous launches.

F-65

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 18—Share-based payment arrangements (Continued)

        Under the share-price performance component, the number of shares conditionally granted is dependent upon the base salary of the Eligible Participant. The actual number of shares that each Eligible Participant will receive free-of-charge at a future date is dependent on i) the performance of ABB Ltd shares during a defined period (Evaluation Period) compared to those of a selected peer group of publicly-listed multinational companies and ii) the term of service of the respective Eligible Participant in their capacity as an Eligible Participant during the Evaluation Period. The actual number of shares received after the Evaluation Period cannot exceed 100 percent of the conditional grant.

        The performance of the Company compared to its peers over the Evaluation Period will be measured as the sum, in percentage terms, of the average percentage price development of the ABB Ltd share price over the Evaluation Period and an average annual dividend yield percentage (the Company's Performance).

        In order for shares to vest, the Company's Performance over the Evaluation Period must be positive and equal to or better than half of the defined peers. The actual number of shares to be delivered by the Company, after the end of the Evaluation Period, will be dependent on the Company's ranking in comparison with the defined peers. The full amount of the conditional grant will vest if the Company's Performance is better than three-quarters of the defined peers.

        Under the co-investment component of the LTIP, each Eligible Participant is invited to invest in the Company's shares, up to an individually defined maximum number of shares. If the Eligible Participant remains the owner of such shares until the end of the Evaluation Period, the Company will deliver free-of-charge to the Eligible Participant a matching number of shares.

        Presented below is a summary of launches of the LTIP outstanding at December 31, 2008:

Launch year	Evaluation Period	Conditionally granted shares outstanding at December 31, 2008		Reference price (Swiss francs)(1)
2006	March 15, 2006, to March 15, 2009		598,824		15.48
2007	March 15, 2007, to March 15, 2010		503,659		21.08
2008	March 15, 2008, to March 15, 2011		661,001		26.20

⁽¹⁾

For the purpose of comparison with the peers, the reference price is calculated as the average of the closing prices of the ABB Ltd share on SIX Swiss Exchange over the 20 trading days preceding March 15 of the respective launch year.

        Presented below is a summary of activity under the LTIP for the year ended December 31, 2008:

	Number of shares			Weighted-average grant-date fair value per share (Swiss francs)
Nonvested at January 1, 2008		2,265,416			17.14
Granted		696,118			31.47
Vested		(1,128,947	)		13.63
Forfeited		(69,103	)		28.12
Nonvested at December 31, 2008		1,763,484			24.62

F-66

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 18—Share-based payment arrangements (Continued)

        Effective January 1, 2006, the Company accounts for the LTIP in accordance with SFAS 123R. The charge is based on the market price of the ABB Ltd share on grant date and is recorded in selling, general and administrative expenses over the vesting period, which is from grant date to the end of the Evaluation Period.

        The aggregate fair value, at the dates of grant, of shares conditionally granted in 2008, 2007 and 2006 was approximately $21 million, $16 million and $10 million, respectively.

        At December 31, 2008, there was $21 million of total unrecognized compensation cost related to non-vested shares conditionally granted under the LTIP. Such cost is expected to be recognized over a weighted-average period of 1.9 years. The total grant-date fair value of shares that vested during 2008 and 2006 was 15 million Swiss francs and 3 million Swiss francs, respectively. No grants under LTIP vested in 2007. The weighted-average grant-date fair value of shares conditionally granted during 2008, 2007 and 2006, was 31.47 Swiss francs, 23.75 Swiss francs and 16.75 Swiss francs, respectively.

Other share-based payments

        The Company has other insignificant share-based payment arrangements. In 2008 and 2007, such arrangements represented an aggregate grant of less than 1 million and less than half a million shares, respectively, and the expense recorded in selling, general and administrative expenses for such arrangements totaled $8 million and $3 million, respectively. The 2006 amounts were insignificant.

Note 19—Stockholders' equity

        At December 31, 2008, the Company had 2,770,314,755 authorized shares, of which 2,322,792,835 were registered and issued. At December 31, 2007, the Company had 2,570,314,947 authorized shares, of which 2,316,015,102 were registered and issued.

        In February 2008, the Company announced a share buyback program to purchase up to a maximum value of 2.2 billion Swiss francs (equivalent to $2 billion at then-current exchange rates) with the intention of completing the buyback program prior to the Annual General Meeting of Shareholders in 2010 and proposing the cancellation of the shares at that meeting. Up to December 31, 2008, a total of 22.675 million shares have been repurchased at a total cost of 652 million Swiss francs ($619 million, using exchange rates effective at the respective repurchase dates). The repurchased shares are included in treasury stock at December 31, 2008. On February 12, 2009, the Company stated that given the market uncertainty, the Company is not actively pursuing new purchases under the program.

        In May 2008, the Annual General Meeting of Shareholders approved a proposal to reduce the nominal value of ABB Ltd's shares from 2.50 Swiss francs per share to 2.02 Swiss francs per share and to distribute the 0.48 Swiss francs per share to shareholders. The distribution, equivalent to $1.06 billion, resulted in a reduction in capital stock and additional paid-in capital.

        Upon and in connection with each launch of the Company's MIP, the Company sold call options to a bank at fair value, giving the bank the right to acquire shares equivalent to the number of shares represented by the MIP warrant and WAR awards to participants. Under the terms of the agreement with the bank, the call options can only be exercised by the bank to the extent that MIP participants have either sold or exercised their warrants or exercised their WARs. During 2008, the bank exercised

F-67

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 19—Stockholders' equity (Continued)

a portion of the call options held (with strike prices of 7.00 and 7.50 Swiss francs) that had been issued at fair value during 2003 and 2004. As a result, approximately 6.8 million shares were issued by the Company resulting in a net increase in capital stock and additional paid-in capital of $49 million.

        At December 31, 2008, call options representing 21.6 million shares and with strike prices ranging from 7.00 to 36.40 Swiss francs were held by the bank. These call options expire in periods ranging from December 2009 to May 2014. However, at December 31, 2008, only 1.3 million of these instruments, with strike prices ranging from 7.00 to 36.40 Swiss francs, could be exercised under the terms of the agreement with the bank.

        In addition to the above, at December 31, 2008, the Company had further outstanding obligations to deliver:

•

up to 2.8 million shares, at a strike price of 26.00 Swiss francs, relating to the options granted under the 2007 launch of the MIP, vesting in May 2010 and expiring in May 2013;

•

up to 3.1 million shares, at a strike price of 36.40 Swiss francs, relating to the options granted under the 2008 launch of the MIP, vesting in May 2011 and expiring in May 2014;

•

up to 6.3 million shares, at a strike price of 15.30 Swiss francs, to employees under the ESAP, vesting and expiring in November 2009;

•

up to 1.8 million shares free-of-charge to Eligible Participants under the 2008, 2007 and 2006 launches of the LTIP, vesting and expiring in March 2011, 2010 and 2009, respectively;

•

less than a million shares in connection with certain other share-based payment arrangements with employees.

        See Note 18 for a description of the above share-based payment arrangements.

        As described in Note 12, during 2007, the bondholders of the Company's 1 billion Swiss franc convertible bonds converted their bonds, resulting in the issuance of 105 million shares and an increase in capital stock and additional paid-in capital of $830 million.

        During 2007, the Company purchased on the open market 10 million of its own shares for use in connection with share-based payment arrangements. These transactions resulted in an increase in treasury stock of $199 million.

        In November 2007 and 2006, the Company issued 3.7 million and 5.7 million shares, respectively, from contingent capital stock for the purposes of fulfilling the Company's obligations under the ESAP. This share issuance resulted in an increase in capital stock and additional paid-in capital of $60 million and $47 million, respectively.

        During 2007, the bank holding call options issued during 2001, 2003 and 2004 (in connection with the launches of the Company's MIP in those years), and with strike prices ranging from 7.00 to 13.49 Swiss francs, exercised a portion of the call options held. As a result, approximately 19.6 million shares were issued by the Company and there was a net increase in capital stock and additional paid-in capital of $181 million.

F-68

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 19—Stockholders' equity (Continued)

        In 2006, as a result of the Company's induced conversion of its $968 million, 4.625% USD Convertible Bonds, due 2007, and its subsequent call of the remaining outstanding bonds, a total of approximately 105 million shares were issued out of contingent capital and a further 2 millions ADSs were delivered out of treasury stock. These transactions resulted in an increase in the Company's equity (capital stock and additional paid-in capital and treasury stock) of approximately $928 million, after consideration of certain charges in connection with share issuance.

        In 2005, 30,298,913 ABB Ltd shares were reserved to cover part of the Company's asbestos liabilities. These shares were contributed to the CE Asbestos PI Trust on April 21, 2006, and resulted in a reduction in asbestos obligations by $407 million, the fair value of the shares on the date of contribution. This amount was offset by a corresponding increase in capital stock and additional paid-in capital in the Consolidated Balance Sheets.

        Dividends are payable to the Company's stockholders based on the requirements of Swiss law, ABB Ltd's Articles of Incorporation and stockholders' equity as reflected in the unconsolidated financial statements of ABB Ltd, Zurich prepared in compliance with Swiss law. At December 31, 2008, of the 12,567 million Swiss francs stockholders' equity reflected in such unconsolidated financial statements, 4,692 million Swiss francs is share capital, 2,665 million Swiss francs is restricted, 2,655 million Swiss francs is unrestricted and 2,555 million Swiss francs is available for distribution. At December 31, 2007, of the 12,833 million Swiss francs stockholders' equity reflected in such unconsolidated financial statements, 5,790 million Swiss francs is share capital, 4,096 million Swiss francs is restricted, 1,175 million Swiss francs is unrestricted and 1,772 million Swiss francs is available for distribution.

        In February 2009, the Board of Directors announced that a proposal will be put to the Annual General Meeting to reduce the nominal value of the shares from 2.02 Swiss francs per share to 1.54 Swiss francs per share and distribute the 0.48 Swiss francs per share to shareholders.

Note 20—Earnings per share

        Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call options; outstanding options and shares granted subject to market and/or vesting conditions under the Company's share-based payment arrangements; and, prior to September 2007, shares issuable in relation to outstanding convertible bonds. In 2008, 2007 and 2006, outstanding securities representing a maximum of 24 million, 3 million and 4 million shares, respectively, were

F-69

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 20—Earnings per share (Continued)

excluded from the calculation of diluted earnings (loss) per share as their inclusion would have been anti-dilutive.

	Year ended December 31,
	2008			2007		2006
	($ in millions, except per share data in $)
Income from continuing operations		3,139			3,171		1,532
Income (loss) from discontinued operations, net of tax		(21	)		586		(142	)
Net income		3,118			3,757		1,390
Weighted-average number of shares outstanding (in millions)		2,287			2,258		2,128
Basic earnings (loss) per share:
Income from continuing operations		1.37			1.40		0.72
Income (loss) from discontinued operations, net of tax		(0.01	)		0.26		(0.07	)
Net income		1.36			1.66		0.65

		Year ended December 31,
		2008			2007		2006
		($ in millions, except per share data in $)
Income from continuing operations			3,139			3,171		1,532
Effect of dilution:
	Interest on convertible bonds, net of tax		—			9		29
Income from continuing operations			3,139			3,180		1,561
Income (loss) from discontinued operations, net of tax			(21	)		586		(142	)
Net income, adjusted			3,118			3,766		1,419
Weighted-average number of shares outstanding (in millions)			2,287			2,258		2,128
Effect of dilutive securities:
	Call options and shares		9			18		15
	Convertible bonds		—			32		105
Dilutive weighted-average number of shares outstanding (in millions)			2,296			2,308		2,248
Diluted earnings (loss) per share:
Income from continuing operations			1.37			1.38		0.69
Income (loss) from discontinued operations, net of tax			(0.01	)		0.25		(0.06	)
Net income, adjusted			1.36			1.63		0.63

F-70

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 21—Transformer business consolidation program and other restructuring charges

        In 2005, the Company announced its decision to consolidate its global transformer business in the Power Products division, including closing certain plants and employment reductions, as a result of overcapacity, increasing raw material costs and a regional shift in demand experienced by the transformer business. The Company finalized the transformer business consolidation program in 2008 and expensed a total of $241 million between 2005 and the end of 2008.

        During 2008, the Company recorded an expense of $46 million; $27 million was recorded in cost of sales, $16 million in selling, general and administrative expenses and $3 million in other income (expense) net. This expense consisted of $16 million charges related to employee severance costs, $26 million of estimated contract settlement, loss order and other costs and $4 million related to inventory and long-lived asset impairments.

        During 2007, the Company recorded an expense of $34 million; $23 million was recorded in cost of sales, $2 million in selling, general and administrative expenses and $9 million in other income (expense) net. This expense consisted of $15 million charges related to employee severance costs, $9 million of estimated contract settlement and loss order costs and $10 million related to inventory and long-lived asset impairments.

        During 2006, the Company recorded an expense of $38 million; $26 million was recorded in cost of sales, $9 million in selling, general and administrative expenses and $3 million in other income (expense), net. This expense consisted of $47 million of estimated contract settlement and loss order costs, $3 million charges related to employee severance costs and $1 million related to inventory and long-lived asset impairments and costs. These expenses were offset by a change in estimate of $13 million related to employee severance costs.

        Liabilities associated with these expenses consisted of the following:

	Employee severance costs			Contractual settlement/(loss) order costs			Total
	($ in millions)
Liability at December 31, 2006		26			37			63
Expenses		17			15			32
Cash payments		(10	)		(31	)		(41	)
Exchange rate differences		2			3			5
Change in estimates		(2	)		(6	)		(8	)
Liability at December 31, 2007		33			18			51
Expenses		22			26			48
Cash payments		(14	)		(14	)		(28	)
Exchange rate differences		2			1			3
Change in estimates		(6	)		—			(6	)
Liability at December 31, 2008		37			31			68

        Further, in 2008, the Company initiated its plan to adjust its engineering, manufacturing and service capacities in the Robotics division, primarily in western Europe and the U.S. as a result of the

F-71

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 21—Transformer business consolidation program and other restructuring charges (Continued)

economic downturn in some of the division's key markets as well as increase the presence in emerging markets. The plan includes closing certain production lines as well as employment reductions and is expected to be completed by the end of 2009. The Company recorded liabilities of $62 million related to employee severance costs and additional expenses of $5 million related to inventory and long-lived asset impairments. $47 million was recorded in cost of sales and $20 million in selling, general and administrative expenses.

Note 22—Operating segment and geographic data

        Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131), establishes standards for reporting information about operating segments. The Chief Operating Decision Maker (CODM), as defined by SFAS 131, is the Company's Executive Committee. The CODM allocates resources to and assesses the performance of each operating segment using the information outlined below. The Company's operating segments consist of Power Products, Power Systems, Automation Products, Process Automation and Robotics. The remaining operations of the Company are included in Corporate and Other. Effective January 1, 2008, following the sale of the majority of the Company's non-core activities, Non-core and Other is no longer presented separately but included in Corporate and Other. All periods presented have been restated to reflect the Company's current organizational structure.

•

Power Products manufactures and sells high- and medium-voltage switchgear and apparatus, circuit breakers for all current and voltage levels, power and distribution transformers and sensors for electric, gas and water utilities for industrial and commercial customers.

•

Power Systems installs and upgrades transmission and distribution systems and power plant automation and electrification solutions, incorporating components manufactured by both the Company and by third parties.

•

Automation Products produces low-voltage switchgear, breakers, switches, control products, DIN-rail components, enclosures, wiring accessories, instrumentation, drives, motors, generators, power electronics systems and services related to these products that help customers to increase productivity, save energy and increase safety.

•

Process Automation develops and sells control, plant optimization, automation products and solutions, industry specific application knowledge and services for the pulp and paper, metals and minerals, chemicals and pharmaceuticals, oil and gas, utility automation, marine and turbocharging industries.

•

Robotics offers robot products, systems and service for the automotive and other manufacturing industries.

•

Corporate and Other includes Headquarter, Central Research and Development, the Company's Real Estate activities, Group Treasury Operations and other minor activities.

        The Company evaluates performance of its segments based on earnings before interest and taxes, which excludes interest and dividend income, interest and other finance expense, provision for taxes, minority interest and income (loss) from discontinued operations, net of tax. In accordance with SFAS 131, the Company presents division revenues, depreciation and amortization, earnings before

F-72

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 22—Operating segment and geographic data (Continued)

interest and taxes, net operating assets and capital expenditures. The Company accounts for inter-division sales and transfers as if the sales and transfers were to third parties, at current market prices.

        The following tables summarize information for each segment:

2008	Third party revenues		Interdivisional revenues			Total revenues			Depreciation and amortization		Earnings before interest and taxes			Total assets		Capital expenditures
	($ in millions)
Power Products		9,866		2,024			11,890			161		2,100			7,136		305
Power Systems		6,673		239			6,912			54		592			4,402		89
Automation Products		9,100		1,150			10,250			162		1,908			5,782		305
Process Automation		7,574		241			7,815			100		926			4,438		79
Robotics		1,612		30			1,642			20		9			856		28
Corporate and Other		87		1,606			1,693			164		(983	)		10,567		365
Inter-division elimination		—		(5,290	)		(5,290	)		—		—			—		—
Discontinued operations		—		—			—			—		—			—		—
Consolidated		34,912		—			34,912			661		4,552			33,181		1,171

2007	Third party revenues		Interdivisional revenues			Total revenues			Depreciation and amortization		Earnings before interest and taxes			Total assets		Capital expenditures
	($ in millions)
Power Products		8,228		1,549			9,777			131		1,596			5,770		209
Power Systems		5,604		228			5,832			57		489			4,167		50
Automation Products		7,651		993			8,644			150		1,477			5,371		193
Process Automation		6,176		244			6,420			109		683			4,111		91
Robotics		1,389		18			1,407			21		79			821		14
Corporate and Other		135		1,429			1,564			129		(301	)		10,629		192
Inter-division elimination		—		(4,461	)		(4,461	)		—		—			—		—
Discontinued operations		—		—			—			5		—			132		7
Consolidated		29,183		—			29,183			602		4,023			31,001		756

2006	Third party revenues		Interdivisional revenues			Total revenues			Depreciation and amortization		Earnings before interest and taxes			Total assets		Capital expenditures
	($ in millions)
Power Products		6,238		1,037			7,275			119		939			4,322		145
Power Systems		4,310		234			4,544			59		279			3,345		26
Automation Products		6,130		707			6,837			138		1,053			4,554		148
Process Automation		5,216		232			5,448			114		541			3,644		70
Robotics		1,280		8			1,288			23		1			750		14
Corporate and Other		107		1,200			1,307			102		(256	)		7,130		117
Inter-division elimination		—		(3,418	)		(3,418	)		—		—			—		—
Discontinued operations		—		—			—			15		—			1,397		16
Consolidated		23,281		—			23,281			570		2,557			25,142		536

F-73

ABB Ltd

Notes to the Consolidated Financial Statements (Continued)

(U.S. dollar amounts in millions, except per share amounts)

Note 22—Operating segment and geographic data (Continued)

Geographic information

	Revenues year ended December 31,						Long-lived assets at December 31,
	2008		2007		2006		2008		2007
	($ in millions)						($ in millions)
Europe		15,815		13,322		10,969		2,455		2,358
The Americas		6,428		5,247		4,394		328		258
Asia		8,967		7,480		5,863		663		522
Middle East and Africa		3,702		3,134		2,055		116		108
		34,912		29,183		23,281		3,562		3,246

        Revenues have been reflected in the regions based on the location of the customer. China generated approximately 11 percent, 11 percent and 12 percent of the Company's total revenues in 2008, 2007 and 2006, respectively. The United States generated approximately 11 percent of the Company's total revenues in 2008, 2007 and 2006. Germany generated approximately 8 percent of the Company's total revenues in 2008, 2007 and 2006. More than 95 percent of the Company's total revenues were generated outside Switzerland in 2008, 2007 and 2006. Long-lived assets represent property, plant and equipment, net and are shown by location of the assets. Switzerland and Germany represented approximately 19 percent and 13 percent, respectively, of the Company's long-lived assets at December 31, 2008 and approximately 19 percent and 15 percent at December 31, 2007.

        The Company does not segregate revenues derived from transactions with external customers for each type or group of products and services. Accordingly, it is not practicable for the Company to present revenues from external customers by product and service type.

        Approximately 64 percent of the Company's employees are subject to collective bargaining agreements in various countries. These agreements are subject to various regulatory requirements and are renegotiated on a regular basis in the normal course of business.

F-74

EX-1.1

Exhibit 1.1

ABB Ltd, Zurich

Articles

of Incorporation

Articles of Incorporation of ABB Ltd, Zurich

as of November 24, 2008

This is a translation of the original German version. In case of any discrepancy, the German version shall prevail.

Section 1: Name, Place of Incorporation, Purpose and Duration

Name, Place of Incorporation

Article 1

Under the name

ABB Ltd

ABB AG

ABB SA

there exists a corporation with its place of incorporation in Zurich.

Purpose

Article 2

1The purpose of the Company is to hold interests in business enterprises, particularly in enterprises active in the areas of industry, trade and services.

2The Company may acquire, encumber, exploit or sell real estate and intellectual property rights in Switzerland and abroad and may also finance other companies.

3The Company may engage in all types of transactions and may take all measures that appear appropriate to promote, or that are related to, the purpose of the Company.

Duration

Article 3

The duration of the Company shall be unlimited.

Section 2: Share Capital

Share Capital

Article 4

1The share capital of the Company is CHF 4,692,041,526.70 and is divided into 2,322,792,835 fully paid registered shares. Each share has a par value of CHF 2.02.

2Upon resolution of the General Meeting of Shareholders, registered shares may be converted into bearer shares and bearer shares may be converted into registered shares.

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Contingent Share Capital

Article 4bis

1   The share capital may be increased in an amount not to exceed CHF 424,200,000 through the issuance of up to 210,000,000 fully paid registered shares with a par value of CHF 2.02 per share,

a)up to the amount of CHF 404,000,000 through the exercise of conversion rights and/or warrants granted in connection with the issuance on national or international capital markets of newly or already issued bonds or other financial market instruments by the Company or one of its group companies, and

b)up to the amount of CHF 20,200,000 through the exercise of warrant rights granted to the shareholders by the Company or one of its group companies. The Board of Directors may grant warrant rights not taken up by shareholders for other purposes in the interest of the Company.

The pre-emptive rights of the shareholders shall be excluded in connection with the issuance of convertible or warrant-bearing bonds or other financial market instruments or the grant of warrant rights. The then current owners of conversion rights and/or warrants shall be entitled to subscribe for the new shares. The conditions of the conversion rights and/or warrants shall be determined by the Board of Directors.

2The acquisition of shares through the exercise of conversion rights and/or warrants and each subsequent transfer of the shares shall be subject to the restrictions of art. 5 of these Articles of Incorporation.

3In connection with the issuance by the Company or one of its group companies of convertible or warrant-bearing bonds or other financial market instruments, the Board of Directors shall be authorized to restrict or deny the advance subscription rights of shareholders if such issuances are for the purpose of financing or refinancing the acquisition of an enterprise, parts of an enterprise, participations or new investments or the issuance on national or international capital markets. If advance subscription rights are denied by the Board of Directors, the following shall apply: the convertible or warrant-bearing bonds or other financial market

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instruments shall be issued at the relevant market conditions and the new shares shall be issued pursuant to the relevant market conditions taking into account the share price and/or other comparable instruments having a market price. Conversion rights may be exercised during a maximum 10-year period, and warrants may be exercised during a maximum 7-year period, in each case from the date of the respective issuance. The advance subscription rights of the shareholders may be granted indirectly.

4The share capital may be increased in an amount not to exceed CHF 75,794,278.40 through the issuance of up to 37,521,920 fully paid registered shares with a par value of CHF 2.02 per share by the issuance of new shares to employees of the Company and group companies. The pre-emptive and advance subscription rights of the shareholders of the Company shall thereby be excluded. The shares or rights to subscribe for shares shall be issued to employees pursuant to one or more regulations to be issued by the Board of Directors, taking into account performance, functions, levels of responsibility and profitability criteria. Shares or subscription rights may be issued to employees at a price lower than that quoted on the stock exchange.

5The acquisition of shares within the context of employee share ownership and each subsequent transfer of the shares shall be subject to the restrictions of art. 5 of these Articles of Incorporation.

Authorized Share Capital

Article 4ter

1The Board of Directors shall be authorized to increase the share capital in an amount not to exceed CHF 404,000,000 through the issuance of up to 200,000,000 fully paid registered shares with a par value of CHF 2.02 per share by not later than May 3, 2009. Increases in partial amounts shall be permitted.

2The subscription and acquisition of the new shares, as well as each subsequent transfer of the shares, shall be subject to the restrictions of art. 5 of these Articles of Incorporation.

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3The Board of Directors shall determine the date of issue of new shares, the issue price, the type of payment, the conditions for the exercise of pre-emptive rights, and the beginning date for dividend entitlement. In this regard, the Board of Directors may issue new shares by means of a firm underwriting through a banking institution, a syndicate or another third party with a subsequent offer of these shares to the shareholders. The Board of Directors may permit pre-emptive rights that have not been exercised to expire or it may place these rights and/or shares as to which pre-emptive rights have been granted but not exercised, at market conditions or use them for other purposes in the interest of the Company.

4The Board of Directors is further authorized to restrict or deny the pre-emptive rights of shareholders and allocate such rights to third parties if the shares are to be used:

a)for the acquisition of an enterprise, parts of an enterprise, or participations, or for new investments, or, in case of a share placement, for the financing or refinancing of such transactions; or

b)for the purpose of broadening the shareholder constituency in connection with a listing of shares on domestic or foreign stock exchanges.

Share Register and Restrictions on Registration, Nominees

Article 5

1The Company shall maintain a share register listing the surname and first name (in the case of legal entities, the company name) and address of the holders and usufructuaries of the registered shares.

2Acquirors of registered shares shall be registered upon request in the share register as shareholders with the right to vote, provided that they expressly declare that they acquired the registered shares in their own name and for their own account.

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3If persons fail to expressly declare in their registration applications that they hold the shares for their own account (the “Nominees”), the Board of Directors shall enter such persons in the share register with the right to vote, provided that the Nominee has entered into an agreement with the Board of Directors concerning his status and is subject to a recognized bank or financial market supervision.

4After hearing the registered shareholder or Nominee, the Board of Directors may cancel registrations in the share register, retroactive to the date of registration, if such registrations were made based on incorrect information. The relevant shareholder or Nominee shall be informed immediately as to the cancellation.

5The Board of Directors shall regulate the details and issue the instructions necessary for compliance with the preceding provisions. In special cases, it may grant exemptions from the rule concerning Nominees. The Board of Directors may delegate its duties.

6Notwithstanding paras. 2—4 of this article, acquirors of registered shares may be registered in the share register with Värdepapperscentralen VPC AB (“VPC”) in accordance with Swedish law.

Share Certificates

Article 6

1The shareholder may at any time request the Company to issue a confirmation of the number of registered shares held by such shareholder. The shareholder is not entitled, however, to request the printing and delivery of certificates for registered shares. The Company may, on the other hand, at any time print and deliver certificates for registered shares, and may, with the consent of the shareholder, destroy issued certificates that are delivered to it, without replacement.

2 Uncertificated registered shares, including any uncertificated rights arising thereunder, may be transferred only by way of assignment. The assignment must be notified to the Company in order to be valid.

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3Uncertificated registered shares and the pecuniary rights associated therewith may be pledged only by way of a written agreement, and only in favor of the bank at which the shareholder holds such shares in book-entry form. Notification to the Company shall not be necessary. Uncertificated registered shares registered with VPC may be pledged in accordance with Swedish law.

4In the event that shares are printed, they shall bear the signatures of two members of the Board of Directors. These signatures may be facsimile signatures.

5The Company may in any event issue certificates representing more than one share.

Exercise of Rights

Article 7

1The Company shall only accept one representative per share.

2The right to vote and rights relating thereto under a registered share may be exercised vis-à-vis the Company only by a shareholder, usufructuary or Nominee registered in the share register with the right to vote.

Dividend Access Facility

Article 8

1The Company has established a dividend access facility under which shareholders who are resident in Sweden have the option to be registered with VPC as holders of a total of up to 600,004,716 registered shares of the Company, with suspended dividend entitlement. The claim to dividends against the Company on such registered shares shall be suspended as long as such registered shares are registered with VPC. In lieu thereof, on each such registered share, an amount equivalent to the dividend resolved on a registered share of the Company shall be paid in Swedish kronor by ABB Norden Holding AB based on the dividend entitlement on a preference share.

2In deciding on the appropriation of dividends, the General Meeting of Shareholders shall take into account that the Company will pay dividends only on shares that do not participate in the dividend access facility.

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Section 3: Corporate Bodies

A. General Meeting of Shareholders

Competence

Article 9

The General Meeting of Shareholders is the supreme body of the Company.

Ordinary General Meetings

Article 10

The Ordinary General Meeting of Shareholders shall be held each year within six months after the close of the fiscal year of the Company; the business report and the Auditors’ report, together with the Group Auditors’ report, shall be made available for inspection by the shareholders at the place of incorporation of the Company by no later than twenty days prior to the meeting. Each shareholder is entitled to request immediate delivery of a copy of these documents. Shareholders will be notified of this in writing.

Extraordinary General Meetings

Article 11

1Extraordinary General Meetings of Shareholders shall be held when deemed necessary by the Board of Directors or the Auditors.

2Furthermore, Extraordinary General Meetings of Shareholders shall be convened upon resolution of a General Meeting of Shareholders or if this is requested by one or more shareholders who represent an aggregate of at least one-tenth of the share capital and who submit a petition signed by such shareholder(s), specifying the items for the agenda and the proposals.

Notice of General Meetings

Article 12

1Notice of General Meetings of Shareholders shall be given by the Board of Directors or, if necessary, by the Auditors, by no later than twenty days prior to the meeting date. Notice of the meeting shall be given by way of an announcement appearing once in the official publication organ of the Company. Shareholders may also

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be informed by ordinary mail. Liquidators and representatives of bondholders shall also be entitled to call a General Meeting of Shareholders.

2The notice of a meeting shall state the items on the agenda and the proposals of the Board of Directors and of the shareholders who demanded that a General Meeting of Shareholders be held or that an item be included on the agenda and, in case of elections, the names of the nominated candidates.

Agenda

Article 13

1One or more shareholders whose combined shareholdings represent an aggregate par value of at least CHF 808,000 may demand that an item be included on the agenda of a General Meeting of Shareholders. Such inclusion must be requested in writing at least forty days prior to the meeting and shall specify the agenda items and proposals of such shareholder(s).

2No resolutions may be passed at a General Meeting of Shareholders concerning agenda items for which proper notice was not given. This provision shall not apply, however, to proposals made during a General Meeting of Shareholders to convene an Extraordinary General Meeting of Shareholders or to initiate a special audit.

3No previous notification shall be required for proposals concerning items included on the agenda and for debates as to which no vote is taken.

Presiding Officer, Minutes, Vote Counters

Article 14

1The General Meeting of Shareholders shall be held at the place of incorporation of the Company, unless the Board of Directors decides otherwise. The Chairman of the Board or, in his absence, a Vice-Chairman or any other Member appointed by the Board, shall take the chair.

2The presiding officer shall appoint the secretary and the vote counters. The minutes shall be signed by the presiding officer and the secretary.

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3 The presiding officer shall have all powers and authority necessary to ensure the orderly and undisturbed conduct of the General Meeting of Shareholders.

Proxies

Article 15

1The Board of Directors shall issue procedural rules regarding participation in and representation at the General Meeting of Shareholders.

2A shareholder may be represented only by his legal representative, another shareholder with the right to vote, a corporate body (Organvertreter), an independent proxy (unabhängiger Stimmrechtsvertreter), or a depositary (Depotvertreter). All shares held by one shareholder may be represented by only one representative.

Voting Rights

Article 16

Subject to art. 5 para. 2 of these Articles of Incorporation, each share shall grant the right to one vote.

Resolutions, Elections

Article 17

1Unless otherwise required by law, the General Meeting of Shareholders shall pass resolutions and decide elections upon an absolute majority of the votes represented.

2Resolutions and elections shall be decided by a show of hands, unless a secret ballot is resolved by the General Meeting of Shareholders or is ordered by the presiding officer. The presiding officer may also arrange for resolutions and elections to be carried out by electronic means. Resolutions and elections carried out by electronic means are deemed to have the same effect as secret ballots.

3The presiding officer may at any time order that an election or resolution decided by a show of hands be repeated through a secret ballot if, in his view, the results of the vote are in doubt. In this case, the preceding decision by a show of hands shall be deemed to have not occurred.

4If the first ballot fails to result in an election and more than one candidate is standing for election, the presiding officer shall order a second ballot in which a relative majority shall be decisive.

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Specific Powers of the General Meeting

Article 18

The following powers shall be vested exclusively in the General Meeting of Shareholders:

a)adoption and amendment of the Articles of Incorporation;

b)election of the members of the Board of Directors, the Auditors, the Group Auditors and the Special Auditors;

c)approval of the annual report and the consolidated financial statements;

d)approval of the annual financial statements and deciding on the allocation of profits shown on the balance sheet, in particular with regard to dividends;

e)granting discharge to the members of the Board of Directors and the persons entrusted with management;

f)passing resolutions as to all matters reserved to the authority of the General Meeting by law or under these Articles of Incorporation or that are submitted to the General Meeting by the Board of Directors, subject to art. 716a Swiss Code of Obligations.

Special Quorum

Article 19

The approval of at least two-thirds of the votes represented shall be required for resolutions of the General Meeting of Shareholders with respect to:

a)a modification of the purpose of the Company;

b)the creation of shares with increased voting powers;

c)restrictions on the transfer of registered shares and the removal of such restrictions;

d)restrictions on the exercise of the right to vote and the removal of such restrictions;

e)an authorized or conditional increase in share capital;

f)an increase in share capital through the conversion of capital surplus, through an in-kind contribution or in exchange for an acquisition of property, and a grant of special benefits;

g)the restriction or denial of pre-emptive rights;

h)a transfer of the place of incorporation of the Company;

i)the dissolution of the Company.

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B. Board of Directors

Number of Directors

Article 20

The Board of Directors shall consist of no less than 7 and no more than 13 members.

Term of Office

Article 21

1The term of office of the members of the Board of Directors shall be one year. In this regard, one year shall mean the period between two Ordinary General Meetings of Shareholders.

2Members of the Board of Directors whose terms of office have expired shall be immediately eligible for re-election.

Organization of the Board, Remuneration

Article 22

1The Board of Directors shall elect from among its members one Chairman. It shall appoint a secretary who need not be a member of the Board.

2The members of the Board of Directors shall be entitled to the reimbursement of all expenses incurred in the interests of the Company, as well as remuneration for their services that is appropriate in view of their functions and responsibilities. The amount of the remuneration shall be fixed by the Board of Directors or a committee of the Board of Directors.

Convening of Meetings

Article 23

The Chairman shall convene meetings of the Board of Directors if and when the need arises or whenever a member or the chief executive officer so requests in writing.

Resolutions

Article 24

1In order to pass resolutions, at least a majority of the members of the Board of Directors must be present. No attendance quorum shall be required for resolutions of the Board of Directors providing for the confirmation of capital increases or for the amendment of the Articles of Incorporation in connection therewith.

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2Resolutions of the Board of Directors shall be adopted upon a majority of the votes cast. In the event of a tie, the Chairman shall have the casting vote.

3Resolutions may be passed by way of circulation (in writing), provided that no member requests oral deliberation.

Specific Powers of the Board

Article 25

1The Board of Directors has, in particular, the following nondelegable and inalienable duties:

a)the ultimate direction of the business of the Company and the issuance of the necessary instructions;

b)the determination of the organization of the Company;

c)the administration of accounting, financial control and financial planning;

d)the appointment and removal of the persons entrusted with management and representation of the Company;

e)the ultimate supervision of the persons entrusted with management of the Company, specifically in view of their compliance with law, these Articles of Incorporation, the regulations and directives;

f)the preparation of business reports, the preparations for the General Meetings of Shareholders and the implementation of the resolutions adopted by the General Meetings of Shareholders;

g)the adoption of resolutions concerning an increase in share capital to the extent that such power is vested in the Board of Directors (art. 651 para. 4 Swiss Code of Obligations) and of resolutions concerning the confirmation of capital increases and corresponding amendments to the Articles of Incorporation, as well as making the required report on the capital increase;

h)the examination of the professional qualifications of the qualified auditors;

i)notification of the court if liabilities exceed assets.

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2In addition, the Board of Directors may pass resolutions with respect to all matters that are not reserved to the authority of the General Meeting of Shareholders by law or under these Articles of Incorporation.

Delegation of Powers

Article 26

Subject to art. 25 of these Articles of Incorporation, the Board of Directors may delegate management of the Company in whole or in part to individual directors or to third persons (Executive Committee) pursuant to regulations governing the internal organization.

Signature Power

Article 27

The due and valid representation of the Company by members of the Board of Directors or other persons shall be set forth in regulations governing the internal organization.

C. Auditors

Term, Powers and Duties

Article 28

1The Auditors, which shall be elected by the General Meeting of Shareholders each year, shall have the powers and duties vested in them by law.

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Section 4: Annual Financial Statements, Consolidated Financial Statements and Profit Allocation

Fiscal Year, Business Report

Article 29

1The fiscal year shall close as of December 31 of each year, closing for the first time on December 31, 1999.

2For each fiscal year, the Board of Directors shall prepare a business report including the annual financial statements (consisting of the profit and loss statements, balance sheet and notes to the financial statements), the annual report and the consolidated financial statements.

Allocation of Profit Shown on the Balance Sheet, Reserves

Article 30

1The profit shown on the balance sheet shall be allocated by the General Meeting of Shareholders within the limits set by applicable law. The Board of Directors shall submit its proposals to the General Meeting of Shareholders.

2Further reserves may be taken in addition to the reserves required by law.

3Dividends that have not been collected within five years after their expiry date shall pass to the Company and be allocated to the general reserves.

Section 5: Announcements, Communications

Announcements, Communications

Article 31

1The official publication organ of the Company shall be the Swiss Official Gazette of Commerce.

2To the extent that personal notification is not mandated by law, all communications to the shareholders shall be deemed valid if published in the Swiss Official Gazette of Commerce. Written communications by the Company to its shareholders shall be sent by ordinary mail to the last address of the shareholder or authorized recipient entered in the share register.

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Section 6: In-Kind Contributions and Acquisitions of Property

In-Kind Contributions

Article 32

1Pursuant to an in-kind contribution agreement by and between the Company and Credit Suisse First Boston, in Zurich, dated June 26, 1999, the Company, in connection with the capital increase dated June 26, 1999, shall acquire from Credit Suisse First Boston, in Zurich, as trustee of the former shareholders of ABB Participation AG (former ABB AG), in Baden, 5,453,500 fully paid registered shares of ABB Participation AG (former ABB AG) with a par value of CHF 10 per share and 7,904,200 bearer shares of ABB Participation AG (former ABB AG) with a par value of CHF 50 per share. These shares will be acquired at a total value of CHF 3,328,079,400. In consideration for such contribution in-kind, the Company shall issue to Credit Suisse First Boston, as trustee of the former shareholders of ABB Participation AG (former ABB AG), a total of 145,807,329 fully paid registered shares with an aggregate par value of CHF 1,458,073,290. The Company shall allocate the difference between the total par value of the issued shares and the net book value of the in-kind contribution in the total amount of CHF 1,870,006,110 to the reserves.

2Pursuant to an in-kind contribution agreement by and between the Company and Skandinaviska Enskilda Banken AB (publ), in Stockholm, dated June 26, 1999, the Company, in connection with the capital increase dated June 26, 1999, shall acquire from Skandinaviska Enskilda Banken AB (publ), in Stockholm, as trustee of the former shareholders of ABB Participation AB (former ABB AB), in Västerås, 651,813,826 A shares of ABB Participation AB (former ABB AB) and 241,261,761 B shares of ABB Participation AB (former ABB AB). These shares will be acquired at a total value of CHF 3,260,285,190. In consideration for such contribution in-kind, the Company shall issue to Skandinaviska Enskilda Banken AB (publ), as trustee of the former shareholders of ABB Participation AB (former ABB AB), a total of 142,830,293 fully paid registered shares with an aggregate par value of CHF 1,428,302,930. The

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Company shall allocate the difference between the total par value of the issued shares and the net book value of the in-kind contribution in the total amount of CHF 1,831,982,260 to the reserves.

Acquisitions of Property

Article 33

1Pursuant to an acquisition of property agreement dated June 26, 1999, the Company, following the capital increase dated June 26, 1999, will acquire from Asea Holding AB, in Västerås, 16,383,744 A shares and 28,453,689 B shares of ABB Participation AB (former ABB AB), in Västerås, at a price of CHF 71,708,860.

2Following the capital increase dated June 26, 1999, the Company intends to acquire from the remaining public shareholders of ABB Participation AG (former ABB AG), in Baden, or in the cancellation procedure pursuant to art. 33 SESTA all shares of ABB Participation AG (former ABB AG) which were not tendered to the Company in connection with the exchange offer dated March 26, 1999, in exchange for the Company’s own registered shares based on the exchange offer dated March 26, 1999.

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ABB Ltd

P.O. Box

CH-8050 Zurich

Telephone +41 (0)43 317 71 11

Telefax+41 (0)43 317 44 20

www.abb.com

EX-2.3

Exhibit 2.3

	Clifford Chance LLP
	CONFORMED COPY

ABB CAPITAL B.V.

as issuer

PROGRAMME FOR THE ISSUANCE OF DEBT INSTRUMENTS

FISCAL AGENCY AGREEMENT

17 December 2008

CONTENTS

SECTION		Page
1.	Interpretation	1
2.	Appointment Of The Paying Agents And The Registrars	5
3.	The Instruments	5
4.	Issuance Of Instruments	8
5.	Replacement Instruments	12
6.	Payments To The Fiscal Agent Or The Registrar	13
7.	Payments To Holders Of Bearer Instruments	15
8.	Payments To Holders Of Registered Instruments	16
9.	Miscellaneous Duties Of The Fiscal Agent And The Paying Agents	17
10.	Early Redemption	21
11.	Miscellaneous Duties Of The Registrars	22
12.	Commissions, Fees And Expenses	24
13.	Terms Of Appointment	25
14.	Changes In Agents	26
15.	Substitution	29
16.	Further Issuers	29
17.	Notices	30
18.	Law And Jurisdiction	31
19.	Modification	32
20.	Counterparts	32
21.	Contracts (Rights Of Third Parties) Act 1999	32
Form Of Temporary Global Instrument (Bearer)		33
Form Of Permanent Global Instrument		46
Form Of Definitive Instrument		53
Form Of Registered Instrument		61
Provisions For Meetings Of Holders Of Instruments		65
Form Of Deed Of Assumption		73
Regulations Concerning Transfers Of Registered Instruments And Exchanges Of Bearer Instruments For Registered InstrumentS		79
The Specified Offices Of The Paying Agents And The Registrars		81

THIS FISCAL AGENCY AGREEMENT is made on 17 December 2008.

BETWEEN:

(1)ABB CAPITAL B.V. (“ACBV”) (the “Issuer”, which expression shall, where the context so permits, include any Further Issuer as defined in Clause 16.1 hereof);

(2)FORTIS BANQUE LUXEMBOURG S.A. in its capacities as fiscal agent (the “Fiscal Agent”, which expression shall include any successor to Fortis Banque Luxembourg S.A. in its capacity as such) and principal registrar (the “Principal Registrar”, which expression shall include any successor to Fortis Banque Luxembourg S.A. in its capacity as such); and

(3)FORTIS BANQUE (SUISSE) S.A. in its capacity as Swiss paying agent for the purposes of article 26 of the Listing Rules of the SIX Swiss Exchange (together with the Fiscal Agent, the “Paying Agents”, which expression shall include any substitute or additional paying agents appointed in accordance herewith).

WHEREAS:

(A)The Issuer established a programme (the “Programme”) for the issuance of debt instruments (the “Instruments”) in connection with which they have entered into a dealership agreement dated 17 December 2008 (the “Dealership Agreement”) and made between the Issuer, ABB Ltd and Morgan Stanley & Co. International Limited (the “Dealer”, which expression shall include any substitute or additional dealers appointed in accordance with the Dealership Agreement). In respect of bearer Instruments issued in temporary global or permanent global form, the Issuer has executed and delivered a deed of covenant dated 17 December 2008 (the “Deed of Covenant”).

(B)Instruments may be issued on a listed or unlisted basis. The Issuer has made an application to the SIX Swiss Exchange (the “SIX”) for approval of the Programme, under which, upon approval (and subsequent annual approvals of updates of the Programme), Instruments can be issued and listed on SIX for a period of twelve months.

(C)The parties hereto wish to record certain arrangements which they have made in relation to the Instruments to be issued under the Programme.

IT IS AGREED as follows:

1.INTERPRETATION

1.1All terms and expressions which have defined meanings in the Information Memorandum or the Dealership Agreement shall have the same meanings in this Agreement except where the context requires otherwise or unless otherwise stated. In addition, in this Agreement, any reference to:

“Banking Day” is to a day (other than Saturdays and Sundays) on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in the place where the specified office of the Fiscal Agent or, as the case may be, the Registrar is located;

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a “Clause” is, unless the context indicates otherwise, to a Clause in a Section hereof;

“Clearstream, Luxembourg” is to Clearstream Banking, société anonyme;

a “Condition” is to the terms and conditions of the Instruments as appearing in the Information Memorandum or, in relation to any Tranche or Series of Instruments, such terms and conditions as the same may be amended or supplemented or replaced as described in the relevant Pricing Supplement or Pricing Supplements and any reference to a numbered “Condition” is to the correspondingly numbered provision thereof and “terms and conditions” should be construed accordingly;

a “Coupon” is to an interest coupon and where the context permits, a Talon, in each case appertaining to a Definitive Instrument;

“Euroclear” is to Euroclear Bank S.A./N.V.;

“Event of Default” is to any of the circumstances or events set out in Condition 7 (as the same may be modified by the relevant Pricing Supplement in relation to any Tranche of Instruments);

the “Exchange Act” is to the United States Securities Exchange Act of 1934;

the “Exchange Date” is to the date which is 40 days after the completion of the distribution of the Instruments comprising the relevant Tranche, as specified in the relevant Pricing Supplement;

“Information Memorandum” is to the information memorandum the preparation of which has been procured by the Issuer in order to obtain approval by SIX of the Programme as a “domestic issuance programme” according to the Additional Rules for the Listing of Bonds of SIX, together with any information incorporated therein by reference, as the same may be amended, supplemented, updated and/or substituted from time to time and any further information memorandum prepared in connection with the listing of such Instruments on any other stock exchange (as such further information memorandum may be amended, supplemented, updated and/or substituted from time to time);

“Instalment Instrument” is to an Instrument the principal amount of which is repayable by instalments;

“issue date” is, in relation to any Tranche of Instruments, to the date of issue of such Instruments;

“local time” in relation to any payment is to the time in the city or town in which the relevant bank or the relevant branch or office thereof is located and any reference to “local banking days” in relation thereto is to days on which commercial banks are open for general business in such city or town;

“Luxembourg Banking Day” is to a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in Luxembourg;

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“outstanding” is, in relation to the Instruments of the Issuer, to all the Instruments of the Issuer and any coupons relating thereto other than:

(i)those which have been redeemed in full or purchased and cancelled pursuant to Condition 6;

(ii)those in respect of which the date for redemption in full (including, but not limited to, the due date for payment of the final instalment in respect of an Instalment Instrument) has occurred and the redemption moneys therefor (including all interest accrued thereon to such date for redemption) have been duly paid to the Fiscal Agent or (in the case of Registered Instruments) the Registrar in the manner provided for in this Fiscal Agency Agreement (and, where appropriate, notice to that effect has been given in accordance with Condition 14) and remain available for payment in accordance with the Conditions;

(iii)any Bearer Instrument which has been exchanged for a Registered Instrument;

(iv)          those which have become void under Condition 10 or Condition 9A.06;

(v)           (for the purpose only of ascertaining the amount outstanding and without prejudice to their status for any other purpose) those Instruments which are alleged to have been lost, stolen or destroyed and in respect of which replacement Instruments have been issued pursuant to Condition 12;

(vi)          those Instruments which have been mutilated or defaced and which have been surrendered or cancelled and in respect of which replacement Instruments have been issued pursuant to Condition 12;

(vii)         any Temporary Global Instrument to the extent that it has been exchanged for Definitive Instruments, Registered Instruments or a Permanent Global Instrument; and

(viii)any Permanent Global Instrument to the extent that it has been exchanged for Definitive Instruments.

Provided that for the purposes of the Fifth Schedule those Instruments which are beneficially held by, or are held on behalf of, the Issuer or any affiliated company of the Issuer or ABB Ltd or any subsidiary of ABB Ltd and not cancelled shall (unless and until ceasing to be so held) be deemed not to remain outstanding;

“principal amount outstanding” is, on any date, to the principal amount of that Instrument on its date of issue (i) less, in respect of any Instrument any amount of principal in respect of that Instrument that has become due and payable and either has been paid to the relevant holder or in respect of which the Relevant Date (as defined in Condition 8) shall have occurred, and (ii) less, in respect of any partly paid Instrument, any amount that shall not have been paid up in full;

“Registrar” is to the Principal Registrar as specified in the relevant Pricing Supplement relating to Registered Instruments;

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“Regulations” is to the regulations concerning the transfer of Registered Instruments or for the exchange of Bearer Instruments for Registered Instruments as may from time to time be promulgated by the Issuer. The initial such regulations are set out in the Seventh Schedule;

“Relevant Dealer” is, in respect of any Tranche of Instruments, to the institution specified as such in the relevant Pricing Supplement or, if there is only one Dealer in respect of such Tranche of Instruments, such Dealer;

“Zurich Banking Day” is to a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in Zurich;

the “specified office” of any Paying Agent or any Registrar is to the office specified against its name in the Eighth Schedule or such other office in the same city or town as such Paying Agent or, as the case may be, such Registrar may specify by notice to the Issuer and the other parties hereto in accordance with Clause 14.7;

a “Schedule” is, unless the context indicates otherwise, to a Schedule hereto;

a “Section” is, unless the context indicates otherwise, to a Section hereof;

the “Securities Act” is to the United States Securities Act of 1933;

a “Talon” is to a talon exchangeable for further Coupons; and

a “Tranche” is to an issue of Instruments which are identical in all respects (save that they may be denominated in different amounts and may comprise Instruments in bearer form and Instruments in registered form), which are intended to be issued on the same closing date.

1.2Terms used, but not defined, herein shall have the meanings ascribed to them as set out in the terms and conditions of the relevant Instruments.

1.3Section and Schedule headings are for ease of reference only and shall not affect the construction or interpretation of this Agreement.

1.4In this Agreement, any reference to payments of principal, redemption amount or interest includes any additional amounts payable in relation thereto under Condition 8.

1.5Any Instruments issued on or after the date of this Agreement shall be issued pursuant to this Agreement. This does not affect the rights or obligations of any party under any previous fiscal agency agreement entered into in connection with the Programme, with respect to any Instruments issued prior to the date of this Agreement.

1.6All references in this Agreement to an agreement, instrument or other document (including the Dealership Agreement, the Deed of Covenant and the Information Memorandum) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time.

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2.APPOINTMENT OF THE PAYING AGENTS AND THE REGISTRARS

2.1The Issuer appoints each of the Paying Agents and each of the Registrars at their respective specified offices as its agent in relation to the Instruments for the purposes specified in this Agreement and on the terms and conditions applicable thereto and all matters incidental thereto. Except where the context otherwise requires references to the Paying Agents and the Registrars are to them acting solely through such respective specified offices. The obligations of the Paying Agents and the Registrars hereunder are several and not joint.

2.2Each of the Paying Agents and each of the Registrars accepts its appointment as agent of each Issuer in relation to the Instruments and shall perform all matters expressed to be performed by it in, and otherwise comply with, the terms and conditions applicable thereto and the provisions of this Agreement and, in connection therewith, shall take all such action as may be incidental thereto.

3.THE INSTRUMENTS

3.1Instruments may be issued in series (each a “Series”) and each Series may comprise one or more Tranches of Instruments. Each Tranche will be the subject of a pricing supplement (each a “Pricing Supplement”) prepared by or on behalf of the Issuer or, as the case may be, the relevant Dealer, attached to or incorporated by reference into each Instrument of such Tranche and in the case of a Tranche in relation to which application shall be made for listing on the SIX, lodged with the SIX.

3.2Instruments may be issued in bearer form or in registered form, as specified in the relevant Pricing Supplement.

3.3The holders of interests in Instruments listed on SIX shall not have the right to request the printing and delivery of definitive instruments. If the Fiscal Agent deems (i) the printing of definitive instruments and coupons to be necessary or useful or (ii) the presentation of definitive instruments and coupons to be required by Swiss or foreign laws in connection with the enforcement of the rights of the holders, the Fiscal Agent will provide for such printing. The Issuer hereby irrevocably authorises the Fiscal Agent to provide for such printing on its behalf. The definitive instruments will be printed and issued to the holders free of charge in exchange for their interests in the respective global instrument.

Instruments in bearer form (“Bearer Instruments”) will initially be represented by a temporary global instrument, without interest coupons (a “Temporary Global Instrument”), in bearer form which shall be exchangeable in accordance with its terms on and from the Exchange Date applicable to the Instruments represented by such Temporary Global Instrument and upon due certification as described therein, for a permanent global instrument (a “Permanent Global Instrument”, together with the Temporary Global Instrument, each a “Global Instrument”) representing such Bearer Instruments or, if so specified in the relevant Pricing Supplement, for definitive instruments (“Definitive Instruments”). In the case of a Series comprising both Bearer Instruments and Instruments in registered form (“Registered Instruments”) the Temporary Global Instrument may be exchanged for Registered Instruments in accordance with its terms only on and from the Exchange Date applicable to the

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Instruments represented by such Temporary Global Instrument and upon due certification as described therein. Each Permanent Global Instrument will only be exchangeable in accordance with its terms for Definitive Instruments and/or (in the case of a Series comprising both Bearer Instruments and Registered Instruments) Registered Instruments.

3.4Each Temporary Global Instrument shall:

(a)be printed, lithographed or typewritten in substantially the form (duly completed) set out in the First Schedule but with such modifications, amendments and additions as the Fiscal Agent, the relevant Dealer and the Issuer shall have agreed to be necessary;

(b)have attached thereto or incorporated by reference therein the terms and conditions applicable thereto;

(c)be executed manually by two directors (or, as the case may be) managing directors of, or by a duly authorised attorney on behalf of, the Issuer and shall be authenticated manually by or on behalf of the Fiscal Agent; and

(d)bear a unique serial number.

3.5Each Permanent Global Instrument shall:

(a)be printed, lithographed or typewritten in substantially the form (duly completed) set out in the Second Schedule but with such modifications, amendments and additions as the Fiscal Agent, the relevant Dealer and the Issuer shall have agreed to be necessary;

(b)have attached thereto or incorporated by reference therein the terms and conditions applicable thereto;

(c)be executed manually by two directors (or, as the case may be) managing directors of, or by a duly authorised attorney on behalf of, the Issuer and shall be authenticated manually by or on behalf of the Fiscal Agent; and

(d)bear a unique serial number.

3.6Each Definitive Instrument shall:

(a)be in substantially the form (duly completed) set out in the Third Schedule but with such modifications, amendments and additions as the Fiscal Agent, the relevant Dealer and the Issuer shall have agreed to be necessary;

(b)unless the contrary is specified in the relevant Pricing Supplement, be in the format from time to time specified by the International Securities Markets Association or any successor body thereto;

(c)have a unique serial number printed thereon;

(d)if so specified in the relevant Pricing Supplement, have attached thereto at the time of its initial delivery Coupons;

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(e)if so specified in the relevant Pricing Supplement, have attached thereto at the time of its initial delivery a Talon;

(f)have endorsed thereon, attached thereto or incorporated by reference therein the terms and conditions applicable thereto;

(g)be executed manually or in facsimile by two directors (or, as the case may be) managing directors of the Issuer and authenticated manually by or on behalf of the Fiscal Agent;

(h)be printed in accordance with the requirements of any clearing system by which such Instruments are intended to be accepted; and

(i)be printed in accordance with the requirements of any stock exchange on which such Instruments may be listed.

3.7Each Registered Instrument shall:

(a)be printed, lithographed or typewritten in substantially the form (duly completed) set out in the Fourth Schedule but with such modifications, amendments and additions as the Registrar, the relevant Dealer and the Issuer shall have agreed to be necessary;

(b)have endorsed thereon, attached thereto or incorporated by reference therein the terms and conditions applicable thereto; and

(c)be executed manually by two directors (or, as the case may be) managing directors of, or by a duly authorised attorney on behalf of the Issuer or shall be executed in facsimile by two directors (or, as the case may be) managing directors of the Issuer and, in any case, shall be authenticated manually by or on behalf of the Registrar.

3.8The Issuer may adopt and use the signature of any person who at the date of signing a Temporary Global Instrument, Permanent Global Instrument or Registered Instrument is an authorised signatory for such purpose of the Issuer notwithstanding that such person may for any reason (including death) have ceased to be such an authorised signatory at the time of the creation and issue of the relevant Tranche or the issue and delivery of the relevant Instruments.

3.9Any facsimile signature affixed to an Instrument may be that of a person who is at the time of the creation and issue of the relevant Tranche an authorised signatory for such purpose of the Issuer notwithstanding that such person may for any reason (including death) have ceased to be such an authorised signatory at the time at which the relevant Instrument may be delivered.

3.10Execution in facsimile of any Instruments and any photostatic copying or other duplication of master Global Instruments (in unauthenticated form, but executed manually on behalf of the Issuer as stated above) shall be binding upon the Issuer in the same manner as if such Instruments were signed manually by such signatories.

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3.11In regard to Instruments listed or to be listed on SIX, the global instruments and definitive instruments representing such Instruments shall comply with the regulations of SIX that may be applicable from time to time.

4.ISSUANCE OF INSTRUMENTS

4.1Upon the conclusion of any agreement between the Issuer and any Dealer(s) for the issue by the Issuer and the subscription by such Dealer(s) of any Instruments the Issuer shall, as soon as practicable but in any event not later than 3.00 p.m. (Luxembourg time) four Luxembourg Banking Days, prior to the proposed issue date therefor:

(a)confirm by an email attaching the signed and scanned written confirmation followed by the original letter by mail to the Fiscal Agent or, if such Instruments are to be Registered Instruments, the Registrar (copied to the Fiscal Agent) all such information as the Fiscal Agent or, as the case may be, the Registrar may reasonably require to carry out its functions under this Agreement and in particular, if a master Global Instrument or master Registered Instruments is/are to be used, such details as are necessary to enable it to complete a duplicate of the master Global Instrument or master Registered Instruments, the settlement and payment procedures applicable to the relevant Tranche of Instruments and the account of the Issuer to which payment should be made;

(b)deliver a duly executed copy of the Pricing Supplement in relation to the relevant Tranche to the Fiscal Agent or, as the case may be, the Registrar (copied to the Fiscal Agent); and

(c)unless a master Global Instrument or a master Registered Instrument and the and the Issuer shall have provided such document to the Fiscal Agent or, as the case may be, the Registrar pursuant to Clause 4.2, ensure that there is delivered to the Fiscal Agent a Temporary Global Instrument and/or Permanent Global Instrument (in unauthenticated form but executed on behalf of the Issuer and otherwise complete) or, as the case may be, to the Registrar Registered Instruments (in unauthenticated form and with the names of the registered holders left blank but executed on behalf of the Issuer and otherwise complete) in relation to the relevant Tranche.

4.2The Issuer may, at its option, deliver from time to time to the Fiscal Agent an original master Temporary Global Instrument and an original master Permanent Global Instrument (in unauthenticated form but executed on behalf of the Issuer) and/or, to the Registrar, original master Registered Instruments (in unauthenticated form but executed on behalf of the Issuer). Any such master Instruments shall be held in safe custody by the Fiscal Agent or, as the case may be, the Registrar upon trust for the Issuer for use only in accordance with the written instructions of the Issuer. The Fiscal Agent or, as the case may be, the Registrar shall return the master Instruments to the Issuer forthwith upon written request by the Issuer.

4.3The Fiscal Agent or, as the case may be, the Registrar shall, on behalf of the Issuer, where the relevant Instruments are to be listed on SIX, deliver a copy of the Pricing

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Supplement in relation to the relevant Tranche to the Listing Agent as soon as practicable but in any event not later than 2.00 p.m. (local time) two Zurich Banking Days prior to the proposed issue date therefor.

4.4The provisions of this Clause 4.4 shall apply to each Tranche of Instruments unless otherwise agreed between the Issuer, the Relevant Dealer and the Fiscal Agent or (in the case of Registered Instruments) the Registrar. The Fiscal Agent or, as the case may be, the Registrar shall, in a timely manner, authenticate and deliver to the relevant depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system the relevant Temporary Global Instrument or, as the case may be, Registered Instruments together with instructions to Euroclear or Clearstream, Luxembourg or such other clearing system to credit the Instruments represented by such Temporary Global Instrument or the Registered Instruments to such securities account(s) on a delivery against payment basis (or on such other basis as shall have been agreed between the Issuer and the Relevant Dealer and notified to the Fiscal Agent) as shall have been notified to the Fiscal Agent by the Issuer.

The Fiscal Agent shall give instructions to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system to credit Instruments represented by a Temporary Global Instrument or, as the case may be, Registered Instruments registered in the name of the relevant depositary, to the Fiscal Agent’s distribution account. Unless otherwise agreed in respect of any Tranche of Instruments by the Issuer and the Relevant Dealer and notified to the Fiscal Agent each Instrument which is so credited to the Fiscal Agent’s distribution account with Euroclear or Clearstream, Luxembourg or such other clearing system following the delivery of a Temporary Global Instrument or Registered Instrument to the relevant depositary shall be held to the order of the Issuer pending delivery to the relevant Dealer(s) on a delivery against payment basis in accordance with the normal procedures of Euroclear or Clearstream, Luxembourg or such other clearing system, as the case may be. The Fiscal Agent shall on the issue date in respect of the relevant Tranche and against receipt of funds from the relevant Dealer(s) transfer (with same value date) the proceeds of issue to the Issuer to the account notified in accordance with Clause 4.1 above.

4.5If the Fiscal Agent or, as the case may be, the Registrar should pay an amount (an “advance”) to the Issuer in the belief that a payment has been or will be received from a Dealer and if such payment is not received by the Fiscal Agent or, as the case may be, the Registrar on the date that the Fiscal Agent or, as the case may be, the Registrar pays the Issuer, the Issuer shall forthwith repay the advance (unless prior to such repayment the payment is received from the Dealer) and shall pay interest on such amount which shall accrue (as well after as before judgment) on the basis of a year of 360 days (365 days (or 366 days, in the case of a leap year) in the case of an advance paid in sterling) and the actual number of days elapsed from the date of payment of such advance until the earlier of (i) repayment of the advance or (ii) receipt by the Fiscal Agent or, as the case may be, the Registrar of the payment from the Dealer, and at the rate per annum which is the aggregate of one per cent. per annum and the rate per annum specified by the Fiscal Agent or, as the case may be, the Registrar as reflecting its cost of funds for the time being in relation to the unpaid amount.

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4.6Unless a master Permanent Global Instrument is to be used and the Issuer has provided such document to the Fiscal Agent pursuant to Clause 4.2, the Issuer shall, in relation to each Tranche of Bearer Instruments, ensure that there is delivered to the Fiscal Agent not less than four Luxembourg Banking Days before the Exchange Date for the relevant Temporary Global Instrument, the Permanent Global Instrument (in unauthenticated form but executed by the Issuer and otherwise complete) in relation thereto or, as the case may be, the Definitive Instruments or Registered Instruments (in unauthenticated form but executed by the Issuer and otherwise complete) in relation thereto. If, in the case of a Series comprising both Bearer Instruments and Registered Instruments, the Temporary Global Instrument is exchangeable for Definitive Instruments and/or Registered Instruments, (unless a master Registered Instrument is to be used and the Issuer shall have provided such document to the Registrar pursuant to Clause 4.2) the Issuer shall ensure that there is delivered to the Registrar, sufficient Registered Instruments to enable the Registrar to effect exchanges of interests in the Temporary Global Instrument for Registered Instruments in accordance with the terms of the Temporary Global Instrument. The Fiscal Agent or, as the case may be, the Registrar, shall authenticate and deliver such Permanent Global Instrument or, as the case may be, Definitive Instruments and/or Registered Instruments in accordance with the terms hereof and of the relevant Temporary Global Instrument.

4.7The Issuer shall, in relation to each Tranche of Bearer Instruments which is represented by a Permanent Global Instrument in relation to which an exchange notice has been given in accordance with the terms of such Permanent Global Instrument, ensure that there is delivered to the Fiscal Agent not less than ten Luxembourg Banking Days before the day on which the relevant notice period expires the Definitive Instruments (in unauthenticated form but executed by the Issuer and otherwise complete) in relation thereto. If, in the case of a Series comprising both Bearer Instruments and Registered Instruments, the Permanent Global Instrument is exchangeable for Definitive Instruments and/or Registered Instruments, (unless a master Registered Instrument is to be used and the Issuer shall have provided such document to the Registrar pursuant to Clause 4.2) the Issuer shall ensure that there is delivered to the Registrar, sufficient Registered Instruments to enable the Registrar to effect exchanges of interests in the Permanent Global Instrument for Registered Instruments in accordance with the terms of the Permanent Global Instrument. The Fiscal Agent or, as the case may be, the Registrar, shall authenticate and deliver such Definitive Instruments and/or Registered Instruments in accordance with the terms hereof and of the relevant Permanent Global Instrument.

4.8Where any Definitive Instruments with Coupons attached are to be delivered in exchange (not earlier than the Exchange Date) for a Temporary Global Instrument or a Permanent Global Instrument, the Fiscal Agent shall ensure that such Definitive Instruments shall have attached thereto only such Coupons as shall ensure that neither loss nor gain of interest shall accrue to the bearer thereof.

4.9The Fiscal Agent or, as the case may be, the Registrar shall hold in safe custody and in trust for the account of, and to the order of, the Issuer all unauthenticated Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments or, as the case may be, Registered Instruments delivered to it in accordance with this Section 4, Section 

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5 or Section 11 and shall ensure that the same are authenticated and delivered only in accordance with the terms hereof and, if applicable, the relevant Temporary Global Instrument or Permanent Global Instrument.

4.10The Fiscal Agent and the Registrar are authorised by the Issuer to authenticate such Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments or, as the case may be, Registered Instruments as may be required to be authenticated hereunder by the signature of any of their respective officers or any other person duly authorised for the purpose by the Fiscal Agent or, as the case may be, the Registrar.

4.11On each occasion on which a portion of a Temporary Global Instrument or a Permanent Global Instrument is exchanged for a portion of a Permanent Global Instrument or, as the case may be, for Definitive Instruments and/or Registered Instruments, the Fiscal Agent shall note or procure that there is noted on the Schedule to, or in the absence of a Schedule, on the face of, the Temporary Global Instrument or, as the case may be, Permanent Global Instrument the aggregate principal amount thereof so exchanged and the remaining principal amount of the Temporary Global Instrument or, as the case may be, Permanent Global Instrument (which shall be the previous principal amount thereof less (or, in the case of a Permanent Global Instrument in respect of an exchange of a portion of a Temporary Global Instrument for a Permanent Global Instrument, plus) the aggregate principal amount so exchanged) and shall procure the signature of such notation on its behalf. The Fiscal Agent shall forthwith cancel or procure the cancellation of each Temporary Global Instrument or, as the case may be, Permanent Global Instrument against surrender of which it has made full exchange for a Permanent Global Instrument or Definitive Instruments and/or Registered Instruments.

4.12The Issuer shall, in relation to each series of Definitive Instruments to which a Talon is attached upon the initial delivery thereof, on each occasion on which a Talon becomes exchangeable for further Coupons, not less than five Luxembourg Banking Days before the date on which the final Coupon comprised in any Coupon sheet (which includes a Talon) matures (“Talon Exchange Date”), ensure that there is delivered to the Fiscal Agent such number of Coupon sheets as may be required in order to enable the Paying Agent to fulfil their obligation under Clause 4.13 hereof.

4.13The Paying Agent shall on or after the Talon Exchange Date in respect of such Talon deliver a Coupon sheet against the presentation and surrender of such Talon provided that if any Talon is presented and surrendered for exchange to any Paying Agent and the Replacement Agent (as defined in Clause 5.1) has delivered a replacement therefor the Paying Agent shall forthwith notify the Fiscal Agent which shall immediately inform the Issuer of such presentation and surrender and the Paying Agent shall not exchange against the same unless and until it is so instructed in writing by the Fiscal Agent. The Paying Agent which makes an exchange as set out in this Clause 4.13 shall cancel each Talon surrendered to it and in respect of which a Coupon sheet shall have been delivered and shall (if such Paying Agent is not the Fiscal Agent) forthwith deliver the cancelled Talon to the Fiscal Agent.

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4.14The Issuer undertakes to notify the Fiscal Agent of any changes in the identity of the Dealers and the Fiscal Agent agrees to notify the other Paying Agents and Registrars thereof as soon as reasonably practicable thereafter.

5.REPLACEMENT INSTRUMENTS

5.1The Fiscal Agent or, as the case may be, the Registrar (in such capacity “Replacement Agent”) shall in accordance with the instructions of the Issuer and the terms and conditions (subject to the provisions of Clause 5.2 below) authenticate and deliver a Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or, as the case may be, Registered Instrument as a replacement for any of the same which has been mutilated or defaced or which has or has been alleged to have been destroyed, stolen or lost provided that no Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument shall be delivered as a replacement for any of the same which has been mutilated or defaced otherwise than against surrender of the same and any replacement Definitive Instrument shall have the same number of Coupons and, if applicable, a Talon as are attached to the mutilated or defaced Definitive Instrument so replaced.

5.2The Replacement Agent shall not issue any replacement Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or, as the case may be, Registered Instrument unless the claimant shall have:

(i)paid such costs as may be incurred; and

(ii)furnished (in the case of destroyed, lost or stolen Instruments) such evidence, security, indemnity and otherwise as the Issuer may require.

5.3Each replacement Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument delivered hereunder shall bear a unique serial number.

5.4The Replacement Agent shall cancel each mutilated or defaced Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument surrendered to it and in respect of which a replacement has been delivered.

5.5The Replacement Agent shall forthwith notify the Issuer, and (in the case of Bearer Instruments) the other Paying Agents of the delivery by it in accordance herewith of any replacement Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument, specifying the serial number thereof and the serial number (if any and if known) of the Instrument which it replaces and confirming (if such be the case) that the Instrument which it replaces has been cancelled.

5.6The Issuer shall ensure that the Replacement Agent has available to it supplies of such Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments, Coupons and Registered Instruments, as the case may be, as shall be necessary to effect the delivery of replacement Instruments under this Section 5.

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5.7Each of the Fiscal Agent, the Registrar and the Replacement Agent undertake to notify the Issuer if it holds insufficient Instruments or Coupons to fulfil its respective obligations under Section 4 and this Section 5.

5.8Unless the Issuer instructs otherwise, the Replacement Agent shall destroy each mutilated or defaced Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument surrendered to and cancelled by it and in respect of which a replacement has been delivered and shall as soon as possible but not later than three months after such destruction furnish the Issuer with a certificate as to such destruction and specifying the serial numbers of the Temporary Global Instrument, Permanent Global Instrument, Definitive Instruments and Registered Instruments in numerical sequence and the total number by maturity date of Coupons (and distinguishing any Talon in respect thereof) so destroyed.

6.PAYMENTS TO THE FISCAL AGENT OR THE REGISTRAR

6.1In order to provide for the payment of interest and principal or, as the case may be, any other redemption amount payable in respect of the Instruments of each Series as the same shall become due and payable the Issuer shall pay to the Fiscal Agent or, as the case may be, the Registrar on or before the date on which such payment becomes due an amount equal to the amount of principal, redemption amount or, as the case may be, interest then becoming due in respect of such Instruments.

6.2Each amount payable by the Issuer under Clause 6.1 shall be paid unconditionally by credit transfer in the currency in which the Instruments of the relevant Series are denominated or, if different, payable and in immediately available, freely transferable funds not later than 10.00 a.m. (Luxembourg time) on the relevant day to such account with such bank as the Fiscal Agent or, as the case may be, the Registrar may by notice to the Issuer have specified for the purpose. If the due date for payment in respect of any Instruments is not, in respect of such Instruments, a Relevant Financial Centre Day (as defined in Condition 9B.02 of the terms and conditions of the relevant Instruments) then payment will be made on the next following Relevant Financial Centre Day (or, in the case of Instruments denominated or, if different, payable in Euro on the next following day which is a TARGET Business Day (as defined in Condition 5B.04 of the terms and conditions of the Instruments). The Fiscal Agent or, as the case may be, the Registrar shall give not less than 14 nor more than 21 days’ notice to the Issuer of the due date for, and amount of, each payment in respect of the Instruments. The Issuer shall, before 10.00 a.m. (Luxembourg time) at least two Luxembourg Banking Days before the due date of each payment by it under Clause 6.1, confirm to the Fiscal Agent or, as the case may be, the Registrar by tested telex or email that it has given irrevocable instructions for the transfer of the relevant funds to the Fiscal Agent or, as the case may be, the Registrar and the name and the account of the bank through which such payment is being made.

6.3The Fiscal Agent and each Registrar shall be entitled to deal with each amount paid to it hereunder in the same manner as other amounts paid to it as a banker by its customers, provided that:

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(a)it shall not against the Issuer exercise any lien, right of set-off or similar claim in respect thereof; and

(b)it shall not be liable to any person for interest thereon.

6.4All moneys paid to the Fiscal Agent by the Issuer in respect of any Instrument shall be held by the Fiscal Agent in a segregated account upon trust for the persons entitled thereto from the moment when such moneys are received until the time of actual payment thereof, to apply the same in accordance with Section 7, and the Fiscal Agent shall not be obliged to repay any such amount unless or until claims against the Issuer in respect of the relevant Instruments are prescribed or the relevant payment becomes void or ceases in accordance with the terms and conditions, in which event it shall forthwith repay to the Issuer such portion of such amount as relates to such payment by paying the same by credit transfer to such account with such bank as the Issuer may by notice to the Fiscal Agent have specified for the purpose.

6.5(a)The Fiscal Agent or, as the case may be, the Registrar shall forthwith notify the Paying Agents and the Issuer by telex or fax or cable if, by 10.00 a.m. (local time) on the due date for any payment to it under Clause 6.1, it has not received confirmation that the Issuer has given irrevocable instructions for payment to be made as referred to in Clause 6.2.

(b)The Fiscal Agent or, as the case may be, the Registrar shall forthwith (and in any event within one Relevant Financial Centre Day in respect of the relevant Instruments) notify the Issuer if it has not received from the Issuer in the manner provided herein full payment on the due date of any amount with respect to the Instruments.

(c)If the Fiscal Agent or, as the case may be, the Registrar has not received the full amount payable by the due date but receives such amount later it shall:

(i)forthwith so notify the other Paying Agents; and

(ii)forthwith give notice to the holders of the Instruments in accordance with Condition 14 that it has received such full amount.

6.6All moneys paid to the Registrar by the Issuer in respect of any Instrument shall be held by the Registrar in a segregated account upon trust for the persons entitled thereto from the moment when such moneys are received until the time of actual payment thereof, to apply the same in accordance with Section 8, and the Registrar shall not be obliged to repay any such amount unless or until the claims against the Issuer in respect of the relevant Registered Instruments are prescribed or the relevant payment becomes void or ceases in accordance with the terms and conditions, in which event it shall forthwith repay to the Issuer such portion of such amount as relates to such claims in respect of the relevant Registered Instruments by paying the same by credit transfer to such account with such bank as the Issuer may by notice to the Registrar have specified for the purpose.

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7.PAYMENTS TO HOLDERS OF BEARER INSTRUMENTS

7.1Each Paying Agent shall make payments of interest, principal or, as the case may be, redemption amount in respect of Bearer Instruments in accordance with the terms and conditions applicable thereto (and, in the case of a Temporary Global Instrument or a Permanent Global Instrument, the terms thereof), provided that:

(a)if any Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument or Coupon is presented or surrendered for payment to any Paying Agent and such Paying Agent has delivered a replacement therefor or has been notified that the same has been replaced, such Paying Agent shall forthwith notify the Fiscal Agent (which shall immediately notify the Issuer) of such presentation or surrender and shall not make payment against the same until it is so instructed in writing by the Issuer and has received the amount to be so paid;

(b)if any Temporary Global Instrument or Permanent Global Instrument is presented or surrendered for payment to any Paying Agent other than the Fiscal Agent, such Paying Agent shall (without prejudice to Clause 7.3) forthwith notify the Fiscal Agent of that fact;

(c)unless and until the full amount of any payment has been transferred to the Fiscal Agent, none of the Paying Agents shall be bound to make payments on behalf of the Issuer in respect of the Instruments;

(d)in the absence of contrary notification from the Fiscal Agent on the due date for any payment in respect of the Instruments of any Series, the Paying Agents shall assume that the Fiscal Agent has received the full amount so due in respect of such Instruments and shall be entitled:

(i)to pay maturing Instruments and Coupons in accordance with the terms and conditions; and

(ii)to claim any amounts so paid by it from the Fiscal Agent;

(e)each Paying Agent shall (in the case of the Temporary Global Instrument or Permanent Global Instrument, in accordance with the directions of the Fiscal Agent) cancel or procure the cancellation of each Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument (in the case of early redemption, together with such unmatured Coupons or unexchanged Talons as are attached to or are surrendered with it at the time of such redemption), or, as the case may be, Coupon against surrender of which it has made full payment and shall (if such Paying Agent is not the Fiscal Agent) forthwith deliver or procure the delivery of each Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument (together with as aforesaid) or Coupon so cancelled by it to the Fiscal Agent together with all relevant details; and

(f)in the case of payment of interest, principal or, as the case may be, redemption amount against presentation of a Temporary Global Instrument or a Permanent Global Instrument or in the case of payment of an instalment in respect of an Instalment Instrument against presentation of a Definitive Instrument, the

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relevant Paying Agent shall (in the case of the Temporary Global Instrument or Permanent Global Instrument, in accordance with the directions of the Fiscal Agent) note or procure that there is noted on the Schedule thereto, or in the absence of a Schedule, on the face thereof, the amount of such payment and, in the case of payment of principal or redemption amount, the remaining principal amount of the relevant Instrument (which shall be the previous principal amount less the amount of principal or, as the case may be, the principal amount in respect of which redemption amount has then been paid) and shall procure the signature of such notation on its behalf.

7.2None of the Paying Agents shall exercise any lien, right of set-off or similar claim against any person to whom it makes any payment under Clause 7.1 in respect thereof, nor shall any commission or expense be charged by it to any such person in respect thereof.

7.3If a Paying Agent other than the Fiscal Agent makes any payment in accordance with Clause 7.1:

(a)it shall notify the Fiscal Agent of the amount so paid by it, the serial number of the Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument or Coupon against presentation or surrender of which payment of interest, principal or redemption amount was made and the number of Coupons by maturity against which payment of interest was made; and

(b)the Fiscal Agent shall on demand promptly reimburse such Paying Agent for the amount so properly paid by it by payment out of the funds received by it under Clause 6.1 of an amount equal to the amount so paid by it by paying the same by credit transfer to such account with such bank as such Paying Agent may by notice to the Fiscal Agent have specified for the purpose.

7.4If the Fiscal Agent makes any payment in accordance with Clause 7.1 out of its own funds, it shall be entitled to appropriate for its own account out of the funds received by it under Clause 6.1 an amount equal to the amount so paid by it.

7.5If at any time and for any reason a Paying Agent makes a partial payment in respect of any Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument or Coupon surrendered for payment to it, such Paying Agent shall endorse thereon a statement indicating the amount and date of such payment.

8.PAYMENTS TO HOLDERS OF REGISTERED INSTRUMENTS

8.1The Registrar shall make payments of interest, principal or, as the case may be, redemption amount in respect of Registered Instruments in accordance with the terms and conditions applicable thereto, provided that unless and until the full amount of any payment has been transferred to the Registrar, the Registrar shall not be bound to make payments on behalf of the Instruments.

8.2The Registrar shall not exercise any lien, right of set-off or similar claim against any person to whom it makes any payment under Clause 8.1 in respect thereof, nor shall any commission or expense be charged by it to any such person in respect thereof.

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8.3If a Registrar makes any payment in accordance with Clause 8.1 out of its own funds, it shall be entitled to appropriate for its own account out of the funds received by it under Clause 6.1 an amount equal to the amount so paid by it.

8.4If at any time and for any reason a Registrar makes a partial payment in respect of any Registered Instrument surrendered for payment to it, such Registrar shall endorse thereon a statement indicating the amount and date of such payment.

9.MISCELLANEOUS DUTIES OF THE FISCAL AGENT AND THE PAYING AGENTS

Cancellation, destruction and records

9.1The Fiscal Agent shall:

(a)maintain a complete record of all Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments and Coupons delivered hereunder and of their redemption, payment, exchange, cancellation, mutilation, defacement, alleged destruction, theft or loss or replacement provided that no record need be maintained of the serial numbers of Coupons save insofar as that a record shall be maintained of the serial numbers of unmatured Coupons missing at the time of redemption or other cancellation of the relevant Definitive Instruments and of any subsequent payments against such Coupons and shall send forthwith to the other Paying Agents a list of any unmatured Coupons and/or unexchanged Talons missing upon redemption of the relevant Definitive Instrument;

(b)maintain a record of all certifications received by it in accordance with the provisions of any Temporary Global Instrument;

(c)upon request by the Issuer, inform the Issuer of the spot rate of exchange quoted by it for the purchase of the currency in which the relevant Instruments are denominated against payment of United States dollars (or such other currency specified by the Issuer) on the date on which the Relevant Agreement (as defined in the Dealership Agreement) in respect of such Instruments was made;

(d)in relation to each series of Instruments the terms and conditions applicable to which provide that the rate of interest or redemption amount or any calculation applicable thereto shall be determined by the Fiscal Agent, determine such rate of interest or redemption amount or make such calculation from time to time on the basis therein and take all such actions as may to it seem reasonably incidental thereto including, without limitation, the notification of all rates and amounts so determined and the maintenance of all appropriate records; and

(e)make such records available for inspection at all reasonable times by the Issuer and the other Paying Agents.

9.2The Paying Agents shall make available to the Fiscal Agent such information as may reasonably be required for the maintenance of the records referred to in Clause 9.1.

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9.3In relation to any Instruments subscribed by the Issuer or any of its affiliated companies, the Issuer may deliver to the Fiscal Agent Definitive Instruments and unmatured Coupons appertaining thereto for cancellation or, as the case may be, may procure the delivery to the Fiscal Agent of a Temporary Global Instrument or a Permanent Global Instrument with instructions to cancel a specified aggregate principal amount of Instruments represented thereby (which instructions shall be accompanied by evidence satisfactory to the Fiscal Agent that the Issuer is entitled to give such instructions) whereupon the Fiscal Agent shall cancel such Definitive Instruments and Coupons or, as the case may be, note or procure that there is noted on the Schedule to, or in the absence of a Schedule, on the face of, such Temporary Global Instrument or Permanent Global Instrument the aggregate principal amount of Instruments so to be cancelled and the remaining principal amount thereof (which shall be the previous principal amount thereof less the aggregate principal amount of the Instruments so cancelled) and shall procure the signature of such notation on its behalf.

9.4As soon as possible (and in any event within three months) after each interest or other payment date in relation to any Series of Bearer Instruments, after each date on which Instruments are cancelled in accordance with Clause 9.3, and after each date on which the Instruments fall due for redemption, the Fiscal Agent shall notify the Issuer and the other Paying Agents (on the basis of the information available to it) of:

(i)the aggregate principal amount paid on, and the serial numbers of all Instruments redeemed, surrendered and cancelled and the serial numbers of any Definitive Instruments which have not yet been surrendered for payment;

(ii)for each date for the payment of interest, the total number of Coupons paid and the aggregate amount paid thereon;

(iii)the aggregate principal amount and serial numbers of Instruments purchased and cancelled; and

(iv)the total number by maturity date of unmatured Coupons missing from Instruments redeemed or purchased and surrendered and the serial numbers of the Instruments to which such missing unmatured Coupons appertained.

9.5The Fiscal Agent shall (unless the Issuer otherwise requests) destroy each Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument and Coupon delivered to or cancelled by it in accordance with Clauses 4.11, 4.13, paragraph (d) of Clause 7.1, Clause 9.14, Clause 11.13 or (where there is no principal amount remaining of such Temporary Global Instrument or Permanent Global Instrument) delivered to and cancelled by it in accordance with Clause 9.3, in which case it shall as soon as possible (and in any event within 3 months of such destruction) furnish the Issuer with a certificate as to such destruction and specifying the serial numbers of the Temporary Global Instrument, Permanent Global Instrument, Definitive Instruments in numerical sequence and the total number by maturity date of Coupons (distinguishing Talons) so destroyed.

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Meetings of Holders of Instruments

9.6Each Paying Agent shall, at the request of the holder of any Bearer Instrument issue voting certificates and block voting instructions in a form and manner which comply with the provisions of the Fifth Schedule (except that it shall not be required to issue the same less than forty-eight hours before the time fixed for any meeting therein provided for) and will perform the other functions specified in the Fifth Schedule. The provisions contained in the Fifth Schedule will have full effect in the like manner as if they had been expressly incorporated herein in full. Each Paying Agent shall keep a full record of voting certificates and block voting instructions issued by it and will give to the Issuer not less than twenty-four hours before the time appointed for any meeting or adjourned meeting full particulars of all voting certificates and block voting instructions issued by it in respect of such meeting or adjourned meeting.

Documents and Forms

9.7The Issuer shall provide to the Fiscal Agent for distribution among the Paying Agents:

(a)specimen Instruments;

(b)sufficient copies of all documents required to be available for issue or inspection as provided in the Information Memorandum or, in relation to any Instruments, the terms and conditions or Pricing Supplement in respect of such Instruments; and

(c)in the event that the provisions of such Condition become relevant in relation to any Instruments, the certificate contemplated under the Condition headed “Early Redemption for Taxation Reasons”.

9.8Each Paying Agent shall make available for examination or use during normal business hours at its specified office such documents as may be specified as so available at the specified office of such agent in the Information Memorandum or, in relation to any Instruments, the terms and conditions or Pricing Supplement in respect of such Instruments, or as may be required by any stock exchange on which the Instruments may be listed and, without prejudice to the generality of the foregoing, the Fiscal Agent and the Paying Agent with its specified offices in Luxembourg and Zurich respectively, shall make available for examination or use during normal business hours at its specified office copies of the Information Memorandum and each Pricing Supplement and all other documents listed in paragraph 8 of the General Information Section of the Information Memorandum and, in the event that the provisions of such Condition become relevant, the certificate contemplated in the Condition headed “Early Redemption for Taxation Reasons”.

Notifications

9.9The Fiscal Agent shall make all necessary notifications (including the submission of documents or reports where required) to and with the Bank of England and the Ministry of Finance in Japan in connection with Instruments denominated in Pounds Sterling and Yen respectively and other similar notifications (including the submission of documents or reports where required) as may be required in respect of any other Instruments. Within one week after the end of each calendar month, the Fiscal Agent shall notify the

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Bank of England of the principal amount of each Tranche of Instruments denominated in Sterling (i) outstanding as at the end of the relevant calendar month and (ii) issued and redeemed since the previous such notification (or since the date of this Fiscal Agency Agreement, as the case may be). Such notification shall be made even if no such Instruments were outstanding as at such time or issued or redeemed during such calendar month. Such notification shall be consistent with the requirements from time to time of the Bank of England. Within fifteen days after the end of each calendar month, the Fiscal Agent shall submit a report in Japanese to the Ministry of Finance in Japan in respect of each Tranche of Instruments denominated in Yen issued during the relevant calendar month. Such report shall be submitted even if no such Instruments were issued during such calendar month. Such report shall be consistent with the requirements from time to time of the Ministry of Finance of Japan.

9.10The Fiscal Agent agrees with the Issuer that, to the extent that it is notified by each relevant Dealer that the distribution of the Instruments of any Tranche is complete it will notify the Issuer and the relevant Dealers of the completion of distribution of the Instruments of any Tranche which are sold to or through more than one Dealer as contemplated in Schedule 1 to the Dealership Agreement.

Notices

9.11Forthwith upon receipt by the Fiscal Agent of any notice or other communication from or on behalf of the holder of any Instrument in relation to any Instrument, the Fiscal Agent shall forward a copy of the notice or communication to the Issuer. Each of the Paying Agents agrees to notify the Fiscal Agent forthwith in the event that it receives any such notice or communication.

9.12The Fiscal Agent shall, upon and in accordance with the instructions of the Issuer but not otherwise promptly arrange for the publication of any notices required to be given to the holders of Bearer Instruments in accordance with the terms and conditions of the relevant Instruments or required to comply with the requirements of any stock exchange on which the relevant Instruments may be listed and shall supply a copy thereof to each other Paying Agent.

Indemnity

9.13Each of the Paying Agents shall severally indemnify the Issuer and each of them against any direct loss, liability, cost, claims, action, demand or expense incurred by the Issuer as a result of or arising out of or in relation to or in connection with any breach by such Paying Agent, or any person acting on its behalf, of the terms of this Agreement, or as a result of its wilful misconduct, negligence or bad faith or that of its agents, officers or employees. The Issuer and each of them shall remain entitled to the benefit and each of the Paying Agents shall be subject to the provisions of this Clause 9.13 notwithstanding the provisions of Clause 14.5.

Exchange of Bearer Instruments for Registered Instruments

9.14In relation to any Series comprising Bearer and Registered Instruments, the Fiscal Agent shall receive requests to effect exchanges of Bearer Instruments for Registered

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Instruments together with the relevant Bearer Instruments, inform the Registrar (specifying (i) the aggregate principal amount of such Bearer Instruments, (ii) the name(s) and address(es) to be entered on the Register as the holder(s) of the Registered Instrument(s) and (iii) the denomination(s) of the Registered Instrument(s)) and assist in the issue of the Registered Instrument(s) in accordance with the terms and conditions applicable thereto and in accordance with the Regulations. The Fiscal Agent shall, on the exchange date (as defined in Condition 2.06) applicable to such exchange of Bearer Instruments for Registered Instruments, cancel such Bearer Instruments.

10.EARLY REDEMPTION

10.1If the Issuer intends (other than consequent upon an Event of Default) to redeem all or any of the Instruments prior to their stated maturity date it shall not less than 15 days prior to the latest date for the publication of the notice of redemption required to be given to the holders of any Instruments, give notice of such intention to the Fiscal Agent or, in the case of Registered Instruments, the Registrar (copied to the Fiscal Agent) stating the date on which such Instruments are to be redeemed.

10.2In respect of any Instruments to which Condition 6.06 applies or which carries any other right of redemption at the option of the holders of such Instruments, the Issuer will provide the Paying Agents or, in the case of Registered Instruments, the Registrar with copies of the form of the current redemption notice and the Paying Agents or, as the case may be, the Registrar will make available forms of the current redemption notice to holders of Instruments upon request during usual business hours at their respective specified offices. Upon receipt of any Instrument deposited in the exercise of such option, the Paying Agent or, in the case of Registered Instruments, the Registrar with which such Instrument is deposited shall hold such Instrument (together with, in the case of a Definitive Instrument, any Coupons relating to it deposited with it) on behalf of the depositing holder of such Instrument (but shall not, save as provided below, release it) until the due date for redemption of the relevant Instrument consequent upon the exercise of such option, when, subject as provided below, it shall present such Instrument (and any such Coupons) to itself for payment in accordance with the terms and conditions of the relevant Instruments and shall pay such moneys in accordance with the directions of the holder of the Instrument contained in the relevant redemption notice. If, prior to such due date for its redemption, such Instrument becomes immediately due and payable by reason of an Event of Default or if upon due presentation payment of such redemption moneys is improperly withheld or refused, the Paying Agent concerned or, as the case may be, the Registrar shall without prejudice to the exercise of such option mail such Instrument (together with any such Coupons) by uninsured post to, and at the risk of, the holder of the relevant Instrument at such address as may have been given by such holder in the relevant redemption notice.

10.3At the end of any applicable period for the exercise of such option or, as the case may be, not later than 7 days after the latest date for the exercise of such option in relation to a particular date, in relation to Bearer Instruments each Paying Agent shall promptly notify the Fiscal Agent of the principal amount of the Instruments in respect of which such option has been exercised with it together with their serial numbers and the Fiscal Agent shall promptly notify such details to the Issuer.

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10.4At the end of any applicable period for the exercise of such option or, as the case may be, not later than 7 days after the latest date for the exercise of such option in relation to a particular date, in relation to Registered Instruments, the Registrar shall promptly notify the Issuer of the principal amount of the Instruments in respect of which such option has been exercised together with their serial numbers.

11.MISCELLANEOUS DUTIES OF THE REGISTRARS

Cancellation and Records

11.1Each Registrar shall maintain in relation to each Series of Registered Instruments in relation to which it is appointed as registrar a register (each a “Register”), which shall be kept in accordance with the terms and conditions applicable to such Series of Registered Instruments and the Regulations. Each Register shall show the aggregate principal amount and date of issue of each Tranche comprising the relevant Series of Registered Instruments, the names and addresses of the initial holders thereof and the dates of all transfers to, and the names and addresses of, all subsequent holders thereof. The Registrar shall further, in relation to each Series of Registered Instruments the terms and conditions applicable to which provide that the rate of interest or redemption amount or any calculation applicable thereto shall be determined by such Registrar, determine such rate of interest or redemption amount or make such calculation from time to time on the basis therein provided and take all such action as may to it seem reasonably incidental thereto including, without limitation, the notification of all rates and amounts so determined and the maintenance of all appropriate records. The Registrar shall make each Register and all such records available for inspection at all reasonable times by the Issuer.

11.2The Registrar shall by the issue of new Registered Instruments, the cancellation of old Registered Instruments and the making of entries in the relevant Register give effect to transfers of Registered Instruments in accordance with the terms and conditions applicable thereto and in accordance with the Regulations.

11.3In relation to any Instruments purchased by the Issuer or any of its affiliated companies, the Issuer may from time to time deliver to the Registrar such Registered Instruments of which it is the holder for cancellation, whereupon such Registrar shall cancel the same and shall make the corresponding entries in the relevant Register.

11.4As soon as possible (and in any event within three months) after each date on which Registered Instruments are cancelled in accordance with Clause 11.3 or fall due for redemption, the Registrar shall notify the Issuer of:

(i)the aggregate principal amount paid on, and the serial numbers of all Registered Instruments redeemed, surrendered and cancelled and the serial numbers of any Registered Instruments (and the names and addresses of the holders thereof) which have not yet been surrendered for payment; and

(ii)the aggregate principal amount and serial numbers of Registered Instruments purchased and cancelled.

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11.5The Issuer shall ensure that each Registrar has available to it supplies of such Registered Instruments as shall be necessary in connection with the transfer of Registered Instruments under this Section 11.

11.6The Registrar shall, upon and in accordance with the instructions of the Issuer but not otherwise, promptly arrange for the despatch of any notices required to be given to the holders of Registered Instruments in accordance with the terms and conditions of the relevant Instruments or required to comply with the requirements of any stock exchange on which the relevant Instruments may be listed.

Meetings of Holders of Instruments

11.7The Registrar shall, at the request of the holder of any Registered Instrument, issue voting certificates and block voting instructions in a form and manner which comply with the provisions of the Fifth Schedule (except that it shall not be required to issue the same less than forty-eight hours before the time fixed for any meeting therein provided for) and shall make available at the request of the holder of any Registered Instrument, forms of proxy in a form and manner which comply with the provisions of the Fifth Schedule and will comply with the other functions specified in the Fifth Schedule. The provisions contained in the Fifth Schedule will have full effect in the like manner as if they had been expressly incorporated herein in full. The Registrar shall keep a full record of voting certificates and block voting instructions issued by it and will give to the Issuer not less than twenty-four hours before the time appointed for any meeting or adjourned meeting, full particulars of all voting certificates and block voting instructions issued by it in respect of such meeting or adjourned meeting.

Documents and Forms

11.8The Issuer shall provide to the Registrar:

(a)specimen Instruments;

(b)sufficient copies of all documents required to be available for issue or inspection as provided in the Information Memorandum or, in relation to any Instruments, the terms and conditions or Pricing Supplement in respect of such Instruments; and

(c)in the event that the provisions of such Condition become relevant in relation to any Instruments, the certificate contemplated under the Condition “Early Redemption for Taxation Reasons”.

11.9The Registrar shall make available for examination or use during normal business hours at its specified office such documents as may be specified as so available at the specified office of such agent in the Information Memorandum or, in relation to any Instruments, the terms and conditions or Pricing Supplement in respect of such Instruments or as may be required by any stock exchange on which the Instruments may be listed and, without prejudice to the generality of the foregoing, shall make available for examination or use during normal business hours at its specified office copies of the Information Memorandum and each Pricing Supplement and all other documents listed in paragraph 8 of the General Information Section of the Information Memorandum and, in the event

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that the provisions of such Condition become relevant, the certificate contemplated in the Condition headed “Early Redemption for Taxation Reasons”.

Provision of Information

11.10The Registrar shall provide the Fiscal Agent with all such information as the Fiscal Agent may reasonably require in order to perform the obligations set out in Clause 9.9 hereof.

Indemnity

11.11The Registrar shall severally indemnify the Issuer and each of them against any direct loss, liability, cost, claims, action, demand or expense incurred by such Issuer as a result of or arising out of or in relation to or in connection with any breach by the Registrar, or any person acting on its behalf, of the terms of this Agreement, or as a result of its wilful misconduct, negligence or bad faith or that of its agents, officers or employees. The Issuer and each of them shall remain entitled to the benefit and the Registrar shall be subject to the provisions of this Clause 11.11 notwithstanding the provisions of Clause 14.5.

11.12Forthwith upon receipt by the Registrar of any notice or other communication from or on behalf of the holder of any Instrument in relation to any Instrument, the Registrar shall forward a copy of the notice or communication to the Issuer.

Exchanges of Bearer Instruments for Registered Instruments

11.13In relation to any Series comprising Bearer and Registered Instruments, by the receipt of requests for exchanges of Bearer Instruments for Registered Instruments together with the relevant Bearer Instruments (or notifications from the Fiscal Agent of receipt thereof by the Fiscal Agent), the issue of Registered Instruments and the making of entries in the Register, give effect to exchanges of Bearer Instruments for Registered Instruments in accordance with the terms and conditions applicable thereto and in accordance with the Regulations.

The Registrar shall forthwith upon the receipt of a request for the exchange of Bearer Instruments for Registered Instruments notify the Fiscal Agent thereof (specifying (i) the serial numbers of the Bearer Instruments, (ii) the aggregate principal amount of Instruments involved, and (iii) the exchange date (as defined in Condition 2.06) applicable thereto) and shall on the exchange date cancel the relevant Bearer Instruments and forward the same to the Fiscal Agent. The Registrar shall notify the Issuer promptly of the exchange of Bearer Instruments for Registered Instruments, specifying the serial numbers of the Bearer Instruments and of the Registered Instruments issued in exchange therefor, the aggregate principal amount involved and the applicable exchange date.

12.COMMISSIONS, FEES AND EXPENSES

12.1The Fiscal Agent and the Issuer shall separately agree from time to time as to the amount of any commissions, fees and expense reimbursements to which the Fiscal Agent, the Paying Agents and the Registrars will be entitled hereunder, and any and all such agreements shall be binding on all of the parties hereto.

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12.2The Issuer shall pay all stamp and other similar taxes and duties, if any, which may be payable on the execution of this Agreement, on the creation and issue of the Instruments issued by it and the related Coupons and the delivery of the Instruments pursuant to the Dealership Agreement.

13.TERMS OF APPOINTMENT

13.1Each of the Paying Agents and the Registrars may, in connection with its services hereunder:

(a)(in the case of Bearer Instruments) except as ordered by a court of competent jurisdiction or as required by law and notwithstanding any notice to the contrary or any writing thereon, treat the bearer of any Instrument as the absolute owner thereof and make payments thereon accordingly;

(b)refer any question relating to the ownership of any Instrument or Coupon or, without prejudice to Clause 5.25.2(ii), the adequacy or sufficiency of any evidence supplied in connection with the replacement of any Instrument or Coupon to the Issuer for determination by the Issuer and rely upon any determination so made; and

(c)after approval by the Issuer such approval not to be unreasonably withheld, engage and pay for the advice or services of any leading firm of lawyers, or other leading experts, with recognised expertise in the relevant field whose advice or services may to it seem necessary and rely upon any advice so obtained. Any request for the Issuer’s approval of any such firm or expert must be answered by the Issuer within a reasonable time following such request, failing which such approval shall be assumed to have been given.

13.2None of the Paying Agents or the Registrars shall have any obligations towards or relationship of agency or trust for or with any person other than the Issuer (except as provided in Clauses 6.4 and 6.6 hereof) and shall be responsible only for performance of the duties and obligations expressly imposed upon them herein.

13.3Each Paying Agent and Registrar and their officers, directors and employees may become the holder of, or acquire any interest in, any Instruments or Coupons with the same rights that it or they would have if it were not such agent or agents hereunder, and may engage or be interested in any transaction with the Issuer and may act on, or as depositary, trustee or agent for, any committee or body of holders of Instruments or Coupons or other obligations of the Issuer as freely as if it were not such agent or agents hereunder.

13.4The Issuer shall indemnify each Paying Agent and each Registrar against any direct loss, liability, claim, action, demand, reasonable cost or expense which it may properly incur or which may be made against it arising out of or in connection with its appointment or the exercise of its powers and performance of its duties hereunder in respect of Instruments issued by the Issuer, except such as may result from its wilful misconduct, negligence or bad faith or that of its agents, officers or employees. The foregoing

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indemnity shall not apply to any expenses of any Paying Agent or Registrar provided for pursuant to Clause 12.1.

14.CHANGES IN AGENTS

14.1Any Paying Agent or Registrar may resign its appointment as the agent of the Issuer in relation to the Instruments of the Issuer upon the expiration of not less than ninety days’ prior written notice to that effect by such Paying Agent or, as the case may be, the Registrar to the Issuer (with a copy, if necessary, to the Fiscal Agent) provided that:

(a)any such notice which would otherwise expire within fifteen days before or after the maturity date of any Series of Instruments or any interest or other payment date in relation to any Series of Instruments shall be deemed, in relation to such Series only, to expire on the fifteenth day following such maturity date or, as the case may be, such interest or other payment date; and

(b)in the case of (i) the Fiscal Agent, (ii) the only remaining Paying Agent or Registrar with its specified office in continental Europe (but outside the United Kingdom), (iii) so long as any Instruments are listed on the SIX and/or any other stock exchange, the Paying Agent or the Registrar with its specified office in Zurich and Luxembourg respectively, and/or in such other place as may be required by such other stock exchange, (iv) the Registrar in respect of any Series of Instruments then outstanding, (v) in the circumstances described in Condition 9A.04, the Paying Agent with its specified office in New York City, or (vi) a Paying Agent in a member state of the European Union that will not be obliged to withhold or deduct tax pursuant to the European Council Directive 2003/48/EC (the “Directive”) on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, this Directive;

such resignation shall not be effective until a successor thereto (which in the case of the Fiscal Agent and the Registrar shall be a bank or trust company of good standing and authorised to exercise corporate trust powers) has been appointed by the relevant Issuer as the agent of such Issuer in relation to the Instruments of such Issuer and notice of such appointment has been given in accordance with the terms and conditions, provided that such successor, in the case of (ii), shall have its specified office in continental Europe (but outside the United Kingdom and, in the case of (iii), shall which must be a bank or a securities dealer that is subject to supervision by the Swiss Federal Banking Commission and have its specified office in Switzerland and/or in such other place as may be required by SIX.

14.2The Issuer may revoke its appointment of any Paying Agent or Registrar as its agent in relation to the Instruments by not less than thirty days’ notice to that effect to such Paying Agent or, as the case may be, such Registrar provided, however, that, in the case of

(i) the Fiscal Agent, (ii) the only remaining Paying Agent or Registrar with its specified office in continental Europe (but outside the United Kingdom), (iii) so long as any

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Instruments are listed on the SIX and/or any other stock exchange, the Paying Agent or Registrar with its specified office in Switzerland and/or in such other place as may be required by such other stock exchange, (iv) the Registrar in respect of any Series of Instruments then outstanding or (v) in the circumstances described in Condition 9A.04, the Paying Agent with its specified office in New York City, or (vi) a Paying Agent in a member state of the European Union that will not be obliged to withhold or deduct tax pursuant to the Directive on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to this Directive;

such revocation shall not be effective until a successor thereto (which in the case of the Fiscal Agent and the Registrar shall be a bank or trust company of good standing and authorised to exercise corporate trust powers) has been appointed by the Issuer as the agent of the Issuer in relation to the Instruments of the Issuer and notice of such appointment has been given in accordance with the terms and conditions, provided that such successor, in the case of (ii), shall have its specified office in continental Europe (but outside the United Kingdom) and, in the case of (iii), which must be a bank or a securities dealer that is subject to supervision by the Swiss Federal Banking commission and have its specified office in Switzerland and/or in such other place as may be required by SIX.

14.3The appointment of any Paying Agent or Registrar as the agent of the Issuer in relation to the Instruments shall terminate forthwith if any of the following events or circumstances shall occur or arise, namely: such Paying Agent or, as the case may be, Registrar becomes incapable of acting; such Paying Agent or, as the case may be, Registrar is adjudged bankrupt or insolvent; such Paying Agent or, as the case may be, Registrar files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of a receiver, administrator or other similar official of all or any substantial part of its property or admits in writing its inability to pay or meet its debts as they mature or suspends payment thereof; a resolution is passed or an order is made for the winding-up or dissolution of such Paying Agent or, as the case may be, Registrar; a receiver, administrator or other similar official of such Paying Agent or, as the case may be, Registrar or of all or any substantial part of its property is appointed; an order of any court is entered approving any petition filed by or against such Paying Agent or, as the case may be, Registrar under the provisions of any applicable bankruptcy or insolvency law; or any public officer takes charge or control of such Paying Agent or, as the case may be, Registrar or of its property or affairs for the purpose of rehabilitation, conservation or liquidation.

14.4The Issuer may (and shall where necessary to comply with the terms and conditions applicable to any Instruments) appoint substitute or additional agents in relation to the Instruments and shall forthwith notify the other parties hereto thereof, whereupon the parties hereto and such substitute or additional agents shall thereafter have the same rights and obligations among them as would have been the case had they then entered into an agreement in the form mutatis mutandis of this Agreement.

14.5Upon any resignation or revocation becoming effective under this Section 14, the relevant Paying Agent or, as the case may be, Registrar shall:

27

(a)be released and discharged from its obligations under this Agreement (save that it shall remain entitled to the benefit of and subject to and bound by the provisions of Clause 9.13, 11.11, Clause 12.2, Clause 13 and this Clause 14);

(b)repay to the Issuer such part of any fee paid to it as referred to in Clause 12.1 as may be agreed between the relevant Paying Agent or, as the case may be, the Registrar and the Issuer;

(c)in the case of the Fiscal Agent, deliver to the Issuer and to  the successor Fiscal Agent a copy, certified as true and up-to-date by an officer of the Fiscal Agent, of the records maintained by it in accordance with Clause 9;

(d)in the case of a Registrar, deliver to the Issuer and to the successor Registrar a copy, certified as true and up-to-date by an officer of such Registrar, of each of the Registers and other records maintained by it in accordance with Clause 11; and

(e)forthwith transfer all moneys and papers (including any unissued Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments, Coupons or, as the case may be, Registered Instruments held by it hereunder) to its successor in that capacity and, upon appropriate notice, provide reasonable assistance to such successor for the discharge by it of its duties and responsibilities hereunder.

14.6Any corporation into which any Paying Agent or Registrar may be merged or converted, any corporation with which any Paying Agent or Registrar may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Paying Agent or Registrar shall be a party, shall, to the extent permitted by applicable law (and provided, (i) in the case of the Fiscal Agent or any Registrar that such corporation shall be a bank or trust company of good standing and authorised to execute corporate trust powers (ii) in regard to the Paying Agent with a specified office in Switzerland the resulting corporation shall be a bank or a securities dealer that is subject to supervision by the Swiss Federal Banking Commission), be the successor to such Paying Agent or, as the case may be, Registrar as agent of the Issuer in relation to the Instruments without any further formality, whereupon the parties hereto and such successor agent shall thereafter have the same rights and obligations among them as would have been the case had they then entered into an agreement in the form mutatis mutandis of this Agreement. Notice of any such merger, conversion or consolidation shall forthwith be given by such successor to the Issuer and the other parties hereto.

14.7If any Paying Agent or Registrar decides to change its specified office (which may only be effected within the same city) it shall give notice to the Issuer (with a copy, if necessary, to the Fiscal Agent) of the address of the new specified office stating the date on which such change is to take effect, which date shall be not less than thirty days after the date of such notice. The relevant Paying Agent or Registrar shall at its own expense not less than fourteen days prior to the date on which such change is to take effect (unless the appointment of the relevant Paying Agent or Registrar is to terminate pursuant to any of the foregoing provisions of this Section 14 on or prior to the date of

28

such change) publish or cause to be published notice thereof in accordance with the terms and conditions.

15.SUBSTITUTION

15.1As provided in Condition 15 of the terms and conditions of the relevant Instruments, the Issuer may be replaced, and ABB Ltd or any direct or indirect subsidiary of ABB Ltd may be substituted for the Issuer, as principal debtor in respect of the Instruments without the consent of the Holders of the Instruments or Coupons. If the Issuer shall determine that ABB Ltd or any such subsidiary shall become the principal debtor (in such capacity, the “Substituted Debtor”), the Issuer shall give not less than 30 nor more than 45 days’ notice, in accordance with Condition 14, to the Holders of the Instruments of such event and, immediately on the expiry of such notice, the Substituted Debtor shall enter into a Deed of Assumption, substantially in the form set out in the Sixth Schedule hereto, and become the principal debtor in respect of the Instruments in place of the Issuer and the Holders of the Instruments shall thereupon cease to have any rights or claims whatsoever against the Issuer. However, no such substitution shall take effect (i) if the Substituted Debtor is any other subsidiary of ABB Ltd, until such Substituted Debtor shall have entered into a keep-well agreement with ABB Ltd substantially in the form of the Keep-Well Agreement (as defined in the terms and conditions of the relevant Instruments), (ii) until such Substituted Debtor shall have executed a deed of covenant substantially in the form of the Deed of Covenant (as defined in the terms and conditions of the relevant Instruments), (iii) in any case, until the Substituted Debtor shall have provided to the Fiscal Agent and (if applicable) the Registrar such documents as may be necessary to make the Deed of Assumption, the relevant Instruments, the Fiscal Agency Agreement, such deed of covenant and any such keep-well agreement the legal, valid and binding obligations of, as appropriate, the Substituted Debtor and ABB Ltd together with legal opinions either unqualified or subject only to normal, usual or appropriate qualifications and assumptions to the effect that the Instruments, the Fiscal Agency Agreement, the Deed of Assumption, such deed of covenant and any such keep-well agreement are legal, valid and binding obligations of, as appropriate, the Substituted Debtor and ABB Ltd; (iv) the Substituted Debtor shall have obtained all necessary governmental and regulatory approvals and consents, if any, in connection with the substitution and (v) the Substituted Debtor shall have appointed the process agent appointed by the Issuer in Condition 19.03 of the terms and conditions of the relevant Instruments as its agent in England to receive service of process on its behalf in relation to any legal action or proceedings arising out of or in connection with the relevant Instruments. Upon any such substitution, the Instruments and Coupons will, if necessary, be deemed to be modified in all appropriate respects.

15.2The terms and conditions of the relevant Instruments shall, following any substitution effected in accordance with this Clause, apply to the Substituted Debtor, amended as set out in the Schedule to the Deed of Assumption.

16.FURTHER ISSUERS

16.1Each of the Paying Agents and Registrars hereby agrees to act as the agent (in the capacity in which it was appointed hereunder) of (i) any Substituted Debtor as defined in (and where such substitution shall have taken effect as provided in) Condition 15 of the

29

	terms and conditions of the relevant Instruments or (ii) any New Issuer (as that expression is defined in Clause 10.2 of the Dealership Agreement) which shall have become party to the Dealership Agreement and which shall have (a) executed an agreement, in form and substance satisfactory to the Fiscal Agent, whereby such New Issuer agrees to be bound by the provisions of this Agreement and (b) provided to the Fiscal Agent such documents as may be necessary to make this Agreement its legal, valid and binding obligations (any such Substituted Debtor or New Issuer as described in (i) or (ii) above is herein referred to as a “Further Issuer”).
16.2	Each of the Paying Agents and the Registrars hereby agrees that any Issuer in its capacity as such, shall be released from its obligations, undertakings and covenants under this Agreement upon such Issuer ceasing to be an Issuer pursuant to and in accordance with Clause 10.1 of the Dealership Agreement provided always that such release shall not affect any rights, liabilities or obligations accrued or incurred under this Agreement prior to the date upon which such release takes effect.
17.	NOTICES
	All communications hereunder shall be in writing and shall be delivered to or telexed to or sent by facsimile (confirmed by letter sent by express airmail) to the following addresses:

(a)	if to ACBV, to it at:
	Address:	Burgemeester Haspelslaan 65, 5/F
		NL-1181 Amsterdam
		The Netherlands
	Fax:	+31 20 4459844
	Attention:	Business Administration
with a copy to:
	Address	ABB Group Treasury Operations
		Affolternstrasse 44
		CH-8050 Zurich
		Switzerland
	Fax:	+41 43 317 7474
	Attention:	Business Operations

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(b)	if to the Fiscal Agent at:
	Address:	Fortis Banque Luxembourg S.A.
		50, Avenue J.F. Kennedy
		L 2951 Luxembourg
	Telex:	3401 BGL lu
	Fax:	+352 4242 2887
	Email:	LAA@fortis.lu and AGAD@fortis.lu
	Attention:	Global Markets, Listing & Agency

(or in the case of a Fiscal Agent not originally a party hereto, specified by notice to the other parties hereto at or about the time of its appointment as the agent of the Issuer in relation to the Instruments).

(c)	if to the Swiss Paying Agent at:
	Address:	Fortis Banque (Suisse) S.A.
		20, Bd. des Philosophes
		CH-1211 Genève 4
		Switzerland
	SWIFT:	MPCHCHGG
	Fax:	+41 (0) 58 322 0457

All communications relating to this Agreement between the Issuer and any of the Paying Agents or between the Paying Agents themselves shall be made through the Fiscal Agent;

(d)

if to a Registrar to it at the address, fax or telex number specified against its name in the Eighth Schedule (or, in the case of a Registrar not originally a party hereto, specified by notice to the other parties hereto at or about the time of its appointment as the agent of the Issuer in relation to the Instruments) for the attention of the person or department therein specified (or as aforesaid)

or, in any case, to such other address, telex number or fax number or for the attention of such other person or department as the addressee has by prior notice to the sender specified for the purpose.

Any notice sent by letter shall take effect at the time of delivery and any notice sent by telex shall take effect at the time of despatch provided that the correct answerback is received and any notice sent by facsimile transmission shall take effect upon receipt thereof. Where a notice is copied to another address such notice shall take effect at the time when the first of the notice or the copy takes effect.

18.LAW AND JURISDICTION

18.1This Agreement and all non-contractual obligations arising out of or in connection with this Agreement are governed by English law.

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18.2The Issuer hereby agrees for the exclusive benefit of each of the Paying Agents and the Registrars that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and any non-contractual obligation arising out of or in connection with this Agreement and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with this Agreement may be brought in such courts. Nothing contained in this Clause shall limit any right to take Proceedings against the Issuer in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.

18.3The Issuer hereby appoints ABB Limited of Daresbury Park, Daresbury, Warrington WA4 4BT, Cheshire to accept service of any Proceedings on its behalf in England. If for any reason such process agent ceases to act as such or no longer has an address in England, the Issuer agrees to appoint a substitute process agent and notify the Fiscal Agent of such appointment and if the Issuer fails to make any such appointment within twenty-one days, the Fiscal Agent shall be entitled to appoint such a person by notice to the Issuer.

18.4Nothing contained herein shall affect the right to serve process in any other manner permitted by law.

19.MODIFICATION

This Agreement may be amended by the Issuer and the Fiscal Agent, without the consent of the other Paying Agents or the Registrars or the Holder of any Instrument or Coupon, for the purposes of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or in any manner which the Issuer and the Fiscal Agent may deem necessary or desirable and which shall not be inconsistent with the Instruments or Coupons and which will not, in the opinion of the Issuer and the Fiscal Agent, be materially prejudicial to the interests of the Holders of the Instruments, the Coupons or the Paying Agents or the Registrars.

20.COUNTERPARTS

This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when so executed shall constitute one and the same binding agreement between the parties.

21.CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written.

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THE FIRST SCHEDULE

FORM OF TEMPORARY GLOBAL INSTRUMENT (BEARER)

Series Number: [     ] Serial Number: [     ]

THE SECURITIES REPRESENTED BY THIS TEMPORARY GLOBAL INSTRUMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.](1)

ABB CAPITAL B.V.

(incorporated with limited liability in The Netherlands and having its corporate seat in Amsterdam)

(1)Insert only where the maturity of the Instruments is more than one year.

33

TEMPORARY GLOBAL INSTRUMENT

representing

[Aggregate principal amount of Tranche]

[Number of Instruments]

[Title of Instruments]

[Swiss Security Number]

[ISIN]

[Common Code]

This Temporary Global Instrument is issued in respect of an issue of [description of Instruments including aggregate principal amount of Tranche] (the “Instruments”) by [                    ] (the “Issuer”).

The Issuer for value received promises, all in accordance with the terms and conditions [attached hereto/set out in the information memorandum prepared by the Issuer and dated 17 December 2008 and the pricing supplement prepared in relation to the Instruments (the “Pricing Supplement”)] to pay to the bearer upon presentation and, if appropriate, surrender hereof on [maturity date] [by [   ] [equal] successive [semi-annual/quarterly/other] instalments on the dates specified in the Pricing Supplement](2) or on such earlier date as the same may become payable in accordance therewith the principal amount of [aggregate principal amount of Tranche] (as reduced from time to time in accordance with such terms and conditions) or such lesser amount as is equal to the outstanding principal amount of the Instruments represented by this Temporary Global Instrument or such other redemption amount as may be specified therein [and to pay in arrear on the dates specified therein interest on the principal amount hereof from time to time at the rate or rates specified therein], all subject to and in accordance with such terms and conditions.

Except as specified herein, the bearer of this Temporary Global Instrument is entitled to the benefit of the terms and conditions referred to above and of the same obligations on the part of the Issuer as if such bearer were the bearer of the Instruments represented hereby except that the bearer of this Temporary Global Instrument shall not be entitled to receive payment of [the principal of or] interest on the Instruments except to the extent that, upon due presentation and surrender of this Temporary Global Instrument for exchange, delivery of the Permanent Global Instrument, or as the case may be Definitive Instruments or Registered Instruments is improperly withheld or refused, and all payments under and to the bearer of this Temporary Global Instrument shall be valid and effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Instruments.

This Temporary Global Instrument is exchangeable in whole or in part for a permanent global instrument (the “Permanent Global Instrument”) representing the Instruments and in substantially the form (subject to completion) set out in the Second Schedule to a fiscal agency agreement dated 17 December 2008 (as further supplemented, amended or replaced, the “Fiscal Agency Agreement”) and made between the Issuer Fortis Banque Luxembourg S.A. in its capacity as fiscal agent (the “Fiscal Agent”, which expression shall include any successor to Fortis Banque Luxembourg S.A. in its capacity as such), Fortis Banque Luxembourg S.A. as principal registrar and certain other financial institutions named therein or, if so specified in the

(2)Insert only where Instruments are Instalment Instruments.

34

Pricing Supplement, for definitive instruments (“Definitive Instruments”) in substantially the form (subject to completion) set out in the Third Schedule to the Fiscal Agency Agreement [or for registered instruments (“Registered Instruments”) in substantially the form (subject to completion) set out in the Fourth Schedule to the Fiscal Agency Agreement]. An exchange for a Permanent Global Instrument or Definitive Instruments will be made only on or after the date (the “Exchange Date”) which is 40 days after the later of the date of issue of this Temporary Global Instrument and the completion (as notified to the Fiscal Agent by the Issuer) of the distribution of the Instruments represented by this Temporary Global Instrument and upon presentation or, as the case may be, surrender of this Temporary Global Instrument to the Fiscal Agent at its specified office in relation to the Instruments and upon and to the extent only of delivery to the Fiscal Agent of a certificate or certificates issued by Euroclear Bank, S.A./N.V., (“Euroclear”) or Clearstream, société anonyme, Luxembourg (“Clearstream Luxembourg”), or by any other relevant clearing system dated as of the day the Temporary Global Instrument is exchanged for a Permanent Global Instrument or Definitive Instrument in substantially the form set out in Annex I hereto or, as the case may be, in the form that is customarily issued in such circumstances by such other clearing system. [An exchange for Registered Instruments will be made at any time upon presentation or, as the case may be, surrender of this Temporary Global Instrument to the Fiscal Agent at its specified office.](3)  [Any Registered Instruments shall be made available in exchange in accordance with the terms and conditions applicable to the Instruments represented hereby and the Fiscal Agency Agreement (which shall apply as if the bearer of this Temporary Global Instrument were the bearer of the Instruments represented hereby).](4)  Payments of interest in respect of the Temporary Global Instrument will be made only upon presentation of the Temporary Global Instrument to the Fiscal Agent at its specified office in relation to the Instruments and upon and to the extent only of delivery to the Fiscal Agent of a certificate or certificates issued by Euroclear or Clearstream, Luxembourg or by any other relevant clearing system dated as of the day on which the interest payment is made in substantially the form set out in Annex II hereto or, as the case may be, in the form that is customarily issued in such circumstances by such other clearing system.

In the event that (i) this Temporary Global Instrument is not duly exchanged, whether in whole or in part, for a Permanent Global Instrument or, as the case may be, Definitive Instruments [or Registered Instruments](5) by 6.00 p.m. (London time) on the thirtieth day after the time at which the preconditions to such exchange are first satisfied or (ii) any Instrument represented hereby becomes immediately redeemable following the occurrence of an Event of Default in relation thereto and is not duly redeemed (and the funds required for such redemption are not available to the Fiscal Agent for the purposes of effecting such redemption and remain available for such purpose) by 6.00 p.m. (London time) on the thirtieth day after the time at which such Instruments become immediately redeemable, then this Temporary Global Instrument will become void and the bearer will have no further rights hereunder (but without prejudice to the rights which such bearer or any other person having an interest in this Temporary Global

(3)	Insert only in the case of a Series comprising both Bearer and Registered Instruments if the relevant Pricing Supplement specifies that Bearer Instruments are exchangeable for Registered Instruments.
(4)	Insert only in the case of a Series comprising both Bearer and Registered Instruments if the relevant Pricing Supplement specifies that Bearer Instruments are exchangeable for Registered Instruments.
(5)	Insert only where the maturity of the Instruments is more than one year.

35

Instrument immediately prior to it becoming void may have under a deed of covenant dated 17 December 2008 and executed by the Issuer in respect of the Instruments).

[On any occasion on which a payment of interest is made in respect of this Temporary Global Instrument, the Issuer shall procure that the Paying Agent to which such Temporary Global Instrument is presented notes the same on the Schedule hereto.]

On any occasion on which a payment of principal or redemption amount is made in respect of this Temporary Global Instrument or on which this Temporary Global Instrument is exchanged in whole or in part as aforesaid or on which Instruments represented by this Temporary Global Instrument are to be cancelled, the Issuer shall cause the Paying Agent to which such Temporary Global Instrument is presented to procure that (i) the aggregate principal amount of the Instruments in respect of which such payment is made (or, in the case of a partial payment, the corresponding part thereof) or which are delivered in definitive [or registered] form or which are exchanged for a permanent global instrument or which are to be cancelled and (ii) the remaining principal amount of this Temporary Global Instrument (which shall be the previous principal amount hereof less the amount referred to at (i) above) are noted on the Schedule hereto, whereupon the principal amount of this Temporary Global Instrument shall for all purposes be as most recently so noted.

Payments due in respect of Instruments for the time being represented by this Temporary Global Instrument shall be made to the bearer of this Temporary Global Instrument and each payment so made will discharge the Issuer’s obligations in respect thereof. Any failure to note such payments, as provided above, shall not affect such discharge.

The holders of interests in Instruments listed on SIX do not have the right to request the printing and delivery of definitive instruments. If the Fiscal Agent deems (i) the printing of definitive instruments and coupons to be necessary or useful or (ii) the presentation of definitive instruments and coupons to be required by Swiss or foreign laws in connection with the enforcement of the rights of the holders, the Fiscal Agent will provide for such printing. The Issuer has irrevocably authorised the Fiscal Agent to provide for such printing on its behalf. The definitive instruments will be printed and issued to the holders free of charge in exchange for their interests in the respective Global Instrument. This Temporary Global Instrument is governed by, and shall be construed in accordance with, English law.

This Temporary Global Instrument shall not be valid for any purpose until authenticated for and on behalf of Fortis Banque Luxembourg S.A., Luxembourg, as fiscal agent.

This Temporary Global Instrument and all non-contractual obligations arising out of or in connection with it are governed by English law.

36

AS WITNESS the manual signature of two duly authorised officers on behalf of the Issuer.

[                             ]		[                             ]
By:	[manual signature]	By:	[manual signature]
	(duly authorised)	(duly authorised)
ISSUED in [        ] as of [         ]		[   ]

AUTHENTICATED for and on behalf of

FORTIS BANQUE LUXEMBOURG S.A.

as fiscal agent

By:	[manual signature]
	(duly authorised)

37

THE SCHEDULE

Payments, Delivery of Definitive Instruments or Registered Instruments,
Exchange for Permanent Global Instrument and
Cancellation of Instruments

Date of
payment,
delivery or
cancellation Amount of
interest then
paid Amount of
principal or,
as the case
may be,
redemption
amount then
paid Aggregate
principal
amount of
Definitive or
Registered
Instruments
then
delivered Aggregate
principal
amount of
this
Temporary
Global
Instrument
then
exchanged
for the
Permanent
Global
Instrument Aggregate
principal
amount of
Instruments
then
cancelled Remaining
principal
amount of
this
Temporary
Global
Instrument Authorised
signature of
the Fiscal
Agent and/or
the Registrar

38

ANNEX I

[Form of certificate to be given in relation to exchanges of this Temporary Global Instrument for a Permanent Global Instrument, Definitive Instruments or Registered Instruments. This Certificate is not required for Registered Instruments:]

[Name of Issuer]

[Aggregate principal amount and title of Instruments]

(the “Securities”)

This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our “Member Organisations”) substantially to the effect set forth in the Fiscal Agency Agreement as of the date hereof, [   ] principal amount of the above-captioned Securities (i) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estates or trust the income of which is subject to United States Federal income taxation regardless of its source (“United States persons”), (ii) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) (“financial institutions”)) purchasing for their own account or for resale, or (b) acquired the Securities through and are holding through on the date hereof foreign branches of United States financial institutions (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in Clause (iii) above (whether or not also described in Clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

This is also to certify with respect to such principal amount of the above-captioned Securities, except as set forth below, we have received in writing, by tested telex or by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion, substantially to the effect set forth in the Fiscal Agency Agreement.

As used herein, “United States” means the United States of America (including the States and the District of Columbia); and its “possessions” include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part

39

submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as at the date hereof.

We understand that this certification is required in connection [with certain tax laws and, if applicable,] certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Date:    [          ](6)

[Euroclear Bank S.A./N.V./Clearstream Banking, société anonyme, Luxembourg]

By:       [authorised signature]

(6)To be dated as of the date of the exchange of the Temporary Global Instrument for a Permanent Global Instrument, Definitive Instrument or Registered Instrument.

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ANNEX II

[Form of certificate to be given in relation to payments of interest falling due before the Exchange Date:]

[Name of Issuer]

[Aggregate principal amount and title of Instruments]

(the “Securities”)

This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our “Member Organisations”) substantially to the effect set forth in the Fiscal Agency Agreement as of the date hereof, [   ] principal amount of the above-captioned Securities (i) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estates or trust the income of which is subject to United States Federal income taxation regardless of its source (“United States persons”), (ii) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) (“financial institutions”)) purchasing for their own account or for resale, or (b) acquired the Securities through and are holding through on the date hereof foreign branches of United States financial institutions (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in Clause (iii) above (whether or not also described in Clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

This is also to certify with respect to such principal amount of Securities set forth above that, except as set forth below, we have received in writing, by tested telex or by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion, substantially to the effect set forth in the Fiscal Agency Agreement.

41

As used herein, “United States” means the United States of America (including the States and the District of Columbia); and its “possessions” include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as at the date hereof.

We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Date:    [          ](7)

[Euroclear Bank S.A./N.V./Clearstream Banking, société anonyme, Luxembourg]

By:[authorised signature]

(7)  To be dated as of the date on which the interest payment is made.

42

ANNEX III

[Form of account-holder’s certification referred to in the preceding certificates:]

[Note: This certificate is not required for Registered Instruments]

[Name of Issuer]

[Aggregate principal amount and title of Instruments]

(the “Securities”)

This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (i) are owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations, estates or trust the income of which is subject to the United States Federal income taxation regardless of its source (“United States persons”), (ii) are owned by United States person(s) that (a) are foreign branches of a United States financial institution (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) (“financial institutions”) purchasing for their own account or for resale, or (b) acquired above-captioned the Securities through and are holding through on the date hereof foreign branches of United States financial institutions (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Issuer or the Issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the above-captioned Securities is a United States or foreign financial institution described in clause (iii) above (whether or not also described in clause (i) or (ii)) this is further to certify that such financial institution has not acquired the above-captioned Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

This is also to certify that, except as set further below, the above-captioned Securities are beneficially owned by (a) non-U.S. person(s) or (b) U.S. persons resident outside the United States who purchased the Securities in transactions outside the United States in accordance with Regulation S under the U.S. Securities Act of 1933, as amended the (“Act”). As used in this paragraph the terms “U.S. person” and “United States” have the meanings given to them by Regulation S under the Act.

As used herein, “United States” means the United States of America (including the States and the District of Columbia); and its “possessions” include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.

43

This certification excepts and does not relate to [    ] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

We understand that this certification is required in connection with certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Date:    [          ](8)

(8)  To be dated not earlier than fifteen days prior to the date of the exchange of the Temporary Global Instrument for a Permanent Global Instrument, Definitive Instrument or Registered Instrument or, as the case may be, as of the date on which the interest payment is made.

44

[Account-holder] as or as agent for the beneficial owner of the Instruments.

By:        [authorised signature]

45

THE SECOND SCHEDULE

FORM OF PERMANENT GLOBAL INSTRUMENT

Series Number:    [      ] Serial Number: [   ]

THE SECURITIES REPRESENTED BY THIS PERMANENT GLOBAL INSTRUMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.](9)

ABB CAPITAL B.V.

(incorporated with limited liability in The Netherlands and having its corporate seat in Amsterdam)

(9)  Insert only where the maturity of the Instruments is more than one year

46

PERMANENT GLOBAL INSTRUMENT

representing up to

[Aggregate principal amount of Tranche]

[Number of Instruments]

[Title of Instruments]

[Swiss Security Number]

[ISIN]

[Common Code]

This Permanent Global Instrument is issued in respect of an issue of [description of Instruments including aggregate principal amount of Tranche] (the “Instruments”) by [                    ] (the “Issuer”).

The Issuer for value received promises, all in accordance with the terms and conditions [attached hereto/set out in the information memorandum prepared by the Issuer and dated 17 December 2008 and the pricing supplement prepared in relation to the Instruments (“Pricing Supplement”)], to pay to the bearer upon presentation and, if appropriate, surrender hereof on [maturity date] [by [   ] [equal] successive [semi-annual/quarterly/other] instalments on the dates specified in the Pricing Supplement](10) or on such earlier date as the same may become payable in accordance therewith the principal amount of [aggregate principal amount of Tranche] (as reduced from time to time in accordance with such terms and conditions) or such lesser amount as is equal to the outstanding principal amount of the Instruments represented by this Permanent Global Instrument or such other redemption amount as may be specified therein [and to pay in arrear on the dates specified therein interest on the principal amount hereof from time to time at the rate or rates specified therein], all subject to and in accordance with such terms and conditions.

The bearer of this Permanent Global Instrument is entitled to the benefit of the terms and conditions referred to above and the same obligations on the part of the Issuer as if such bearer were the bearer of the Instruments represented hereby, and all payments under and to the bearer of this Permanent Global Instrument will discharge the Issuer’s obligations in respect thereof. Any failure to note any payments, as provided below, shall not affect such discharge.

This Permanent Global Instrument will be exchangeable for definitive Instruments (“Definitive Instruments”) in substantially the form (subject to completion) set out in the Third Schedule to a fiscal agency agreement dated 17 December 2008 (as further supplemented, amended or replaced, the “Fiscal Agency Agreement”) and made between the Issuer, Fortis Banque Luxembourg S.A. in its capacity as fiscal agent (the “Fiscal Agent”, which expression shall include any successor to Fortis Banque Luxembourg S.A. in its capacity as such), Fortis Banque Luxembourg S.A. as principal registrar and certain other financial institutions [or for registered instruments (“Registered Instruments”) in substantially the form (subject to completion) set out in the Fourth Schedule to the Fiscal Agency Agreement or for a combination of Definitive Instruments and Registered Instruments](11) (a) if Euroclear Bank S.A./N.V. (“Euroclear”) or Clearstream Banking, société anonyme, Luxembourg (“Clearstream, Luxembourg”) or any

(10)Insert only where Instruments are Instalment Instruments.

(11)Insert only in the case of a Series comprising both Bearer and Registered Instruments if the relevant Pricing Supplement specifies that Bearer Instruments are exchangeable for Registered Instruments.

47

other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of public holidays) or announces an intention permanently to cease business; (b) if any of the Instruments represented hereby becomes due and payable following an Event of Default (as defined in Condition 7) of the terms and conditions referred to above; or (c) at the option of the bearer hereof acting on behalf of the relevant beneficial owners of the interests in this Permanent Global Instrument and at the expense of such beneficial owners, and, in each case, upon the request of the bearer hereof on behalf of the relevant beneficial owners of the interests in this Permanent Global Instrument and at the expense of such beneficial owners. In order to make such request, the bearer hereof must, not less than forty-five days before the date upon which the delivery of such Definitive Instruments [and/or Registered Instruments] is required, deposit this Permanent Global Instrument with the Fiscal Agent at its specified office with the form of exchange notice endorsed hereon duly completed. On an exchange of the whole of this Permanent Global Instrument, this Permanent Global Instrument shall be surrendered to the Fiscal Agent. [Any Registered Instruments shall be made available in exchange in accordance with the terms and conditions applicable to the Instruments represented hereby and the Fiscal Agency Agreement (which shall apply as if the bearer of this Permanent Global Instrument were the bearer of the Instruments represented hereby).](11)  Any Definitive Instruments will be made available for collection by the persons entitled thereto at the specified office of the Fiscal Agent. If default is made by the Issuer in the required delivery of such Definitive Instruments [and/or, as the case may be, Registered Instruments](11) and such default is continuing at 6.00 p.m. (London time) on the thirtieth day after the day on which the relevant notice period expires, then this Permanent Global Instrument will become void and the bearer will have no further rights hereunder (but without prejudice to the rights which such bearer or any other person(s) having an interest in this Permanent Global Instrument immediately prior to it becoming void may have under a deed of covenant dated 17 December 2008 and executed by the Issuer in respect of the Instruments).

[On any occasion on which a payment of interest is made in respect of this Permanent Global Instrument, the Issuer shall procure that the Paying Agent to which this Permanent Global Instrument is presented notes the same on the Schedule hereto].

On any occasion on which a payment of principal or redemption amount is made in respect of this Permanent Global Instrument or on which this Permanent Global Instrument is exchanged as aforesaid or on which any Instruments represented by this Permanent Global Instrument are to be cancelled, the Issuer shall cause the Paying Agent to which this Permanent Global Instrument is presented to procure that (i) the aggregate principal amount of the Instruments in respect of which such payment is made (or, in the case of a partial payment, the corresponding part thereof) or which are delivered in definitive [or registered form](11) or which are to be cancelled and (ii) the remaining principal amount of this Permanent Global Instrument (which shall be the previous principal amount hereof less the amount referred to at (i) above) are noted on the Schedule hereto, whereupon the principal amount of this Permanent Global Instrument shall for all purposes be as most recently so noted.

Insofar as the Temporary Global Instrument by which the Instruments were initially represented has been exchanged in part only for this Permanent Global Instrument and is then to be further exchanged as to the remaining principal amount or part thereof for this Permanent Global Instrument, then upon presentation of this Permanent Global Instrument to the Fiscal Agent at its specified office in relation to the Instruments and to the extent that the aggregate principal

48

amount of such Temporary Global Instrument is then reduced by reason of such further exchange, the Issuer shall cause the Fiscal Agent to procure that (i) the aggregate principal amount of the Instruments in respect of which such further exchange is then made and (ii) the new principal amount of this Permanent Global Instrument (which shall be the previous principal amount hereof plus the amount referred to at (i) above) are noted on the Schedule hereto, whereupon the principal amount of this Permanent Global Instrument shall for all purposes be as most recently noted.

The holders of interests in Instruments listed on SIX do not have the right to request the printing and delivery of definitive instruments. If the Fiscal Agent deems (i) the printing of definitive instruments and coupons to be necessary or useful or (ii) the presentation of definitive instruments and coupons to be required by Swiss or foreign laws in connection with the enforcement of the rights of the holders, the Fiscal Agent will provide for such printing. The Issuer has irrevocably authorised the Fiscal Agent to provide for such printing on its behalf. The definitive instruments will be printed and issued to the holders free of charge in exchange for their interests in the respective global instrument.

This Permanent Global Instrument and all non-contractual obligations arising out of or in connection with it are governed by English law.

This Permanent Global Instrument shall not be valid for any purpose until authenticated for and on behalf of Fortis Banque Luxembourg S.A., as fiscal agent.

49

AS WITNESS the manual signature of two duly authorised officers on behalf of the Issuer.

[                              ]		[                              ]
By:	[manual signature]	By:	[manual signature]
	(duly authorised)		(duly authorised)

ISSUED in [          ] on [          ] [  ]

AUTHENTICATED for and on behalf of

FORTIS BANQUE LUXEMBOURG S.A.

as fiscal agent

By:	[manual signature]
	(duly authorised)

50

THE SCHEDULE

Payments, Delivery of Definitive or Registered Instruments, Further Exchanges of the
Temporary Global Instrument and Cancellation of Instruments

Date of
payment,
delivery,
further
exchange
of
Temporary
Global
Instrument
or
cancellation Amount of
interest
then paid Amount of
principal
or, as the
case may
be,
redemption
amount
then paid Aggregate
principal
amount of
exchanges
for
Definitive
Instruments
or
Registered
Instruments
then
delivered Aggregate principal
amount of
Instruments
then
cancelled Aggregate
principal
amount of
exchanges
for further
exchanges
of
Temporary
Global
Instrument Current
principal
amount of
this
Permanent
Global
Instrument Authorised
signature of
the Fiscal
Agent
and/or the
Registrar

51

EXCHANGE NOTICE

                        , being the bearer of this Permanent Global Instrument at the time of its deposit with the Fiscal Agent at its specified office for the purposes of the Instruments, hereby exercises the option set out above to have this Permanent Global Instrument exchanged in whole or in part for Instruments in [definitive/registered form/[    ] in aggregate principal amount of Instruments in definitive form and [   ] in aggregate principal amount of Instruments in registered form]* and directs that such Instruments in definitive form be made available for collection by it from the Fiscal Agent’s specified office and that such Instruments in registered form be made available in accordance with the terms and conditions applicable to the Instruments represented hereby and the Fiscal Agency Agreement.

By:
	(duly authorised)

*           Delete and complete, as appropriate

52

THE THIRD SCHEDULE

FORM OF DEFINITIVE INSTRUMENT

[On the face of the Instrument:]

[<9999999+AAXXXXXXXXX9+XX+999999>]

[Denomination]

THIS INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.](12)

ABB CAPITAL B.V.

(incorporated with limited liability in The Netherlands and having its corporate seat in Amsterdam)

(12)       Insert only where the maturity of the Instruments is more than one year.

53

[Aggregate principal amount of Tranche]

[Title of Instruments]

[Swiss Security Number]

[ISIN]

[Common Code]

[                              ] (the “Issuer”) for value received promises, all in accordance with the terms and conditions [endorsed hereon/attached hereto] [and the pricing supplement referred to therein and prepared in relation to the Instruments (the “Pricing Supplement”)] to pay to the bearer upon presentation and, if appropriate, surrender hereof on [maturity date] [by [   ] [equal] successive [semi-annual/quarterly/other] instalments on the dates specified in the Pricing Supplement](13) or on such earlier date as the same may become payable in accordance therewith the principal amount of:

[denomination in words and numerals]

or such other redemption amount as may be specified therein [and to pay in arrear on the dates specified therein interest on such principal amount at the rate or rates specified therein, all subject to and in accordance with such terms and conditions].

[This [title of Instrument] shall not/Neither this [title of Instrument] nor any of the interest coupons appertaining hereto shall] be valid for any purpose until this [title of Instrument] has been authenticated for and on behalf of Fortis Banque Luxembourg S.A., as fiscal agent.

This [title of Instrument] and all non-contractual obligations arising out of or in connection with it are governed by English law.

AS WITNESS the facsimile signature of two duly authorised officers on behalf of the Issuer.

[                          ]		[                         ]
By:	[facsimile signature]	By:	[facsimile signature]
	(duly authorised)		(duly authorised)

ISSUED in [          ] as of [          ] [  ]

(13)       Insert only where Instruments are Instalment Instruments.

54

AUTHENTICATED for and on behalf of

FORTIS BANQUE LUXEMBOURG S.A.,

as fiscal agent

without recourse, warranty or liability

By:	[manual signature]
	(duly authorised)

55

[On the reverse of the Instruments:]

TERMS AND CONDITIONS

[As contemplated in the Information Memorandum and as amended by the relevant Pricing Supplement]

[At the foot of the Terms and Conditions:]

FISCAL AGENT

Fortis Banque Luxembourg S.A.,

50, Avenue J.F. Kennedy

L2951 Luxembourg

SWISS PAYING AGENT

Fortis Banque (Suisse) S.A.

20, Bd. des Philosophes

CH-1211 Genève 4

Switzerland

56

Forms of Coupons

[On the front of Coupon:]

[Attached to the Instruments (interest-bearing, fixed rate and having Coupons):]

[Issuer]

[Amount and title of Instruments]

Coupon for [     ] due on [          ]

Such amount is payable (subject to the terms and conditions [endorsed on/attached to the [title of Instrument] to which this Coupon appertains [and the pricing supplement referred to therein], which shall be binding on the holder of this Coupon whether or not it is for the time being attached to such [title of Instrument]) against surrender of this Coupon at the specified office of the Fiscal Agent or any of the Paying Agents set out on the reverse hereof (or any other or further fiscal or paying agents and/or specified offices from time to time designated for the purpose by notice duly given in accordance with such terms and conditions).

[The attention of Couponholders is drawn to condition 9A.06 of the terms and conditions. The Instrument to which this Coupon appertains may in certain circumstances specified in such terms and conditions, fall due for redemption before the due date in relation to this Coupon. In such event, the Paying Agent to which such Instrument is presented for redemption may determine, in accordance with the aforesaid condition 9A.06 that this Coupon is to become void.]

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.](14)

[<99+9999999+AAXXXXXXXXX9+XX+999999>]

(14)       Insert only where the maturity of the Instruments is more than one year.

57

[Attached to the Instrument (interest-bearing, floating rate and having Coupons):]

[Issuer]

[Amount and title of Instruments]

Coupon for the amount of interest due on [          ]

Such amount is payable (subject to the terms and conditions [endorsed on/attached to] the [title of Instrument] to which this Coupon appertains [and the pricing supplement referred to therein], which shall be binding on the holder of this Coupon whether or not it is for the time being attached to such [title of Instrument]) against surrender of this Coupon at the specified office of the Fiscal Agent or any of the Paying Agents set out on the reverse hereof (or any other or further fiscal or paying agents and/or specified offices from time to time designated for the purpose by notice duly given in accordance with such terms and conditions).

The Instrument to which this Coupon appertains may, in certain circumstances specified in such terms and conditions, fall due for redemption before the due date in relation to this Coupon. In such event, this Coupon will become void and no payment will be made in respect hereof.

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.](15)

[<99+9999999+AAXXXXXXXXX9+XX+999999>]

(15)       Insert only where the maturity of the Instruments is more than one year.

58

[On the reverse of each Coupon:]
FISCAL	Fortis Banque Luxembourg S.A.,
AGENT:	50, Avenue J.F. Kennedy
	L2951 Luxembourg
SWISS PAYING	Fortis Banque (Suisse) S.A.
AGENT:	20, Bd. des Philosophes
	CH-1211 Genève 4
	Switzerland

59

Form of Talon

No 

[                           ]

[Amount and title of Instruments]

Talon for further Coupons

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.](16)

After all the Coupons appertaining to the Instrument to which this Talon appertains have matured, further Coupons [(including, where appropriate, a Talon for further Coupons)] will be issued at the specified office of the Fiscal Agent or any of the Paying Agents set out in the reverse hereof (or any other or further paying agents and/or specified offices from time to time designated by notice duly given in accordance with the terms and conditions [endorsed on/attached to] the [title of Instrument] to which this Talon appertains [and the pricing supplement referred to therein] (which shall be binding on the holder of this Talon whether or not it is for the time being attached to such [title of Instrument])) upon production and surrender of this Talon upon and subject to such terms and conditions. The initial Paying Agents and their specified offices are set out on the reverse hereof.

Under the said terms and conditions, such Instrument may, in certain circumstances, fall due for redemption before the original due date for exchange of this Talon and in any such event this Talon shall become void and no exchange shall be made in respect hereof.

[Issuer]

(16) Insert only where the maturity of the Instruments is more than one year.

60

THE FOURTH SCHEDULE

FORM OF REGISTERED INSTRUMENT

ISIN Number: [    ]       Series Number: [    ]       Serial Number: [    ]

THIS INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

ABB CAPITAL B.V.

(incorporated with limited liability in The Netherlands and having its corporate seat in Amsterdam)]

61

[                              ] (the “Issuer”) for value received promises, all in accordance with the terms and conditions [endorsed hereon/attached hereto] [and the pricing supplement referred to therein and prepared in relation to the Instruments (“Pricing Supplement”)], to pay to

                                                                           of                                      

(being the person registered in the register referred to below or, if more than one person is so registered, the first-named of such persons) on [maturity date] [by [   ] [equal] successive [semi-annual/quarterly/other] instalments on the dates specified in the Pricing Supplement](17) or on such earlier date as the same may become payable in accordance therewith the principal sum of                                                                         [(, in the case of payment on such earlier date, as reduced in accordance with such terms and conditions)] or such other redemption amount as may be specified therein [and to pay in arrear on the dates specified therein interest on such principal amount [(as reduced in accordance with such terms and conditions)](17) at the rate or rates specified therein], all subject to and in accordance with such terms and conditions.

The statements set forth in the legend, if any, set forth above are an integral part of the terms of this Instrument and by acceptance hereof each holder of this Instrument agrees to be subject to and bound by the terms and provisions set forth in such legend, if any.

This Instrument is evidence of entitlement only. Title to the Instrument passes only on due registration in the Register maintained by [                              ](18), as registrar, and only the duly registered holder or if more than one person is so registered, the first-named of such persons is entitled to payment in respect of this Instrument.

This Instrument and all non-contractual obligations arising out of or in connection with it are governed by English law.

This Instrument shall not be valid for any purpose until this Instrument has been authenticated for and on behalf of [                                            ](19), as registrar.

AS WITNESS the facsimile or manual signatures of two duly authorised officers of the Issuer.

[                              ][                            ]

By:	[manual/facsimile signature]	By:	[manual/facsimile signature]
	(duly authorised)		(duly authorised)

ISSUED in [             ] as of [            ] [ ]

AUTHENTICATED for and on behalf of

[                                      ]

as registrar without recourse, warranty or liability

(17) Insert only where Instruments are Instalment Instruments.

(18) Insert name of the relevant Registrar.

62

By:	[manual signature]
	(duly authorised)

63

FORM OF TRANSFER

FOR VALUE RECEIVED _________________, being the registered holder of this [title of Instrument], hereby transfers to _____________________________ of ___________________ _____________, ___________________ in principal amount of this [title of Instrument] and irrevocably requests and authorises [                                  ](19), in its capacity as registrar in relation to the [title of Instruments] (or any successor to [           ](19), in its capacity as such) to effect the relevant transfer by means of appropriate entries in the register kept by it.

Dated: 

By:	[manual signature]	[By:	[manual signature]
	(duly authorised)		(duly authorised)

Notes:

The name of the person by or on whose behalf this form of transfer is signed must correspond with the name of the registered holder as it appears on the face of this Instrument.

(i)	A representative of such registered holder should state the capacity in which he signs (e.g. executor).
(ii)	The signature of the person effecting a transfer shall conform to any list of duly authorised specimen signatures supplied by the registered holder or be certified by a recognised bank, notary public or in such other manner as the Registrar may require.
(iii)	Any transfer of [title of Instruments] shall be in an amount equal to the minimum denomination as may be specified in the relevant Pricing Supplement or an integral multiple thereof.

(19) Insert name of the relevant Registrar.

64

THE FIFTH SCHEDULE

PROVISIONS FOR MEETINGS OF HOLDERS OF INSTRUMENTS

1.(A)As used in this Schedule, the following expressions shall have the following meanings unless the context otherwise requires:

(1)“voting certificate” shall mean a certificate in the English language issued by any Paying Agent or, as the case may be, any Registrar and dated, in which it is stated:

(a)that on the date thereof outstanding Bearer Instruments of any Series (not being Bearer Instruments in respect of which a block voting instruction has been issued and is outstanding in respect of the meeting specified in such voting certificate or any adjournment thereof) bearing specified serial numbers have been deposited to the order of such Paying Agent and that no such Bearer Instruments will be released until the first to occur of:

(i)the conclusion of the meeting specified in such certificate or any adjournment thereof; and

(ii)the surrender of the certificate to such Paying Agent; or

(b)that on the date thereof Registered Instruments of any Series (not being Registered Instruments in respect of which a block voting instruction has been issued and is outstanding in respect of the meeting specified in such voting certificate or any adjournment thereof) are registered in the books and records maintained by the Registrar in the names of specified registered holders; and

(c)that until the release of the Bearer Instruments represented thereby the bearer thereof is entitled to attend and vote at such meeting or any adjournment thereof in respect of the Instruments represented by such certificate; and

(2)“block voting instruction” shall mean a document in the English language issued by any Paying Agent or, as the case may be, any Registrar and dated, in which:

(a)it is certified that outstanding Bearer Instruments of any Series (not being Bearer Instruments in respect of which a voting certificate has been issued and is outstanding in respect of the meeting specified in such block voting instruction or any adjournment thereof) have been deposited to the order of such Paying Agent and that no such Bearer Instruments will be released until the first to occur of:

(i)the conclusion of the meeting specified in such document or any adjournment thereof; and

65

(ii)the surrender, not less than 48 hours before the time for which such meeting or adjournment thereof is convened, of the receipt for each such deposited Bearer Instrument which has been deposited to the order of such Paying Agent, coupled with notice thereof being given by such Paying Agent to the Issuer; or

(b)It is certified that Registered Instruments of any Series (not being Registered Instruments in respect of which a voting certificate has been issued and is outstanding in respect of the meeting specified in such block voting instruction and any adjournment thereof) are registered in the books and records maintained by the Registrar in the names of specified registered holders;

(c)It is certified that each depositor of such Instruments or registered holder thereof or a duly authorised agent on his or its behalf has instructed the Paying Agent or, as the case may be, the Registrar that the vote(s) attributable to his or its Instruments so deposited or registered should be cast in a particular way in relation to the resolution or resolutions to be put to such meeting or any adjournment thereof and that all such instructions are, during the period of 48 hours prior to the time for which such meeting or adjourned meeting is convened, neither revocable nor subject to amendment;

(d)the total number, principal amount outstanding, the serial numbers and series numbers of the Instruments so deposited or registered are listed, distinguishing with regard to each such resolution between those in respect of which instructions have been given as aforesaid that the votes attributable thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto should be cast against the resolution; and

(e)any person named in such document (hereinafter called a “proxy”) is authorised and instructed by the Paying Agent or, as the case may be, the Registrar to cast the votes attributable to the Instruments so listed in accordance with the instructions referred to in (c) and (d) above as set out in such document.

(B)A registered holder of a Registered Instrument may by an instrument in writing in the form for the time being available from the specified office of the Registrar in the English language (hereinafter called a “form of proxy”) signed by the holder or its duly appointed attorney or, in the case of a corporation, executed under its seal or signed on its behalf by its duly appointed attorney or a duly authorised officer of the corporation, appoint any person (hereinafter also called a “proxy”) to attend and act on his or its behalf in connection with any meeting or proposed meeting of the holders of Instruments.

(C)Voting certificates, block voting instructions and forms of proxy shall be valid for so long as the relevant Instruments have not been released or, in the case of Registered Instruments, are duly registered in the name(s) of the registered

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holder(s) certified in the relevant voting certificate or block voting instruction or, in the case of a form of proxy, in the name of the appointor but not otherwise and notwithstanding any other provision of this Schedule and during the validity thereof the holder of any such voting certificate or, as the case may be, the proxy shall, for all purposes in connection with any meeting of holders of Instruments, be deemed to be the holder of the Instruments of the relevant Series to which such voting certificate, block voting instructions or form of proxy relates and, in the case of Bearer Instruments, the Paying Agent to the order of whom such Instruments have been deposited and, in the case of Registered Instruments, the registered holder(s) shall nevertheless be deemed for such purposes not to be the holder of those Instruments.

2.The Issuer at any time may, and upon a request in writing by holders of Instruments holding not less than one-tenth of the principal amount outstanding of the Instruments of any particular Series for the time being outstanding at any time after such Instruments shall have become repayable owing to an event of default under the Conditions applicable to such Instruments shall, convene a meeting of the holders of Instruments of such Series. Whenever the Issuer wishes or is obliged to convene any such meeting it shall forthwith give notice in writing to the Fiscal Agent of the day, time and place thereof and of the nature of the business to be transacted thereat. Every such meeting or adjournment thereof shall be held at such time and place as the Fiscal Agent may approve.

3.At least twenty-one days’ notice (exclusive of the day on which the notice is given and of the day on which the meeting is held) specifying the day, time and place of meeting shall be given to the holders of the Instruments of the relevant Series. A copy of the notice shall be given to the Issuer unless the meeting shall be convened by the Issuer and a copy shall be given to the Fiscal Agent and, in the case of Registered Instruments, the Registrar. Such notice shall be given in the manner provided in the Conditions and shall specify the general nature of the business to be transacted at the meeting thereby convened but (except in the case of an Extraordinary Resolution) it shall not be necessary to specify in such notice the form of any resolution to be proposed and shall include, inter alia, statements to the effect:

(a)that Bearer Instruments of the relevant Series may be deposited with (or to the order of) any Paying Agent for the purpose of obtaining voting certificates or appointing proxies until 48 hours before the time fixed for the meeting but not thereafter;

(b)that (without prejudice to the provisions of paragraph 1(B)) registered holders of Registered Instruments may obtain voting certificates or appoint proxies not later than (except in the case of a form of proxy) 48 hours before the time fixed for the meeting but not thereafter.

4.A person (who may, but need not, be the holder of an Instrument of the relevant Series) nominated in writing by the Fiscal Agent shall be entitled to take the chair at every meeting but if no such nomination is made or if at any meeting the person nominated shall not be present within fifteen minutes after the time appointed for the holding of

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such meeting the holders of Instruments present may appoint another such person to be chairman and failing such choice the Issuer may appoint the chairman. The chairman of a reconvened meeting need not be the same person who was chairman of the original meeting.

5.At any such meeting any two or more persons present in person holding Instruments of the relevant Series or voting certificates or being proxies and holding or representing in the aggregate at least one-third in principal amount outstanding of the Instruments of the relevant Series for the time being outstanding shall form a quorum for the transaction of business, provided that at any meeting at which an Extraordinary Resolution is to be proposed for the purpose of effecting any of the modifications specified in the proviso to paragraph 18 hereof the quorum for such meeting shall be any two or more persons present in person holding Instruments of the relevant Series or voting certificates or being proxies and holding or representing in the aggregate at least 75 per cent. in principal amount outstanding of the Instruments of the relevant Series for the time being outstanding and no business (other than the choosing of a chairman) shall be transacted at any meeting unless the requisite quorum be present at the commencement of business.

6.If within 15 minutes from the time appointed for any such meeting a quorum is not present the meeting shall, if convened upon the requisition of holders of Instruments, be dissolved. In any other case it shall stand adjourned for such period, not being less than fourteen days nor more than forty-two days, as may be decided by the chairman. At such adjourned meeting two or more persons present in person holding Instruments of the relevant Series or voting certificates or being proxies (whatever the principal amount outstanding of the Instruments of the relevant Series so held or represented by them) shall form a quorum and shall have the power to pass any resolution and to decide upon all matters which could properly have been dealt with at the original meeting had a quorum been present at such meeting, provided that at any adjourned meeting at which an Extraordinary Resolution is to be proposed for the purpose of effecting any of the modifications specified in the proviso to paragraph 18 hereof the quorum for such meeting shall be two or more persons present holding Instruments of the relevant Series or voting certificates or being proxies and holding or representing in the aggregate at least 25 per cent. in principal amount outstanding of the Instruments of the relevant Series for the time being outstanding.

7.The chairman may with the consent of (and shall if directed by) any meeting adjourn the same from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place.

8.At least ten days’ notice (exclusive of the day on which the notice is given and the day on which the meeting is held) of any meeting adjourned through want of a quorum shall be given in the same manner as of an original meeting and such notice shall state the quorum required at such adjourned meeting. Subject as aforesaid, it shall not be necessary to give any notice of an adjourned meeting.

9.Every question submitted to a meeting shall be decided in the first instance by a show of hands and in case of equality of votes the chairman shall both on a show of hands and on

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a poll have a casting vote in addition to the vote or votes (if any) to which he may be entitled as a holder of an Instrument or voting certificate or being a proxy.

10.At any meeting, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman or the Issuer or by one or more persons holding one or more Instruments of the relevant Series or voting certificates or being proxies and holding or representing in the aggregate not less than 2 per cent. of the principal amount outstanding of the Instruments of the relevant Series for the time being outstanding, a declaration by the chairman that a resolution has been carried or carried by a particular majority or lost or not carried by any particular majority shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

11.If at any meeting a poll is so demanded, it shall be taken in such manner and (subject as hereinafter provided) either at once or after such an adjournment as the chairman directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded.

12.Any poll demanded at any meeting on the election of a chairman or on any question of adjournment shall be taken at the meeting without adjournment.

13.The Fiscal Agent, the Issuer and, in the case of Registered Instruments, the Registrar (through their respective representatives) and their respective advisers shall be entitled to attend and speak at any meeting of the holders of Instruments. No person shall be entitled to attend (except as provided above) or to vote at any meeting of the holders of Instruments or to join with others in requesting the convening of such a meeting unless he is the holder of an Instrument or a voting certificate or is a proxy.

14.Subject as provided in paragraph 9 above, at any such meeting (a) on a show of hands every person who is present (being an individual) in person or (being a corporation) by a duly authorised representative and (i) who is a holder of Instruments, and in the case of Bearer Instruments, produces such Instruments or (ii) who produces a voting certificate or (iii) is a proxy shall have one vote and (b) on a poll every person who is so present shall have one vote in respect of each [            ](20) principal amount outstanding of Instruments of the relevant Series so produced or represented by the voting certificate so produced or in respect of which he is a proxy. Without prejudice to the obligations of the proxies named in any block voting instruction or form of proxy, any person entitled to more than one vote need not use all his votes or cast all the votes to which he is entitled in the same way.

15.A proxy named in any block voting instruction or form of proxy need not be a holder of an Instrument.

(20)The currency and amount of the smallest denomination of Instruments available in relation to the particular Series shall be deemed to be inserted here.

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16.Each block voting instruction and each form of proxy, together (if so required by the Issuer) with proof satisfactory to the Issuer of its due execution, shall be deposited at such place as the Issuer shall designate not less than 24 hours before the time appointed for holding the meeting or adjourned meeting at which the proxy named in the block voting instruction or form of proxy proposes to vote and in default the block voting instruction or form of proxy shall not be treated as valid unless the chairman of the meeting decides otherwise before such meeting or adjourned meeting proceeds to business. A certified copy of each such block voting instruction and form of proxy and satisfactory proof as aforesaid (if applicable) shall, be deposited with the Issuer at such place as aforesaid before the commencement of the meeting or adjourned meeting but the Issuer shall not thereby be obliged to investigate or be concerned with the validity of, or the authority of the proxy named in, any such block voting instruction or form of proxy.

17.Without prejudice to paragraph 1, any vote given in accordance with the terms of a block voting instruction or form of proxy shall be valid notwithstanding the previous revocation or amendment of the block voting instruction or form of proxy or of any of the Instrument holders’ instructions pursuant to which it was executed, provided that no intimation in writing of such revocation or amendment shall have been received by the Issuer or by the chairman of the meeting, in each case not less than 24 hours before the commencement of the meeting or adjourned meeting at which the block voting instruction or form of proxy is used.

18.A meeting of the holders of Instruments shall, in respect of the Instruments of the relevant Series and subject to the provisions contained in the Conditions, in addition to the powers hereinbefore given, but without prejudice to any powers conferred on other persons by these presents, have the following powers exercisable by Extraordinary Resolution only namely:

(a)power with the approval of the Issuer to sanction any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the holders of Instruments and/or Coupons in respect of the Instruments of the relevant Series, against the Issuer, whether such rights shall arise under the Instruments of that Series, the Deed of Covenant executed by the Issuer or otherwise;

(b)power to assent to any modification to the provisions contained herein or of the Instruments or Coupons of the relevant Series which shall be proposed by the Issuer;

(c)power to sanction any proposal by the Issuer for the exchange or substitution for the Instruments of the relevant Series of, or the conversion of those Instruments into, shares, stock, bonds, debentures, debenture stock or other obligations or securities of the Issuer or any other body corporate formed or to be formed otherwise than in accordance with any provisions of the Conditions applicable to the Instruments of the relevant Series;

(d)power to assent to any modification of the provisions contained in the Instruments or the Coupons of the relevant Series, the Conditions thereof, this

70

Schedule, the Fiscal Agency Agreement or the Deed of Covenant executed by the Issuer which shall be proposed by the Issuer;

(e)power to waive or authorise any breach or proposed breach by the Issuer of its obligations under the Conditions applicable to the Instruments of the relevant Series or any act or omission which might otherwise constitute an event of default under the Conditions applicable to the Instruments of the relevant Series;

(f)power to authorise the Fiscal Agent, the Registrar or any other person to concur in and execute and do all such deeds, instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution;

(g)power to give any authority, direction or sanction which under the Conditions applicable to the Instruments of the relevant Series is required to be given by Extraordinary Resolution;

(h)power to appoint any persons (whether holders of Instruments or not) as a committee or committees to represent the interests of the holders of Instruments in respect of the Instruments of the relevant Series and to confer upon such committee or committees any powers or discretions which such holders of Instruments could themselves exercise by Extraordinary Resolution; and

(i)power to approve other security as contemplated by Condition 4.01.

Provided that the special quorum provisions contained in the provisos to paragraphs 5 and 6 shall apply in relation to any Extraordinary Resolution for the purpose of making modification of the provisions contained in the Instruments or the Coupons of any Series or the Conditions applicable thereto which:

(i)varies the date of maturity or any date of redemption of any of the Instruments of the relevant Series or any date for payment of any principal or interest in respect thereof; or

(ii)reduces or cancels the principal amount of the Instruments of the relevant Series or any amount payable thereon, varies any provision regarding the calculation of the rate of interest or any other amount payable thereon or varies the rate of discount, rate of amortisation or any other rate of return applicable thereto; or

(iii)modifies the provisions contained in this Schedule concerning the quorum required at any meeting of holders of Instruments in respect of the Instruments of the relevant Series or any adjournment thereof or concerning the majority required to pass an Extraordinary Resolution; or

(iv)varies the currency in which any payment (or other obligation) in respect of the Instruments of the relevant Series is to be made; or

(v)amends this proviso in any manner.

19.An Extraordinary Resolution passed at a meeting of the holders of Instruments in respect of the Instruments of the relevant Series duly convened and held in accordance with

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these presents shall be binding upon all the holders of Instruments of the relevant Series, whether present or not present at such meeting, and upon all the holders of all Coupons in respect of Instruments of the relevant Series and each of the holders of Instruments and Coupons shall, in respect of the Instruments of that Series, be bound to give effect thereto accordingly. The passing of any such resolution shall be conclusive evidence that the circumstances of such resolution justify the passing thereof.

20.The expression “Extraordinary Resolution” when used in these presents means a resolution passed at a meeting of the holders of Instruments in respect of the Instruments of the relevant Series duly convened and held in accordance with the provisions contained herein by a majority consisting of not less than three-fourths of the votes cast thereon.

21.Minutes of all resolutions and proceedings at every such meeting as aforesaid shall be made and duly entered in books to be from time to time provided for that purpose by the Issuer and any such minutes as aforesaid, if purporting to be signed by the chairman of the meeting at which such resolutions were passed or proceedings transacted or by the chairman of the next succeeding meeting of the holders of Instruments in respect of the Instruments of the relevant Series, shall be conclusive evidence of the matters therein contained and, until the contrary is proved, every such meeting in respect of the proceedings of which minutes have been made and signed as aforesaid shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted thereat to have been duly passed and transacted.

22.So long as the relevant Instruments are represented by a global instrument, for the purposes of this Schedule the holder of the global instrument shall be deemed to be two persons holding or representing such principal amount of Instruments as are, at the relevant time, represented by such global instrument.

23.Any Instruments which have been purchased or are held by (or on behalf of) the Issuer or any affiliate of the Issuer or ABB Ltd or any subsidiary of ABB Ltd but which have not been cancelled shall, unless or until resold, be deemed not to be outstanding for the purposes of this Schedule.

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THE SIXTH SCHEDULE

FORM OF DEED OF ASSUMPTION

This Deed of Assumption is made on [        ], [   ] between [          ] (the “Issuer”), a company incorporated under the laws of [          ] whose registered/principal office is situated at [          ] and [          ] (the “Substituted Debtor”) a company incorporated in [          ] whose registered/principal office is situated at [          ].

WHEREAS:

(A)The Issuer has issued [insert aggregate principal amount and title of the Instruments] (the “Instruments”, each holder of such Instruments being an “Instrumentholder”) [and any interest coupons attached to such Instruments (the “Coupons”, each holder of such Coupons being a “Couponholder”)] pursuant to a Fiscal Agency Agreement dated 17 December 2008 (the “Fiscal Agency Agreement”) between Fortis Banque Luxembourg S.A., (the “Fiscal Agent”), the Issuer, the other companies named therein as issuers and the paying agents and registrars named therein.

(B)The Issuer proposes, pursuant to Condition 15 of the Terms and Conditions of the Instruments (the “Conditions”) to substitute the Substituted Debtor as principal debtor in respect of the Instruments.

NOW THIS DEED WITNESSETH AS FOLLOWS:

1.The Substituted Debtor hereby agrees that, with effect from and including the effective date hereof, it shall be the “Issuer” for all purposes in respect of the Instruments and the Coupons and accordingly it shall assume all the obligations and liabilities and shall be entitled to all the rights and benefits on the part of the Issuer contained therein.

2.The Substituted Debtor hereby acknowledges and agrees that, with effect from and including the effective date hereof:

(a)the Issuer is released from all its liabilities, in its capacity as issuer of the Instruments, in respect of the Instruments; and

(b)the Conditions are amended in accordance with the Schedule hereto.

3.The Substituted Debtor and the Issuer hereby jointly and severally agree that the existing [Temporary Global Instrument, Permanent Global Instrument, Registered Instrument(s) or, as the case may be, Definitive Instruments] shall continue in full force and effect on the understanding that, with effect from and including the effective date hereof:

(a)all references to “[Name of Issuer]” shall be read and construed as references to the Substituted Debtor; and

(b)the Conditions shall be amended as set out in the Schedule hereto, together with any other consequential amendments which may be appropriate in order to preserve the rights of the Instrumentholders and (if any) Couponholders.

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4.(A)The Substituted Debtor and the Issuer hereby acknowledge and covenant that the benefit of the undertakings and the covenants binding upon them contained in this Deed of Assumption shall be for the benefit of each and every Instrumentholder and (if any) Couponholder whether or not such Instrumentholder or Couponholder was an initial subscriber of such Instrument and each Instrumentholder and (if any) Couponholder shall be entitled severally to enforce the said obligations against the Substituted Debtor.

(B)This Deed of Assumption shall be deposited with and held by the Fiscal Agent and the Substituted Debtor, and the Issuer and the Substituted Debtor hereby acknowledge the right of every Instrumentholder and Couponholder to production of this Deed of Assumption and upon request and payment of the expenses incurred in connection therewith, the production of a copy hereof certified by the Fiscal Agent to be a true and complete copy.

5.The illegality, invalidity or unenforceability of any provision of this Deed of Assumption under the law of any jurisdiction shall not affect its legality, validity or enforceability under the law of any other jurisdiction nor the legality, validity or enforceability of any other provision.

6.This Deed of Assumption may only be amended in the same way as the other Conditions of the Instruments are capable of amendment pursuant to the Fifth Schedule of the Fiscal Agency Agreement.

7.(A)This Deed of Assumption and all non-contractual obligations arising out of or in connection with this Deed of Assumption shall be governed by and construed in accordance with the laws of England.

(B)The Courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Deed of Assumption or any non-contractual obligations arising out of or in connection with this Deed of Assumption and accordingly any legal action or proceedings arising out of or in connection with this Deed of Assumption (“Proceedings”) may be brought in such courts. Each of the Substituted Debtor and the Issuer irrevocably submits to the jurisdiction of such courts and waives any objection to Proceedings in such courts whether on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. These submissions are for the benefit of each of the Instrumentholders and the Couponholders and shall not limit the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not).

(C)Each of the Substituted Debtor and the Issuer irrevocably appoints ABB Limited at its registered office (presently at Daresbury Park, Daresbury, Warrington WA4 4BT, Cheshire) as its authorised agent for service of process in England in respect of any Proceedings. If for any reason such agent shall cease to be such agent for service of process or shall no longer have a registered office in England, the Substituted Debtor and the Issuer shall appoint another

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agent for service of process in England within twenty-one days and if the Issuer and/or the Substituted Debtor fails to make any such appointment within twenty-one days, the Fiscal Agent shall be entitled to appoint such a person by notice to the Issuer and/or the Substituted Debtor.

IN WITNESS whereof this Deed has been executed by and on behalf of the parties hereto as of the day and year first above written.

EXECUTED as a deed under Seal by	)
[the Substituted Debtor]	)
acting by [          ] and [          ]	)
in the presence of:	)

Witness:

Name:

Address:

Occupation:

Witness:

Name:

Address:

Occupation:

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EXECUTED as a deed under Seal by	)
[the Issuer]	)
acting by [          ] and [          ]	)
in the presence of:	)

Witness:

Name:

Address:

Occupation:

Witness:

Name:

Address:

Occupation:

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THE SCHEDULE

Post-Substitution Amendments to the Conditions

of the Instruments of the relevant Series

1.Following any substitution pursuant to Condition 15, the Conditions of the Instruments of the relevant Series shall apply as if all references to the “Issuer” therein were to the Substituted Debtor.

2.In the event that ABB Ltd shall become the Substituted Debtor the Conditions shall apply with the following further amendments:

(i)Conditions 4.02, 4.03 and Condition 7.01(v) shall not apply to such Instruments;

(i)the words “... its obligation set out in Condition 4.02 ...” to “... performance or observance of any of its other...” in lines 1 to 5 of Condition 7.01(ii) shall be deleted and replaced by the word “any”;

(ii)Condition 15 shall not apply to such Instruments and, in respect of such Instruments, shall be deemed to be replaced with the following:

“the Issuer may be replaced, and any direct or indirect subsidiary of the Issuer may be substituted for the Issuer, as principal debtor in respect of the Instruments, without the consent of the Holders of the Instruments or Coupons. If the Issuer shall determine that any such subsidiary shall become the principal debtor (in such capacity, the “Substituted Debtor”), the Issuer shall give not less than 30 nor more than 45 days’ notice, in accordance with Condition 14, to the Holders of the Instruments of such event and, immediately on the expiry of such notice, the Substituted Debtor shall enter into a Deed of Assumption, the form of which is set out in the Sixth Schedule to the Fiscal Agency Agreement and become the principal debtor in respect of the Instruments in place of the Issuer and the Holders of the Instruments shall thereupon cease to have any rights or claims whatsoever against the Issuer. However, no such substitution shall take effect (i) until such Substituted Debtor shall have entered into a keep-well agreement with ABB Ltd substantially in the form of other keep-well agreements entered into by ABB Ltd with certain of its direct or indirect subsidiaries, (ii) until such Substituted Debtor shall have executed a deed of covenant substantially in the form of the Deed of Covenant, (iii) in any case, until the Substituted Debtor shall have provided such documents as may be necessary to make the Deed of Assumption, the  Instruments, the Fiscal Agency Agreement, such deed of covenant and such keep-well agreement the legal, valid and binding obligations of, as appropriate, the Substituted Debtor and ABB Ltd together with legal opinions, either unqualified or subject only to normal, usual or appropriate qualifications and assumptions to the effect that the Deed of Assumption, the Instruments, the Fiscal Agency Agreement, such deed of covenant and such keep-well agreement are legal, valid and binding obligations of, as appropriate, ABB Ltd and the Substituted Debtor, (iv) the Substituted Debtor shall have obtained all necessary governmental and

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regulatory approvals and consents, if any, for the substitution, and (v) the Substituted Debtor shall have appointed the process agent appointed by the Issuer in Condition 18.3 as its agent in England to receive service of process on its behalf in relation to any legal action or proceedings arising out of or in connection with the Instruments and the Coupons. Upon any such substitution, the Instruments and Coupons will, if necessary, be deemed to be modified in all appropriate respects.”

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THE SEVENTH SCHEDULE

Regulations Concerning Transfers Of Registered Instruments And Exchanges Of Bearer Instruments For Registered InstrumentS

1.Each Registered Instrument shall be in a principal amount equal to the minimum denomination specified in the relevant Pricing Supplement or an integral multiple thereof.

2.The Registered Instruments are transferable in a principal amount equal to the minimum denomination specified in the relevant Pricing Supplement or an integral multiple thereof by execution of the form of transfer endorsed under the hand of the transferor or of a duly appointed attorney on its behalf or, where the transferor is a corporation, under its seal or signed on its behalf by its duly appointed attorney or a duly authorised officer or officers of the corporation. In this Schedule “transferor” shall where the context permits or requires include joint transferors and be construed accordingly.

3.The Registered Instrument to be transferred must be delivered for registration to the specified office of the Registrar accompanied by such other evidence (including legal opinions) as the Registrar may reasonably require to prove the title of the transferor or his right to transfer the Registered Instrument and his identity and, if the form of transfer is executed by some other person on his behalf or in the case of the execution of a form of transfer on behalf of a corporation by an officer or officers or an attorney, the authority of that person or those persons to do so. The signature of the person effecting a transfer of a Registered Instrument shall conform to any list of duly authorised specimen signatures supplied by the registered holder or be certified by a recognised bank, notary public or in such other manner as the Registrar may require.

4.The executors or administrators of a deceased holder of a Registered Instrument (not being one of several joint holders) and in the case of the death of one or more of joint holders the survivor or survivors of such joint holders shall be the only persons recognised by the Issuer as having any title to such Registered Instruments.

5.Any person becoming entitled to Registered Instruments in consequence of the death or bankruptcy of the holder of such Registered Instruments may, upon producing such evidence that he holds the position in respect of which he proposes to act under this paragraph or of his title as the Issuer shall require (including legal opinions), be registered himself as the holder of such Registered Instruments or, subject to the preceding paragraphs as to transfer, may transfer such Registered Instruments. The Issuer and the Registrar may retain any amount payable upon the Registered Instruments to which any person is so entitled until such person shall be so registered or shall duly transfer the Registered Instruments.

6.Unless otherwise requested by him and agreed by the Issuer, the holder of Registered Instruments or the holder of Bearer Instruments, the subject of a request for an exchange for Registered Instruments shall be entitled to receive only one Registered Instrument in respect of his holding or in respect of the Bearer Instruments, the subject of a particular request for an exchange.

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7.The joint holders of a Registered Instrument shall be entitled to one Registered Instrument only in respect of their joint holding which shall, except where they otherwise direct, be delivered to the joint holder whose name appears first in the Register in respect of the joint holding.

8.Where there is more than one transferee (to hold other than as joint holders), separate forms of transfer (obtainable from the specified office of the Registrar) must be completed in respect of each new holding.

9.Where a holder of a Registered Instrument has transferred part only of his holding comprised therein there shall be delivered to him a Registered Instrument in respect of the balance of such holding.

10.The Issuer, the Registrar and the Fiscal Agent shall, save in the case of the issue of replacement Registered Instruments, make no charge to the holders for the registration of any holding of Registered Instruments or any transfer of Registered Instruments or in respect of any exchange of Bearer Instruments for Registered Instruments or for the issue of any Registered Instruments or for the delivery of Registered Instruments at the specified office of the Registrar.

11.Subject always to the terms and conditions applicable to the Instruments of the relevant Series, the Registrar will within three Relevant Banking Days of the transfer date or the exchange date applicable to a transfer of Registered Instruments or an exchange of Bearer Instruments for Registered Instruments make available at its specified office a new Registered Instrument in respect of the Registered Instrument transferred or in respect of Bearer Instruments the subject of a request for an exchange for Registered Instruments. In the case of a transfer of part only of a Registered Instrument, a new Registered Instrument in respect of the balance of the Registered Instrument transferred will be so delivered to the transferor.

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THE EIGHTH SCHEDULE

THE SPECIFIED OFFICES OF THE PAYING AGENTS AND THE REGISTRARS

The Fiscal Agent and Principal Registrar:

Fortis Banque Luxembourg S.A.,

50, Avenue J.F. Kennedy

L2951 Luxembourg

Telex:3401 BGL lu

Fax:+352 4242 2887

The other Paying Agent:

Fortis Banque (Suisse) S.A.

20, Bd. des Philosophes

CH-1211 Genève 4

Switzerland

Tel:+41 (0) 58 322 0349

Fax:+41 (0) 58 322 0457

SWIFT:MPCHCHGG

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SIGNATURES
ABB CAPITAL B.V.
By:	ALFRED STORCK	By:	BRIAN VAN REIJN
FORTIS BANQUE LUXEMBOURG S.A. as Fiscal Agent and
Principal Registrar
By:	NICOLAS OGDEN	By:	JEAN-CLAUDE BAULISCH
FORTIS BANQUE (SUISSE) S.A. as Paying Agent
By:	ALEXANDER HEUSS	By:	SERGE GRANDJEAN

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EX-2.4

Exhibit 2.4

	CLIFFORD CHANCE LLP
	CONFORMED COPY

ABB CAPITAL B.V.

as Issuer

PROGRAMME FOR THE ISSUANCE OF DEBT INSTRUMENTS

DEALERSHIP AGREEMENT

17 December 2008

CONTENTS

Clause			Page
1.	Definitions		2
2.	Issuance Of Instruments		4
3.	Representations, Warranties And Undertakings By The Issuer And Abb Ltd		7
4.	Undertakings By The Dealers		15
5.	Indemnity		16
6.	Costs And Expenses		18
7.	Notices And Communications		19
8.	Changes In Dealers		20
9.	Increase In Authorised Amount		20
10.	Change In Issuers		21
11.	Law And Jurisdiction		22
12.	Modification And Amendment		22
13.	Counterparts		22
14.	Contracts (Rights Of Third Parties) Act 1999		22
SCHEDULE 1		SELLING RESTRICTIONS	23
SCHEDULE 2		CONDITIONS PRECEDENT	28
SCHEDULE 3		DEALER ACCESSION LETTER	30
SCHEDULE 4		SPECIMEN FORM OF RECORD OF RELEVANT AGREEMENT APPROPRIATE WHERE A GROUP OF DEALERS ARE JOINTLY AND SEVERALLY AGREEING TO SUBSCRIBE FOR THE RELEVANT INSTRUMENTS	32
SCHEDULE 5		NOTICE OF INCREASE OF AUTHORISED AMOUNT	34
SCHEDULE 6		UNDERTAKING FROM NEW ISSUER	35
SCHEDULE 7		NOTICE DETAILS	36

THIS DEALERSHIP AGREEMENT is made on 17 December 2008.

BETWEEN

(1)ABB CAPITAL B.V. (“ACBV”) (the “Issuer” which expression shall include any New Issuer (as defined in Clause 10.2) which has become a party to this Agreement as an Issuer and shall exclude any entity which shall have ceased to be a party to this Agreement as an Issuer);

(2)ABB LTD; and

(3)MORGAN STANLEY & CO. INTERNATIONAL PLC (the “Dealer”, which expression shall include any institution(s) appointed as a dealer in accordance with Clause 8.1(b), together with the Dealer, the “Dealers” and, save as specified herein, excludes any institution(s) whose appointment as a Dealer has been terminated in accordance with Clause 8.1(a) provided that where any such institution has been appointed as Dealer in relation to a particular Tranche (as defined below) of Instruments, the expression “Dealer” or “Dealers” shall only mean or include such institution in relation to such Tranche).

WHEREAS

(A)The Issuer established a programme (the “Programme”) for the issuance of debt instruments (the “Instruments”, which expression shall refer only to those debt instruments issued under the Programme), in connection with which Programme the Issuer has entered into the Fiscal Agency Agreement and has executed and delivered the Deed of Covenant, referred to below.

(B)ABB Ltd has given certain undertakings to the Issuer pursuant to a keep-well agreement effective as of 31 March 2000 (the “Keep-Well Agreement”), which expressions shall include, where the context so admits, any keep-well agreement between ABB Ltd and a New Issuer.  The Keep-Well Agreement is not a guarantee by ABB Ltd of the Instruments.

(C)Instruments may be issued on a listed or unlisted basis.  The Issuer has made an application to the SIX Swiss Exchange (“SIX”) for the approval of the Programme.  For a period of twelve months following such approval Instruments issued under the Programme can be submitted for listing on SIX.

(D)The parties hereto wish to record the arrangements agreed between them in relation to the issue by the Issuer and the subscription by Dealers from time to time of Instruments.

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IT IS AGREED as follows:

1.DEFINITIONS

1.1All terms and expressions which have defined meanings in the Information Memorandum shall have the same meanings in this Agreement except where the context requires otherwise or unless otherwise stated.  In addition, for the purposes of this Agreement:

“this Agreement” includes any amendment or supplement hereto (including any supplemental agreement executed pursuant to Clause 8.1(b) and any undertaking executed pursuant to Clause 10.2(i)) and the expressions ‘herein’ and ‘hereto’ shall be construed accordingly;

“Annual Report” means the most recently published publicly available audited financial statements of the Issuer or, as the case may be, ABB Ltd, whether consolidated or non-consolidated (including the report of the auditors thereon);

“Authorised Amount” means the amount of United States Dollars (“U.S.$”) 5,250,000,000 or such other amount as may have been authorised pursuant to Clause 9 hereof;

a “Condition” means the terms and conditions of the Instruments as appearing in the Information Memorandum or, in relation to any Tranche or Series of Instruments, such terms and conditions as the same may be amended or supplemented or replaced as described in the relevant Pricing Supplement or Pricing Supplements and any reference to a numbered “Condition” is to the correspondingly numbered provision thereof; and “Terms and Conditions” should be construed accordingly;

“Constitutive Documents” means the constitutional documents of the Issuer or ABB Ltd, being, in the case of ACBV its articles of association and, in the case of ABB Ltd, the extract from the Swiss Commercial Register (“Handelsregister”) and its articles of incorporation;

“Deed of Covenant” means the deed of covenant dated 17 December 2008 and executed by the Issuer, as the same may be amended or supplemented from time to time and includes, where the context so admits, any deed of covenant executed by a New Issuer and “Deed of Covenant” means in relation to any Issuer, the Deed of Covenant executed and delivered by it;

“Fiscal Agent” means Fortis Banque Luxembourg S.A. in its capacity as fiscal agent, which expression shall include any successor(s) thereto;

“Fiscal Agency Agreement” means the fiscal agency agreement dated 17 December 2008 made between the Issuer, the Fiscal Agent, the Paying Agents and the Registrars, as amended or supplemented from time to time;

“FSMA” means the Financial Services and Markets Act 2000;

“Information Memorandum” means the information memorandum dated 17 December 2008 prepared in connection with the application for Instruments to be approved by SIX,

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together with any information incorporated therein by reference, as the same may be amended, supplemented, updated and/or substituted from time to time and any further information memorandum prepared in connection with the admission to the listing, trading and/or quotation of the Instruments on any other listing authority, stock exchanges and/or quotation system on which any Instruments may from time to time be admitted to listing, trading and/or quotation (as such further information memorandum may be amended, supplemented, updated and/or substituted from time to time);

“Listing Agent” means Homburger AG in its capacity as listing agent, which expression shall include any successor(s) thereto;

“London business day” means a day on which commercial banks are open for business in London (including dealings in foreign exchange and foreign currency deposits);

“Paying Agents” means Fortis Banque (Suisse) S.A. in its capacity as paying agent, and such expression shall also include the Fiscal Agent and any substitute or additional paying agents appointed in accordance with the Fiscal Agency Agreement;

“Pricing Supplement” means a pricing supplement prepared in relation to the relevant Tranche on the basis of the form in the Information Memorandum;

“Relevant Agreement” means an agreement (oral or in writing) between the Issuer, ABB Ltd and any Dealer(s) for the issue by the Issuer and the subscription as principal by such Dealer(s) (or on such other basis as may be agreed between the Issuer, ABB Ltd and the relevant Dealer(s) at the relevant time) of any Instruments which shall include, without limitation, any agreement in the form or based on the form set out in Schedule 4 (Specimen Form of Record of Relevant Agreement Appropriate Where a Group of Dealers are Jointly and Severally Agreeing to Subscribe for the Relevant Instruments);

“Relevant Dealer” means, in relation to a Relevant Agreement which is made between the Issuer, ABB Ltd and more than one Dealer, the institution specified as such in the Pricing Supplement and/or such Relevant Agreement; and, in relation to a Relevant Agreement which is made between the Issuer, ABB Ltd and a single Dealer, such Dealer;

“Registrars” means Fortis Banque Luxembourg S.A. and “Registrar” means, in relation to any Series of Instruments in registered form, the Principal Registrar as specified in the relevant Pricing Supplement;

“Series” means a Tranche of Instruments or Tranches of Instruments which are identical except that the issue date, the first payment of interest and, if so specified in the relevant Pricing Supplement, the denomination thereof may be different (and save that a Series may comprise Instruments in bearer form and Instruments in registered form);

a “subsidiary” of the Issuer or ABB Ltd means a company the financial statements of which are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the Issuer or, as the case may be, ABB Ltd;

“Stabilising Manager” means, in relation to any Tranche of Instruments, the Dealer specified as the Stabilising Manager in the Pricing Supplement relating to such Tranche;

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“Tranche” means Instruments, the terms of which are identical (whether as to currency, interest, maturity or otherwise), which are the subject of the same Pricing Supplement and which have the same issue date (save that a Tranche may comprise Instruments in bearer form and Instruments in registered form); and

“Transparency Directive” means a European Union Directive implementing the European Commission’s proposal for a Directive of the European Parliament and of the Council on the harmonisation of transparency requirements with regard to information about issuers whose securities are admitted to trading on a regulated market in the European Union (2003/0045 (COD)).

1.2Any Instruments issued on or after the date of this Agreement shall be issued pursuant to this Agreement.  This does not affect the rights or obligations of any party under any previous dealership agreement entered into in connection with the Programme with respect to any Instruments issued prior to the date of this Agreement.

1.3All references in this Agreement to an agreement, instrument or other document (including the Fiscal Agency Agreement, the Deed of Covenant and the Information Memorandum) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time.

2.ISSUANCE OF INSTRUMENTS

2.1The Issuer, ABB Ltd and the Dealer(s) agree that any Instruments which may from time to time be agreed between the Issuer, ABB Ltd and any Dealer(s) to be issued by the Issuer and subscribed by such Dealer(s) shall be issued and subscribed on the basis of, and in reliance upon, the representations and warranties, undertakings and indemnities made or given or provided to be made or given in this Agreement or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the Dealer(s) in respect of the relevant Instruments.  Unless otherwise agreed, neither the Issuer nor any Dealer is or shall be under any obligation to issue or, as the case may be, subscribe any Instruments.

2.2Upon the conclusion of any Relevant Agreement and subject as provided in Clause 2.3:

(a)the Relevant Dealer shall promptly confirm the terms of the Relevant Agreement to the Issuer (with a copy to the Fiscal Agent or, if the Relevant Agreement relates to the issue of Instruments in registered form, the Registrar) in writing (by letter, telex, fax or e-mail);

(b)the Issuer shall promptly confirm, as appropriate, such terms to the Fiscal Agent or, as the case may be, the Registrar in writing, and the Relevant Dealer or, if such Dealer so agrees with the Issuer, the Issuer will prepare a Pricing Supplement in relation to the relevant Instruments for approval (such approval not to be unreasonably withheld or delayed) by the Issuer or, as the case may be, the Relevant Dealer and for execution on behalf of the Issuer and the relevant Dealer(s);

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(c)the Issuer shall on the agreed date of issue of the relevant Instruments procure the issue of such Instruments in the relevant form (subject to amendment and completion) scheduled to the Fiscal Agency Agreement and shall procure their delivery to or to the order of the relevant Dealer(s);

(d)the Dealer(s) shall for value on the agreed date of issue of the relevant Instruments procure the payment of the net subscription moneys therefor (namely the agreed issue or sale price thereof plus any accrued interest and less any agreed commissions, concessions or other agreed deductibles) to or to the order of the Issuer by credit transfer to such account as may have been specified by or on behalf of the Issuer to the Relevant Dealer for the purpose; and

(e)where a single Dealer has agreed with the Issuer to subscribe a particular tranche pursuant to this Clause 2, if requested by the Relevant Dealer in relation to such Tranche the Issuer, ABB Ltd and the Relevant Dealer shall enter into a subscription agreement based on the form set out in Schedule 4 to this Agreement or such other form as may be agreed between the Issuer, ABB Ltd and the Relevant Dealer.

2.3The obligations of the Dealer(s) under Clause 2.2(d) are conditional upon:

(a)the agreement by the Issuer and the Relevant Dealer to the terms of the relevant Pricing Supplement;

(b)the execution of the relevant Pricing Supplement by or on behalf of the Issuer and the relevant Dealer(s) and the delivery of a copy thereof to each party;

(c)the delivery to or to the order of the Dealer(s) of the temporary global instrument representing the relevant Instruments and/or, as the case may be, the relevant Instruments in registered form to be held to the order of the Issuer pending receipt by the Issuer of the net subscription moneys payable to it in respect of the relevant Instruments;

(d)there having been, in the opinion of the Relevant Dealer acting in good faith, since the date of the Relevant Agreement, no adverse change in the financial condition of the Issuer or of ABB Ltd and its subsidiaries taken as a whole that is material in the context of issuance under the Programme nor, since the date of the Relevant Agreement, any change in the rating accorded by an internationally recognised rating agency to any security of the Issuer or ABB Ltd nor a change which has a material adverse effect on the financial condition of the Issuer or of ABB Ltd and its subsidiaries taken as a whole;

(e)the truth and correctness in all material respects of the representations and warranties on the part of the Issuer and ABB Ltd contained herein or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the relevant Dealer(s) in respect of the relevant Instruments and there having been no event rendering untrue or incorrect in any material respect any of such representations or warranties as though they had been made and given on the date of the Relevant Agreement and on the agreed

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date of issue of the relevant Instruments, with reference in each case to the facts and circumstances then subsisting;

(f)neither the Issuer nor ABB Ltd being in material breach of any of its undertakings set out herein or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the relevant Dealer(s) in respect of the relevant Instruments;

(g)there having been, since the date of the Relevant Agreement and in the opinion of the Relevant Dealer acting in good faith, no such change in national or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in its view, be likely to prejudice materially the placement, offering, distribution or sale of the relevant Instruments (whether in the primary market or in respect of dealings in the secondary market);

(h)the Dealers acting in good faith being satisfied that all authorisations, consents, approvals, filings and registrations, if any, required by any jurisdiction to which the Issuer or ABB Ltd is subject or in the country of origin of the currency or currencies in which the relevant Instruments are denominated or payable or required because of the term or other characteristics of the relevant Instruments, having been obtained and being in full force and effect or having been effected and, where relevant, certified translations thereof into English having been supplied to the Relevant Dealer; and

(i)(in the case of Instruments which are to be listed on SIX and/or which are to be listed on such other stock exchange as may have been agreed between the Issuer, ABB Ltd and the relevant Dealer(s)) SIX having approved the Programme.

2.4The Relevant Dealer, on behalf of itself only, or, as the case may be, the other Dealer(s) party to the Relevant Agreement in question may, in its absolute discretion, waive any of the conditions set out in Clause 2.3 in writing to the Issuer in so far only as they relate to an issue of Instruments by the Issuer to such Dealer(s) and any condition so waived shall be deemed to have been satisfied as regards such Dealer(s) alone.  If any of the conditions set out in Clause 2.3 are not satisfied or, as the case may be, waived by the Relevant Dealer on or before the issue date of any relevant Tranche, the Relevant Dealer shall, subject as mentioned below, be entitled to terminate the Relevant Agreement and, in that event, the parties to such Relevant Agreement shall be released and discharged from their respective obligations thereunder (except for any rights or liabilities which may have arisen pursuant to Clauses 3, 4, 5 or 6 of this Agreement).

2.5If the Relevant Dealer, in connection with the distribution of any Tranche of Instruments, offers Instruments in excess of the aggregate principal amount to be issued or effects transactions with a view to stabilising or maintaining the market price of the Instruments at levels other than those which might otherwise prevail in the open market, it shall not in doing so be deemed to act as agent of the Issuer but rather as principal.  The Issuer will not as a result of any action taken by such Dealer under this Clause, be obliged to issue Instruments in excess of the aggregate amount of Instruments agreed to be issued,

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nor shall the Issuer be liable for any loss, or entitled to any profit, arising from any excess offers or stabilisation.

2.6The Dealer who is specified in the applicable Pricing Supplement relating to any Tranche of Instruments as the Stabilising Manager (or any duly appointed person acting for such Stabilising Manager) may over-allot or effect transactions with a view to supporting the market price of the Instruments of the Series of which such Tranche forms part at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager (or any agent of the Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Tranche of Instruments is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Tranche of Instruments and 60 days after the date of the allotment of the relevant Tranche of Instruments. Such stabilising or over-allotment shall be conducted in accordance with all applicable laws and rules.  Any loss or profit sustained as a consequence of any such over-allotment or stabilising shall, as against the Issuer, be for the account of the Stabilising Manager(s).

3.REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS BY THE ISSUER AND ABB LTD

3.1The following representations and warranties shall be made or given by the Issuer and ABB Ltd, as appropriate, on the date hereof, on each date on which the Information Memorandum is amended, supplemented, updated and/or substituted and, in respect of each Tranche of Instruments agreed as contemplated herein to be issued and subscribed, on the issue date and on the date on which the Relevant Agreement is made (it being understood that any representations and warranties made with respect to a Tranche of Instruments on their issue date and on the date the Relevant Agreement relating thereto is made shall be applicable only to the Instruments to be issued and sold on such issue date or pursuant to such Relevant Agreement, as the case may be):

(a)each of the Issuer and ABB Ltd is duly incorporated and validly existing under the laws of its jurisdiction of incorporation, with full power and authority to conduct their respective businesses as described in the Information Memorandum;

(b)

(i)the Issuer is and was empowered to enter into and comply with all provisions of this Agreement, the Fiscal Agency Agreement, the Deed of Covenant, the Keep-Well Agreement and the Relevant Agreement, to issue and deliver the relevant Instruments (in relation to each Tranche of Instruments agreed as contemplated herein to be issued by the Issuer and subscribed by the relevant Dealer(s)) and to undertake and to perform the obligations expressed to be assumed by it herein and therein;

(ii)ABB Ltd is and was empowered to enter into and comply with all provisions of this Agreement and the Relevant Agreement and to undertake and to perform the obligations expressed to be assumed by it herein and therein;

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(c)

(i)this Agreement, the Fiscal Agency Agreement, the Deed of Covenant and the Keep-Well Agreement have been duly authorised, executed and delivered by the Issuer and constitute valid and legally binding obligations of the Issuer in accordance with their respective terms and (in relation to each Tranche of Instruments agreed as contemplated herein to be issued and subscribed) the Relevant Agreement in respect of such Instruments constitutes valid and legally binding obligations of the Issuer in accordance with its terms;

(ii)this Agreement and the Relevant Agreement, when duly executed, in respect of such Instruments each constitute valid and legally binding obligations of ABB Ltd in accordance with its terms;

(d)(in relation to each Tranche of Instruments agreed as contemplated herein to be issued and subscribed) the Instruments have been duly authorised by the Issuer and, when duly executed, authenticated and delivered in accordance with the Fiscal Agency Agreement will constitute valid and legally binding obligations of the Issuer in accordance with their terms;

(e)ABB Ltd is and was at the date of execution of the Keep-Well Agreement with the Issuer, empowered to enter into and comply with all the provisions of the Keep-Well Agreement and the Keep-Well Agreement constitutes a valid and legally binding obligation of ABB Ltd in accordance with its terms;

(f)(in relation to each Tranche of Instruments agreed as contemplated herein to be issued and subscribed), the obligations of the Issuer in respect of the Instruments of the relevant Series will, subject to Condition 4.01 headed “Negative Pledge”, constitute unsecured and unsubordinated obligations and shall at all times rank pari passu in right of payment and without any preference among themselves.  The payment obligations of the Issuer under the Instruments of the relevant Series shall (subject to Condition 4.01) at all times rank at least equally with all other present and future unsecured and unsubordinated obligations of the Issuer other than any obligations preferred by law;

(g)all necessary actions, authorisations, conditions and things required to be taken, given, fulfilled and done by the Issuer and/or ABB Ltd, as the case may be, (including any necessary registrations and consents) have been or, in relation to each Tranche of Instruments agreed as contemplated herein to be issued and subscribed, will, on the date of issue of the relevant Instruments, have been taken, given, fulfilled and done in connection with:

(i)the issue of the Information Memorandum and the distribution of the Information Memorandum and the relevant Pricing Supplement in accordance with the provisions set out in Schedule 1 hereto;

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(ii)the execution and delivery by the Issuer of, and the compliance by the Issuer with the provisions of, this Agreement, the Fiscal Agency Agreement and the Deed of Covenant;

(iii)the execution and delivery by ABB Ltd of, and the compliance by ABB Ltd with the provisions of, this Agreement;

(iv)in relation to each Tranche of Instruments of the Issuer agreed as contemplated herein to be issued and subscribed, the entry into of, and the compliance with the provisions of, the Relevant Agreement, the creation and issue of the relevant Instruments and the offering of the relevant Instruments in accordance with the terms of this Agreement and the Fiscal Agency Agreement;

(v)the execution and delivery of, and the compliance with the provisions of, the Keep-Well Agreement by the Issuer and ABB Ltd;

(vi)the carrying out of the various procedures and the performance of all other acts contemplated by the Relevant Agreement, this Agreement, the Fiscal Agency Agreement, the Deed of Covenant and the Keep-Well Agreement;

and will be in full force and effect;

(h)the matters referred to in paragraph (g) above do not and will not conflict with or result in a breach of any existing provisions of the laws or regulations of the country or state of incorporation of the Issuer, ABB Ltd or their respective Constitutive Documents nor of any agreement or other instrument or restriction whether statutory, contractual or otherwise, to which either of the Issuer or ABB Ltd is party or by which it or any of its assets is bound;

(i)the financial statements and other financial information contained in the Annual Report of the Issuer and incorporated by reference in the Information Memorandum present fairly the financial position (consolidated where relevant) of the Issuer and, where relevant, its subsidiaries as of the dates of such statements or information and the results of operations and the changes in financial position (consolidated where relevant) of the Issuer and, where relevant, its subsidiaries for the periods they cover or to which they relate and such financial statements and information have been prepared in accordance with any relevant statutory requirements and with generally accepted accounting principles in the United States or in its jurisdiction of incorporation applied on a consistent basis throughout the periods involved (unless and to the extent otherwise stated therein);

(j)the consolidated financial statements of ABB Ltd and its subsidiaries contained in the Annual Report of ABB Ltd and incorporated by reference in the Information Memorandum were in conformity with accounting principles generally accepted in the United States and with Swiss law, such consolidated financial statements present fairly the consolidated financial position of ABB Ltd and its subsidiaries as at the dates of such statements and the results of their

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operations and the changes in their financial position for the periods they cover or to which they relate;

(k)the capitalisation tables and other financial information and statistical data relating to the Issuer and ABB Ltd in the Information Memorandum present fairly the information shown therein and have been compiled on a basis consistent with that of the relevant financial statements and other financial information contained in the Annual Report of the Issuer or, as the case may be, ABB Ltd; the auditors who reported upon the audited financial statements and other financial information included in the Annual Report of the Issuer or, as the case may be, ABB Ltd are appropriately qualified in the country in which the Issuer or, as the case may be, ABB Ltd is incorporated and are independent of the Issuer or, as the case may be, ABB Ltd;

(l)the information contained in the Information Memorandum is true and accurate in all material respects and not misleading and to the best of its knowledge and belief there are no other facts the omission of which would make any statement therein misleading in any material respect and all reasonable enquiries have been made to verify the accuracy of such information and the opinions and intentions expressed therein are honestly held and, in relation to each Tranche of Instruments agreed as contemplated herein to be issued and subscribed, the Information Memorandum together with the relevant Pricing Supplement contains all the information which is material in the context of the issue of such Instruments;

(m)save as otherwise disclosed in the Information Memorandum, neither the Issuer nor ABB Ltd and its subsidiaries taken as a whole is involved in any litigation or arbitration proceedings which would be expected to have a material adverse effect on the business of the ABB Group taken as a whole in the context of the Programme nor, so far as the Issuer or ABB Ltd is aware, is any such litigation or arbitration pending or threatened;

(n)since the last day of the period in respect of which the Annual Report of the Issuer or ABB Ltd has been prepared, there has, save as may be disclosed in the Information Memorandum, to the best of the knowledge and belief of the Issuer and ABB Ltd, been no material adverse change in the financial position (consolidated where relevant) of the Issuer or of ABB Ltd and its subsidiaries taken as a whole nor a change which has a material adverse effect on the financial condition of the Issuer or of ABB Ltd and its subsidiaries taken as a whole;

(o)(in relation to any Tranche of Instruments agreed as contemplated herein to be issued and subscribed), as of the issue date of the relevant Instruments, the aggregate principal amount outstanding (as defined in the Fiscal Agency Agreement) (expressed in United States dollars) of Instruments issued under the Programme will not exceed the Authorised Amount and for this purpose (i) Instruments denominated in a currency other than United States dollars shall be converted into United States dollars using the spot rate of exchange for the

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subscription of the relevant currency against payment of United States dollars being quoted by the Fiscal Agent on the date on which the Relevant Agreement in respect of the relevant Instruments was made or such other rate as the Issuer and the Dealers may agree, (ii) any Instruments which provide for an amount less than the principal amount thereof to be due and payable upon redemption following an event of default in respect of such Instruments shall have a principal amount equal to their nominal amount and (iii) the currency in which any Instruments are payable, if different from the currency of their denomination, shall be disregarded;

(p)(in relation to any Tranche of Instruments agreed as contemplated herein to be issued and subscribed) no event exists which, had such Instruments been issued, would (or with the giving of notice, or the lapse of time, or both, would) constitute an “Event of Default” as defined in the Terms and Conditions of the relevant Instruments;

(q)(in relation to each Tranche of Instruments agreed as contemplated herein to be issued and purchased) neither the Issuer nor any of its affiliates nor any persons acting on its or their behalf (which for the avoidance of doubt shall not include any Dealer) have engaged or will engage in any directed selling efforts in the United States (as defined in Regulation S under the United States Securities Act of 1933, as amended, (the “Securities Act”)) with respect to the Instruments and it and they have complied and will comply with the offering restrictions provided in such Regulation;

(r)neither the Issuer nor any of its affiliates (as defined in Rule 501 (b) of Regulation D under the Securities Act (“Regulation D)), nor any person acting on its or their behalf (i) has made offers or sales of any security, or solicited offers to buy, or otherwise negotiated in respect of, any security, under circumstances that would require the registration of Instruments under the Securities Act; or (ii) has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Rule 502(c) of Regulation D) in connection with any offer or sale of Instruments in the United States; and

(s)the Issuer, any affiliate of the Issuer, and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S under the Securities Act.

3.2The Issuer and ABB Ltd undertake to and agree with the Dealer(s) and each of them, in respect of each Tranche of Instruments agreed as contemplated herein to be issued and subscribed, that it shall:

(a)unless the same is capable of remedy and is forthwith remedied, forthwith notify the Relevant Dealer of anything which, prior to payment of the net subscription moneys being made to the Issuer on the agreed date of issue of the relevant Instruments, has or may have rendered or will or may render untrue or incorrect in any material respect any of the representations and warranties made by or on behalf of the Issuer and/or ABB Ltd in respect thereof as if they had

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been made or given on the date of the Relevant Agreement and on the agreed date of issue of the relevant Instruments;

(b)in relation to each Tranche of Instruments agreed by the Issuer, ABB Ltd and the relevant Dealer(s) to be listed on SIX and/or on any other listing authority, stock exchanges and/or quotation system as may have been agreed between the Issuer, ABB Ltd and the relevant Dealer(s), cause the Listing Agent to procure the listing of the relevant Instruments on SIX and/or on such other listing authority, stock exchanges and/or quotation system and to maintain the same until none of such Instruments is outstanding provided, however, that if it should be impracticable or unduly burdensome to maintain such admission to listing, trading and/or quotation, each of the Issuer and ABB Ltd shall use its reasonable endeavours to procure and maintain as aforesaid an admission to listing, trading and/or a quotation for the relevant Instruments on such other listing authority stock exchanges and/or quotation systems as it and the relevant Dealer(s) decide;

(c)not and will cause its respective affiliates (as defined in Regulation 501(b) of Regulation D under the Securities Act) not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) in a manner which would require the registration of the Instruments issued by the Issuer under the Securities Act;

(d)procure, in relation to any Tranche of Instruments which is to be listed on SIX and/or any other listing authority, stock exchanges and/or quotation system, if required, that the relevant Pricing Supplement is lodged with SIX and/or with such other listing authority, stock exchanges and/or quotation system by the time required by SIX or such other listing authority, stock exchanges and/or quotation system;

(e)in accordance with the terms thereof, cause the Fiscal Agent to ensure that any Instrument in temporary global or, as the case may be, permanent global form is exchanged for Instrument(s) in permanent global or, as the case may be, definitive and/or (in the case of a Series comprising Instruments in bearer and registered form and if so specified in the relevant Pricing Supplement) registered form and any talon issued in respect of any Instrument in definitive form is exchanged in accordance with the Terms and Conditions of the relevant Instruments for further coupons;

(f)in relation to any Instruments in respect of which any Dealer is appointed as the agent of the Issuer for the purposes of calculating any rate or amount of interest or other redemption amount applicable to such Instruments, indemnify such Dealer in its capacity as such agent in the same manner as set out in Clause 13.4 of the Fiscal Agency Agreement, mutatis mutandis; and

(g)in respect of any Tranche of Instruments which must be redeemed before the first anniversary of the date of its issue, the Issuer will issue such Instruments only if the following conditions apply (or the Instruments can otherwise be issued without contravention of section 19 of the FSMA):

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(i)Selling restrictions: each Relevant Dealer represents, warrants and agrees in the terms set out in sub-clause (b) of the United Kingdom selling restriction in Schedule 1 (Selling Restrictions - United Kingdom); and

(ii)Minimum denomination: the redemption value of each such Instrument is not less than £100,000 (or an amount of equivalent value denominated wholly or partly in a currency other than sterling), and no part of any Instrument may be transferred unless the redemption value of that part is not less than £100,000 (or such an equivalent amount).

3.3The Issuer and ABB Ltd undertake to and agree with the Dealer(s) it shall:

(a)

(i)in the case of the Issuer, comply (and for this purpose shall ensure that all necessary action is taken and all necessary conditions are fulfilled) with all applicable laws, regulations, policies and guidelines (as amended from time to time) of any governmental and regulatory authorities or central bank relevant in the context of the issue of any Instruments and the performance of and compliance with its obligations thereunder, under this Agreement, the Fiscal Agency Agreement, the Keep-Well Agreement and the Deed of Covenant, and shall submit (or procure the submission on its behalf of) such reports or information and shall make (or procure that there is made on its behalf) such registrations and filings as may from time to time be required for compliance with such laws, regulations, policies and guidelines and shall procure that Instruments shall have such maturities and denominations as may from time to time be required for compliance with all applicable laws, regulations, policies and guidelines;

(ii)in the case of ABB Ltd, comply (and for this purpose shall ensure that all necessary action is taken and all necessary conditions are fulfilled) with all applicable laws, regulations, policies and guidelines (as amended from time to time) of any governmental and regulatory authorities or central bank relevant in the context of the issue of any Instruments and the performance of and compliance with its obligations thereunder, under this Agreement and the Keep-Well Agreement, and shall submit (or procure the submission on its behalf of) such reports or information and shall make (or procure that there is made on its behalf) such registrations and filings as may from time to time be required for compliance with such laws, regulations, policies and guidelines and shall procure that Instruments shall have such maturities and denominations as may from time to time be required for compliance with all applicable laws, regulations, policies and guidelines;

(b)in connection with the proposed issuance of Instruments, notify any Dealer promptly upon request by such Dealer of the aggregate principal amount of Instruments of the Issuer then outstanding (expressed in United States dollars) under the Programme and for this purpose sub-paragraphs (i) to (iii) of Clause 3.1(o) shall apply;

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(c)in connection with the proposed issuance of Instruments, from time to time deliver to each Dealer a certified copy of any document which amends or supersedes any of its Constitutive Documents and a certified copy of any resolution of its board of directors or, as the case may be, managing directors or other governing body which amends or supersedes the resolution in respect of the Issuer or ABB Ltd, as the case may be, referred to in the Information Memorandum;

(d)deliver to each Dealer a copy of each document lodged by or on behalf of the Issuer or ABB Ltd, as the case may be, in relation to the Programme or any Instruments with SIX or with such other listing authority, stock exchanges and/or quotation system on which Instruments shall then be admitted to listing, trading and/or quotation (other than Pricing Supplements) as soon as practicable after it has been lodged and a copy of each document made available for inspection at the offices of any Paying Agent (as detailed in the Information Memorandum) as soon as the same shall have become so available;

(e)without prejudice to paragraph (d) above, as soon as the same become publicly available, deliver to each Dealer a copy of its Annual Report and in the case of ABB Ltd, a copy of its Annual Report and interim financial information;

(f)supply (or procure the supply) to each Dealer addressed to all Dealers (whether or not (in the case of sub-paragraphs (ii) or (iii) below) any such Dealer is participating in the relevant issuance of Instruments) legal opinions as set out in Schedule 2 to this Agreement, comfort letters or agreed upon procedures letters on the following basis:

(i)before the first issue of Instruments occurring after each anniversary of the date of this Agreement;

(ii)a legal opinion in respect of ABB Ltd, upon the issuance by the Issuer of any Instruments agreed as contemplated herein to be issued and subscribed;

(iii)(unless otherwise stated in the Relevant Agreement) an auditors’ comfort letter or agreed upon procedures letter in respect of ABB Ltd and the Issuer and a legal opinion in respect of the Issuer (from suitable lawyers qualified in English law) upon the issuance by the Issuer of any Instruments;

(iv)a legal opinion in respect of, as relevant, the Issuer and/or ABB Ltd and/or from suitable lawyers qualified in English or, as relevant Swiss, law if requested by any Dealer in relation to any material change or proposed material change to any of this Agreement, the Fiscal Agency Agreement or the Deed of Covenant or the Keep-Well Agreement, or any change or proposed change in applicable law or regulation relating to the issuance of Instruments affecting in any material respect the Issuer or ABB Ltd, this Agreement, the Fiscal Agency Agreement or the Deed of Covenant or the Keep-Well Agreement;

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(g)so long as any Instrument remains outstanding, the Issuer will not modify, amend or terminate the Keep-Well Agreement where such modification, amendment or termination would have an adverse effect upon any holder of any Instrument or Coupon, nor will the Issuer waive, or fail to take all reasonable steps to ensure that ABB Ltd complies with its obligations under the Keep-Well Agreement (except where such waiver or failure would not have an adverse effect upon any holder of any Instrument or Coupon);

(h)in the case of the Issuer, not consent to any amendment to the Fiscal Agency Agreement which may materially adversely affect the interests of any Dealer or any holder of any Instrument or Coupon;

(i)in the case of the Issuer, without prejudice to the provisions of paragraphs (g) and (h) above, give to each Dealer at least fifteen days’ prior notice in writing of any proposed amendment to the Fiscal Agency Agreement, the Deed of Covenant and the Keep-Well Agreement (whether or not adversely affecting the interests of any Dealer or any holder of any Instrument or Coupon);

(j)from time to time deliver to each Dealer a certificate as to the names and signatures of those persons who are authorised to act on behalf of the Issuer, or, as the case may be, ABB Ltd in relation to the Programme; and

(k)prepare or procure the preparation of an amendment or supplement to the Information Memorandum or publish a new information memorandum as may from time to time be required to be prepared by law or by the requirements of any relevant listing authority, stock exchanges and/or quotation system or, without prejudice to the generality of the foregoing, if, while Instruments are offered under the Programme, there shall occur any adverse change in the financial condition of the Issuer or ABB Ltd and its subsidiaries taken as a whole that is material in the context of issuance under the Programme (in the case of ABB Ltd and its subsidiaries taken as a whole, being a change which might reasonably be expected to affect the decision of a person considering whether to provide finance to the Issuer in reliance on the existence of the relevant Keep-Well Agreement), which is not reflected in the Information Memorandum.

3.4The rights and remedies conferred upon any Dealer (or other indemnified person) under this Clause shall continue in full force and effect notwithstanding the completion of the arrangements set out herein for the issue and subscription of the relevant Instruments and regardless of any investigation made by such Dealer (or other indemnified person).

4.UNDERTAKINGS BY THE DEALERS

4.1Each Dealer undertakes to the Issuer and ABB Ltd that in relation to each Tranche of Instruments agreed as contemplated herein to be issued and subscribed:

(a)it will comply with the provisions set out in Schedule 1 hereto it being agreed that, subject to compliance by the Issuer with its obligations under paragraphs (b), (c), (d) and (e) of Clause 3.2 and paragraphs (a) and (k) of Clause 3.3 and

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not being in breach of any of the representations and warranties on its part contained in paragraphs (a) to (e), (g), (h), (l), (o) and (q) to (s) of Clause 3.1, the Issuer shall not have any responsibility in respect of the legality of any Dealer offering and selling Instruments in any jurisdiction or in respect of the Instruments qualifying for sale in any jurisdiction;

(b)in relation to each Tranche of Instruments agreed as contemplated herein to be issued and subscribed it will make no public announcement (except for an initial announcement on Reuters and/or Bloomberg in the form typically appearing on Reuters and/or Bloomberg) with regard to the Issuer or ABB Ltd or the issue or sale of the Instruments without the written consent of the Issuer, which consent shall not be unreasonably withheld or delayed; and

(c)it will make no representation and supply no information regarding the Issuer, ABB Ltd or any of their respective subsidiaries or the Instruments in connection with the issue or sale of the Instruments other than the form (including the terms and conditions) of the Instruments, the Fiscal Agency Agreement, the Deed of Covenant and the Keep-Well Agreement and other than any information contained in or extracted from any public information (including for the avoidance of doubt, the Information Memorandum) or as is approved in writing for such purpose by the Issuer, without the written consent of the Issuer, which consent shall not be unreasonably withheld or delayed.

4.2The obligations of the Dealers hereunder are several.  In addition each of the Dealers agrees that Morgan Stanley & Co. International plc has only acted in an administrative capacity to facilitate the establishment and/or maintenance of the Programme and has no responsibility to it for (a) the adequacy, accuracy, completeness or reasonableness of any representation, warranty, undertaking, agreement, statement or information in the Information Memorandum, any Pricing Supplement, this Agreement or any information provided in connection with the Programme or (b) the nature and suitability to it of all legal, tax and accounting matters and all documentation in connection with the Programme or any Tranche.

5.INDEMNITY

5.1The Issuer and ABB Ltd undertake to and agree with the Dealers and each of them that if such Dealer or any of its officers, directors or employees and each person by whom it is controlled for the purposes of the Securities Act (each a “Relevant Party”) incurs any direct claim, demand, action, liability, damages and loss and any reasonable cost or expense (including, without limitation, reasonable legal fees and any applicable value added tax) (a “Loss”) as a result or arising out of or in relation to or in connection with any breach (or any allegation by a person other than any Dealer or any officer, director or employee or controlling person of any Dealer of any breach) of the representations and warranties made by it herein or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the relevant Dealer(s) in respect of any Instruments agreed to be issued and subscribed hereunder or any breach or alleged breach of any of the undertakings given by it herein or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the

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relevant Dealer(s) in respect of any Instruments agreed to be issued and subscribed hereunder the Issuer or, as the case may be, ABB Ltd shall pay to such Dealer an amount equal to such Loss.  No Dealer shall have any duty or obligation, whether as fiduciary for any Relevant Party or otherwise, to recover any such payment for such Relevant Party or to account to such Relevant Party for any amounts paid to such Dealer under this Clause 5.1.

5.2If any action, proceeding, claim or demand shall be brought or asserted against any Dealer (or any of its officers, directors or employees or any person by whom it is controlled for the purposes of the Securities Act) in respect of which indemnity may be sought from the Issuer or, as the case may be, ABB Ltd as herein provided, such Dealer shall promptly notify the Issuer or, as the case may be, ABB Ltd in writing thereof.

5.3The Issuer or, as the case may be, ABB Ltd shall have the option to assume the defence thereof with legal advisers in each relevant jurisdiction reasonably satisfactory to the relevant Dealer (who shall not without the prior written consent of such Dealer also be legal advisers to the Issuer or, as the case may be, ABB Ltd).  If the Issuer or, as the case may be, ABB Ltd so assumes the defence and retains such legal advisers, such Dealer shall bear the fees and expenses of any additional legal advisers retained by it in any relevant jurisdiction.  If the Issuer or, as the case may be, ABB Ltd does not elect to assume the defence or fails to employ legal advisers in any relevant jurisdiction reasonably satisfactory to such Dealer to represent such Dealer within a reasonable time after notice of commencement of the action, it will reimburse such Dealer for the reasonable fees and expenses of any legal advisers retained by such Dealer.  After timely notice from the Issuer or, as the case may be, ABB Ltd of its election so to assume the defence thereof, the Issuer or, as the case may be, ABB Ltd will not be liable to such Dealer under this Clause 5.3 for any legal expenses subsequently incurred by such Dealer in connection with the defence thereof other than the reasonable costs of investigation.  The Issuer or, as the case may be, ABB Ltd shall not be liable to indemnify any Dealer for any settlement of any such action effected without the written consent of the Issuer or, as the case may be, ABB Ltd which consent shall not be unreasonably withheld or delayed.

5.4The rights and remedies conferred upon any Dealer (or other indemnified person) under this Clause shall continue in full force and effect notwithstanding the completion of the arrangements set out herein for the issue and subscription of the relevant Instruments and regardless of any investigation made by such Dealer (or other indemnified person).

5.5Each Dealer undertakes with the Issuer and ABB Ltd that if the Issuer and/or ABB Ltd or any of their respective officers, directors or employees and each person by whom either of the Issuer or ABB Ltd is controlled incurs any direct claim, demand, action, liability, damages and loss and any reasonable cost or expense (including, without limitation, reasonable legal fees and any applicable value added tax) (a “Loss”) as a result or arising out of, or in relation to, or in connection with any breach (or any allegation by a person other than the Issuer, ABB Ltd, any officer, director, employee or controlling person of the Issuer or ABB Ltd of any breach) of any of the warranties, undertakings and agreements made by it herein or in any Relevant Agreement or in writing in any other agreement in respect of any Instruments whether arising before or

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after the completion of the subscription and issue of the relevant Instruments then such Dealer shall pay to the Issuer or, as the case may be, ABB Ltd an amount equal to such Loss.  The provisions of Clauses 5.3 and 5.4 with respect to the conduct and settlement of actions shall apply mutatis mutandis to this indemnity.

6.           COSTS AND EXPENSES

6.1The Issuer is, failing which ABB Ltd is, responsible for payment of the proper costs, charges and expenses (and any applicable value added tax):

(a)incurred by it or of any legal, accountancy and other professional advisers retained and instructed by it in connection with the establishment of the Programme, the preparation of the Information Memorandum, the preparation, production and delivery of this Agreement, the Fiscal Agency Agreement, the Deed of Covenant and any other document connected with the Programme or the performance of and compliance by it with any of its obligations or without prejudice to Clause 5.5, the exercise of its rights under this Agreement, the Fiscal Agency Agreement, the Deed of Covenant or the Keep-Well Agreement;

(b)of any legal, accountancy or other professional advisers retained and instructed by it in respect of any Instruments issued by it and any document prepared in connection therewith;

(c)of and incidental to the setting, proofing, printing and distribution of the Information Memorandum and any Pricing Supplements provided that where such costs, charges and expenses are incurred by (a) person(s) other than the Issuer or ABB Ltd, the prior written approval of the Issuer and/or ABB Ltd to the incurrence of such costs, charges and expenses shall have been obtained;

(d)of and incidental to the setting, proofing, printing, checking and initial delivery of any Instruments (whether in global or definitive bearer form or in registered form) including inspection and authentication provided that where such costs, charges and expenses are incurred by (a) person(s) other than the Issuer or ABB Ltd, the prior written approval of the Issuer and/or ABB Ltd to the incurrence of such costs, charges and expenses shall have been obtained;

(e)incurred at any time in connection with the listing of Instruments on SIX or on such other listing authority, stock exchanges and/or quotation system on which any Instruments may from time to time be admitted to listing, trading and/or quotation and the maintenance of any such admission to listing, trading and/or quotation provided that where such costs, charges and expenses are incurred by (a) person(s) other than the Issuer or ABB Ltd, the prior written approval of the Issuer and/or ABB Ltd to the incurrence of such costs, charges and expenses shall have been obtained; and

(f)of any advertising agreed upon between the Issuer, ABB Ltd or any of them and the Dealers or any of them.

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6.2As between the Issuer, ABB Ltd and the Dealer(s), the Issuer is, failing which ABB Ltd is, responsible for the payment of the proper costs, charges and expenses (and any applicable value added tax):

(a)incurred by ABB Ltd or of any legal, accountancy and other professional advisers retained and instructed by ABB Ltd in connection with the establishment of the Programme, the preparation of the Information Memorandum, the preparation, production and delivery of this Agreement, the Fiscal Agency Agreement, the Deed of Covenant and any other document connected with the Programme or the performance of and compliance by it with any of its obligations under the Keep-Well Agreement; and

(b)of any legal, accountancy or other professional advisers retained and instructed by it in respect of any Instruments issued by such Issuer and any document prepared in connection therewith.

6.3The Issuer, failing which ABB Ltd, shall be responsible for the payment of all stamp, registration and other taxes and duties (including any interest and penalties thereon or in connection therewith) which may be payable upon or in connection with the execution and delivery of this Agreement and the Fiscal Agency Agreement, the Deed of Covenant executed by the Issuer and/or ABB Ltd, as the case may be, and the issue or initial issue or delivery by the Issuer of Instruments of the Issuer and the execution and delivery by it and/or ABB Ltd, as the case may be, of each Pricing Supplement and any other document to which the Issuer and/or ABB Ltd, as the case may be, is/are party entered into in connection with the Programme or any Instruments of the Issuer and shall indemnify each Dealer against any direct claim, demand, action, loss, liability and damages and any reasonable cost or expense (including, without limitation, reasonable legal fees and any applicable value added tax) which it may incur as a result or arising out of or in relation to any failure to pay or delay in paying any of the same.

7.NOTICES AND COMMUNICATIONS

7.1All notices and communications hereunder shall be made in writing (by letter (first class mail, in the case of inland post and airmail, in the case of cross border post), telex or fax) and shall be sent to the addressee at the address, telex number or fax number specified against its name in Schedule 7 to this Agreement (or, in the case of a Dealer not originally party hereto, specified by notice to the Issuer, ABB Ltd and the other Dealers at or about the time of its appointment as a Dealer) and for the attention of the person or department therein specified (or as aforesaid) or, in any case, to such other address, telex number or fax number and for the attention of such other person or department as the addressee has by prior notice to the sender specified for the purpose.

7.2Whenever a notice or other communication shall be given as aforesaid by telex or fax it shall be deemed received (subject, in the case of telex, to a confirmed answer back being received at the end of the transmission and, in the case of fax, to confirmation being received at the end of the transmission) on the day of dispatch provided that if the time of despatch is after 3.00 p.m. (local time of the recipient) on any day which is a business day (in the place of the recipient) or any time on a day which is not a business day (in the place of the recipient), it shall be deemed to have been received on the next business day

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(in the place of the recipient) and whenever a notice or other communication is sent by post as aforesaid it shall be deemed received three days (in the case of inland post) or seven days (in the case of cross border post) after being posted in a properly prepaid envelope and whenever a notice or other communication is delivered by hand, it shall be deemed received upon actual delivery.

8.CHANGES IN DEALERS

8.1The Issuer and/or ABB Ltd may:

(a)by ten days’ notice in writing to any Dealer, terminate the right of such Dealer to remain a Dealer under this Agreement (but without prejudice to any rights, liabilities, duties or obligations accrued or incurred on or before the effective date of termination and in particular the validity of any existing agreement for the issue and subscription of any Instruments); and/or

(b)nominate any reputable institution, which may include the Issuer and/or ABB Ltd, as a new Dealer hereunder either generally in respect of the Programme or in relation to a particular Tranche of Instruments, in which event upon the execution by such institution of a supplemental agreement in the terms set out in Schedule 3 to this Agreement or in terms acceptable to the other parties hereto such institution shall, subject as provided below, become a party hereto with all the authority, rights, powers, duties and obligations of a Dealer hereunder either generally in respect of the Programme or in relation to a particular Tranche of Instruments provided always that an institution which has become a Dealer in relation to a particular Tranche of Instruments shall not be entitled to the benefit of the undertakings of the Issuer and ABB Ltd contained in Clause 3.3 and Clause 5.1, except for those contained in paragraphs (a), (f)(ii) and (iii), (g), (h), (i) and (k) of Clause 3.3 and the provisions of Clauses 8, 9 and 10 shall not apply to any such Dealer.

8.2Any Dealer may, by ten days’ written notice to the Issuer and ABB Ltd, resign as a Dealer under this Agreement (but without prejudice to any rights, liabilities, duties or obligations accrued or incurred on or before the effective date of resignation and in particular the validity of any existing agreement for the issue and subscription of any Instruments).

8.3The Issuer or ABB Ltd will notify the Dealers and the Fiscal Agent of any change in the identity of the Dealers appointed generally in respect of the Programme as soon as reasonably practicable thereafter.

9.INCREASE IN AUTHORISED AMOUNT

9.1The Issuer and/or ABB Ltd may, subject to the provisions of Clause 9.2 below, from time to time, by giving at least twenty days’ notice by letter in substantially the form set out in Schedule 5 to this Agreement to the Dealer, (with a copy to the Paying Agents and the Registrars), inform the Dealer that the Authorised Amount be increased and, the Dealer will be deemed to have given its consent to the increase in the Authorised

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Amount, whereupon all references in this Agreement shall be to the increased Authorised Amount.

9.2No increase shall be effective unless and until (i) the Dealer shall have received (a) certified true copies (and, if applicable, English translations) of the resolution of the board of directors or, as the case may be, board of managing directors or other governing body of the Issuer and ABB Ltd authorising the increase in the Authorised Amount, (b) the documents and confirmations described in paragraphs 4 and 10 of Schedule 2 to this Agreement and (c) confirmation of the approval of the Programme in respect of Instruments up to the new Authorised Amount by SIX and any amendment or supplement to the Information Memorandum prepared in connection therewith and (ii) the Issuer and ABB Ltd shall have complied with all legal and regulatory requirements, if any, necessary for the issuance of Instruments up to the new Authorised Amount and shall have provided to the Dealer such evidence of compliance the Dealer may reasonably require.

10.CHANGE IN ISSUERS

10.1The Issuer may, provided that at such time it is not party to a Relevant Agreement in respect of which the related Instruments have not as yet been issued, from time to time by 10 days’ written notice to the Dealer cease, subject to the following provisions of this Clause, to be an Issuer in respect of the Programme.

If, upon the expiry of such notice period, the Issuer does not have outstanding any Instruments then, with effect from the date of the expiry of such notice period such Issuer shall cease to be a party to this Agreement as Issuer, but without prejudice to any rights, liabilities or obligations accrued or incurred under this Agreement on or prior to such date.

If, upon the expiry of such notice period, the Issuer does have outstanding any Instruments, then such Issuer shall not cease to be a party to this Agreement unless and until ABB Ltd or a direct or indirect subsidiary of ABB Ltd shall have been substituted for and become principal debtor in respect of such Instruments or Coupons pursuant to Condition 15 of the Terms and Conditions of such Instruments, in which event such Issuer shall cease to be party to this Agreement on the date upon which such substitution shall take effect, but without prejudice to any rights, liabilities and obligations accrued or incurred under this Agreement on or prior to such date.

10.2The Issuer may request that ABB Ltd or a direct or indirect subsidiary of ABB Ltd (the “New Issuer”) should become an Issuer in respect of the Programme and accordingly should be party to this Agreement.  If such a request is made, upon the delivery to the Dealer of (i) the undertaking of the New Issuer to be bound by the provisions of this Agreement substantially in the form as set out in Schedule 6 hereto and (ii) a copy of an agreement duly executed by the New Issuer whereby the New Issuer agrees to be bound by the Fiscal Agency Agreement, the New Issuer shall become a party to this Agreement as if originally named herein as an Issuer.

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11.LAW AND JURISDICTION

11.1This Agreement and each Relevant Agreement and all non-contractual obligations arising out of or in connection with this Agreement and each Relevant Agreement are governed by English law.

11.2The Issuer and ABB Ltd hereby agree for the exclusive benefit of the Dealer(s) that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and any Relevant Agreement or any non-contractual obligation arising out of or in connection with this Agreement or any Relevant Agreement and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with this Agreement and any Relevant Agreement may be brought in such courts.  Nothing contained in this Clause shall limit any right to take Proceedings against the Issuer or ABB Ltd in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.

11.3The Issuer and ABB Ltd hereby appoints ABB Limited of Daresbury Park, Daresbury, Warrington WA4 4BT, Cheshire to accept service of any Proceedings on its behalf in England.  If for any reason such process agent ceases to act as such or no longer has an address in England, the Issuer and ABB Ltd agrees to appoint a substitute process agent and notify the Dealer(s) of such appointment and if the Issuer or ABB Ltd, as the case may be, fails to make any such appointment within twenty-one days, any Dealer shall be entitled to appoint such a person by notice to the Issuer or ABB Ltd, as the case may be.

11.4Nothing contained herein shall affect the right to serve process in any other manner permitted by law.

12.MODIFICATION AND AMENDMENT

No modification or amendment of this Agreement shall be valid unless it is in writing and signed by or on behalf of each of the parties hereto.

13.COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.  Any party may enter into this Agreement by signing any such counterpart.

14.CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written.

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SCHEDULE 1

SELLING RESTRICTIONS

United States of America

Each Dealer understands that the Instruments have not been and will not be registered under the Securities Act and may not be offered, sold or delivered within the United States, or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act.  Each Dealer represents that it has offered and sold Instruments, and will offer and sell Instruments (i) as part of their distribution at any time and (ii) otherwise until forty days after the completion of the distribution of Instruments of the relevant Tranche, as determined and certified to the relevant Issuer by such Dealer (or, in the case of a sale of a Tranche of Instruments to or through such Dealer and one or more other Dealers, by each of such Dealers) only in accordance with Rule 903 of Regulation S under the Securities Act.  Accordingly, each Dealer further represents and agrees that neither it, its affiliates nor any person, acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to Instruments, and that it and they have complied and will comply with the offering restrictions requirement of Regulation S.  Each Dealer agrees that, at or prior to confirmation of sale of Instruments, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Instruments from it during the distribution compliance period a confirmation or notice to substantially the following effect:

“The Instruments covered hereby have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) and may not be offered, or delivered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until forty days after the later of the commencement of the offering and the issue date of the Instruments of the relevant Tranche, except in either case in accordance with Regulation S under the Securities Act.  Terms used above have the meanings given to them by Regulation S.”

Terms used in the above paragraph have the meanings given to them by Regulation S.

Each Dealer represents and agrees that it has not entered and will not enter into any written agreement with any person with respect to any sub-underwriting, selling group or other similar arrangement relating to the distribution or delivery of Instruments except with its affiliates or with the prior written consent of the relevant Issuer.

In addition, each Dealer represents and agrees that:

(i)except to the extent permitted under U.S. Treas. Reg. § 1.163-5(c)(2)(i)(D) (the “D Rules”), (x) it has not offered or sold, and during the restricted period will not offer or sell, Instruments in bearer form to a person who is within the United States or its possessions or to a United States person, and (y) such Dealer has not delivered and will not deliver within the United States or its possessions definitive Instruments in bearer form that are sold during the restricted period;

(ii)it has and throughout the restricted period will have in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling

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Instruments in bearer form are aware that such Instruments may not be offered or sold during the restricted period to a person who is within the United States or its possessions or to a United States person, except as permitted by the D Rules;

(iii)if such Dealer is a United States person, it represents that it is acquiring the Instruments in bearer form for purposes of resale in connection with their original issuance and, if such Dealer retains Instruments in bearer form for its own account, it will only do so in accordance with the requirements of U.S. Treas. Reg. § 1.163-5(c)(2)(i)(D)(6);

(iv)with respect to each affiliate (if any) that acquires from such Dealer Instruments in bearer form for the purposes of offering or selling such Instruments during the restricted period, such Dealer either (A) hereby represents and agrees on behalf of such affiliate (if any) to the effect set forth in sub-paragraphs (i), (ii) and (iii) of this paragraph or (B) agrees that it will obtain from such affiliate (if any) for the benefit of the relevant Issuer the representations and agreements contained in sub-paragraphs (i), (ii) and (iii) of this paragraph; and

(v)it will obtain from any distributor (within the meaning of U.S. Treas. Reg. § 1.163-5(c)(2)(i)(D)(4)(ii)) that purchases any Instruments in bearer form from such Dealer pursuant to a written contract with it (except a distributor that is one of its affiliates or is another Dealer), for the benefit of the Issuer and each other Dealer, the representations contained in, and such distributor’s agreement to comply with, the provisions of sub- paragraphs (i), (ii), (iii) and (iv) of this paragraph insofar as they relate to the D Rules, as if such distributor were a Dealer hereunder.

In addition, where the C Rules are specified in the relevant Pricing Supplement as being applicable in relation to any issuance of Instruments, such Instruments must in their original issuance, be issued and delivered outside the United States and its possessions and, accordingly, each Dealer will be required to represent, undertake and agree (and each additional Dealer will be required to represent, undertake and agree) that, in connection with the original issuance of the Instruments:

(i)it has not offered, sold or delivered, and will not offer, sell or deliver, directly or indirectly, any bearer Instruments within the United States or its possessions;

(ii)it has not communicated, and will not communicate, directly or indirectly, with a prospective purchaser if either such purchaser or such Dealer is within the United States or its possessions and will not otherwise involve the United States office of such Dealer in the offer and sale of bearer Instruments.

Terms used in sub-clauses (i) and (ii) have the meanings given to them by the Internal Revenue Code of 1986, as amended, and the regulations thereunder, including the C Rules and the D Rules.

Each issuance of index-, commodity- or currency-linked Instruments shall be subject to additional U.S. selling restrictions as the relevant Dealer or Dealers shall agree as a term of the issuance and purchase of such Instruments.  Each Dealer agrees that it shall offer, sell and deliver such Instruments only in compliance with such additional U.S. selling restrictions.

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Selling Restrictions Addressing Additional Securities Laws of The Netherlands

Zero Coupon Instruments may not, directly or indirectly, as part of their initial distribution (or immediately thereafter) or as part of any re-offering be offered, sold, transferred or delivered in The Netherlands. As used herein “Zero Coupon Instruments” are Instruments that are in bearer form and that constitute a claim for a fixed sum against the Issuer and on which interest does not become due during their tenor or on which no interest is due whatsoever.

Selling Restrictions Addressing Additional Securities Laws of the United Kingdom

Each Dealer further represents and agrees, that:

(i)in relation to any Instruments which have a maturity of less than one year, (i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any Instruments other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Instruments would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer;

(ii)it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Instruments in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or ABB Ltd.;  and

(iii)it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Instruments in, from or otherwise involving the United Kingdom.

Japan

Each Dealer understands that the Instruments have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended, the “FIEL”) and, accordingly, undertakes that it will not offer or sell any Instruments directly or indirectly, in Japan or to, or for the benefit of, any Japanese Person or to others for re-offering or re-sale, directly or indirectly, in Japan or to any Japanese Person except under circumstances which will result in compliance with the FIEL and all applicable laws, regulations and guidelines promulgated by the relevant Japanese governmental and regulatory authorities and in effect at the relevant time.  For the purposes of this paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation or other entity organised under the laws of Japan.

Public Offer Selling Restriction Under the Prospectus Directive

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each Dealer represents and agrees that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Instruments which are the subject of the offering contemplated by the

25

Information Memorandum as completed by the Pricing Supplement in relation thereto (or are the subject of the offering contemplated by a drawdown prospectus, as the case may be) to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Instruments to the public in that Relevant Member State:

(a)if the Pricing Supplement in relation to the Instruments specify that an offer of those Instruments may be made other than pursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State (a “Non-exempt Offer”), following the date of publication of a prospectus in relation to such Instruments which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, provided that any such prospectus which is not a drawdown prospectus has subsequently been completed by the Pricing Supplement contemplating such Non-exempt Offer, in accordance with the Prospectus Directive, in the period beginning and ending on the dates specified in such prospectus or Pricing Supplement, as applicable;

(b)at any time to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

(c)at any time to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, all as shown in its last annual or consolidated accounts;

(d)at any time to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or

(e)at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive.

provided that no such offer of Instruments referred to in (b) to (e) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Instruments to the public” in relation to any Instruments in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Instruments to be offered so as to enable an investor to decide to purchase or subscribe the Instruments, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

General

Each Dealer acknowledges that no action has been or will be taken by the Issuer or any Dealer that would, or is intended to, permit a public offer of the Instruments in any country or

26

jurisdiction where any such action for that purpose is required.  Accordingly, each Dealer undertakes that it will observe all applicable laws and regulations in each country or jurisdiction in or from which it may acquire, offer, sell or deliver Instruments or have in its possession or distribute any offering material, information memorandum, offering circular, prospectus, form of application, advertisement or other document or information.

Each Dealer further agrees that it will not directly or indirectly offer, sell or deliver any Instruments or distribute or publish the Information Memorandum or any other offering material in or from any country or jurisdiction except under circumstances that will, in its reasonable belief, result in compliance with any applicable laws and regulations, including in respect of the jurisdictions set out above, and all offers and sales of Instruments by it will be made on the foregoing terms.

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SCHEDULE 2

CONDITIONS PRECEDENT

1.A certified true copy (and, if applicable, English translation) of the Constitutive Documents of the Issuer and ABB Ltd.

2.Certified true copies (and, if applicable, English translations) of all relevant resolutions of its board of directors or, as the case may be, board of managing directors or other governing body of the Issuer (including any New Issuer) authorising the issuance of Instruments in an aggregate principal amount of up to the Authorised Amount applicable to the Issuer and the execution, delivery and performance by the Issuer of the Dealership Agreement, the Fiscal Agency Agreement, the Deed of Covenant and the Instruments.

3.In relation to the Issuer and ABB Ltd, a list of the names and titles and specimen signatures of the persons authorised:

(a)to sign on behalf of the Issuer or ABB Ltd, as the case may be, the above-mentioned documents;

(b)to sign on behalf of the Issuer or ABB Ltd, as the case may be, all notices and other documents to be delivered pursuant thereto or in connection therewith; and

(c)to take any other action on behalf of the Issuer or ABB Ltd, as the case may be,  in relation to the Programme.

4.Any necessary governmental, tax, exchange control or other approvals or consents.

5.The Dealership Agreement, duly executed.

6.The Fiscal Agency Agreement, duly executed or a conformed copy thereof.

7.In respect of the Issuer, the Deed of Covenant duly executed or a conformed copy thereof.

8.A certified copy of the relevant duly executed Keep-Well Agreement.

9.The Information Memorandum and confirmation of the approval of the Programme by SIX and the issuance of Instruments by the Issuer.

10.Legal opinions from suitable lawyers qualified in English law, internal Counsel of ABB Ltd, and (in the case of the Issuer) from the legal advisers to the Issuer in The Netherlands, (in the case of any New Issuer (as defined in Clause 10.2)) from reputable and suitably qualified legal advisers in the jurisdiction of incorporation and, if different, tax residence of such New Issuer.  Each legal opinion referred to above (other than in respect of any New Issuer) to be delivered pursuant to Clause 3.3(f) of the Dealership Agreement.

11.Confirmation of the ratings for the Programme obtained from applicable rating agency(ies).

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12.In relation to the Issuer and ABB Ltd, a letter from ABB Limited agreeing to act as process agent for the Issuer and ABB Ltd, as the case may be, in relation to the Dealership Agreement, the Fiscal Agency Agreement, the Deed of Covenant and the Instruments.

29

SCHEDULE 3

DEALER ACCESSION LETTER

[Date]

[New Dealer[s]]

[Address]

Dear Sirs,

ABB CAPITAL B.V.

(the “Issuer”)

Programme for the Issuance of Debt Instruments

We refer to the Dealership Agreement dated 17 December 2008 entered into in respect of the above Programme for the Issuance of Debt Instruments (such agreement, as amended or supplemented from time to time, the “Dealership Agreement”) between ourselves, ABB Ltd and the Dealers from time to time party thereto, and have pleasure in inviting [each of] you to become a Dealer upon the terms of the Dealership Agreement [in respect of and for the purpose of [specify Tranche of Instruments]](1), a copy of which has been supplied to you by us.  We are enclosing copies of the conditions precedent as set out in Schedule 2 to the Dealership Agreement and copies of the most recent comfort letters and opinions delivered pursuant to paragraph (f) of Clause 3.3 of the Dealership Agreement.  Please return to us a copy of this letter signed by an authorised signatory [on your behalf/on behalf of each of you] whereupon [each of] you will become a Dealer for the purposes of the Dealership Agreement with, [subject as hereinafter provided,] all the authority, rights, powers, duties and obligations of a Dealer under the Dealership Agreement [in respect of and for the purpose of [specify Tranche of Instruments] and provided always that [each of] you shall not be entitled to the benefit of our undertakings contained in Clause 3.3 of the Dealership Agreement except for those contained in paragraphs (a), (f)(ii) and (iii), (g), (h), (i) and (k) thereof and the provisions of Clauses 8, 9 and 10 of the Dealership Agreement shall not apply to [any of] you].(1)

This letter and all non-contractual obligations arising out of or in connection with this letter are governed by English law.

Yours faithfully,

ABB Capital B.V.

By:

By:

By:

ABB Ltd

By:

(1)Applies only where the incoming Dealer is being appointed in respect of a particular Tranche of Instruments

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CONFIRMATION

We hereby accept the appointment as a Dealer and accept all of the duties and obligations under, and terms and conditions of, the Dealership Agreement upon the terms of this letter [in respect of and for the purpose of [specify Tranche of Instruments]].

We confirm that we are in receipt of all the documents referred to in the second sentence of your letter and have found them to be satisfactory.

For the purposes of the Dealership Agreement our communications details are as set out below.

[NEW DEALER]

By:

Date:

Address:	[           ]
Telex:	[           ]
Facsimile:	[           ]
Attention:	[           ]

[NEW DEALER]

By:

Date:

Address:	[           ]
Telex:	[           ]
Facsimile:	[           ]
Attention:	[           ]

[(2)Copies to:

Applies only where the incoming Dealer is being appointed in respect of the Programme generally

(i)all existing Dealers who have been appointed in respect of the Programme generally; and

(ii)the Fiscal Agent.]

(2)Applies only where the incoming Dealer is being appointed in respect of the Programme generally

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SCHEDULE 4

SPECIMEN FORM OF RECORD OF RELEVANT AGREEMENT APPROPRIATE WHERE A GROUP OF DEALERS ARE JOINTLY AND SEVERALLY AGREEING TO SUBSCRIBE FOR THE RELEVANT INSTRUMENTS

[Letterhead of the Issuer]

[Date]

Form of Record of Relevant Agreement

[                      ]

(the “Relevant Dealer”)

[                      ]

(together, with the Relevant Dealer, the “Dealers”)

Dear Sirs

ABB CAPITAL B.V.

Programme for the Issuance of Debt Instruments

Issue of

[Aggregate principal amount and title of Instruments to be issued (the “Instruments”)]

We, [ABB Capital B.V.] (the “Issuer”) and ABB Ltd, refer to the dealership agreement (the “Dealership Agreement”) dated 17 December 2008 (as amended or supplemented from time to time) and made between ourselves as Issuer, ABB Ltd and the Dealer named therein and entered into with respect to the Programme for the issuance of debt instruments, described in an information memorandum dated 17 December 2008.  [The Instruments are the subject of an invitation telex dated [        ].]

We write in order to record the agreement between us as follows:

(a)our agreement recorded in this letter is a Relevant Agreement as defined in the Dealership Agreement and is subject to the Dealership Agreement (save as modified in relation to the Instruments as provided herein) and the Pricing Supplement which has been prepared in respect of such Instruments;

(b)we will, in accordance with the Fiscal Agency Agreement dated 17 December 2008 and as further amended or supplemented from time to time, issue the Instruments (represented by an appropriate temporary global instrument) on [           ]* (or such later date, being not later than [        ]*, as may be agreed between us and the Relevant Dealer on your behalf) (the “closing date”);

32

(c)you jointly and severally undertake that you will subscribe for the Instruments on the closing date at their [issue price]* as specified in the invitation telex [plus (if the closing date has been subject to postponement) accrued interest on their principal amount]* (the “Issue Price”) and, on the closing date, pay the net subscription moneys for the Instruments being the Issue Price [(less the commissions, concessions and other matters agreed to be deducted pursuant to paragraph (d) below)] by credit transfer in the currency in which the Instruments are denominated for same day/immediate value to [set out full details of the Issuer’s receiving bank account];

(d)[specify agreement with respect to commissions, concessions, costs and expenses and other such matters stating whether such items may be deducted from the Issue Price payable on the closing date;]

(e)[[          ] agrees to act as [insert details of any calculation agency or similar function which [          ] has agreed to undertake] and we confirm that the provisions of Clause 3.2(f) of the Dealership Agreement will apply to such appointment].**

Please signify your confirmation that the foregoing correctly records the agreement between us by counter-signing and returning the enclosed copy of this letter together with evidence of the authority of the person signing on your behalf.

This letter agreement and all non-contractual obligations arising out of or in connection with this letter are governed by English law.

Yours faithfully

[ABB CAPITAL B.V.]

By:	By:
ABB LTD
By:	By:

Confirmed

[list the Relevant Dealer and Dealers in
the agreed order]

By:

*delete or complete as appropriate

**only to be considered in relation to Tranches where a Dealer has agreed to undertake any calculation agency or similar function

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SCHEDULE 5

NOTICE OF INCREASE OF AUTHORISED AMOUNT

To:[list all current Dealer(s) appointed in respect of the Programme generally]

Dear Sirs,

ABB CAPITAL B.V.

(the “Issuer”)

Programme for the Issuance of up to U.S.$5,250,000,000 Debt Instruments

We refer to the Dealership Agreement dated 17 December 2008 entered into in respect of the above Programme for the Issuance of Debt Instruments (such agreement, as amended or supplemented from time to time, the “Dealership Agreement”), between ourselves as Issuer, ABB Ltd and the Dealers from time to time party thereto.  Terms used in the Dealership Agreement shall have the same meanings in this letter.

Pursuant to Clause 9.1 of the Dealership Agreement, we hereby inform each of the addressees listed above that the Authorised Amount be increased from [          ] to [          ] with effect from [date] or such later date upon which the requirements of Clause 9.2 of the Dealership Agreement shall be fulfilled, subject always to the provisions of Clause 9.2 of the Dealership Agreement.

From the date upon which the increase in the Authorised Amount becomes effective, all references in the Dealership Agreement to the Authorised Amount shall be to the new increased amount as specified herein.

This letter and all non-contractual obligations arising out of or in connection with this letter are governed by the laws of England.

Yours faithfully,

ABB Capital B.V.

By:

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SCHEDULE 6

UNDERTAKING FROM NEW ISSUER

To:[list all current Dealer(s) appointed in respect of the Programme generally]

Dear Sirs,

ABB CAPITAL B.V.

(the “Issuer”)

Programme for the Issuance of up to U.S.$5,250,000,000 Debt Instruments

We refer to the Dealership Agreement dated 17 December 2008 entered into in respect of the above Programme for the Issuance of Debt Instruments (such agreement, as modified or amended from time to time, the “Dealership Agreement”), between the Issuer, ABB Ltd and the Dealers from time to time party thereto.  Terms used in the Dealership Agreement shall have the same meanings in this letter.

We desire to become an Issuer in respect of the Programme and accordingly a party to the Dealership Agreement.

We hereby undertake, with effect from [          ], to each of the Dealers to be bound by and to represent, warrant, undertake, perform and comply with all the provisions of the Dealership Agreement in all respects as if we had been originally named a party thereto as Issuer but on the basis that [specify any amendments, supplements or modifications which are necessary to the provisions of the Dealership Agreement in its application to the New Issuer].

This letter agreement and all non-contractual obligations arising out of or in connection with this letter agreement are governed by the laws of England.

Yours faithfully,

ABB Captial B.V.

By:

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SCHEDULE 7

NOTICE DETAILS

ABB CAPITAL B.V.

Address:	Burgemeester Haspelslaan 65, 5/F
	NL-1181 Amsterdam
	The Netherlands
Fax:	+31 20 4459844
Attention:	Business Administration
copy to:
Address:	ABB Group Treasury Operations
	Affolternstrasse 44
	CH 8050 Zurich
	Switzerland
Fax:	+41 43 317 7474
Attention:	Business Operations
ABB LTD
Address:	Affolternstrasse 44
	8050 Zurich
	Switzerland
Fax:	+41 43 317 7992
Attention:	Legal Department
MORGAN STANLEY & CO. INTERNATIONAL PLC
Address:	25 Cabot Square
	Canary Wharf
	London E14 4QA
Fax:	+44 20 7677 7999
Attention:	Global Capital Markets - Head of Transaction Management Group

36

SIGNATURES

The Issuer

ABB CAPITAL B.V.
By:     ALFRED STORCK	By:     BRIAN VAN REIJN
ABB Ltd
ABB LTD
By:     ALEX HALL	By:     RICHARD A. BROWN
The Dealer
MORGAN STANLEY & CO. INTERNATIONAL PLC
By:     BARBARA L. ALEXANDER

37

EX-2.5

Exhibit 2.5

	CLIFFORD CHANCE LLP
	CONFORMED COPY

ABB CAPITAL B.V.

PROGRAMME FOR THE ISSUANCE OF
UP TO U.S. $5,250,000,000 DEBT INSTRUMENTS

DEED OF COVENANT

THIS DEED OF COVENANT is made on 17 December 2008

BY

(1)ABB CAPITAL B.V. (the “Issuer”)

IN FAVOUR OF

(2)THE ACCOUNTHOLDERS (as defined below); and

(3)THE PERSONS for the time being and from time to time registered as holders of the Registered Instruments referred to below (the “Holders” of Registered Instruments and, together with the Accountholders, the “Beneficiaries”);

WHEREAS

(A)The Issuer has established a programme (the “Programme”) for the issuance of debt instruments (the “Instruments”), in connection with which it has entered into a dealership agreement dated 17 December 2008 (the “Dealership Agreement”) and a fiscal agency agreement dated 17 December 2008 (the “Fiscal Agency Agreement”).

(B)Instruments may be issued on a listed or unlisted basis.  The Issuer has made an application to the SIX Swiss Exchange (“SIX”) for the approval of the Programme.  For a period of twelve months following such approval Instruments issued under the Programme can be submitted for listing on SIX.

(C)Instruments issued under the Programme may be issued in bearer form (“Bearer Instruments”) or in registered form (“Registered Instruments”).  Bearer Instruments may be in the form of either a temporary global instrument in bearer form (the “Temporary Global Instrument”) or a permanent global instrument in bearer form (the “Permanent Global Instrument”).  Such Instruments may be represented initially by a Temporary Global Instrument exchangeable in accordance with its terms for a Permanent Global Instrument or, as the case may be, definitive instruments (the “Definitive Instruments”) and/or (if the Temporary Global Instruments so provides) Registered Instruments.  Permanent Global Instruments are, in accordance with their respective terms, exchangeable for Definitive Instruments and/or (if the Permanent Global Instrument so provides) Registered Instruments.  References herein to a “Global Instrument” shall, as the context may require, be to a Permanent Global Instrument or, as the case may be, a Temporary Global Instrument.

(D)The Issuer wishes to constitute the Registered Instruments by deed poll and to make arrangements for the protection of the interests of Accountholders in the event that any Temporary Global Instrument or Permanent Global Instrument becomes void in accordance with its terms.

NOW THIS DEED OF COVENANT WITNESSES as follows:

1.INTERPRETATION

1.1Definitions

1

All terms and expressions which have defined meanings in the Information Memorandum, the Dealership Agreement or the Fiscal Agency Agreement shall have the same meanings in this Deed of Covenant except where the context requires otherwise or unless otherwise stated.  In addition, in this Deed of Covenant the following expressions have the following meanings:

“Accountholder” means any accountholder with a Clearing System which at the Determination Date has credited to its securities account with such Clearing System one or more Entries in respect of a Global Instrument, except for any Clearing System in its capacity as an accountholder of another Clearing System;

“Clearing System” means each of Euroclear Bank S.A./N.V., Clearstream, Luxembourg, and any other clearing system specified in the relevant Pricing Supplement;

“Conditions” has the meaning given in the Information Memorandum except that, in relation to any particular Tranche of Instruments, it means the Conditions (as defined in the Information Memorandum) as supplemented, amended and/or replaced by the relevant Pricing Supplement, and any reference to a numbered Condition shall be construed accordingly;

“Determination Date” means, in relation to any Global Instrument, the date on which such Global Instrument becomes void in accordance with its terms;

“Direct Rights” means the rights referred to in Clause 3.1 (Direct Rights - Creation);

“Entry” means, in relation to a Global Instrument, any entry which is made in the securities account of any Accountholder with a Clearing System in respect of Instruments represented by such Global Instrument; and

“Principal Amount” means, in respect of any Entry, the aggregate principal amount of the Instruments to which such Entry relates.

1.2Clauses

Any reference in this Deed of Covenant to a Clause is, unless otherwise stated, to a clause hereof.

1.3Other agreements

All references in this Deed of Covenant to an agreement, instrument or other document (including the Information Memorandum, the Dealership Agreement and the Fiscal Agency Agreement) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time.  In addition, in the context of any particular Tranche of Instruments, each reference in this Deed of Covenant to the Information Memorandum shall be construed as a reference to the Information Memorandum as supplemented and/or amended by the relevant Pricing Supplement.

2

1.4Legislation

Any reference in this Deed of Covenant to any legislation (whether primary legislation or regulations or other subsidiary legislation made pursuant to primary legislation) shall be construed as a reference to such legislation as the same may have been, or may from time to time be, amended or re-enacted.

1.5Headings

Headings and sub-headings are for ease of reference only and shall not affect the construction of this Deed of Covenant.

1.6Benefit of Deed of Covenant

Any Instruments issued under the Programme on or after the date of this Deed of Covenant shall have the benefit of this Deed of Covenant but shall not have the benefit of any subsequent deed of covenant relating to the Programme (unless expressly so provided in any such subsequent deed).

2.THE REGISTERED INSTRUMENTS

The Issuer hereby constitutes the Registered Instruments and covenants in favour of each Holder of a Registered Instrument that it will duly perform and comply with the obligations expressed to be undertaken by it in each Registered Instrument and in the Conditions (and for this purpose any reference in the Conditions to any obligation or payment under or in respect of the Instruments shall be construed to include a reference to any obligation or payment under or pursuant to this provision).

3.DIRECT RIGHTS

3.1Creation

If any Global Instrument representing all or part of a Tranche of Instruments becomes void in accordance with its terms, each Accountholder shall have against the Issuer all rights (“Direct Rights”) which such Accountholder would have had in respect of the Instruments if, immediately before the Determination Date in relation to that Global Instrument, it had been the Holder of Definitive Instruments and/or Registered Instruments of that Tranche, duly executed, authenticated and issued, in an aggregate principal amount equal to the Principal Amount of such Accountholder’s Entries relating to such Global Instrument including (without limitation) the right to receive all payments due at any time in respect of such Definitive Instruments and/or Registered Instruments as if such Definitive Instruments and/or Registered Instruments had (where required by the Conditions) been duly presented and (where required by the Conditions) surrendered on the due date in accordance with the Conditions. Anything which might prevent the issuance of Definitive Instruments and/or Registered Instruments in an aggregate principal amount equal to the Principal Amount of any Entry of any Accountholder shall be disregarded for the purposes of this Clause 3.1, but without prejudice to its effectiveness for any other purpose.

3.2No Further Action

No further action shall be required on the part of the Issuer or any other person:

3

3.2.1Direct Rights:  for the Accountholders to enjoy the Direct Rights; or

3.2.2Benefit of the Conditions:  for each Accountholder to have the benefit of the Conditions as if they had been incorporated mutatis mutandis into this Deed of Covenant,

provided, however, that nothing herein shall entitle any Accountholder to receive any payment in respect of any Global Instrument which has already been made.

4.EVIDENCE

4.1Records

The records of the Clearing Systems shall, absent manifest error, be conclusive as to the identity of the Accountholders and the respective amounts of Instruments credited to their securities accounts and a statement issued by a Clearing System setting out:

4.1.1Name:  the name of the Accountholder in respect of which it is issued; and

4.1.2Principal Amount:  the Principal Amount of any Entry credited to the securities account of such Accountholder with such Clearing System on any date,

Shall, absent manifest error, be conclusive evidence for all purposes of this Deed of Covenant.

4.2Determination Date

If a Clearing System determines the Determination Date, such determination shall be binding on all Accountholders with such Clearing System.

5.DEPOSIT OF DEED OF COVENANT

This Deed of Covenant shall be deposited with and held by the Fiscal Agent for so long as the Programme remains in effect and thereafter until the date on which all the obligations of the Issuer under or in respect of the Instruments (including, without limitation, its obligations under this Deed of Covenant) have been discharged in full.  The Issuer hereby acknowledges the right of every Beneficiary to the production of this Deed of Covenant.

6.STAMP DUTIES

The Issuer shall pay all stamp, registration and other similar taxes and duties (including any interest and penalties thereon or in connection therewith) which may be payable upon or in connection with the execution and delivery of this Deed of Covenant, and shall indemnify each Beneficiary against any claim, demand, action, liability, damages, cost, loss or expense (including, without limitation, legal fees and any applicable value added tax) which it may incur or which may be made against it as a result or arising out of or in relation to any failure to pay or delay in paying any of the same.

4

7.BENEFIT OF DEED OF COVENANT

7.1Deed Poll

This Deed of Covenant shall take effect as a deed poll for the benefit of the Beneficiaries from time to time.  Delivery of this Deed of Covenant shall be deemed to take place upon execution hereof.

7.2Benefit

This Deed of Covenant shall enure to the benefit of each Beneficiary and its (and any subsequent) successors and assigns, each of which shall be entitled severally to enforce this Deed of Covenant against the Issuer.

7.3Assignment

The Issuer shall not be entitled to assign or transfer all or any of its rights, benefits and obligations hereunder.  Each Beneficiary shall be entitled to assign all or any of its rights and benefits hereunder.

8.PARTIAL INVALIDITY

If at any time any provision hereof is or becomes illegal, invalid or unenforceable in any respect under the laws of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the laws of any other jurisdiction shall in any way be affected or impaired thereby.

9.NOTICES

9.1Address for notices

All notices and other communications to the Issuer hereunder shall be made in writing (by letter or fax) and shall be sent to the Issuer at:

Burgemeester Haspelslaan 65, 5/F

NL-1181 Amsterdam

The Netherlands

Fax:	+ 31 20 4459844
Attention:	Business Administration

or to such other address, telex number or fax number or for the attention of such other person or department as the Issuer has notified to the holders of Instruments in the manner prescribed for the giving of notices in connection with the Instruments.

9.2Effectiveness

Every notice or other communication sent in accordance with Clause 8.1 (Address for notices) shall be effective, if sent by letter or fax, upon receipt by the Issuer, provided, however, that any such notice or other communication which would otherwise take effect after 4.00 p.m. on any particular day shall not take effect until 10.00 a.m. on the immediately succeeding business day in the place of the Issuer.

5

10.LAW AND JURISDICTION

10.1Governing law

This Deed of Covenant and all non-contractual obligations arising out of or in connection with this Deed of Covenant are governed by English law.

10.2English courts

The courts of England have exclusive jurisdiction to settle any dispute (a “Dispute”), arising out of or in connection with this Deed of Covenant (including a dispute regarding the existence, validity or termination of this Deed of Covenant or any non-contractual obligation arising out of or in connection with this Deed of Covenant) or the consequences of its nullity.

10.3Appropriate forum

The Issuer agrees that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue to the contrary.

10.4Rights of the Accountholders to take proceedings outside England

Clause 10.2 (English courts) is for the benefit of the Beneficiaries only.  As a result, nothing in this Clause 10 (Law and jurisdiction) prevents the Beneficiaries from taking proceedings relating to a Dispute (“Proceedings”) in any other courts with jurisdiction.  To the extent allowed by law, the Beneficiaries may take concurrent Proceedings in any number of jurisdictions.

10.5Process agent

The Issuer agrees that the documents which start any Proceedings and any other documents required to be served in relation to those Proceedings may be served on it by being delivered to ABB Limited at Daresbury Park, Daresbury, Warrington WA4 4BT, Cheshire or, if different, its registered office for the time being or at any address of the Issuer in Great Britain at which process may be served on it in accordance with Part XXIII of the Companies Act 1985.  If such person is not or ceases to be effectively appointed to accept service of process on behalf of the Issuer, the Issuer shall, on the written demand of any Beneficiary addressed to the Issuer and delivered to the Issuer appoint a further person in England to accept service of process on its behalf and, failing such appointment within 15 days, any Beneficiary shall be entitled to appoint such a person by written notice addressed to the Issuer and delivered to the Issuer.  Nothing in this paragraph shall affect the right of any Beneficiary to serve process in any other manner permitted by law.  This clause applies to Proceedings in England and to Proceedings elsewhere.

11.MODIFICATION

The Fiscal Agency Agreement contains provisions for convening meetings of holders of Instruments to consider matters relating to the Instruments, including the modification of any provision of this Deed of Covenant.  Any such modification may be made by supplemental deed poll if sanctioned by an Extraordinary Resolution and shall be

6

binding on all Beneficiaries (to the extent that this Deed of Covenant relates to the relevant Series of Instruments).

IN WITNESS whereof this Deed of Covenant has been executed by the Issuer and is intended to be and is hereby delivered on the date first before written.

EXECUTED as a deed	)
by ABB CAPITAL B.V.	)
acting by	)
	)	ALFRED STORCK
	)	BRIAN VAN REIJN

7

EX-8.1

Exhibit 8.1

20F Company List	Reporting period = 2009_02A
Country	Name	Group Interest %	Share Capital(in 1000s)	Curr
ALGERIA	ABB Power Technologies SpA, Hydra	100.00	108000	DZD
ALGERIA	SARPI - Société Algérienne pour la réalisation de projets industriels, Alger	50.00	407250	DZD
ANGOLA	ABB Electrica SGPS, Lda., Luanda	100.00	200	USD
ARGENTINA	ABB S.A., Buenos Aires	100.00	10510	ARS
ARUBA (NL)	ABB Import & Export Services Ltd., Oranjestad/Aruba (NA)	100.00	10006	USD
AUSTRALIA	ABB Australia Pty Limited, Sydney	100.00	122436	AUD
AUSTRALIA	ABB Group Holdings Pty. Ltd., Sydney	100.00	316200	AUD
AUSTRALIA	ABB Group Investment LLP, Sydney	100.00	146232	AUD
AUSTRALIA	ABB Group Investment Management Pty. Ltd., Sydney	100.00	9110	AUD
AUSTRIA	ABB AG, Vienna	100.00	15000	EUR
AZERBAIJAN	ABB Azerbaijan LLC, Baku	100.00	900	EUR
BAHRAIN	ABB Technologies W.L.L., Bahrain	100.00	500	USD
BELGIUM	ABB N.V., Zaventem	100.00	13290	EUR
BOLIVIA	Asea Brown Boveri Ltda., La Paz	99.81	518	BOB
BOTSWANA	ABB (Pty) Ltd., Gaborone	100.00	541	BWP
BRAZIL	ABB Ltda., Osasco	100.00	94396	BRL
BULGARIA	ABB Automation EOOD, Rakovski	100.00	100	BGN
BULGARIA	ABB Avangard AD, Sevlievo	99.82	6867	BGN
BULGARIA	ABB Bulgaria EOOD, Sofia	100.00	3010	BGN
CAMEROON	Asea Brown Boveri S.A., Douala	99.90	30000	XAF
CANADA	ABB Bomem Inc., Quebec	100.00	5052	CAD
CANADA	ABB Inc., St. Laurent, Quebec	100.00	301957	CAD
CHILE	ABB S.A., Santiago	100.00	4733956	CLP
CHILE	CMS Tecnologia S.A., Santiago	70.00	4292517	CLP
CHINA	ABB (China) Engineering Co. Ltd. Xiamen	100.00	2100	USD
CHINA	ABB (China) Ltd., Beijing	100.00	120000	USD
CHINA	ABB Bailey Beijing Controls Co. Ltd., Beijing	51.00	1796	USD
CHINA	ABB Beijing Drive Systems Co. Ltd., Beijing	90.00	5000	USD
CHINA	ABB Chongqing Transformer Company Ltd., Chongqing City	62.20	48647	USD
CHINA	ABB DATONG Traction Transformers Co., Ltd, Shanxi	50.00	6000	USD
CHINA	ABB Electrical Machines Ltd., Shanghai	100.00	8000	USD
CHINA	ABB Engineering (Shanghai) Ltd., Shanghai	100.00	4000	USD
CHINA	ABB Hefei Transformer Co. Ltd., Hefei	100.00	29000	USD
CHINA	ABB High Voltage Switchgear Co. Ltd., Beijing	60.00	11400	USD
CHINA	ABB Holding Ltd., Hong Kong	100.00	27887	HKD
CHINA	ABB Huadian High Voltage Switchgear (Xiamen) Company Ltd., Xiamen	51.00	6000	USD
CHINA	ABB Jiangjin Turbo Systems Company Limited, Chongqing	61.00	16000	USD
CHINA	ABB LV Installation Materials Co. Ltd., Beijing	85.70	17100	USD
CHINA	ABB Shanghai Motors Co. Ltd., Shanghai	75.00	11217	USD
CHINA	ABB Shanghai Transformer Co. Ltd., Shanghai	51.00	7000	USD
CHINA	ABB Tellhow Generators Ltd., Jiangxi	51.00	5000	USD
CHINA	ABB Tianjin Switchgear Co., Ltd., Tianjin	60.00	4000	USD
CHINA	ABB Transmission & Distribuition Automation Equipment (Xiamen) Co. Ltd., Fujian	100.00	2100	USD
CHINA	ABB Xi’an High Power Rectifier Company Limited, Xi’an	62.00	2500	USD
CHINA	ABB Xi’an Power Capacitor Company Limited, Xi’an	91.00	37022	USD
CHINA	ABB Xiamen Electrical Controlgear Co. Ltd., Fujian Province	80.00	4300	USD
CHINA	ABB Xiamen Low Voltage Equipment Co. Ltd., Xiamen	100.00	6200	USD

1

Country	Name	Group Interest %	Share Capital(in 1000s)	Curr
CHINA	ABB Xiamen Switchgear Co. Ltd., Xiamen	64.30	5000	USD
CHINA	ABB Xinhui Low Voltage Switchgear Co. Ltd., Xinhui (Guangdong)	80.00	6200	USD
CHINA	ABB Zhongshan Transformer Company Ltd., Zhongshan City	51.00	15000	USD
COLOMBIA	Asea Brown Boveri Ltda., Bogotá	99.99	486440	COP
COTE D’IVOIRE	ABB Technology SA, Abidjan	99.00	178540	XOF
CROATIA	ABB Ltd., Zagreb	100.00	2730	HRK
CZECH REPUBLIC	ABB s.r.o., Sokolovska	100.00	400000	CZK
DENMARK	ABB A/S, Skovlunde	100.00	100000	DKK
ECUADOR	ABB Ecuador S.A., Quito	96.87	315	USD
EGYPT	ABB Arab Contractors for Construction, Heliopolis	100.00	72750	EGP
EGYPT	ABB Arab S.A.E., Cairo	100.00	40000	EGP
EGYPT	ABB Metals & Plastics Manufact. Co. SAE, 10th of Ramadan City	100.00	5000	EGP
EGYPT	ABB Power Systems and Automation Technology S.A.E, Cairo	100.00	35000	EGP
EGYPT	ABB Transformers S.A.E., El-Nozha El-Gedida	65.00	30000	EGP
EGYPT	ABB Turbochargers S.A.E., Suez	100.00	300	USD
EGYPT	Asea Brown Boveri S.A.E., Cairo	100.00	16000	USD
EL SALVADOR	ABB S.A. de CV, San Salvador	100.00	82	USD
ESTONIA	ABB AS, Tallinn	100.00	25985	EEK
FINLAND	ABB Oy, Helsinki	100.00	10003	EUR
FINLAND	Efora Oy, Helsinki	49.00	5100	EUR
FRANCE	ABB France SAS, Rueil Malmaison cedex	99.83	25778	EUR
FRANCE	ABB S.A., Rueil-Malmaison	100.00	38921	EUR
FRANCE	L’Ebenoid, Villeurbanne	100.00	1000	EUR
FRANCE	Striebel & John S.A.R.L., Fellering	51.00	678	EUR
GERMANY	ABB AG, Mannheim	100.00	167500	EUR
GERMANY	ABB Airport Technologies GmbH, Mannheim	100.00	5700	DEM
GERMANY	ABB Automation GmbH, Mannheim	100.00	15000	EUR
GERMANY	ABB Automation Products GmbH, Ladenburg	100.00	20750	DEM
GERMANY	ABB Automatisierungsanlagen Cottbus GmbH, Cottbus	100.00	12000	DEM
GERMANY	ABB Bauprojektmanagement GmbH, Mannheim	100.00	50	DEM
GERMANY	ABB Beteiligungs- und Verwaltungsges. mbH, Mannheim	100.00	120000	DEM
GERMANY	ABB Beteiligungs-Management GmbH, Mannheim	100.00	9000	EUR
GERMANY	ABB Beteiligungsgesellschaft mbH, Mannheim	100.00	37800	DEM
GERMANY	ABB Business Services GmbH, Heidelberg	100.00	25	EUR
GERMANY	ABB Grundbesitz GmbH & Co. Objekte Berlin OHG, Ladenburg	100.00		DEM
GERMANY	ABB Grundbesitz GmbH, Ladenburg	100.00	10000	DEM
GERMANY	ABB Logistics Center Europe GmbH, Menden	100.00	50	DEM
GERMANY	ABB New Ventures GmbH, Ratingen	100.00	432	EUR
GERMANY	ABB Service GmbH Bobingen, Bobingen	100.00	50	DEM
GERMANY	ABB Stotz-Kontakt GmbH, Heidelberg	100.00	7500	EUR
GERMANY	ABB Stotz-Kontakt/Striebel & John Vertriebs-GmbH, Heidelberg	75.50	511	EUR
GERMANY	ABB Training Center GmbH & Co. KG, Heidelberg	100.00	2366	EUR
GERMANY	ABB Wirtschaftsbetriebe GmbH, Mannheim	100.00	500	DEM
GERMANY	Busch-Jaeger Elektro GmbH, Mannheim/Lüdenscheid	100.00	3000	DEM
GERMANY	Hartmann & Braun Grundstücksverwaltungs GmbH, Mannheim	100.00	10000	DEM
GERMANY	JLEC Power Ventures GmbH, Mannheim	100.00	50	DEM
GERMANY	Komposit-Risikoberatungs- und Versicherungsvermittlungs-GmbH, Ladenburg	100.00	50	DEM
GERMANY	Pucaro Elektro-Isolierstoffe GmbH, Roigheim	100.00	4500	DEM

2

Country	Name	Group Interest %	Share Capital(in 1000s)	Curr
GERMANY	Striebel & John GmbH & Co. KG, Sasbach-Obersasbach	51.00	2000	DEM
GERMANY	Striebel Vermögensverwaltungs-GmbH, Sasbach-Obersasbach	51.00	50	DEM
GREECE	Asea Brown Boveri S.A., Metamorphossis Attica	100.00	1182	EUR
GUERNSEY	ABB Equity Limited, St. Peter’s Port	100.00	10	GBP
GUERNSEY	ABB ESAP Limited, St. Peter’s Port	100.00	50	CHF
GUERNSEY	ABB Insurance Limited, St. Peter’s Port	100.00	4000	USD
GUERNSEY	ABB International Finance Limited, St. Peter’s Port	100.00	240	USD
GUERNSEY	ABB Transinvest Limited, St. Peter’s Port	100.00	3641	CHF
HONG KONG	ABB (Hong Kong) Ltd., Hong Kong	100.00	20000	HKD
HONG KONG	ABB Asia Pacific Services Ltd., Hong Kong	100.00	1000	HKD
HONG KONG	ABB Turbo Systems (Hong Kong) Limited	61.00	14000	HKD
HONG KONG	Industrial and Building Systems (H.K.) Limited, Hong Kong	100.00	6000	HKD
HUNGARY	ABB Engineering Trading and Service Ltd., Budapest	100.00	444090	HUF
INDIA	ABB Global Industries and Services Limited, Bangalore	100.00	3585930	INR
INDIA	ABB Limited, Bangalore	52.11	423817	INR
INDONESIA	PT ABB Bailey, Jakarta	100.00	400000	USD
INDONESIA	PT ABB Installation Materials, Jakarta	100.00	3655000	IDR
INDONESIA	PT ABB Sakti Industri, Jakarta	51.00	4000	USD
INDONESIA	PT ABB Transmission and Distribution, Jakarta	60.00	11050	USD
IRAN, ISLAMIC REPUBLIC OF	ABB (P.J.S.C.), Teheran	100.00	6444000	IRR
IRELAND	ABB Ltd, Dublin	100.00	635	EUR
ISRAEL	ABB Technologies Ltd., Tirat Carmel	99.99	420	ILS
ITALY	ABB Corporate Administration & Properties S.p.A., Milan	100.00	6800	EUR
ITALY	ABB Environmental Service Srl., Milan	99.99	41	EUR
ITALY	ABB S.p.A., Milan	100.00	107000	EUR
JAPAN	ABB K.K., Tokyo	100.00	1000000	JPY
JAPAN	Bailey Japan Co. Ltd., Shizuoka-Ken	51.00	187347	JPY
JAPAN	Turbo Systems United Co. Ltd., Tokyo	60.00	400000	JPY
JERSEY	ABB Equity Ventures (Jersey) Ltd., St. Helier	100.00	0	USD
JORDAN	ABB Ltd. Jordan, Amman	100.00	350	JOD
JORDAN	ABB Near East Trading Ltd., Amman	95.00	30	JOD
KAZAKHSTAN	ABB LLP., Almaty	100.00	19520	KZT
KAZAKHSTAN	CJSC Energia Kazakh Scientific Research Institute of Energy, Almaty	92.57	51170	KZT
KAZAKHSTAN	Energoinvestprojekt JV LLP, Almaty	100.00	10482	KZT
KENYA	ABB Limited, Nairobi	100.00	15500	KES
KOREA, REPUBLIC OF	ABB Ltd., Seoul	100.00	18670000	KRW
KUWAIT	ABB Engg. Technologies Co. (KSCC), Safat	49.00	100	KWD
LATVIA	ABB SIA, Riga	100.00	2506	LVL
LEBANON	ABB Electrical Co. S.A.L., Beirut	67.00	155000	LBP
LITHUANIA	ABB UAB, Vilnius	100.00	2554	LTL
MALAYSIA	ABB Holdings Sdn. Bhd., Subang Jaya	100.00	4490	MYR
MALAYSIA	ABB Industrial and Building Syst. Sdn. Bhd., Subang Jaya	100.00	3000	MYR
MALAYSIA	ABB Malaysia Sdn Bhd, Subang Jaya	100.00	3500	MYR
MALAYSIA	ABB Manufacturing Sdn. Bhd., Subang Jaya	49.00	700	MYR
MALAYSIA	ABB Transmission and Distribution Sdn. Bhd., Subang Jaya	66.00	3500	MYR
MAURITIUS	Asea Brown Boveri Ltd., Port Louis	100.00	3000	MUR
MEXICO	ABB Mexico S.A. de C.V., Tlalnepantla	100.00	156618	MXN
MEXICO	Asea Brown Boveri S.A. de C.V., Tlalnepantla	100.00	419096	MXN
MOROCCO	ABB S.A., Casablanca	100.00	5400	MAD

3

Country	Name	Group Interest %	Share Capital(in 1000s)	Curr
NAMIBIA	Asea Brown Boveri (Pty) Ltd., Windhoek	100.00	3036	NAD
NETHERLANDS	ABB BV, Rotterdam	100.00	9076	EUR
NETHERLANDS	ABB Capital, B.V., Amsterdam	100.00	9080	EUR
NETHERLANDS	ABB Equity Ventures B.V., Amsterdam	100.00	18	EUR
NETHERLANDS	ABB Finance B.V., Amsterdam	100.00	18	EUR
NETHERLANDS	ABB Group Accounting Services B.V., Rotterdam	100.00	50	EUR
NETHERLANDS	ABB Holdings BV, Amsterdam	100.00	119	EUR
NEW CALEDONIA (FR)	ABB SAS, New Caledonia	100.00	5000	XPF
NEW ZEALAND	ABB Limited, Auckland	100.00	34000	NZD
NEW ZEALAND	ABB Maintenance Services Limited, Auckland	100.00	1	NZD
NIGERIA	ABBNG Limited, Abuja	60.00	162054	NGN
NORWAY	ABB AS, Billingstad	100.00	15100	NOK
NORWAY	ABB Holding AS, Billingstad	100.00	800000	NOK
NORWAY	EIE 1 AS	100.00	2100	NOK
NORWAY	EIE 2 AS, Billingstad	100.00	2100	NOK
OMAN	ABB LLC, Al Hamriya	65.00	150	OMR
PAKISTAN	ABB (Pvt) Ltd., Lahore	100.00	31966	PKR
PANAMA	ABB S.A., Panama	100.00	100	USD
PERU	ABB S.A., Lima	80.60	35469	PEN
PHILIPPINES	ABB, Inc., Paranaque, Metro Manila	100.00	123180	PHP
POLAND	ABB Entrelec Sp. zo.o., Leborska	100.00	4205	PLN
POLAND	ABB Sp. zo.o., Warsaw	99.88	260644	PLN
PORTUGAL	ABB (Asea Brown Boveri), S.A., Paco de Arcos	100.00	4117	EUR
PORTUGAL	ABB Stotz Kontakt Eléctrica, Unipessoal, Lda., Porto	100.00	700	EUR
QATAR	ABB Qatar LLC., Doha	49.00	200	QAR
ROMANIA	ABB SRL, Bucharest	100.00	2300	USD
RUSSIAN FEDERATION	ABB Automation LLC, Moscow	76.20	2200	USD
RUSSIAN FEDERATION	ABB Electroengineering Ltd., Moscow	100.00	39888	RUB
RUSSIAN FEDERATION	ABB Energosvyaz LLC, Moscow	100.00	2750	RUB
RUSSIAN FEDERATION	ABB Ltd., Moscow	100.00	200	USD
RUSSIAN FEDERATION	ABB Moskabel Ltd., Moscow	100.00	7500	USD
RUSSIAN FEDERATION	Asea Brown Boveri Ltd., Moscow	100.00	332	USD
SAUDI ARABIA	ABB Automation Co. Ltd., Riyadh	65.00	10250	SAR
SAUDI ARABIA	ABB Contracting Company Ltd., Riyadh	65.00	40000	SAR
SAUDI ARABIA	ABB Electrical Industries Ltd., Riyadh	65.00	68750	SAR
SAUDI ARABIA	ABB Service Co. Ltd., Al Khobar	65.00	2000	SAR
SAUDI ARABIA	Electrical Materials Center, Riyadh	0.00	500	SAR
SAUDI ARABIA	Saudi SAE Technical Construction Co. Ltd., Riyadh	100.00	10000	SAR
SENEGAL	ABB Technologies S.A., Dakar	100.00	475200	XOF
SERBIA	ABB d.o.o., Belgrade	100.00	100	USD
SINGAPORE	ABB Agencies Pte. Ltd., Singapore	100.00	410	SGD
SINGAPORE	ABB Holdings Pte. Ltd., Singapore	100.00	25597	SGD
SINGAPORE	ABB Industry Pte. Ltd., Singapore	100.00	6845	SGD
SINGAPORE	ABB Power Pte. Ltd., Singapore	100.00	5000	SGD
SINGAPORE	ABB Support Pte. Ltd., Singapore	100.00	11000	SGD
SINGAPORE	ABB Transformers Pte. Ltd., Singapore	100.00	6000	SGD
SINGAPORE	ABB Treasury Center (Asia Pacific) Pte. Ltd., Singapore	100.00	10180	USD
SLOVAKIA	ABB, s.r.o., Bratislava	100.00	10000	SKK
SLOVENIA	ABB D.o.o., Ljubljana	100.00	300	USD
SOUTH AFRICA	ABB Holdings (Pty) Ltd., Sunninghill	80.00	4050	ZAR

4

Country	Name	Group Interest %	Share Capital(in 1000s)	Curr
SOUTH AFRICA	ABB South Africa (Pty) Ltd., Sunninghill	80.00	5000	ZAR
SPAIN	Asea Brown Boveri S.A., Madrid	100.00	33318	EUR
SWEDEN	ABB AB, Västerås	100.00	400000	SEK
SWEDEN	ABB Construction AB, Västerås	100.00	10000	SEK
SWEDEN	ABB Fastighet AB, Västerås	100.00	3000	SEK
SWEDEN	ABB Financial Services AB, Sollentuna	100.00	50000	SEK
SWEDEN	ABB Industriunderhåll AB, Degerfors	51.00	300	SEK
SWEDEN	ABB Norden Holding AB, Västerås	100.00	2344783	SEK
SWEDEN	ABB Technology AB, Västeras	100.00	8001	SEK
SWEDEN	ABB Temporum Fastighets AB, Västerås	100.00	100	SEK
SWITZERLAND	ABB Asea Brown Boveri Ltd, Zurich	100.00	2768000	CHF
SWITZERLAND	ABB Dicoesa, Belfaux	100.00	5000	CHF
SWITZERLAND	ABB Finanz AG, Zurich	100.00	100	CHF
SWITZERLAND	ABB Handels- und Verwaltungs AG, Zurich	100.00	1000	CHF
SWITZERLAND	ABB Immobilien AG, Baden	100.00	20000	CHF
SWITZERLAND	ABB Information Systems Ltd., Zurich	100.00	500	CHF
SWITZERLAND	ABB International Marketing Ltd., Zurich	100.00	1000	CHF
SWITZERLAND	ABB Intra AG, Zurich	100.00	100	CHF
SWITZERLAND	ABB Ltd, Zurich	100.00	4692042	CHF
SWITZERLAND	ABB Management Services Ltd., Zurich	100.00	571	CHF
SWITZERLAND	ABB MEA Participations Ltd., Zurich	100.00	1000	CHF
SWITZERLAND	ABB Research Ltd., Zurich	100.00	100	CHF
SWITZERLAND	ABB Schweiz AG, Baden	100.00	55000	CHF
SWITZERLAND	ABB Sécheron S.A., Satigny	100.00	22000	CHF
SWITZERLAND	ABB Technology Ltd., Zurich	100.00	100	CHF
SWITZERLAND	ABB Turbo-Systems AG, Baden	100.00	10000	CHF
SWITZERLAND	ABB Turbo-Systems Holding Ltd., Baden	100.00	40000	CHF
TAIWAN, PROVINCE OF CHINA	ABB Ltd., Taipei	100.00	200000	TWD
TANZANIA, UNITED REPUBLIC	ABB Limited, Dar Es Salaam	100.00	141000	TZS
THAILAND	ABB LIMITED, Bangkok	100.00	1034000	THB
THAILAND	Asea Brown Boveri Holding Ltd., Bangkok	100.00	1200	THB
THAILAND	Kent Meters (Thailand) Ltd., Bangkok	100.00	2836	THB
TUNISIA	ABB Maghreb Services S.A., Tunis	100.00	83	USD
TUNISIA	L’Ebenoid Production, Tunisie	100.00	180000	TND
TURKEY	ABB Elektrik Sanayi A.S., Istanbul	99.94	12638	USD
TURKEY	ABB Holding A.S., Istanbul	99.95	12844	USD
UGANDA	ABB Ltd., Kampala	100.00	520	USD
UKRAINE	ABB Ltd., Kiev	100.00	5860	USD
UNITED ARAB EMIRATES	ABB Automation L.L.C., Abu Dhabi	49.00	150	AED
UNITED ARAB EMIRATES	ABB FZ-LLC, Dubai	100.00	500	AED
UNITED ARAB EMIRATES	ABB Industries (L.L.C.), Dubai	49.00	5000	AED
UNITED ARAB EMIRATES	ABB Industries FZ, Dubai	100.00	3000	AED
UNITED ARAB EMIRATES	ABB Transmission & Distribution Ltd., Abu Dhabi	49.00	150	AED
UNITED KINGDOM	ABB Combined Heat and Power Ltd., Warrington	100.00	21474	GBP
UNITED KINGDOM	ABB Holdings Limited, Warrington	100.00	203014	GBP
UNITED KINGDOM	ABB Investments Ltd., Warrington	100.00	13	GBP
UNITED KINGDOM	ABB Limited, Warrington	100.00	140000	GBP
UNITED KINGDOM	ABB Service Limited, Warrington	100.00	0	GBP
UNITED STATES	ABB Barranquilla Inc., Princeton, NJ	100.00	0	USD
UNITED STATES	ABB Holdings Inc., Norwalk	100.00	2	USD
UNITED STATES	ABB Inc., Norwalk CT	100.00	1	USD

5

Country	Name	Group Interest %	Share Capital(in 1000s)	Curr
UNITED STATES	ABB Susa Inc., North Brunswick, NJ	100.00	1	USD
UNITED STATES	ABB Treasury Center USA Inc., Norwalk, CT	100.00	1	USD
UNITED STATES	Camelot IS-2 International, Inc. D/B/A Skyva International, Wickliffe	99.97	20694	USD
UNITED STATES	Combustion Engineering Inc., Norwalk, CT	100.00	1	USD
UNITED STATES	KEC Acquisition Corporation, Versailles KY	100.00	49000000	USD
UNITED STATES	Kuhlman Electric Corporation, Crystal Springs MS	100.00	34630000	USD
VENEZUELA	Asea Brown Boveri S.A., Caracas	100.00	30910	VEF
VIET NAM	ABB Ltd., Hanoi	100.00	18871	USD
ZAMBIA	ABB Ltd., Lusaka	100.00	100	ZMK
ZIMBABWE	ABB (Private) Ltd., Harare	100.00	1000	ZWD

6

EX-12.1

Exhibit 12.1

CERTIFICATIONS

I, Joseph M. Hogan, certify that:

1.I have reviewed this Annual Report on Form 20-F of ABB Ltd;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s

auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date:  March 10, 2009

/s/ Joseph M. Hogan

Joseph M. Hogan

Chief Executive Officer

2

EX-12.2

Exhibit 12.2

CERTIFICATIONS

I, Michel Demaré, certify that:

1.I have reviewed this Annual Report on Form 20-F of ABB Ltd;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s

auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date:  March 10, 2009

/s/ Michel Demaré

Michel Demaré

Chief Financial Officer

2

EX-13.1

Exhibit 13.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF ABB LTD, PURSUANT TO

SECTION 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2008 of ABB Ltd (the “Company”) as filed with the U.S. Securities and Exchange Commission (the “Commission”) on the date hereof (the “Report”) and pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Joseph M. Hogan, Chief Executive Officer of the Company, certify, that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Joseph M. Hogan
Name:  Joseph M. Hogan
Title:   Chief Executive Officer

Date: March 10, 2009

EX-13.2

Exhibit 13.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER OF ABB LTD, PURSUANT TO

SECTION 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2008 of ABB Ltd (the “Company”) as filed with the U.S. Securities and Exchange Commission (the “Commission”) on the date hereof (the “Report”) and pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Michel Demaré, Chief Financial Officer of the Company, certify, that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Michel Demaré
Name:  Michel Demaré
Title:   Chief Financial Officer

Date: March 10, 2009

EX-15.1

Exhibit 15.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-129271) of ABB Ltd pertaining to the ABB Employees Share Acquisition Plan — U.S Share Acquisition Sub-Plan of ABB Ltd of our reports dated March 9, 2009, with respect to the consolidated financial statements of ABB Ltd and the effectiveness of internal control over financial reporting of ABB Ltd included in its Annual Report (Form 20-F) for the year ended December 31, 2008.

/s/ Ernst & Young AG

Zürich, Switzerland

March 9, 2009