Environmental liabilities

We are engaged in environmental clean-up activities at certain sites principally in the United States, 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 which extent we are actually obligated to perform. Provisions for these unresolved matters have been set up if it is probable that we have incurred a liability and the amount of loss can be reasonably 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 obligations 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 retained 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, net of tax” in 2000 for our estimated share of the remediation costs for these sites. At December 31, 2011 and 2010, we have recorded in current and non-current other liabilities provisions of $24 million and $181 million, respectively, net of payments from inception of $230 million and $85 million, respectively, as well as certain adjustments. Expenditures charged against the provision were $145 million, $20 million and $11 million during 2011, 2010 and 2009, respectively. We have estimated that during 2012 we will charge expenditures of approximately $6 million against the provision.

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

Financial review

© Copyright 2012 ABB.