and Operating

Financial and Operating Statistics ^1980/81

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VOLVO

VOLVO FINANCIAL AND OPERATING STATISTICS

Inside this book

This edition of Volvo Financial and Operating Statistics has about the same contents as its predecessors: se Ieeted data about the Volvo Group, when available for up to ten years in a row up to and including 1980.

We have included some events and figures from our report for the first three months of 1981 .

Moreover, the merger with Beijerinvest AB and the acquisition of cen- tral parts of White Motor Corp. in the U.S. and resulting measures taken are also mentioned in the text.

A complement will be issued in September 1981 with some further data about these acquisitions.

June 20, 1981

Notes

Figures in Swedish kronor (SEK) may be transialed at the approximate 1980 year-end exchange rates as follows:

SEK 1M =GBP 10.4 M

=USD 4.4 M

=DEM 2.2 M

=FRF 1.0 M

=BEC 0.14 M

= BEF 7.4 M

=CHr 2.5 M

=NLG 2.1 M

During the years 1971-1980, the inflation in Sweden was as follows:

1971 7 percent 1972 6 "

1973 8

1974 11

1975 9

1976 1977 1978 1979 1980

10 13 7 10 12

Volvo shares are traded on the Stockholm Stock Exchange and on the stock exchanges in London, Frankfurt am Main, Dusseldorf, Hamburg and Oslo.

Contents Volvo in brief

Financial Statistics, Consolidated Financial Statistics, AB Volvo Operating Statistics, Consolidated Administration

Financial Reports

Page 1 5 13 19 27

These reports are published regularly by Volvo:

Preliminary Report on the year's operations Definitive Report on the year's operations Annual Report

Interim Report, first quarter Rnancial and Operating Statistics Interim Report, first six months Interim Report, first three quarters

end of January end of March early May end of May early July end of August end of November The above reports as weil as other information may be obtained from:

Financial Relations Department AB Volvo

S-40508 Göteborg, Sweden

Volvo in brief

H4~ and busmes!'>

Volvu acquuEts B0tj€mnvest

S~s OJ qaruzatton ProducOOn facdrttes Capttal expendrtllf"es afld flnanc~:ng

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VOLVO IN BRIEF

The Volvo Group develops, produces and markets products and services for transport and transport related purposes. The Group manufactures mo re than 100 products which are sold in more than 120 countries throughout the world.

History and business

AB Volvo commenced business as a wholly-owned sub- sidiary of AB Svenska Kullagerfabriken, SKF, in 1926 in Gothenburg, Sweden, where tht? Group still has its headquarters and its fargest plant.- The first Volvo pro- ductian ear lett the assembly Iine on April 14, 1927, and the first truck in 1928. The original productian models

were designed to withstand the rigors of Sweden's rough roads and cold temperatures. This emphasis on durability has been a feature of Volvo products ever since.

Following the acquisition in 1931 of Sköfde Gjuteri och Mekaniska Verkstad AB (now Volvo Skövde Plants), which manufaGtures engines for the Volvo vehicles, the Company developed its business from an assembly to a manufacturing operation. This was the first of a nu m ber of acquisitions of manufacturing companies, formingthe foundation for the development of the Volvo Group. In 1941 AB Volvo acquired a majority holding in Svenska Flygmotor AB (now Volvo Flygmotor AB). Köpings Mekaniska Verkstads AB (now part of Volvo Compo- nents Corporation) was acquired in 1942, AB Bolinder- Munktell (now Volvo BM AB) in 1950 and Olofström AB (now Volvo Olofström Plants) in 1969. Volvo BM AB and Volvo Flygmotor AB remain as subsidiaries, while the other campanies have been merged into the Parent Company.

In the 1960s Volvo' s Swedish ear assembly, parts hand- ling and Group head office were transterred to a new camplex at T orslan da, Gothenburg, which has since been expanded in several steps. The smaller Kalmar assembly plant, designed for completely different pro- ductian methods and new forms of work organization, which in effect do away with assembly Iine techniques, was completed in 197 4.

Trucks are assembled at the Lundby Plant, Gothenburg, since the late 1920s, and a new central warehouse was completed at nearby Tuve, in the Gothenburg area, in 1 978. Assembly capacity is cu rrently being expanded at Tuve.

A bus chassis plant in Boråsstarted productian in 1978.

Smaller factories for the manufacture of components have been acquired or established in various com- munities throughout Sweden,-a number of which were selected to meet Government localization policy requirements.

lncreased emphasis on productian outside Sweden- up to now in the form of assembly operations, with the main components being delivered from the Group's Swedish factories- is in response to the need for close centact with major markets. lt also reflects the natural desire of some countries to have part of the manufactur- ing or assembly work carried out locally.

The first stage of a planned assembly plant in Chesapeake, Virginia, the United States, was ready in 1976. The premises are used as an inspection and transshipment point for imported Volvo cars and trucks for the eastern part of the United States.

Following a cooperation agreement concluded in No- vember, 1972, Volvo acquired a ene-third interest in DAF Car BV., the Netherlands, in the beginning of 1 973.

In January 1975, Volvo acquired additionals hares in the company and the name was changed to Volvo Car BV.

In May 1981 a new agreement was signed between Volvo Car Corporation and the Dutch Government cove- ring the financing of future operations of Volvo Car BV.

Under the agreement, the D ute h Government is i nerea- sing its shareholding in Volvo Car BV from 45 to 70 percent through a special issue of new s hares amounting to NLG 250M and Volvo Car Corporation's holding is reduced to 30 percent In accordance with the agreement, this shall be considered to have occurred on January 1, 1981; as a result, effective in 1981, Volvo Car BV is not longer consolidated as a Group company. Vol- vo Car BV thus achieves an independent position but it is intended that it continues to conduct its operations in close cooperation with Volvo Car Corporation in the futu- re.

The agreement also means that Volvo Car BV, during the years 1982-1983, will receive a grant of NLG 95 M from Volvo Car Corporation. In the beginning of 1983 the Dutch Government and Volvo Car Corporation will jointly evaluate Volvo Car BV's situation, earnings and future prospeels and, on the basis of such considerations, will tagether determine how the support program for the years 1984--1986 is to be carried out.

At the end of 1979, Volvo concluded an agreement on industrial cooperation in the passenger ear field with Re- gie Nationale des Usines Renault, France. Through this agreement Renault assumes a minority interest in Volvo Car Corporation, a subsidiary of AB Volvo.

From July 1, 1981 Renaultwill own 15 percent of the share capital in Volvo Car Corporation. Renault has the option to convert a loan of SEK 80 M to shares during 1985-86, after w hi ch its stake in the company would be 20 percent

The agreement with Renault aims at cooperation in re- search, product development and production. This ag- reement will strengthen the competitive ability of both campanies by means of expanded cooperation in the passenger ear field.

A truck and bus assembly plant partiafly owned by Volvo and Brazilian interests was constructed in Brazil. Assem- bly of bus chassis started at the end of 1 979 and truck assembly operations started in the seeond part of 1980.

Volvo, and White Motor Corporation, USA have signed a contract for the purchase by Volvo of the truck manufac- turing assets of White in the spring of 1981.

The purchase includes two assembly plants (Dublin, Vir- ginia and Ogden, Utah) and the cab factory (Orville, Ohio), sales branches plus parts distribution centers and inven- tory. Volvo has also purchased White's modern range of heavy trucks that are adapted to the very specific de- mands of the US m arket.

Further agreements du ring 1980 and the contract with Oy Valmet, Finland, on cooperation regarding farm trac- tors, concluded in 1979, mean that within the foresee- able future, Volvo BM will be a company specializing in construction equipment, supplemented by productian of components for farm tractors and forest machinery.

Volvo Flygmotor concluded cooperation agreements with two U.S. companies, the Garrett Corporation and Gen- eral Electric Co. in 1979 and early 1980, thereby laying the groundwork for greater emphasis on productian of Civilian aircraft engines.

Volvo's petroleum operations were organized in 1979 as part of a newly formed company, Volvo Energy Corpora- tion, in which the Group brought togetherits various interests in the energy field. lt has a share capital of SEK 50 M. Volvo Energy Corporation is active within three main areas:

- Volvo Petroleum -for oil extraction and other oil op- erations.

VOLVO IN BRIEF

Volvo Petroleum A/S was allocated a 1 O percent con- cession in Block 6507/12 on the Halten Bank northwest of Trondheim, Norway, further Volvo Petroleum received a 15 percent concession in Block 22/5 and 15 percent concession in Block 1/4 in the British portion of the North Sea.

Volvo owns one-fourth of the share capita! in the Inter- national Energy Development Corporation, Geneva, whose main purpose is to help developing countries take advantage of their own energy resources.

In March 1981 the shares in Fred. Olsen lnc., an oil prospecting and productian company in the United States, were acquired.

-Volvo Off-shore - equipment and services for the offshore industry.

In March 1980, Volvo Energy bought 30 percent of the shares in the Gothenburg company Consafe, which owns plattorms for offshore operations.

-Volvo Energy systems- for new energy technology, e.g. renewable sources.

Cooperat/on began during 1980 with the Swiss company P Baude & Cie, Geneva with the purpose of obtaining a clearer picture of the prerequisites for commercially apply- ing new technology for the productian and u se of solar cells.

To finance sales in important markets, Volvo has become a major shareholder in finance campanies in Sweden and Norway and owns finance campanies in Switzerland and the Netherlands.

In Sweden, a subsidiary company, Försäkrings AB Vol- via, sells Volvo ear insurance, partlyas an extension to the Volvo tive-year "PV-guarantee" for cars sold and registered in Sweden.

Volvo acquires Beijerinvest

In mid-November 1980, the Boards of Directors of AB Volvo and Beijerinvest AB announced a proposal for a merger of the two companies.

A special meeting of the shareholders, h eld in February 1981, approved the decision of the Board of Directors to make an offer to the shareholders of Beijerinvest AB.

In exchange for each presentshare in Beijerinvest, Volvo offered

- one s hare in Volvo

- two subordinated bond s total i ng SEK 1 05 -a cash payment of SEK 50.

As of April15, the deadline for turning in the Beijerinvest shares, the offer had been accepted by shareholders representing mo re than 96.7 percent of the s hares in Beijerinvest AB. This means that the decision of the merger taken by the Volvo Board of Directors last De- cember will be fulfilled.

The new Board of Directors was appointed at the Annual General Meeting on May 26, see page 28.

The merger will result in a Swedish Group of international dimensions. Volvo's industria/ capacity and international ramifications will be combined with Beijerinvest's de- velopment potential in trading and financial activity. The new Group's areas of operations will be transport vehicles, energy, food, the engineering industry and trad- ing. In addition, financialoperations will conslitute a spe- cial business field.

Sales organization

The Volvo Group has a worldwidesales network with its own sales campanies in Sweden, Den mark, Finland, Norway, Great Britain, West Germany, Switzerland, Au- stria, the Netherlands, France, ltaly, Spain, the United States, Canada, Argentina, Brazil, Peru and Australia.

Through its wholfy-owned subsidiary in Scandinavia, AB Volvator, Volvo owns or has interests in a number of dealersh/ps in the Nordie countries, enabli ng it to partici- pale directly in the structural changes and growth of sales in these important markel areas.

More than 2,500 dealers, same of whom have more than one outlet, sel! Volvo cars to the ultimate customer.

Approximately 6 percent of the dealersh/ps are Jocated in the Nordie area, 59 percent in Europe (excluding the Nordie area) and 22 percent in North America.

Volvo' s share of the Swedish markel for cars in 1980 was about 26 percent, and for heavy trucks and buses over 50 percent Although Sweden is still the most im- portant markel for the Group, the trend has been to- wards a growing percentage of sales in other markets.

Sales abroad have in the last few years exceeded 75 percent of total group sales.

Divided inta market areas, 1980 Group sales were as follows:

SEK M

Sweden 5,927

Nordie area, excluding Sweden 2,728 Europe, excluding Nordie area 9,167

North America 3,014

Other markels 2,967

% 25 11 39 13 12

Total 23,803 100

The Group isattempting to improve the balance be- tween the major markel areas and to increase its pene- tration of additional markets.

In order to develop sales for all product groups in mar- kels outside Europe and North and south America, the Group has created a subsidiary, Volvo International De- velopment Corporation. This u nit evaluates the particular requirements of developing markets, including pos- sibilities for local assembly or manufacture of products.

lt also markets the Group' s products in these areas. The Group considers that its marketing organization is weil equipped to handie the increasing volume of sales ex- pected in the future.

Productian facilities

The Group's principal productian facilities are located in Sweden, where Volvo has 27 factories, including as- sembly plants for cars, trucks, buses, marine and indus- trial engines, construction equipment, farm machinery and aircraft engines, as weil as factories for productian of such vital components as engines, gearboxes, axles,_

brakes and bodies.

Volvo has established wholly-owned assembly plants in Belgium, Great Britain, Canada and Australia, and partly owned plants in the Netherlands, Iran, Malaysia, Thailand, Brazil and Peru.

Assembly work is also carried out in other local faGiiities in Greece, Portugal, Morocco, Kenya, Mozambique, Venezuela and lndonesia.

In cooperat/on with Renault and Peugeot, Volvo has a factoryat Douvrin in France for the manufacture of ear en gines.

Capital expenditures and financing

Over the five-year period 1976--1980, the Group in- vested some SEK 4,600 M in property, plant and equip- ment, the bulk or 70 percent of it in Sweden. lnvestment in plant and company acquisitions has been in the range of 4 to 7 percent of Group sales per year. Most invest- ment has related to the gradual expansion of produclive capacity, but investment in new facilities for technologi- cal development, and for the strengthening of the mar- keting organization, has also been significant.

3

VOLVO IN BRIEF

lovestments by product groups were (SEK M):

C ars

Trucks and buses

Construction equipment and farm machinery

Marine and industrial engines Aircraft engines. etc

Other product groups Group total

1980 1,013 299 57 18 242 28 1,657 lnvestments in property, plant and equipment approved but not yet implemented totaled SEK 2,426 M at year-end 1980. This figure will be ap portioned over the next few years roughly as follows: SEK 1 ,530 M during 1981, SEK 500 M during 1982, and SEK 400 M during 1983 and later. At meetings of the Board of Directors up to the end of March 1981, additional investments were approved to- taling SEK 534 M. This includes ro.ughly SEK 270 M in 1981, SEK 190M in 1982 and SEK 70 M in 1983 and subsequently.

These approved investments were distributed as follows (SEK M):

C ars

Commercial Vehicles Other product groups and joint investments

1,480 885 595 2,960 Capita! expenditures for productian of passenger cars will continue to deminate investments during the next few years, but investments in the Volvo Truck Corpora- tion and the energy field will gr;adually increase.

The Group's operations have in recent years been characterized by a continued high rate of expansion.

During the past five years, Group sales rase by same 50 percent Warking capita! over the period has required considerable additions as the growing business volume and inflationary trends have made heavy demands on capilat for inventories and receivables.

Operating resulls and the Group's policy of consolida- tian have made possible a large measure ofinternally generaled financing of investments. The Group's un- taxed reserves rose by som e SEK 1, 700 M between 1976 and 1 980.

Personnel

At December 31, 1980 the Grouplhad 63,900 employees worldwide, 46,800 of who m were in Swe- den.

Volvo Group, number of employees

Product groups, etc.

Cars Trucks Buses

Construction equipment and farm machinery

Marine and industrial engines Aircraft engines, etc

Volvalor Group's dealers (Nordic countries) Other products and central services

Group total

General plans and goals

Y ear-end 1980 31,700 13,250 1,300

5,750 2,350 2,950 4,300 2,300 63,900

In 1980 the Volvo Group was the targest industrial or- ganization in the Nordie area in terms of sales. The Group's export sales from Sweden accounted for ap- proximately 9 percent of total Swedish exports in 1980.

The Group is the targest manufacturer of cars. trucks and buses in the Nordie area.

As a result of its product development programs the Volvo Group has a competitive range of products which is weil matehed to current markel needs. Il is the policy of the Group to·continue to invest in the development and improvement of transportatio n products with the emphasis on greater economy, quality and safety. The Group has been able to save certain product develop- ment costs as a resull of associations with European au- tomobile and truck manufacturers.

Research and development

The Volvo Group places great emphasis on the quality and safety of its products and maintains an extensive and continuous research program. In recent years expendi- tures for research, development and tooling has been between 5 and 10% of Group sales.

Volvo automotive products comply with the safety and environmental requirements currently applicable in the United States and other markels in which they are sold.

The Company believes that its safety and antipollution standards will keep pace with, or be in advance of, the automotive industry in generaL Il accordingly expects thai ils automotive products will continue to be accept- able under the applicable safety and environmental requirements of all major markets.

An im portant prerequisite for the agreement between Volvo and Renault is thai both campanies should con- duct their activities as equal, independent parties. Through cooperation, their combined development re- sources will be better utilized, while great advantages can be achieved in the form of longer series in manufac- turing joint components.

Early in 1980 Volvo, Renault, P.S.A. (Peugeot-Citroen), Fiat, Volkswagen and British Leyland signed a ca-opera- tive agreement on advanced, long-term research within the field of aulornative technology.

The research work will be earriad out within the existing research organizations of the partners to the agreement as weil as by outside institutions such as universities and research institutes. No new joint research resources will be built up.

In addition to research and development related to auto- motive products, the Company has been a pioneer in improving the working environment of its employees. In particular, new methods of assembly and new materials handling systems have been developed. The Company also markels its expertisa retating to the design and operation of assembly plants.

Shareholders

Volvo has approximately 125,000 shareholders. Less \ than five percent of the Volvo share capita! is owned by persons or institutions outside Sweden. The company has no darninating owner interests. Volvo's shares have been Iisted on the Stockholm Stock Exchange since 1935, on the London Stock Exchange since 1972, on the Stock Exchanges of Frankfurt/Main, Dusseldorf and Hamburg since 1974 and on the Oslo stock Exchange since June, 1979.

....

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Financial Statistics, Consolklated

-~----..,---··---~-~

~ncome Slaterw;:nts 1(::71-1980

Bamce ~ 1971- 1960 lnvestrnents 1971-lDOO Statemoots of chanq.es n1 F1naociai Posfuoo 1974-1980 Capiilahzat!on D<Jc 31 1980 Profltabdf!y 1973--1900 Prof1t ^ffiafgln 1971-1000 Key h'lal'lcral Rat10s 1814-1900

Page 6 7

8 9 10

S&les by proouct

grou.ps

1 971-1900 11 S<Ues by m arket areas

Ex ports kom Sweden lncorne by product groops

1'.371 ·-1980 1971-1 !;1-00

1975-1930

Quartefly $W:'S afY.l ITlCO:n& 1!J73-1 !){31 12

----~----·

FINANCIAL STATISTICS, CONSOLIDATED

1971 1972 1973 1974 1975 1976 1977 1976 1979 1980

lncome Statements for 1971-1980 {SEK M)

Sales 6,104 7,346 8,986 10,537 13,692 15,743 16,168 19,133 23,472 23,803

Less: Cost of operations 5,496 6,389 7,834 9,477 12,563 14,430 14,935 17,625 21,521 22,081

Operating income before depreciation 608 957 1 '152 1,060 1,129 1,313 1,233 1,508 1,951 1,722

Less: Provision for depreciation 166 237 285 358 488 558 599 658 649 676

Operating income after depreciation

according to plan 442 720 867 702 641 755 634 850 1,302 1,046

Add: Interest received less paid 19 36 40 {7) {142) (173) (170) {175) (72} (56)

Other income/(expenses) 2 2 2 42¹) 2

o

^{(113)21 (29)3l 14} 17

lncome belare allocations and taxes 463 758 909 737 501 582 351 646 1,244 1,007

Less: Allocation to/(reallocation from):⁴l

General inventory reserves 85 102 179 384 375 343 49 122 460 177

Extra depreciation 39 21 41 (11) 32 3 (21) (74) (11 0} 252

Write-down of shares 10 20 10 23

lovestment reserves (including

inventory investment reserves) 89 212 191 30 42 91 103 223 296

Other allocations 5) 118 (8) (14) 6 20 2 149

lncome belare laxes 240 403 488 193 60 159 317 475 669 133

Less:Taxes 113 228 240 86 74 112 130 151 240 83

Minority interests in net resulls 1 2 2 {22} (16) (11) 12 13 12

Net income 127 174 246 105 8 63 198 312 416 38

'l In this amount an extraordinary profit made by Volvo BM on sales of fixed assets is included. (SEK 40 M)

2) In this amount extraordinary capital gains on sales of fixed assets of SEK 40 M and extraordinary ex- change losses on loans. of SEK 154 M have been included.

•)In this amount exchange losses of SEK 31 M have been included.

4) All allocations except the write-down of shares re- present untaxed reserves provided by the legislatian in Sweden and som e other countries.

5) Special investment reserve, work environment re- serve and extra appropriation to insurance reserve.

FINANCIAL STATISTICS, CONSOLIDATED

1971 1972 1973 1974 1975 1976 1977 1978 1979¹) 1980

Balance Sheets at year-end 1971-1980 (SEK M) Assets

Current assets

Cash, bank and short-term notes 981 1,298 1,578 1,414 1,589 1,837 1,868 2,385 3,515 3,592

Accounts receivable 1,222 1,481 1,743 2,102 2,918 3,336 3,929 3,888 4,450 4,618

lnventories 1,857 2,014 2,588 3,922 5,137 6,015 6,643 6,903 7,921 8,783

Current assets 4,060 4,793 5,909 7,438 9,644 11 '188 12,440 13,176 15,886 16,993

Blocked investments accounts

with Bank of Sweden 20 32 128 127 115 93 115 54 64 38

Fixed assets 1,851 2,326 2,777 3,271 4,273 4,424 4,435 4,482 5,042 6,088

Total assets 5,931 7,151 8,814 10,836 14,032 15,705 16,990 17,712 20,992 23,11 g

liabilities and shareholders' equity

Current liabilities 2,534 2,894 3,717 4,749 6,081 6,898 7,174 7,295 8,897 9,737

Long-term liabilities 648 883 1,049 1,447 2,583 2,923 3,661 3,867 4,086 4,498

Untaxed reserves 1,776 2,109 2,581 3,115 3,563 3,984 4,019 4,194 4,848 5,717

Minority interests in capita/ 5 11 8 10 80 65 185 199 238 327

Shareholders' equity 968 1,254 1,459 1 ,515 1,725 1,835 1,951 2,157 2,923 2,840

Total liabilities and shareholders' equity 5,931 7,151 8,814 10,836 14,032 15,705 16,990 17,712 20,992 23,119

Assets pledged 1,029 1,049 1,523 1,876 2,151 2,361 2,833 2,758 2,665 2,921

Contingent liabilities 385 303 213 402 621 531 855 1,304 1,667 1,972

lnvestments in property, plant and equipment by market areas 1971-1980 (SEK M)

Sweden 487 466 507 607 674 407 448 418 729 1,405

Nordie area, excluding Sweden 11 14 36 27 12 4 19 66 32 22

Europe, excluding Nordie area 83 128 80 107 265 197 153 170 184 203

North America 17 35 37 43 54 86 19 11 9 13

Other markels 14 9 18 38 29 10 17 3 8 14

Group total 612 652 678 822 1,034 704 656 668 962 1,657

lnvestments in property, plant and equ1pment by product groups (SEK M)

C ars 265 342 654 1,013

Trucks and buses 261 188 174 299

Construction equipment and farm

machinery 74 65 48 57

Marine and industrialengines 19 27 23 18

Aircraft engines, etc 25 36 50 242

Other product group and joint

investments 12 10 13 28

Group total 656 668 962 1,657

') Effective from 1980, new principles are used in above have been translate d in accordance with the transiating the accounts of foreign subsidiaries to new principles. For t w lhtr information. see page 38 Swedish kronor. Balance Sheet figures for 1979 in the Annual Report 1980. 7

FINANCIAL STATISTICS, CONSOLIOATED

1974 1975') 1976 1977 1978 1979³) 1980

statements of Changes in Financial Position 1974-1980 (SEK M)

Funds supplied

lncome before allocations and taxes + 737 + 501 + 582 + 351 + 646 +1,246 +1,007

Depreciation charged against income + 358 + 487 + 558 + 599 + 658 + 650 + 676

Minority interests in income 1 + 22 + 16 + 11 12 13 12

Taxes 86 74 112 130 151

-

^{240 83}

Withdrawals from/allocations to blocked

accounts in Bank of Sweden + + 12 + 22 22 + 61 11 + 26

Funds supplied from year's operations 1,009 948 1,066 8092) 1,202 1,632 1,614

Decrease in long-term receivables + 9

lncrease in long-term liabilities + 398 + 851 + 340

+

^{739 + 206 + 250 +412}

Minority interest in shareholders'

equity of subsidiaries + 2 3 15 + 120 + 13 + 14

+

⁸⁹

New share issue + 100

+

¹⁸³

⁺

^{137 + 212}

Changes in composition of Group etc. + 7 25 + 7

+

33 14 ±

o

+ 97

Total funds supplied 1,516 1,954 1,535 1,701 1,407 2,117 2,212

App/ication of funds

lnvestments in property, plant and

+1,034

equipment, including company acquisitions + 871 + 740 + 656

+

⁶⁷⁷

+

^{962 +1 ,665}

lnvestments in shares and partiGipatians + 81 + 4 + 10

+

²⁶ + 24 + 66

+

¹²²

Less: Residua! value of assets sold and scrapped 65 65 57 67 40 53 32

lncrease in long-term receivables + 31 + 21 + 21 + 5 + 25

+

²¹

Dividend paid + 75 + 79 + 94 + 106 + 106 + 124 + 169

Total lunds applied 993 1,073 808 726 792 1,099 1,945

Change in workjng capita/ + 523 + 881 + 727

+

975

+

615 +1.018 + 267

Specification of change in working capita/

lnventories +1,334 + 887 + 878 + 628 + 260 + 960 + 863

Current receivables + 387

+

^{663 + 418 + 592 41 + 562 + 168}

Current liabilities (minus indicates an increase) -1,033 772 817

-

²⁷⁶ 121 -1.634 841

Bank accounts, cash and short-term nates

-

165 + 103 + 248 + 31 + 517 +1,130 + 77

Total change in working capita! + 523 + 881

+

727 + 975

+

^{615 +1,018}

+

267

The degree of self financing may be expressed as:

Funds supplied from year's operations, less dividend

x

100= 102% 87% 136% 113% 160% 156% 81%

lnvestments in property, plant, equipment, shares net

1) In January 1975 AB Volvo lncreased its holding of ²) In evaluating lunds supplied from the year's 3) Effective from 1980, new principles are used in shares in Car SV to 75 percent The 1975 figures have operations and the degree of self-financing, it should transiating the accounts of foreign subsidiaries to beenshownon the basis of a 75 percent, holding be noted that income before allocations and taxes Swedish kronor. The figures for 1979 above have by AB Volvo of shares in Ca r BV as at 31st was charged with write-ups on long-term Joan been translatad in accordance with the new principles.

December 1974. This means that the above state- liabilities in the amount of SEK 129 M. For tunher information, see page 38 in the An nu al

ment shows lunds supplied and application of lunds Repor11980.

for the Group in 1975 excluding the acquisition of Volvo Car SV.

FINANCIAL STATISTICS, CONSOLIDATED

Capitalization at December 31, 1980

The following table sets out the capitalization of the Volvo Group show1ng long-term debt and Total long-term debt of the Volvo Group 3,460 sharehorders' equity as at December 31, 1980.

SEK

Long-term debt of the Volvo Group millions Pension Ilabillties 1,038

Parent Company Deferred in come tax Ilability 2,858

Minority interests 327 4,223

Unsecured

CHF 60 million 8% Bands 1975/90 at a price of 991/2% 143 Shareholders' equity

CHF 30 million 4 1/2% Not e s 1977/82 at a price of 100% 75 Share capita! 1,059

SEK 75 million 71/2% Bands 1971/91 at a price of 100% 47 ^{Legal reserves} 1,149

SEK 100 million 7 3/4% Bands 197 4/89 at a price of 100% 61 Retained earn1ngs 632

SEK 100 million 91/4% Bands 1975/90 at a price of 100% 60 Special allocations 5,717

SEK lOO million 9 3/4% Bands 1977/93 at a price of 100% 80 ^{Less deferred in} come tax Ilability (2,858) 5,699

USD 25 million 8% Bands 1972/87 at a price of 1001/2% 83 Total capitalil!:ation 13.382

USD 25 million 9 1/2% Bands 1975/85 at a price of 99 1/2% 93

USD 6 milllon 9 3/4% Bands 1975/85 at a price of 100% 18

USD 35 million 8% Bands 1977/87 at a price of 100% 122 Maturities of the totallang-term debt are due m:

NLG 50 million 8 3/4% Bands 1975/85 at a price of 100% 82 1982 431

NLG 22.5 million 9% Bank loan 1974(89 42 1983 372

NLG 15 million 815/16% Bankloan 1974/86 23 1984 332

NLG 25 million 9 7/8% Bankloan 1976/91 49 1985 398

NLG 25 million 9 7(8% Bankloan 1976/91 49 1986 and thereatter 1,927

BEF 150 million 8114% Bankloan 1978/82 19

BEF 100 million 81/3% Bankloan 1978/82 9 ^Total 3,460

LUF 250 million 8% Bank loan 1978/86 36

LUF 500 million 9 3/4% Bands 197g/87 70

SEK 150 million 11 1/4% Subordinated loan 1979/94 130

Other 78

Total unsecured 1,369

Secured 180

Subsidiary Campanies Unsecured

Volvo Car Corporation

NOK 20 million 10 3/4% Bank loan 17

FRF 74 million 7 3/4% Bankloan 74

SEK 160 million 8 3/4% Private loan 160

Other 31

Volvo Car B.V.

NLG 25 million 8 5/8% Private loan 1970/85 26

NLG 25 million 7 3/4% Private loan 1971/86 31

NLG 25 million 71/4% Private loan 1g72/87 36

NLG 25 million 11% Private loan 1974/g4 51

NLG 50 million g1/2% Private loan 1g75/2000 82

NLG 25 million 91/4% Private loan 1976/91 51

NLG 25 million 8 7/8% Private loan 1g77/92 51

NLG 5 million 9 1/2% Private l oan 1975/2000 10

NLG 5 million 91/2% Private loan 1975/2000 10

BEC 3oo million g 3/4% Private loan 1974(85 22

BEC 300 million 9 3/4% Private loan 1976/87 30

BEC 135 million g 3/4% Private loan 1g79/92 19 _*)~n the indivJdual group companies, liabilities in foreign FRF 61.6 million 8 3/8% Export credit 1g75/81 7 currencies are translated to Swedish kronor at the

Other 3 ^h1gher of the rates w hen the liabilities we re in c ur re d o r

year-end rates. In the Consolidated financialstatement of

Volvo BM AB ^the Volvo Gm up allliabilities are. ho~Yever. transialed at

SEK 50 million g1/4% Bands 1976/91 at a price of 100% 33 ^{year-end rates}

SEK 75 million 9 3/4% Bands 1977/92 at a price of 100% 55

SEK 35 million 71 (2% Bands 1972/93 at a price of 100% 24

Other 17

Other subsidiar1es 422

T otal u nsecu red 1,262

Secured 661

Exchange differences• ./. 12

Totallang-term debt of the Volvo Group 3,460 9

FINANCIAL STATISTICS, CONSOLIDATED

1971 1972 1973 1974 1975 1976 1977

Profitability¹l, 1973--1980 (percent)

C ars 14 6 22) 2

o

Trucks and buses 15 13 11 11 11

Construction equipment and farm machinery 9 14 11 7 3

Marine and industrial engines 18 12 3 5 4

Aircraft engines, etc. 11 11 11 10 13

Group total 12 9 6 6 5

Profit margln³l1971-1980 (percent)

C ars 8 11 9 3 14J 1 - 1

Trucks and buses 10 11 12 11 7 9 11

Construction equipment and farm machinery 3 5 9 12 9 3 - 1

Marine and industrial engines 11 16 15 9 -1 1 1

Aircraft engines, etc. 10 11 15 15 15 19 21

Group total 7.6 10.3 10.1 6.6 3.7 3.7 2.9

Key Financial Ratios 1974-1980⁵1

Interest coverage (multiple)6l 4.2 2.3 2.2 1.8

Interest net as percentage of sales 7J - 0.1 - 1.0 - 1.1 - 1.1

Return on working capital excl. noninterest bearing short-term debtBJ 14.1 10.0 9.8 8.7

Return after taxes on shareholders' equity⁹J 11.6 7.5 7.8 5.8

Cashflowas percentage of saleslOJ 9.6 6.9 6.8 5.0

Change in interest bearing debt (SEK M) 1,003 1,864 575 497

Percentage of self-financing11J 102 87 136 113

Percentage of risk bearing equity capitaJ1²l 42.8 38.3 37.5 36.2

Capital turnover (multiple)13J 1.07 1.10 1.06 0.99

loventory as percentage of sales 37 38 38 41

Accounts receivable as percentaga of sales 20 21 21 24

lovestments in property, plant and equipment as percentage of sales 7.8 7.6 4.5 3.8

1) The profitabi/ity of the prod u et g ro u ps has been calculated on the basis of a model developed with in the Volvo G ro up w h e re by product gro u p earn in g s are related to capital employed. Extraordinary income and expenses are not i ncluded in the earn- ings figures.

In determining capital employed for each product group, all assets except cash and short-1erm notes have been included with no deduction for liabilities.

Assets have been determined on the basis of the net current replacement value of property, plant and equipment.

The stated profitability for the Group shows the return on total capital employed, including cash and short-term notes.

') Excluding products from Volvo Car B.V. the return on investments is 4 percent

3) Profit margin is d elined at Volvo as income before allo- cations and taxes, adJusted for extraordinary income and expe n ses, as a perce ntage of sales.

4 ) Excluding products from Volvo Car B. V. the income is 3 percent

"l The calculation for 1980 is bas ed on the exchange rates at year-end.

6) Interest coverage ratio is calculated as operating income after de preciatio n, plus interest income, plus dividend income divided by interest expenses.

7 ) Interest n et as percentage of sales is calc ulated as interest income less interest expenses, divided by sales.

•) Return on working capital excl. noninterest bearing shortterm debt is calculated as income betare alloca- tians and 1axes adjusted for extraordinary income and expenses. plus interest expenses divided by average total assets less non-interest bearing short term debts.

9 ) Return after laxes on ·shareholders' equity is calculated as income before allocations, adjusted for extraordinary income and expenses and mulliplied by 0.5, divided by average shareholders' equity, minority interests and 50 percent of u ntaxed reserves.

1978 1979 1980

4 5 1

11 12 15

1 7 6

3 1 6

10 9 11

5 7 7

2 3 - 2

10 11 14

5 4 4

5 - 1 7

18 12 15

3.4 5.3 4.2

2.2 3.0 2.2

0.9 0.3 0.2

9.8 13.8 12.0

7.5 12.8 8.7

6.3 6.9 6.8

-332 521 823

160 156 81

37.0 36.9 38.4

1.10 1.22 1.08

36 34 37

20 19 19

3.6 4.1 7.5

10) Cash flow equals lunds supplied from year's opera- tions as shown in statement of Changes in Financial Position on page 8.

11)The degree of self-financing may be expressed as:

Funds supplied from years' operations less dividend

x 100 lnvestments i n fixed assets, s hares etc., n et.

12) Percentaga of riskbearing equity capital is calculated as equity capita! and minority capita! plus total untaxed re- serves, divided by total assets.

") Capital turnover is calculated as sales divided by aver- age total assets.

FINANCIAL STATISTICS, CONSOLIDATED

1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

Sales by product groups 1971-1980 (SEK M)

C ars 3,640 4,332 5,132 5,569 7,525 8,441 8,310 10,257 12,617 11,980

Trucks 1,127 1,396 1,854 2,307 2,990 3,634 4,059 4,830 5,991 6,562

Buses 61 112 134 211 321 428 447 455 632 794

Construction equipment and farm

machinery 745 819 986 1,349 1,588 1,778 1,729 1,773 2,242 2,259

Marine and industrial engines 256 335 424 507 601 747 802 911 996 1,128

Aircraft engines, etc. 189 255 290 330 372 379 433 504 571 637

Other products 86 97 166 264 295 336 388 403 423 443

Total 6,104 7,346 8,986 10,537 13,692 15,743 16,168 19,133 23,472 23,803

Sales by market areas 1971-1980 (SEK M)

Sweden 1,923 2,209 2,703 3,385 3,993 5,009 4,716 4,874 5,721 5,927

Nordie area excluding Sweden 947 1,043 1,258 1,388 1,625 2,069 2,266 2,453 3,079 2,728

Europe excluding Nordie area 1,487 2,054 2,543 2,594 3,848 4,741 5,382 7,272 9,252 9,167

North America 1,271 1,406 1,592 1,851 2,165 1,708 1,855 2,357 2,894 3,014

Other markets 476 634 890 1,319 2,061 2,216 1,949 2,177 2,526 2,967

Total 6,104 7,346 8,986 10,537 13,692 15,743 16,168 19,133 23,472 23,803

Exports from Sweden 1971-1980 (SEK M) 3,058 3,728 4,477 5,448 6,789 6,850 7,081 9,013 11,607 11,650

lncome after financial income and expenses by product groups 1975-1980 (SEK M)

C ars 85 100 -105 190 340 -195

Trucks and buses 225 350 480 520 720 1,010

Construction equipment and farm machinery 140 60 - 10 - 85 100 90

Marine and industrial engines -10 10 10 - 50 - 5 75

Aircraft engines, etc. 55 70 95 90 65 90

Other products 6 - 8

-

^{5 - 19 24}

-

⁶³

~ Group income before

allocations and taxes 501 582 465 646 1,244 1,007

11

FINANCIAL STATISTICS, CONSOLIDATED

1973 1974 1975 1976 1977 1978 1979 1980 1981

Quarterly sales and income 1973-1981

·sales (SEK M)

1st quarter 2,078 2,312 3,028 3,461 3,428 4,260 5,320 5,921 5,7616)

2nd quarter 2,097 2,607 3,283 3,858 4,123 4,854 6,376 5,651

3rd quarter 2,246 2,719 3,474 4,099 3,826 4,367 5,128 5,578

4th quarter 2,565 2,899 3,907 4,325 4,791 5,652 6,648 6,653

Whole year 8,986 10,537 13,692 15,743 16,168 19,133 23,472 23,803

lncome atter financial income and expenses (SEK M)

1st quarter 280 235 166 162 129 151 235 385 2806)

2nd quarter 208 228 119 184 151 235 410 220

3rd quarter 214 111 63 144 49 112 216 201

4th quarter 207 123 153 92 136 148 383 201

Whole year 909 697 501 582 465¹⁾ 646²> 1,244³! 1 ,007⁴⁾

Profit margin (income after financial income and expenses as a percentage of sales)

1st q u arter 13.5 10.2 5.5 4.7 3.8 3.5 4.4 6.5 4.96)

2nd quarter 9.9 8.7 3.6 4.8 3.7 4.8 6.4 3.9

3rd quarter 9.5 4.1 1.8 3.5 1.3 2.6 4.2 3.6

4th quarter 8.1 4.2 3.9 2.1 2.8 2.6 5.8 3.0

Whole year 10.1 6.6 3.7 3.7 2.9 3.4 5.3 4.2

Adjusted income in SEK per share⁵)

1st q u arter 11.40 9.40 6.30 5.20 3.70 4.30 6.70 9.10 6.606)

2nd quarter 8.50 9.10 4.60 5.90 4.30 6.60 11.60 5.20

3rd quarter 8.70 4.20 2.00 4.10 1.40 3.20 5.10 4.70

4th quarter 8.30 4.70 4.90 2.60 3.80 4.20 9.00 4.80

Whole year 36.40 26.70 16.00 16.50 13.20 18.30 29.40 23.80

Whole year, adjusted income before

allocations and taxes 36.40 28.20 16.00 16.50 9.90 18.30 29.40 23.80

') After allocallon of a special grant from the Dutch ') lncluding a special grant from the Dutch •) Adjusted in come is d elined as in come alter financial in- ⁶) Not including Volvo Car BV.

Govemment to Volvo Car B. V., in total SEK 193 Government to Volvo Car B. V., SEK 104M with come and expenses reduced by a tax Ilability of 50 per·

M, with 25% to each quarter. SEK 32 M lor the three first quarters and cent. The calculation is based on the number of shares 2}Afler allocation of a special'grant from the Dutch SEK 72 M for the fourth quarter. outstanding at the end of each period.

Government to Volvo Car B .V .. SEK 199 M with 4 ) lncluding a special grant from the Dutch Government to

25% to each quarter. Volvo Car BV, SEK 129 M.

..

Financial Statistics, AB Volvo

Sha! e c&:pttcti Ouotatlons o~ '*"ll•o shares

Dat~ pe-r share Nomber

m

shar&holders Dt:stnbution of snares Too 1::\fgest marehoidefs Untaxed resei'VtliS

1~6-1980

Hl71-1981

1971-1~

1971-1980 Doc 1980

M~ 1'i81

Page 14 15

16

17

FINANCIAL STATISTICS, AB VOLVO

---

AB Volvo, share capital1926-1980 (in SEK)

Share capita! Nu m ber Dividend of shares pershare

1926 200,000 2,000

1930 4,200,000 42,000

19351) 13,000,000 260,000

1937 18,200,000 364,000

1938 18,200,000 364,000

1942 20,000,000 400,0002)

1943 25,000,000 500,000

1945 37,500,000 750,000

1951 56,250,000 1 '125,000 1952 75,000,000 1,500,000 1954 75,000,000 1,500,000 1955 90,000,000 1,800,000 1959 108,000,000 2,160,000 1960 114,000,000 2,280,000 1961 114,000,000 2,280,000 1962 142,500,000 2,850,000 171,000,000 3,420,000 1963 171,000,000 3,420,000 1964 228,000,000 4,560,000 1965 228,000,000 4,560,000 1966 273,600,000 5,472,000 342,000,000 6,840,000 1967 342,000,000 6,840,000 1968 342,000,000 6,840,000 1969 342,000,000 6,840,000 1970 513,000,000 10,260,000 19721) 598,500,000 11,970,000 607,180,000 12,143,600 613,430,0004) 12,268,600 1973 624,505,000 12,490,100 1974¹! 653,755,000 13,075,100 1975 784,506,000 15,690,120 1976 882,569,250 17,651,385 1978 882,569,250 17,651,385 19791) 1 ,059,083,1 00 21,181,662

')The par value was origlnally SEK 100 but was changed to SEK 50 in 1935. lntroduction on the Stockholm Stock Exchange in 1935, on the London Stock Exchange in 1972, on Hamburg, DusseJ- dort and Frankfurt Stock Exchanges in 1974 and on Oslo Stock Exchange in 1979.

2) Rights issue shares not dividend hearing in 1942.

2.50 2.50 3.- 3.- 3.- 3.- 3.- 3.- 3.60 3.- 3.- 3.- 3.75

3.- 4.- 3.- 3.90

3.50 4.50 5.50 6.- 4.-

4.- 6.- 6.- 6.- 6.- 7.- 8.-

Dividend total

rights issue 20:1 SEK 100 650,000 rights issue

910,000 rights issue 2:5 SEK 50 1,092,000

1,092,000 rights issue

1,500,000 rights issue 1 :4 SEK 50 2,250,000 rights issue 1:2 SEK 50 3,375,000 rights issue 1:2 SEK 50 4,500,000 scrip issue 1 :3

5,400,000

5,400,000 scrip issue 1 :5 6,480,000 scrip issue 1 :5 6,840,000 rights issue3J 8,550,000

rights issue 1 :4 SEK 60 10,260,000 scrip issue 1:5

13,680,000

13,680,000 scrip issue 1 :3 17.784,000

rights issue 1 :5 SEK 75 23,940,000 scrip issue 1:4

30,780,000 37,620,000 41,040,000

41,040,000 scrip issue 1 :2

rights issue 1 :6 SEK 80 rights issue3l

49,074,400 rights issue3l 74,940,600 rights issue3J

78,450,600 Special non-public issue5)

94,140,720 rights issue 1 :5 SEK 70 1 05,908,31

o

rights issue 1 :8 SEK 70 123,559,695

169,453,296 rights issue 1 :5 SEK 60

')New Volvo sh a res issued as payment for acquisition of other companies.

•J The regisiered share capita! of the Company amounted to SEK 612.660 M at the end of the year. Alter registration of all share increases decided upon du ring 1972 the share capita!

amounts to SEK 613.430. M.

")A special non-public issue of newshares to the National Pen- sion Jnsurance Fund, Fourth Fund Managing Board at SEK 171.

The share capita! of AB Volvo at December 31, 1980, SEK 1 ,059,083, 100 was divided into 9,397,620 A- shares and 11,784,042 B-shares, each with a par val u e of SEK 50. Each of theA-shares carries one vote and each of the B-shares carries one-tenth of a vote but in all other respects they rank pari passu with the A- s hares.

Out of Volvo's shares on ly 1,645,512 "A" shares and 2,540,619 "B" shares, known as free or unrestricted shares ( representing less !han two-fifths of the share capita! and carrying less than one-fifth of the votes for the totalshare capita!) may be acquired either by sub- scription or transfer by

D any non-Swedish citizen, corporation or institution;

D any Swedish trading partnership with a non- Swedish partner,

O any Swedish cooperative association;

O any Swedish limited company issuing bearer shares; or

O any other Swedish limited company whose Articles of Association do not contain certain restrictions on the acquisition of certain assets.

Unrestricted s hares are designaled "Fria" on the re la- tive share certificates. The remaining Volvoshares are know as restricted shares and may only be acquired by subscription or transfer by Swedish citizens and certain Swedish campanies or associations. These shares are designaled "Bundna" on the share certificates. As a consequence of the offer to Beijerinvest sharehol- ders in 1981 Volvo will increase ils share capita! by a maximum of SEK 378,234,050 through the issue of a maximum 181,125 A-s hares, all restricted, and a maximum of 7,383,556 8-shares, of which a maximum of 1 ,326, 773 will be unrestricted.

FINANCIAL STATISTICS, AB VOLVO

Quotations of Volvoshares on the Stockholm Stock Exchange, 1971-May 1981.

(c/osing price, highsand lows per months, in SEK}

Par value: SEK 50 Source: Aktiv Placering ab

Data per Share 1971-1980 adjusted for issues of new shares Restated net income, SEK1l Dividend, SEK

Share price at year-end, SEK P/E at year-end

Dividend yield at year-end, percent Growth rate of dividend, percent

Number of shareholders, Dec. 31

') Restated net income per share is defined as consolidaled income before allocations and taxes reduced by a tax fiability of 50 percent, divided by the number of shares outstanding at the respective year-ends.

j

N 1:5-70

1~0

1971 1972 1973 1974

16.90 25.60 30.10 23.30

3.00 3.31 4.97 4.97

173 231 169 101

10 10 6 5

1.7 1.4 2.9 4.9

o

10.2 50.0

o

82.500 99,300 108,000 116,900

Ad justments for issues have been made. On calcu- lating the resulls for 1974 a capita! gain of SEK 40 M by Volvo BM has been excluded. For 1977 a capita! gai n of SEK 40 M and exchange losses on loans of SEK 154 M have been excluded.

.

jN 1:5-60

1980 1981

1975 1976 1977 1978 1979 1980

14.40 15.80 12.60 17.50 29.40 23.80

5.43 5.74 5.74 6.70 8.00 8.00

125 89 56 72 71 85

9 6 5 4 2 4

4.3 6.4 10.2 9.3 11.3 9.4

9.4 5.6

o

^16.7 19.4

o

121,000 124,300 127,600 126,000 127,700 124,800

15

FINANCIAL STATISTICS, AB VOLVO

Distribution of shares, December 31, 1980

This table has been compiled primarily from information No. of Percent of Total No. of Percent Average No.

provided by Värdepapperscentralen VPC AB sh are- all share- shares owned of share of shares

(the Swedish seeurities Register Center) holders holders in size class capita l per holder

Volvo shareholders with:

Max 100 shares 95,500 76.5 3,164,000 14.9 33

Min 1 01 , max 500 shares 24,800 19.9 5,182,000 24.5 209

Min 501, max 1,000 shares 2,800 2.2 1,951,000 9.2 709

Min 1 ,001, max 1 0,000 shares 1,400 1.1 3,156,000 14.9 2,178

More than 10,000 shares 106 0.1 7,719,000 36.4 72,819

Share coupen certificates not yet

exchanged, approx. 200 0.2 10,100 0.1 50

Total, approx. 124,800 100.0 21,181,662 100.0 170

\ In the beginning of J une 1981, following the aquisition of Beijerinvest AB, the number ~ of shareholders was so me 140,000.

Nu m ber Percent Nu m ber Percent of shares of share of votes of total

The 15 fargest shareholders, May 31, 1981 • capita! v o tes

Allmänna Pensionsfonden, Fjärde Fondstyrelsen (The National

Pension lnsurance Fund, Fourth Fund Managing Board) 683,595 2.5 581,209 5.1

Svenska Handelsbankens Pensionsstiftelse (pension fund of Svenska Handelsbanken) 598,742 2.1 544,022 4.8

AB Custos (a Swedish investment company) 372,000 1.3 362,600 3.2

Skandia Liv/Skandia Sak (a Swedish insurance company) 1,037,943 3.7 304,520 2.7

Mr Anders Wall 213,514 0.8 213,514 1.9

Svenska Personal-Pensionskassan (one of the largest Swedish private pension funds) 455,440 1.6 201,737 , .8

Beijerinvest AB 321,334 1.2 149,434 1.3

Folksam ömsesidig Försäkring (a Swedish insurance company) 340,500 1.2 145,055 1.3

Industrivärden AB (a Swedish investment company) 307,000 1 .1 140,121 1.2

Boliden AB (a Swedish mineral, metaland chemical company) 593,000 2.1 134,616 1.2

Säfveåns AB (a Swedish investment company) 163,000 0.6 115,000 1.0

Promotion lnvestment AB 116,600 0.4 97,466 0.9

Bonnier & Bonnier Independent Finans AB 194,163 0.7 96,639 0.8

Mr Ulf Lindem 90,000 0.3 90,000 0.8

Carnegie Fondkommission AB 100,020 0.4 77,650 0.7

') This year the shareholders have been rated after their percentage of total votes.

Total number of shares and votes used In the calculations are 27,878,421 resp. 11,406.950.

'

l

FINANCIAL STATISTICS, AB VOLVO

Untaxed reserves General

A brief presentation of "Special allocations"/"Untaxed reserves" appears on page 54 of the 1980 Volvo Annual Re port.

For purposes of international comparisons between companies, about hall of !hese reserves may be re- garded as a deferred income tax liability, and about hall as retained earnings.

The four most im portant reserves are described below in g reater detail than in the Annual Repor!.

General inventory reserve

Volvo's inventories are valued at the lower of cost (FIFO) or market. This value is, however, adjusted for tax purposes through the General inventory reserve.

The following figures are from page 44 of the 1980 Annual Report (Paren! company's balance sheet).

lnventories

General inventory reserve loventory value for tax pur- poses

1980 SEK M 2,775.5 1,611

. o

1 '164.5

100%

58%

42%

Swedish tax law permils the write-down ofinventories to 40 percent of their basic value, or to a lower figure in exceptional cases. There are two supplementarv rules.

1. If, at the end of a year, the value ofinventories is less than the average of the corresponding values at the two preceding year-ends, the company may write down its inventories by 60% of that average value.

2. Raw materials and staple commodities may be valued at 70% of the lowest markel price during the preeect- ing ten years.

'·Il may also be noted that Swedish tax authorities nor- mally permit a special deduction for obsolescence at a flat rate of 5%. The obsolescence reserves are not shown separately in the balance sheet but are deducted directly from the value of inventories.

In accordance with the main rule, the taxpayer mayshow a closing balance in the General inventory reserve of up to 60% of the basic value of the inven- tories. The difference between the opening and closing balances is shown in the income statement

The movement of the Paren! Company' s General inven- tory reserve during 1980 was as follows:

Balance Dec 31, 1979

Charged to 1980 income statement Balance Dec 31, 1980

Extra depreciation

SEKM 1 ,471' + 140 1,611

Extra depreciation represents the difference between depreciation for tax purposes and depreciation accord- ing to plan (i.e. financial depreciation).

Extra depreciation shown in the income statement is accumulated in the balance sheet as "Accumulated extra depreciation".

Swedish tax law permils the depreciation of machinery and equipment by 30% annually, using the declining balance method, or by 20%, using the straight Iine method, whichever is mo re beneficial for the company in a given year. Small assets and assets with an economic Iife of lessthan three years are written off in the year of acquisition. No distinction is made between different types of machinery and equipment.

With the exception of buildings written down against the investment reserves, Volvo uses the same rates for both tax and financial depreciation on buildings.

Most of the accumulated extra depreciation re presents write-downs against investment reserves. (See below.) lnvestment reserve

General

Allocations to this reserve are voluntary. The maximum allocation allowed is 50% of income before allocations to investment reserves, donations and laxes as shown in the income statement This is

approximat~ly

illustraled by the following figures from the Parent Company's 1980 income statement

lncome before allocations and taxes Group contributions

Generål inventory reserve Extra depreciation

N et effect of transfer of fixed assets to Group campanies Allocation to general share reserve

50% ^of 677.0 Actual aflocation

SEK M 1,037.0 360.0 - 140.0

+

210.0

+

2.8 72.8 677.0 338.5 285.0 The allocation is deductible for tax purposes but the company must deposit 50% of the allocation in a non- interest-hearing account in the Bank of Sweden. The final date for filing the company's tax returns is also the final date for making this deposit.

P~rmission to utilize the investment reserve may be ob- tamed from the Government or the Swedish Labor Mar- kel Board when and where the economic and employ- ment situation in Sweden so warrants. When a compåny applies for permission to use its investment reserve, the opinions of the appropriate employee organizations are to be attached.

In addition to permitting the use of lunds already allo- cated to the investment reserve, approvals may be gi- ven in advance for the use of future allocations. Approv- als may be combined with an extra allowance of 1 O% or 20%. ^The extra allowance gives a reduction of the tax expense b ut is otherwise not shown in the books.

The investment reserve may be used for several pur- poses, the most im portant of which are the construction of buildingsand the acquisition of new machinery and equipment.

Amounts withdrawn from the reserve are used

to

write down.the value of investments in such buildingsand mach1nery, as a resull of which future depreciation for tax purposes is limited to the value remaining following the write-down.

Following receipt of approval to utilize the investment reserve, 50% of the amount released may be withdrawn from the blocked account in the Bank of Sweden.

17

FINANCIAL STATISTICS, AB VO:.LV:_:O: _ _ _ _ __ _ __ _ _ _ _ __ _ _ _ _ _ __ _ _ _ _ _ _ _ _ __ _ __ _ _ _ __ _ __ _ _ __ _ _ _ __ _ _

"Free sector"

Five years after it has made an allocation to the invest- ment reserve, a company may use 30% of the allocation - the so-called "free sector" - without special ap proval from the Government. If, however, the company has already utilized a portion of the allocation, the free seetar is reduced by a corresponding amount. Of the funds released, 50% may be withdrawn from the Bank of Sweden in the normal manner.

Accounting example

The following nates are designed to clarify the various entries involved.

a) An allocation, which is deductible for tax purposes.

is made to the investment reserve. b) 50% of the allocation must be deposed in a

blocked account in the Bank of Sweden.

c) The deposit may be withdrawn when final approval to utilize the investment reserve has been granted.

d-e) The investment may, for example, be financed in this way.

f)

g)

h)

From a tax viewpoint, this entry re presents a 100%

write-down of the investment.

Property, plant and equipment Accumulated extra depreciation Residua! value for tax purposes

SEK M 100 100

o

Although the investment is written down to zero from a tax accounting viewpoint, depreciation ac- cording to plan is based on SEK 1 00 M as usual.

For both tax and financial purposes, 4% is a very common rate of depreciation of Volvo plants.

(2% additional depreciation is usually allowed dur- ing the first five years- disregarded here).

The residua! value for tax purposes, as shown in f).

above, is zero.

This means that no part out of the total financial depreciation of SEK 4 M is deductible for tax pur- poses. SEK 4 M is therefore shown as recovered extra depreciation.

Compulsory investment reserve

Swedish earparatians are required to allocate 25 per- cent of i neo me before laxes for the y ear 1980 to a c om- pulsory investment reserve. The entire amount allocated must be paid inta a non-interest-bearing compulsory in- vestment account at the Bank of Sweden. Otherwise the same main principles apply as those described above for the investment reserve.

No similar requirements will be made for the year 1981.

as far as is known at the time of printing.

Balance sheet accounts

Assets liab<tihes

lncome statement acc·ounts

Blocked account with the Central

T:: ·r

Allocalion to

Jnvestment reserve investment reserve

, ,1 c l

~

l

Property. plant Long4erm

and equ1pment liatli~t1es

. __!1!__p= T.

lsuo~,u !

^{e O}

3Ö

Accumulated exl!a depreCiation

=r:-·

^g

4

4

dr er dr er

B

Depreclation according to piBI'I

T .. "

HN j ~

h

Extra depreciation dr

l

^el

4