DOWNSTREAM OIL, GAS AND PETROCHEMICALS RECLASSIFIED TO CONTINUING OPERATIONS
04 February 2005 - ABB (Power Technologies)

The reclassifications, including restatements of prior years, are required under U.S. generally accepted accounting principles and follow developments in the fourth quarter of 2004.

The reclassification of its downstream business, ABB Lummus Global, follows a U.S. court ruling in December, 2004. That ruling will have the effect of excluding asbestos claims related to ABB Lummus Global from a channeling injunction under a bankruptcy plan designed to resolve the asbestos liabilities of several ABB subsidiaries.

As a result, the planned divestment of ABB Lummus Global will be delayed while ABB pursues other options to resolve ABB Lummus Global's asbestos liabilities. Because of this delay, the business no longer qualifies as a discontinued operation under US GAAP.

ABB reclassified both its upstream and downstream oil, gas and petrochemicals businesses into discontinued operations in 2002, when the company announced its intention to sell the businesses. ABB completed the sale of the upstream business in the middle of 2004.

As a result of the reclassification, the revenues and corresponding earnings before interest and taxes from ABB Lummus Global will be included in the group's operational results. Previously, the unit's revenues and EBIT were excluded from operational results and only its net income or loss was reported in results from discontinued operations.

For the first nine months of 2004, ABB Lummus Global had revenues of approximately $795 million and EBIT of about $8 million, compared to revenues of $1.5 billion and an EBIT loss of $239 million for the same period in 2003. For the full year 2003, ABB Lummus Global had revenues of approximately $1.9 billion and an EBIT loss of about $290 million. For the third quarter of 2004, ABB Lummus Global reported revenues of $249 million, an EBIT loss of $10 million, and a net loss of $12 million.

ABB Lummus Global serves the oil and gas, refining and petrochemicals industries. It comprises mainly an engineering, procurement and construction business for both onshore and offshore activities, as well as a technology business.

In addition, ABB said it is reclassifying most of its power lines business, part of the Power Technologies division – to discontinued operations. The businesses being reclassified are in Brazil, which was closed in the fourth quarter of 2004, and Nigeria, whose sale was completed in January 2005. Also reclassified are the business in Italy, whose sale is near completion and in Germany, where the divestment is under way. ABB said it expects to report a loss on the divestments in the fourth quarter 2004 results.

For the first nine months of 2004, the power lines businesses that are being reclassified to discontinued operations had revenues of $84 million, compared to $145 million in the same period in 2003 and approximately $190 million for the full year 2003. The power lines businesses remaining in continuing operations had revenues in the first nine months of 2004 of about $20 million, compared to $55 million in the same period in 2003 and $66 million for the full year 2003.

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