Note 6 Stockholders’ equity

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Share capital

Legal reserves

Free reserves

Total 2012

(CHF in thousands)

 

Ordinary
reserves

Capital
contribution
reserve

Reserve
for own
shares

Other
reserves

Retained
earnings

Net income

 

Opening balance as of January 1

2,384,186

1,000,000

5,268,717

511,752

20,723

2,203,511

1,094,007

12,482,896

Allocation to retained earnings

 

 

 

 

 

1,094,007

(1,094,007)

Allocation to other reserves

 

 

(921)

 

921

 

 

Release to other reserves

 

 

(1,298,921)

 

1,298,921

 

 

Release to other reserves

 

 

 

(116,478)

116,478

 

 

Dividend payment

 

 

 

 

(1,298,921)

 

 

(1,298,921)

Net income for the year

 

 

 

 

 

 

1,173,180

1,173,180

Closing balance as of December 31

2,384,186

1,000,000

3,968,875

395,274

138,122

3,297,518

1,173,180

12,357,155

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Share capital as of December 31, 2012

Number of
registered shares

Par value
(CHF)

Total
(CHF in thousands)

Issued shares

2,314,743,264

1.03

2,384,186

Contingent shares

304,038,800

1.03

313,160

Authorized shares

200,000,000

1.03

206,000

 

 

 

 

Share capital as of December 31, 2011

Number of
registered shares

Par value
(CHF)

Total
(CHF in thousands)

Issued shares

2,314,743,264

1.03

2,384,186

Contingent shares

304,038,800

1.03

313,160

Authorized shares

200,000,000

1.03

206,000

During 2012, a bank holding call options related to ABB Group’s management incentive plan (MIP), exercised a portion of the options. Such options had been issued by the group company that facilitates the MIP (related to MIP launches during 2006) at fair value and with a strike price of CHF 15.30. At issuance, the group company had entered into an intercompany option agreement with the same terms and conditions to enable it to meet its future obligations. As a result of the exercise by the bank, the Company issued 2,726,800 shares at CHF 15.30 out of own shares.

The ABB Group has an employee share acquisition plan (ESAP). To enable the group company that facilitates the ESAP to deliver shares to employees who have exercised their stock options, the group company entered into an agreement with the Company to acquire the required number of shares at their then market value from the Company. Consequently in November 2012 and 2011, the Company issued, out of own shares, to the group company, 2,344,733 and 20,366 shares at CHF 17.23 and CHF 16.75, respectively.

In 2012 and 2011, the Company transferred 466,622 and 964,943 own shares at an average price per share of CHF 21.03 in both cases to fulfill its obligations under other share-based arrangements.

The average acquisition price of the own shares at both December 31, 2012 and 2011, was CHF 21.03.

The movement in the number of own shares during the year was as follows:

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2012

2011

Opening balance as of January 1

24,332,144

25,317,453

Cancellation

Purchases

Transfers

(5,538,155)

(985,309)

Closing balance as of December 31

18,793,989

24,332,144

The own shares are stated at the lower of cost or fair value. As a consequence of the increase in the fair value, the own shares were revalued at December 31, 2012 to CHF 18.75 from CHF 17.68 per share, resulting in a write-up of CHF 38,674 thousand in 2012.

As a result of the Swiss corporate tax reform II that became effective on January 1, 2011, qualifying contributions from the shareholders exceeding the nominal share capital can be distributed without deduction of Swiss withholding tax. According to the corresponding guidelines, such contributions have been recorded in a specific account (Capital contribution reserve) within the legal reserves in order to benefit from the favorable tax treatment.