CD ROM

VOLVO

Printed information

Volvo' sprintedinformation for shareholders consists of the Annual Report, the Environmental Report, the Financial & Operating Statistics brochure, the Report on the year' s operations, quarterly interim reports and Form 20-F (prepared primarily for the Securities & Exchange Com- mission in the U.S. and for American shareholders.)

CD ROM

Volvo's interactive presentation on CD ROM is directed to shareholders, members of the financial community and other persons who are interested in the Volvo Group and its products.

lt is both a fact bank and an intemc- tive experience. The disc provides information on a number of aspects of Volvo and the user determines the areas he or she wants to explore.

Internet

The latest Volvo news is available on the Internet.

Address: http://www.volvo.se

In the financial statements and accompany- ing tables in the notes, parentheses are used to indicate negative figures. All amounts are in millions of Swedish kronor (SEK M) uniess otherwise indicated.

Publlcation dates

Annual Report 1996 March 19, 1997

Environmental Report 1996 March 19, 1997

Financial and Operating Statistics 1 996 April 1 O, 1997

Report on first three months 1997 April 23, 1997

Volvo, CD-Rom· May 23, 1997 ..

Form 20-F, US. GAAP 1996 May 31, 1997

Report on first six months 1997 Ju ly 22, 1997

Report on first nine months 1997 October 22, 1 997

Report on 1997 oper11tions February 1998

Annual Report 1997 March 1998

* Requires PC with 486 processor, 33 Mhz (at least B MB RAM. Windows® 3 .l or Windows®

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•• Available in English only.

The reports shown in holdface type are sent directly to all shareholders who have advised Volvo that they wish to receive fmancial information. These reports are available in both Swedish and English. The Annual Report is also available in French.

All reports, as well as the CD ROM may be ordered from:

AB Volvo Publications Dept. 7940 ARUN

S-405 08, Göteborg, Sweden Telephone: +46-31 66 l O 4 7 Telefax: +46-31 54 57 72 E-mail: vtab.volvoinf@memo. volvo.se

Contents

Volvo In brfef

2 History

4 Group structure 6 Sales and productian 8 Vol"o Cars

10

VolvoTrucks 12 Volvo Buses

13 Volvo Construction Equipment 14 Volvo Penta

15 volvoAero 16 Corevalues

Flnandat statisttes ·

· · Consolidated

18 statements of mcome 19 Balance sheets 20 . Statements of changes

in

financial position 21 Quarterly sales and inr.ome

Approximate net income m ac·cordance with U S. GAAP 22

^Keyratlo~

E:'l:port:5c from Sweden .

By operating sector 23 Sales

24 Operatlng mcome Operating

lllMglll

R.etwn on

opt"..tating

cap1tal 25 Capmil expendrtu:res

R.e.ea.rcll

and

elevdopment

co~ts

Assen.

26 Number of employees

AB Volvoshare capital and share data

29 Share capttal and dtVIdend 30 Listlng of Volvoshares

Number of Volvo shares tr.1ded Volvo share prkes

31 Pet'-mare data Distnbutlon of &hares

The largest

shareholders

m AB

Volvo

Operating stalistics

32

Volvo VF..hicles ':iold

33 Total ear reglStrations

34

Volvo ear reg1stra1:lom

and market shares 35

Total medtum-heavy

truck

tegistrations 36 Volvo medtum-heavy

truck

tegistrations

and market shares

37

Total heavy truck regtstration~

38 Volvo heavy truck

tegi8tratiom

and market shares

39 Total

bus

re~trations

40 Volvo bm

regtStrations

and markelshares 41 World

automotive production

42

Volvo

automotlve producbon Salaries, wages' and other remun<.>rations by plant and. countJ.y

27 Quarterly sales and operating itt<'omt>

2

History

1941 Acquisition of majority holding in Svenska Flygmotor AB, now Volvo Aero.

1944 Introductlon of the PV 444 carmodel.

1959 Presentation of Volvo Penta Aquamatic inbcard engine with outboard drive.

Volvo was incorporated in 1915 as a subsidiary of AB SKF, the Swedish ball- hearing manufacturer. In 1924, Assar Gabrielsson and Gustaf Larson, the two founders, decided to start construction of a Swedish ear.

"l

The original production models were designed to withstand the rigors of Swe- den's rough roads and cold temperatures.

This emphasis on durability has been

~ ^{-. ,.}

^,

^{,.:. . - . - -'}

^{-; l •}

^{,_. :411 -~- ·~}

^{-, 1955} First Volvo cars shipped

to the United States.

a feature of Volvo products ever since.

;;-;:;-uisition of engine manufacturer, taverken, skövde.

1935 Shareholders of SKF AB receive AB Volvo shares as a bonus.

1 With a share capita!

J ofSEK 13M. AB Volvo 19~8 Start of truck production.

l

^is introduced on the

1 Stockholm Stock 'Exchange.

1927 Produrnon of cars starts in Göteborg, Sweden. A total of 297 cars is produced in that year.

'-·-- ,- ^{. .} --

1934 start of bus chassis pro- duction and marine engine productlon.

1950

Acq~7tk;;;;rl

the constructlon equip-

i

ment manufacturer,

l

AB Bolinder-Munktell,

i

later part of the VME Group (now Volvo Conmruction ~!

Equipment).

l

1963 Start of ear assembly in HaUf;o Canada.

~ 953 Few tractors have been as long-awaited as the BMSStrSS, which was introduced in 1953.

1956 Import company

L~~::.

in North America.

1942 Acquisition of the gearbox manufacturer, Köpings Mekaniska Verkstads AB.

1956 In the beginning of 1956, Volvo introduced its PI ZOO Amazon model. The ear was launched as a four-door sedan with its characteristic spUt grille, curved pontoon-shaped frame and large wheels.

1954 Inauguration of the Tarslanda ear plant.

1969 Aequisition of ear body producer, AB Olofström, now part of Volvo Cars.

1965 In Belgium Volvo estab- lished a ear plant in Ghent and a truck plant in Alsemberg.

f"lm2 Pr=~tation

^{of VESC,}

Volvo Experimental Safety Car.

New truck plant in Australia.

, Acquisition of 33% of the shares in the Duteh passenger ear manufacturer DAF (now NedCar). Acquisition of the truck plant in Seotland.

1976 First cata- lytic converter withlambda sond presented.

197& New truck plant in Tuve, Göteborg. New bus plant in Borås, Sweden.

19)'9 Volvo F7 "'fruck of the Y ear". Inauguration of the truck and bus plant in Curitiba,

1986 Volvo FL truck range "Truck of the Year"

(19aa

^A7 ;isition of Leyland Bus Group Ltd.

1 Introduction of Volvo 440. Inauguration of Volvo Uddevalla ear assembly plant.

1985 Merger ofVolvo's and Clark Equipment's construc- tion equipment operations in the VME Group.

Acquisition of Custos and Pharmacia shares.

1S8.(; Volvo FlO Inter- cooler "Truck of the Y ear."

Acquisition of shares in Protorp and Cardo.

r---··~ 1989 Sweden's JAS

•l 39 Gripen, powered : by an RM 12 engine,

the most powerful '' engine ever develop-

ed by Volvo . Flygmotor.

1990 An alliance agreement based on a cross-ownership structure was signed with Renault.

Sale ofVolvo's food seetar and hold- ing in Pharmacia in exchang~ f~r part ownership m Proeardia AB.

Introduction of Volvo 940/960.

, 1983 Food established

i

as a separate operating sector. Acquisition of a 20% interest in Saga

· Petroleum, Norway.

1989Anew truck assem- blyplantin Orrville,

Ohio. 1993

operations into two parts, whereby BCP (the consumer product group) became a subsidiary within the Volvo Group.

'i9S2 Volvo Penta introduces Duoprop, with two counter- rotating propellers, which gave 30% better acceleration and more than 10% better fuel con- sumptian and power output.

i9il2 Volvo 760, the forerunner for Ii the entire 700 series, was introduced

!! in February 1982.

Introduction of the Volvo FH series, a new farnily of heavy trucks.

Decision of the Volvo Board to withdraw the proposal for a merger of Volvo' s automotive oper- ations and Renault.

1S95 AB Volvo aquired the remaining 50% of Volvo Construction Equipment (for- merly the VME Group). In June Volvo aquired 51% of the Canadian bus manufactu- rer Prevost Car Inc.

T wo new ear modets, Volvo S40 and Volvo V 40 were present ed.

The Volvo Environmental Concept Truck and Environ- mental Concept Bus were introduced.

199( The Volvo FH series

"Truck of the Y ear."

Dissolution of the alliance with Renault and a divestment of shares in non-autornative companies.

The frrst Volvo bus in China was produced by Xian Silver Bus.

l

4

Group structure

Volvo is an international auto- motive and transport vehicle group, with slightly more than 70,000 employees. The Group provides a range of transporta- tion-related products and ser- vices, with superior quality,

safety

and environmental care, to demanding customers in selected segments.

Volvo occupies a prominent position as a ear producer within its segment and is among the world leaders in heavy commer- dal vehicles such as trucks, buses and construction equip- ment, as well as in drive systems for marine and industrial appli- cations and aircraft engines.

Volvo has a strong identity that has been built up over a periode of seven decades. The

aim

is to further develop the Group's leading position in

automotive safety. In the envi- ronmental area, Volvo is intensi- fying its programs and preparing for future shifts in technology.

Since 1994 Volvo' s core ope- rations have been strengthened through aquisitions of share- holdings and companies, while businesses outside the auto- motive and transport equipment operations with a value of approximately SEK 34 billion have been divested.

Substantial resources are being invested to develop the Group through aggressive prod- uct and process development, introduction of new product families and an expanded offer-

ing of such services as financing

and maintenance contracts.

lnvestments in the industrial system are increasing to strength- en international presence and proximity to the customer. Mar- keting efforts are being focused

on strategically important

regions. The dealer network as

well as the service and spare

parts operations are being futther enhanced.

Sales, SEK billion thousands

Volvo Cars has a strong

international position as a producer of family cars, and

is

a world leader in large station wagons. With an ex- panded product range, Volvo is also targeting new custo- mer categories. Volvo Cars' main markets are Europe, North America and Japan.

Volvo Cars

Volvo Trucks is one of the

world' s largest manufacturers ofheavy trucks (>16 tons).

Heavy trucks comprise more than 90% of production. Volvo trucks are marketed and sold in practically all parts of the world, the majority in western Europe, North America and South America.

Volvo Trucks

Volvo Buses is ranked seeond

within

the OECD countries in the manufacture of heavy buses (> 12 tons).

The products comprise chassis as weil as complete buses, plus mass transport systems for large cities. Volvo Buses' key markets are in Europe, North America, Latin America and southeast Asia.

Volvo Construction Equipment is a world leader in the manufacture of construction equipment, speciahzing in wheelload- ers, excavators, articulated

and rigid haulers. Sales are mainly in Europe and North America.

Volvo Penta develops, manufac- tures and markets complete power systems for marine and industrial applications. The products are sold in more than 100 countries, of which Europe and North America accounts for the majority.

Volvo Aero's operations consists mainly of the manufacture and overhaul of military and commercial air- craft engines. The company also develops and manufactu- res key components for the European Ariane space pro- ject and gas turbines.

l

6

Sales and production

In

view

of the relatively small domestic market, Volvo has always had an international orientation. In recent decades, Volvo has expanded vigor- ously and now has productian facilities in more than 20 countries on

six

continents.

¹

Approximat ely

40%

of Volvo'

s

workforce

is

employed outside Sweden, mainly in Belgium, the United States and Great Britain. Most of the company s product development

is

carried out

in

Sweden , while assembly plants are located

in

Europe, North America, Latin America, south America, Asia and Australia. Approximately

90%

of sales are outside Sweden, mainly

in

Europe and North America. Vigorous efforts are being made in n ew markets

in

Asia and Latin America.

• Volvo Cars

e

Volvo Trucks Volvo Buses

Total sales SEK 156,060 M

Volvo Construction Equipment Volvo Penta

Volvo Aero

e

^VolvoCars

e

Volvo Trucks

Volvo Buses

Volvo Construction Equipment Volvo Penta

Volvo Aero

Production

Volvo Cars

Göteborg, Ghent, Halifax, Bangkok, Kuala Lumpur, Barn•, Djakarta*, Uddevalla*, Manila*

c ars

Olofström body parts

Skövde gasoline engines

Flo by conneotian rads, brake discs

Köping gearboxes, rear axles

Volvo Trucks

Göteborg, Ghent, New River Valley, Kuala Lumpur, lrvine, Wroclaw, Cuntlba, Brisbane, Lima, Casablanca*, Gaborone~

Toluca•, Bogota•, Mutare*, Teheran• trucks

Umeå truck cabs

Skövde diesel engines

Köping gearboxes

Lindesberg rearaxlas

Volvo Buses

Borås, lrvlne, Curitiba, Lima, Quebec, Kuala Lumpur, Wroclaw, Casablanca•, Xlan•,

Volvo Construction Equipment

Eskilstuna, Arvika, Konz-Könen wheel loaders

Eslöv excavators

Brails Annecy-le Vieux Guelph

Ashevllle, Pedemelras

articulated haulers multipurpose excavators rigid haulers wheelloaders,

Volvo Penta

Vara marine dieselengines

Lexington stern drives, marine gasoline engines

Volvo Aero Trollhättan

Arboga, Bromma

aircraft-and racket engine components, overhauls overhauls aircraft engines

8

Volvo Cars

Volvo Cars

is

the Volvo Group' s largest single operating sector. lt comprises operations pertaining to the development, design, productian and marketing of Volvo passenger cars and the provision of spare parts for the cars.

Research and development is con- ducted largely in Sweden. Produc- tion is Concentrated in Sweden, Bel- gium and the Netherlands. Volvo cars are also assembled in Canada, Indo- nesia, Thailand, Malaysia and the Philippines.

The productian of family cars eonstitotes the base for operations hut Volvo

is

also cultivating other categories of ear owners with new exclusive convertible and coupe models. Operations are based on the premise that cars of the future must be safe and cause the least possible impact on the environment. Volvo Cars' position is to be strengthened, and its volume of sales increased, through more introductions of models and a broader product line.

Volvo C70 Convertlble

YolvoS90

World market

In all, 36.2 (34.6) million cars were sold in 1996. The North American market was sluggish hut the market in Europe increased by 6%. There was a weak increase in Japan.

In the large-car segment - which includes the Volvo 850, the Volvo 960 and the Volvo 940 in 1996- Volvo had 7.8% (10.2) of the market in Europe, 9.5% (8.9) in North America, and 2.5% (2.1) in Japan.

Volvo's share of the market in the medium-size dass in Europe was 3.1%(3.3).

The most important competitors in the world market are Audi, BMW and Mercedes.

America 21,200

Volume units

500 000

450 000

400 000

350 000

300 000

250 000

200 000

150 000

100 000

50000

Product Iife eyeles

Historically, Volvo Cars has had a rela- tively limited model program, with a small number of products that were avail- able in many versions. The products have had long life eyeles and large volumes of sales have been maintained through a number of upgradings during each life cycle.

Volvo Cars' strategy today is based on reaching a broader customer base and offering products adapted to the require- ments and wishes of customers in the

segments before and after the family ear segment: older persons without children, youngcouples and "singles".

Volvo Cars intends to introduce at least one new medel per year in the nearest future. lt wil1 thereby

fill

the earlier gaps in the model program for its new prospective customers. With the broader product program and more fre- quent introductions of new models, the company expects to reach its objective of selling 500,000 cars per year in the next century.

The new strategy is increasing Volvo Cars' product development costs. How- ever, based on the anticipated larger volumes of business, these <.Osts are expected toremainstable at around 5%

of annual sales.

- volvo200

Volvo 700 - volvo850 - volvo900 - Volvo300 - volvo400 - Volvo S40N40

Total

...

•' .•

• .·

. .

.. · . .. . •· _. .

l

Volvo Trucks

Volvo Trucks develops, pro- duces and markets medium- heavy and heavy trucks. The heavy-truck dass (more than 16 tons total weight) accounts for more than 90% of total production.

The Volvo FH truck that was introduced

in

1993 has established the foundation for continuing development of competitive products

in

the heavy truck segment.

Volvo Trucks has a global industrial structure with resources for development and productian in Sweden, Belgium, Brazil and the U.S.

The emphasis

is

on assembling trucks in close proximity to customers. In line with

this approach, Volvo

Trucks also has plants

in

Great Britain, Poland, Peru, Malaysia and Australia.

Volvo trucks are sold in virtually all parts of the world, with a special focus on Europe, North America and South America. New marke- ting programs are currently under way in China, India, Pakistan, eastem Europe and Mexico, among other mar- kets.

Based on preliminary figures, Volvo' s share of the world market was 9% in 1996.

World market

During 1996 the world mar- ket for heavy trucks decreased by about 7%, to 655,000

units, from the record-high level of the p

receding year.

The decline was most appar- ent in North and South America, but the markets

were also smaller in Japan, southeast Asia and Australia.

The market in Europe contin-

ued to be strong, with the

same h

igh level of sales as in

1995.

Sales by market area, SEK

M

Other 11500 Sweden 4,600 Europe outside Sweden 24,100 North America 6,500 Latin America 3,000 Asia 2,600

Modular concept

Volvo Trucks

is

developing a global product range that contains a large percentage of common components. The Volvo FH series constitutes the platform upon which future families of models are being developed.

During 1996, through the introduction of the Volvo VN and Volvo NH, the company implemented the fU"St stage of its program to achieve a glo- bal industrial system. Repla- cements for the Volvo FL and Volvo NL, which will also have a large nurnber of com- mon components, are also in the pipeline.

In its new product program Volvo Trucks

is

increasing the nurnber of common items by developing modules that can be used in a nurnber of prod- ucts as well as components for use in a variety of modules.

The objective

is

to reduce the number of items from slightly more than 40,000 today to

25,000 early in the next cen- tury. Each item in the prod- uctian system today costs an average of SEK 50,000 per year for product development, purchases and spare parts.

By using a common plat-

form and a number of well integrated modules, Volvo Trucks can meet the needs

and expectations of

custom-

ers throughout the world.

The new approach results in

higher quality and greater

flexibility at the same time

that costs are reduced at all

levels - from productian to

sales and after-market opera-

tions.

12

Volvo Buses

Volvo Buses' operations com- prise production and market- ing of bus chassis, complete buses and transport systems for trafflc in large

cities.

Chassis are produced in company- owned plants in Europe and South America. Complete buses are manufactured in wholly and partly owned plants in Europe, Canada and Asia.

There is substantial restruetuting in the industry and Volvo Buses has strength- ened its international presence through acquisitions and

B7

cooperation agreements. At year-end 1996 Volvo Buses was the seeond largest manu- facturer in the OECD coun- tries of buses weigh.ing more than 12 tons. Its principal competitors were Mercedes, Setra, Renault and Scania.

World market

The world market for heavy buses has declined steadily during the 1990s, except for a small uptum in 1995. While the world market as a whole decreased again in 1995, the

total market in western Euro- pe increased and amounted to 18,400 (17,300) vehicles, an increase of 6%, based on prelirninary ngures. Based on preliminary market data, Volvo Buses' share of the western European market for buses weighing more than 12 tons amounted to 19.2%

(18.1%).

Sales by market area, SEK M

t

⁸¹²

t~.o ... ^{c~• B - 6LE IIII31PS --eo . • •}

'

._.

810M

_~· ~ LE O

E t

. (.j l'

Volvo Construction Equipment

Volvo Construction Equip- ment, with a strong position in Europe and growing posi- tions in North America, ranks among the world's leading manufacturers of construction equipment. The organization

is

highly decentralized. lt has productian in Sweden, Ger- many, France, the U.S., Cana- da and Brazil.

Operations are focused on strong growth. A large num- ber of projects based on a sharper focus on customers were initiated in 1996 with a view to increasing the compa- ny' s competitiveness and docurnenting opportunities for accelerated growth. The objective

^is

to broaden the range of products, continue to penetrate new markets outsi- de Europe and North Ameri- ca and implement programs directed to important seg- ments of

customers.

The construction equip- ment

indust:ry is characterized

by a limited number of large

campanies with broad prod-

uct programs and global mar- ket coverage as well as by a

!arge number of smaller, spe- cialized campanies with inter- national or local coverage.

The concentration of the indust:ry continued during 1996, notably

ⁱⁿ

the sector

comprising light equipment.

World market

The decline in important markets continued. It was less striking in North America, while the German market decreased significantly. The markets in other European countries also weakened, especially during the seeond half of the year.

Sales by market area, SEK M '

l~

^.·

^.

^Other600 Sweden 700 Europe outside Sweden 6, 700 North America 3,400 Latin America 600 AsiaBOO

Product range

Compact and Service Equlpment Mini Wheel Loaders, Mini Excavators, Multi-purpose Machines

General Purpose

and Productlon Equipment Wheel Loaders, Excavators, Articulated Haulers, Rigid Haulers, Rigid Haulers <1 04t

Heavy Equipment Rigid Haulers >1 04t

14

Volvo Penta

Volvo Penta develops, manu- factures and markets com- plete power systems for marine and industrial applications.

Due to the company' s com- prehensive knowledge of applications and installations, power systems can be com- bined and adapted individu- ally for the intended end-use.

Volvo Penta's products are sold in more than 100 coun- tries,

of

which Europe and North America account for the overwhelming majority.

The company

is

concentrating on further strengthening its

position

in

North America while simultaneously increas- ing its position in southeast Asia. Its expertise and organi- zation are supplemented through cooperation with other operating sectors within Volvo

as

weil as external cc- operation partners.

Volvo Penta occupies a leading position as a supplier of engines for leisure craft in Europe. In the U.S., it is the

second-largest supplier- after

Mercruiser - with the Aqua- matic products. Volvo Penta

is a world leader as a supplier

of

complete drive systems.

Sales by market area, SEK M

Wortd market

The world market for marine enginesin 1996 was un- changed from 1995. Demand for leisure craft in Europe was slightly lower and the trend in North America was on the

year-earli~r level. The world

market for industrialengines continued to grow.

America 1.100 500

Volvo Aero

Volvo Aero' s operations cover the full spectrum of the Swedish aircraft engine indus- try. Actlvities are character- ized by extreme specialization and are based on close, long- term cooperation with many of the world' s leading manu- facturers of aircraft engines.

The operations consist rnaini

y

of the manufacture and over-

haul of military and commer-

dal aircraft engines. The com- pany also has an important role in the European space program, where it is respons- ible for development and production of key compo- nents used in the Ariane rocket engines. Volvo Aero also

develops and manufactures vehicle components for dec-

tricity

and heat generation.

Development

, production

and maintenance operations are concentrated in Sweden, while approximately 60% of the sales are to customers outside the country.

Operations are subdivided into

six

business areas: Military Engines, Commercial Engines,

Engine Services, Space Propul- sion, Vehicle Components and

Gas Turbines.

Sales by market area, SEK M

Commercial englnes Cooperatlon partner General Electric

Pratt & Whitney Prat! & Whitney Prat! & Whitney

Rolls Royce

BMW/Rolls Royce Allied Signal Allied Signal

Milltary

engines General Electric Pratt & Whitney Rolls Royce

Rocket engines SEP

SEP

Engine Prlmarlly used in

CF6-80 Boeing 747,767, MD11,

Airbus A300, A31 O, A330

JTSD-200 MD80

PW2000 Boeing 757, IL 96, C17 Airbus A340

V2500 Boeing 737,

Airbus A320, MD90

TAY Fokker 100,Fokker70

Gulfstream

BR715 MD95

TFE731 Falcon 900

TPE331 BAC, Jetstream 31

RM12 JAS 39 Gripen

RM8 37 Viggen

RM6 35 Draken

Viking Ariane 4

Vulcain Ariane 5

16

Safety Quality

Environment

Core values

Volvo

is

a concept far bigger than the name of a product.

When people buy a Volvo they buy the Volvo concept as much as they buy the Volvo product. The Volvo

concept is anchored

in a set of values developed over nearly seven decades -

safety,

quality and

environment.

Safety

Safety is the feature that has most clearly contributed to the image associated

with the

Volvo brand

n~

Through-

out

Volvo'

s history, safety has

been one of the company' s

core values, and Volvo now

has a world

leading position

in vehicle safety. Over the years, Volvo has been

first

with a number of pioneering and standard-setting develop- ments. Safety body, three- point seat helts, side-irnpact proteetlon and Volvo'

s unique child safety program are just a few examples.

V~lvo Trucks

was the fU"St COfllpany in the world to introduce airbags in serles-produced heavy

trucks.

Volvo's traffic acddent re-

search teams analyze data

from a huge ntunber of real- life accidents. U sing a data- base containing accident

statistles coverlng 25 years,

Volvo has developed a unique method of correlating acci- dent data with laboratory test results.

Qualily

Volvo has a strong reputation for high quality. The concept of quality includes all the features of

products and ser-

vices that enable Volvo to meet - and if possible exceed - customers' expectations.

Volvo was ranked among the top three in the J D Power'

s

customer survey in the United States in 1996. The same year, Volvo Cars' plant

in Ghent,

Belgium, was ranked as the best in Europe and the plant in Torslanda, Sweden was

ranked third for the seeond

consecutive year. Volvo Aero in

Trollhättan, Sweden, was awarded the "Swedish Distinc- tion of Quality 1996" in the dass for large organizations.

Envlronment

Volvo's environmental work

is

based on a total approach

covering every phase in a

product's life cycle. It

is airned at SUccessively redu- cing the environmental impact of

the company' s

operations and products.

Effective environmental

management systems are

being applied, and training in

environmental issues are high

on the agenda. Volvo's dear

objective

is

to be among the

vehicle producers that have

advanced the furthest in

the

environmental area by the

year 2000.

·-·' ":,;··

. .

· -.

Financial and o.,.r.ang Statistics ·

Financial statistics, consolidaled

statements of income

SEKM 1986 1987 1988 1989 1990

Sales 84,090 92,520 96,639 90,972 83,185

~osts and expenses (75,699) (83,845) (87,255) (83,470) (79,597)

~~preciation and amortization (2,062) (2,213) (2,293) (2,685) (3,021) Operating income (loss)

.~_efore nonrecurring items 8,329 6,462 7,091 4,817 567

-~~:>nrecurring item~-··-_ ^{193 113 313 (2,450)}

Operating income (loss) 6,522 6,462 7,204 5,130 (1,883)

lncome from equity method investments 1,015 1,322

~T_a~i~ in~~~~a!l_d_!l~p-~nses •... __ •

Dividends received

-

^-··- ---

--- ... -- .

81 ^.. 125

- - ·-

166 ^~- 22 31 Gain (loss) on sales of securities, net 137 1,186 47 126 116

_l~t~rest_inEo_m!(exeense) 345 677 952 734 46

Other financlal income (expense) 445 561 (126) (60) 41 lncome (loss} before taxes and

!':'inority Interests 7,530 9,011 8,243 6,967 (327)

Taxes (3,074) (3,272) (3,200) {2,145) (719)

...

Minority interests (36) (74) (103) (35) 26

Net income (loss) 4,420 5,665 4,940 4,787 (1,020)

18

1991 77,223 (74,930)

(3,129) (836)

(838) 599

15 2,026 (1 ,167)

166

803 (560)

439 882

1992 1993 1994 1995 1996

83,002 111,155 155,866 171,511 156,060 (81 ,785) (105,465) (141 ,388) (156,831) (146,999)

(3,119) (3,777) (5,107) (5,656) (5,351)

(1,902) 1,913 9,371 9,024 3,710 (1,450) (1 ,600) 1,215

(3,352) 313 9,371 10,239 3,710 96 (1 ,788) 2,193 1,402 290

50 62 1,126 351 789

131 504 _4!~43 1,180 8,268 (1,138) (1 ,432) (525) 197 1,503 (536) (301) (30) .(321) (357)

(4,749) (2,842) 16,378 13,048 14,203 138 (468) (2,783) (3,741) (1 ,825) 1,291 (356) (365) (45) 99 (3,320) (3,466) 13,230 9,262 12,477

Changes In accounting principles Interest on pension Ilability and accruals for postretirement benelits

Effective in 1995, the Volvo Group's accounting has been adapted to conform with Recommen- dation 4 of the Swedish Institute of Authorized Public Accountants. Accordingly, the interest portion of pension expense is reported as an interest expense. Earlier, this item was included in operating income. Comparable figures for

1 991 -1 994 have been restated.

In addition, accruals for postretirement benefits are stated as an interest-bearing Habil- ity and are included in net financial assets/net debt. Comparable figures for prior years have been restated.

Nonrecurring items

Effective in 1994, nonrecurring items are reported in operating income. The change re- flects application of Recommendation RR4 of the Swedish Financial Accounting standards Council which became effective January 1, 1994. Comparable figures for prior years have been restated.

Extraordinary income and expenses Effective in 1 994, i neo me and expenses are classified in accordance with Recommendation RR4 of the Swedish Financial Accounting Standards Council. The statements of income for prior years have been restated.

Type-speclfic tools

Effective in 1993, Volvo capitalizes type- specific tools. Capitalized tooling costs are being depreciated over the estimated economic Iife of the tools. The change in accounting method conforms with international practice.

Postretirement beneflts other than penslons

Effective January 1, 1993, Volvo's subsidiaries in the United States are applying the new Ame- rican accounting rules (SFAS 106; Employers' accounting for postretirement benefits other than pensions) that became effective on that date. Earfier, income was charged on ly with cur-

Financial statistics, consolidated

rent payments. The current val u e after taxes of benefils earned as of December 31, 1992 was estimated at 571 , In the consolidaled balance

shee~ this amount reduced shareholders' equity by 301 and minority interests by 270. The g reater part of the amount is attributable to campanies within Volvo Trucks.

Application of the above rules in the Amer- ican associated companies, notably those in the Renault and VME groups, reduced sharehold- ers' equity in these groups. The consolidated reported value of Volvo's holdings in the cam- panies affected was reduced by Volvo's share of the reduction in equity, 1 ,928. This amount reduced consolidaled shareholders' equity.

The change in accounting principle thus re- duced Volvo Group's shareholders' equity in 1992 by 2,229, and minority interests by 270.

Reelasslficatlon of leasing ve h ides and company vehicles

Up to and including 1992, leasing vehicles and company vehicles we re included in Group in- ventories. Effective in 1993, these assets are reported am o ng Property, plant and equipment.

Comparable figures for 1989-1992 have been restated.

Assodated campanies

Effective i n the 1989 accounts, associated campanies are reported in accordance with the equity method.

Balance sheets

SEKM Assets Liquid funds Receivables lnventories Current assets l nvestments in bond s

Restricted deposits in Bank of Sweden Long-term assets

T otal assets

Llabllltles and shareholders' equity 1986

17,777 12,346 18,235 48,358

1,180 22,644 72,182

Current liabilities 31 ,548

Long-term liabilities 15,709

Minority i~t~r':sts ___ _ Shareholders' equity

132 24,793

1987

.22,497 12,724 16,561 51,782 1,664 1,721 22,895 78,062

1988

15,632 13,945 19,401 48,978 3,956 4,034 29,983 86,951

1989

18,470 15,837 18,830 53,137

1990

17,585 15,718 18,316 51,619

1991

18,779 17,065 16,705 52,549 3,455 2,854 928

1992

21,760 19,519 18,368 59,647

5,293 2,072 4 1 2

1993

21,442 27,424 21,390 70,256

1994

24,449 30,545 23,380 78,374

1995

23,306 28,906 23,929 76,141

1996

26,661 31,979 23,148 81,788

36,258 45,552 53,230 57,358 64,260 60,208 62,558 59,371 98,143 1 02,097 1 06,7 48 117,007 134,516 138,582 138,699 1 41 '159

31,368 34,500 42,846 48,712 47,778 59,386 74,958 72,212 59,769 58,446 17,077 18,727 17,244 17,794 20.120 23,981 25,784

22-:iöo _ _ _

^{27,125 24,333}

340 484 414 300 4,986 3,91 g 6,686 838 605 504

29,277 33,240 37,639 35,291 33,864 29,721 27,088 43,332 51,200 57,876 T otal liabilities and shareholders' equity_7;..:2::.•;..:18:..:2:..._..:...7..=8:.:,0..=6::.2 --=8~6,::.95::.1:..._;..:9:..:8~, 1:....4:..:3__:1:..:0~2::,09.::.7.:...:...1.::.06:::,7.:...48.:..::..._:_11:...:7..:.:,0:..:0:.:.7__:1.::.3...:.4,::5..:..16:.._..:...1 ::.38:::,58:.::.:2:;._..:..138::;:!;,6:.:9::9:...:1:..;4:..:.1 !..:.' 1 ;:.59::_

Assets pledged Conlingent liabilities

2,959 2,830

1,943 1 ,997 2,427 2,417 2,641 4,114 4,613 6,527 5,434 6,503 3,417 3,095 2,986 3,270 4,691 6,808 8,656 7,581 7,450 6,188

l

Financial statistics, consolidated

statements of changes in financial position

SEK M 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

!~~r's operations

!'!~t_!_n_COI_!l~-~~~-__ _ -· ~,42_9 • 5,665 4,940 2,293

4,787 (1,020) 682 (3,320) (3._466) 13,230 9,262 12,477 Qepreciation and amortization 2,062 2,213 2,685 3,021 3,129 3!1_!~ -~.~77 -- _5,_10? 5,6~6 -- _5,3_5~

~~e-down of shareholdings and fixed assets 674 725 315 -- ----· 574 _ __)!817_

~esults from equity method investments after taxes -_ ___ _ _ . _ (3~7)_ J?.q~ (8~92_ -417 2,815 (1,274) (730) {222) 119 (8,169)

Dividends received from associated campanies 225 277 675 700 717 160 404

Gain on sales of seeurities Gain on sale of subsidiaries

(137) (1,186) (47)

-- (1'26)--

(116)- (2:026)- (131) (504) (4,243) (1,180)

Minority interests after taxes

Decrease {increase) in Receivables current operating assets lnventories l nerease in current opera!in9 li!'lbili~it;:s __

lncrease (decrease) in deferred tax liabilities Net financing from year's operations lnvestments (lncrease)

36 (1,1 02) (2,1 91) ---~.9~4- 651 7,723

74 (378) 1,674

968 352 9,382

103 35 {26)

C12?~L C1.!J9~!.-__ (~66) (2,840) 571 (1,897)

1 ,351 58 2,639

14 98 (812)

4,593 6,1 04 1,070

(439) {1,286) (1,347) 1,484

1,611 2,373 608 1,859 (521) (2,207) 2,198 3,323

(3,032)

356 365 45

(2,732) (3,538) (962) 2,209 (2,687) (516) 6,312 5,915 570

(989) (1 ,373) (267) 8,495 12,236 11 ,067

(99) (4,777) (547) (618) 23 3,538

Proper-ty, plant and equlpment, etc.

Capita! expenditures {3,425) _

(9.~6-~)

(4;64

if

·(6,5o4) (4,598) (2,87 4) (2,915) (3,465) (4,27 4) (6,491) (8,200) Leasing and

C_?_!!lPa!ly_ ":_ehicles _ •. _ -·

Dispasals 305

ln~estme~~ in_s~ares, net (1,851)

Long-term receivables and loans, net Acquisitions and _s~les of co~pa_n,i_e_:;

Remalnlng afler net lnvestments Fi':'_anclng, d_iv!d~~s, etc.

lncrease (decrease) in short-term loans tncrease (decrease) in long-term loans (lncrease) decrease in restricted deposits in Bank of Sweden

l nerease {decrease) in minority interests Dividends paid to AB Volvo shareholders Dividends paid to minority shareholders Other

lncrease (decrease) in llquid funds and lnvestments in bonds,

exd translatlon differences T ranslatlon differences in liquid funds Decrease (increase) in investments in bonds lncrease (decrease) in llquid funds

20

114 (l ,492)

1,374

708 (538)

1,643 (20) (660) 876

3,383

3,383

334 1,852 139 8 7,851

(1,148) 2

274 (1 ,849) (3,008) (166) (4,797)

1,781 839

(400) (1,200)

747 180

(1,635) (5,456) 36 (28) (49) (964) (1 ,701) (1 0,996)

8,288 5,124 ( 1 ,445) 2, 797

(54 1) (2,313) ( 1 ,259) 3,221

134 41 (105) (87)

(718) (815) (1,086) (1~~3)

804 691 (355) (342)

6,384 (4,573) 2,337 (1._486)

(1 ,664) (2,292) 501 601 4,720 (6,865) 2,838 (885)

(1,000) (1,352) (1,678) (2,495) (2,585) (3,851) 1 ,243 299 770 1,460 1 ,351 -- 1 ,958 (7,238) (224) 464 8,182 1,953 -__!_ 4p~~

(102) (1,620) (280) (1,563) {1,953) (2,804)

(210) 323 393 {4,420) (878)

(7,983) (2,166) 4,699 13,546 (1,078) 3,843

(1,542) 2,847

2,031 5,282 (1 ,203)

(157) (7)

(732)

1,926 1,194

(298) (5,1 04) (6,233) (3,993) 5,1 51 3,745 (753) (2,011) 6,166 (1,844)

39 2

122 15 145

(1,203) (601) (601) __ (~12._ ____

o _ _ _

<l?~>

78 93 (1,399)1

236 1,817 928 2,981

(1,649) 1,331

(318) 3,315

(30?) 3,007

(37) 45 (1,512) (1,854)

(~) -- (3_3)_ 46 (1,657)2

(411) (732) (1,143)

3,651 (296) 3,355

In the statements of changes in financial posi·

tion for 1992-96, the effects of major acqui- sitions and divestments of subsidiaries as weil as the distribution of the shares in Swedish Match in 1996 have been excluded from other changes in the balance sheet. Furthemnore, the effects of changes in exchange rates at transla- tlon of foreign subsidiaries have been excluded, since these effects do not influence cash flow.

The statements of changes in financial posi·

tion for 1989-92 have also been adjusted as a consequence of the reclassification of leasing vehicles and company vehicles in 1993. For more information, see pages 18-19.

1 . l ncludes the payment of price adjustment to Renault, 1 ,422.

2. lncludes repayment of loan to Renault, 1 ,536.

Financial statistics, consolidaled

Quarterly sales and income

SEKM 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 See changes in accounting principles on

Sales (SEK M) pages 18-19.

1st quarter 20,661 21,635 21,422 23,067 21,675 17,457 20,023 22,946 37,381 43,454 39,Q68

2nd quarter 21,519 22,717 24,337 23,482 22,917 20,482 21,353 25,859 38,298 41,680 38,991 1. lncludes a write-off of SEK 500 M on the book value of shareholdings, equal to SEK 1 .30 per 3rd quarter 18,798 21,875 22,225 19,241 17,844 17,616 17,429 24,729 36,494 43,990 35,581 s hare.

4th quarter 23,112 26,293 28,655 25,182 20,749 21,668 24,197 37,621 43,693 42,387 42,420 2. lncludes a total amount of SEK 794 M pertaining Full year 84,090 92,520 96,639 90,972 83,185 77,223 83,002 111,155 155,866 171,511 156,060 to the amortization of goodwill i n connection with the acquisition of Volvo Espafia, SA, Spain and a

Operating income (loss) before nonreanring items (SEK M) change in the principle applied in valuing consum-

1st q u arter ^{v ..} 2,090 1,600 1,042 1,503 625 (288) (260) (98) 2,070 2,842 1,176 ab le items and spare parts for fixed assets.

2nd quarter 1,877 1,940 2,135 1,952 749 (52) (403) 445 2,615 2,719 1,105 3. Restructuring costs reduced income before taxes by SEK2,450 Mandincome pershare by SEK

3rd quarter 1,052 1,384 1,417 1,354 (182) (694) (594) 371 2,264 2,520 43 4.40.

4th quarter 1,310 1,538 2,497 8 (625) 198 (645) 1,195 2,422 943 1,386 4. Restructuring costs increased loss before taxes

Full year 6,329 6,462 7,091 4,817 567 (836) (1 ,902) 1,913 9,371 9,024 3,710 by SEK 1 ,450 M and loss per share by SEK 2.20.

5. lncludes write-off of the remaining excess value of

lncome (loss) before taxes and minority interests (SEK M) the shareholding in Renault, SEK 3,603 M, and

1st quarter 2,410 1,982 1,462 2,203 1,052 340 (248) (331) 3,300 3,671 1,924 a provision for excess value pertaining to Volvo

2nd quarter 2,238 2,247 2,379 2,319 996 232 145 711 5,716 1,6616 1,932⁹ Trucks, SEK 1 ,600 M, equal to SEK 13.40 per

s hare.

3rd quarter 1,283 1,558 1,616 2,033 (2,241 )3 14 (604) 679 3,697 5,4347 8,17310 6. lncludes write-off of Volvo Construction Equipment 4!h_q~.a~~r--· _ .. 1,599 3,224 2,786 412² (134) 217 (4,042)4 (3,701 )5 3,665 2,2828 2,174 goodwill of SEK 1 ,817 M and gain on sal e of F~llyear 7,530 9,011 8,243 6,967 (327) 803 (4,749) (2,642) 16,378 13,Q48 14,203 Alfred Berg SEK 280 M, equal to a loss of SEK

3.40 per share.

lncome (loss) pershare (SEK) 7. lncludes gain on sale of Proeardia Food and Abba

1 st q_uarter 3.60 3.30 2.20 3.90 0.90 0.90 (0.50) (0.70) 8.20 5.60 3.1

o

Seafood SEK 2,300 M, equal to SEK 5.00 per s hare.

2nd quarter 3.40 3.60 3.70 4.10 0.80 0.20 0.20 0.80 11.50 0.906 2.809

8. lncludes gain on sale of Falcon Holding and addi- 3rd quarter 2.00 2.50 2.50 3.60 (4.20)3 0.10 (1.00) (0.30) 5.70 10.007 17.1010 tio n al payment for Alfred Berg SEK 452 M, equal

4th quarter 2.40 5.20 4.30 0.702 (0.1 O) 0.60 (7.30)4 cB.7o)5 6.40 3.708 3.90 to SEK 1 .00 per share.

Full year 11.40 14.60 12.70 12.30 (2.60) 1.80 (8.60) (8.90) 31.80 20.20 26.90 9. lncludes gain on sale of s hares in lnvestment AB Bu re 394 M, equal to SEK 0.70 per share.

1 O. lncludes gain on sale of 9.90/o of the share capi1al

Approximate net income in accordance with U.S. generally accepted

^{of Pharmacia &} Upjohn lnc. 7,766 M, equal to

accounting principles (U.S. GAAP)

¹ 6.70 per share.

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Net in come (losst(SEK M) 2,9561 4,636 4,953 5,400 (23)3 816 (4,61 9)4 2,9385 14,122 12,9356 78 12,217910 Net in come (loss)

pershare (SEK) 7.601 11.90 12.80 13.90 (0.10)3 2.20 (12.40)4 7.905 34.60 28.206 78 26.40 g 10

Financial statistics, consolidated

Keyratios

SEKM 1986 1987 1988 1989 1990 1991

Qperating marg in, 0/o 7.8 7.0 7.5 5.6 _{(2_.~)} .. ^(U)

.~~tum on capital employed, % 17.9 19.1 17.5 14.2 4.4 6.4

Re_turn on shareholders' equity, o/o 19.2 21.0 15.8 13.3 neg-- - 2.0 .

l!l.!erest coverage, times 4.6 5.4 5.3 3.6 0.9 1.1

~e~-financing ratio 225 243 99 88 18 57

Net financial assets (net debt), SEK M (1 ,947) 5,583 (1 ,610) (3,011) (9,256) (11 ,357) Net linandal assets (net debt)

as percentaga of shareholders'

equity and minority interests (7.8) 18.8 (4.8) (7.9) (26.0) (29.2) Shareholders' equity and minority interests

as percentaga of total assets 34.5 37.9 38.8 38.8 34.9 36.4 Shareholders' equity

as percentaga of total assets 34.3 37.5 38.2 38.4 34.6 31.7

l Exports from Sweden

SEK M 1986 1987 1988 1989 1990 1991

31,500 29,319 30,151 32,181 32,182 31,881

22

1992 1993 1994 . __ (~.0) 0.3 6.0

1.1 3.7 23.4

ne9 neg 36.5

0.2 0.6 5.5

78 165 181

(18,117) (20,592) (5,999)

(53.9) (61.0) (13.6) 28.8 25.1 31.9 25.4 20.1 31.3

1992 1993 1994 30,344 36,130 43,330

1995 1996

6.0 2.4

18.0 19.4 19.3 23.7

4.6 5.5

122 29

.. 1 .• ?~?- 12,007

2.4 20.6 37.4 41.4 36.9 41.0

1995 1996 56,059 54,589

See alsochanges in aeeounting principles on pages 18-19.

Operating margin

Operating incorne divided by sales.

Return on capital employed

lneome divided by average total assets less average noninterest-hearing eurrent liabilities.

lneome includes operating in come, ineome from equity method investments, dividends received, gain (loss) on sales of seeurities and interest i neo me.

Return on shareholders' equity Net ineome divided by average shareholders' equity.

Interest coverage

lneome divided by interest expense.lncome includes operating income, income from equity method investments, dividends reeeived, gain (loss) on sales of seeurities and interest in- come.

Self financlng ratio

N et financing from year's operations as per- centaga of capita! expenditures.

Net financlal assets (net debt)

Current and long-term interest-hearing liabilities (including accrual for postretirement benefits) reduced by liquid funds, investments in bands and long-term interest-hearing receivables.

Effective in 1992, net debt in Volvo's sales finance campanies is not included since interest expense in these campanies is charged against operating income and does not affect net inter- est expense. Figures for 1989-1992 have been restated to reflect these ch anges.

Financial stalistics by operating sector

Sales

SEKM 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Volvo Construction Equipment

VolvoCars Sweden 4,741 6,434 8,089 7,925 6,812 6,678 6,631 6,995 10,064 11,463 11,445 Volvo Construction Equipment is consolidated

~· .~ .. '·-~--~- .. --.. ^{--~-~···-- -} ' " -· as from Ju ly, 1995. Thus figures for 1995 refer

Europe, excluding Sweden 13,667 14,999 13,511 13,232 15,997 14,962 22,216 24,999 31,054 36,326 38,507

to six months.

l

North America 15,402 15,090 13,607 16,258 12,763 10,860 11,224 17,354 20,613 21,556 21,228

l Other markets 2,168 2,000 3,185 3,941 3,997 4,522 4,527 8,810 11,867 13,995 12,409 Other and eliminations

i

Total, Volvo Cars 35,978 _38,52~ 38,392 41,356 39,569 _{3_7}~_22_} 44.,598 58,158 73,598 83,340 83,589 lncludes mainly Volvo's finance and insurance campanies and certaln intemal service com- Volvo Trucks Sweden 1,052 1,287 2,438 2,859 2,608 2,103 2,184 2,184 2,767 3,472 4,572 panies. For the years prior to 1988, dealership

and construction equipment operations are in- Europe, excludin9 Sweden 8,049 9,496 13,244 14,797 13~31 ~ _ _!_4, 71_1 __ 1_?.,454 13,823 20,814 25,491 24,163 cluded in other. Eliminations were distributed North America - ·----·- - - -- -

-~ ·820

^{4,753 7,768 8,141 7,354} 5,713 6,941 11,815 13,951 13,075 8,561 among the respective operating sectors.

Other markets 2,002 2,402 2,575 3,202 4,213 5,540 3,413 6,133 8,718 8,989 6,979 Automotive and Discontinued operations Total, Volvo Trucks 15,~?3. 17,938 _{26,02~-28,~9~} }_7,492 2_8,9_67 25,992 33,955 46,250 51,027 44,275 Since last years Financial & Operating Statistics

2,596 2,882 2,788

all tables •by operating sectors" summarize Volvo Buses Europe 1,157 1,417 2,612 2,584 3,442 3,940 4,743 4,740 Volvo's Automotive Operations.

Other markets 601 589 788 800 1,139 1,208 1,867 2,045 2,196 2,952 3,787 Discontinued operations (non automotive Total, Volvo Buses 1,758 2,006 3,384 3,682 3,927 3,820 4,451 5,487 6,136 7,695 8,527 operations) are accounted for separately.

Comparable figures for previous years have

Volvo Construc- Europe 4,34~ 7,256 be e n restated.

tian Equipment' North America 1,403 3,385

Other markets 1,164 2,163 ¹ Total sales for Volvo Construction Equipment for

6,916 12,804

the years 1 99 1-1 995, calculated at USD avera~e

Total, Volvo Construction Equipment rates for the respective years amounts to (SEK M :

8,273, 7,890, 9,665, 12,084, 13,684.

Volvo Penta Europe 1,136 1,372 1,558 1,609 1,824 1,563 1,478 1,541 1,753 2,068 2,050 2. lncludes BCP as from November 1 (SEK3,956 M), North America 504 463 564 510 454 437 483 859 1,326 1,171 1,142 which as from 1994 is included in discontinued

Other markets 448 526 471 616 649 585 581 586 663 639 693 operations.

Total, Volvo Penta 2,088 2,361 2,593 2,735 2,927 2,585 2,542 2,986 3,742 3,878 3,885 Volvo Aero Sweden 574 754 1,085 928 830 1,670 1,703 1,627 1,580 1,658 1,658.

Europe, excluding Sweden 407 486 538 601 695 807 443 654 833 957 1,300

North America and other markets 694 750 872 1,106 1,066 1,223 1,272 1,346 1,175 1,175 1,185 Total, Volvo Aero 1,675 1,990 2,495 2,635 2,591 3,700 3,418 3,627 3,588 3,790 4,143

\

Other and eliminations 4,474 4,562 2,131 2,267 2,157 2,029 2,001 6,942² 614 (2,150) (3,006)

l

Automotive operations 61,896 67,380 75,020 81,674 78,663 77,223 83,002 111 '1 55 1 33,928 1 54,496 1 54,21 7

Discontinued operations, etc 22,194 25,140 21,619 9,298 4,522 - 21,938 17,015 1,843

Grouptotal 84,090 92,520 96,639 90,972 83,185 77,223 83,002 111,155 155,866 171,511 156,060

Financial statistics

by

operating sector

Operating income before nonrecurring items

¹

SEKM 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 See changes in accounting principles on pages

Volvo Cars 5,574 4,311 2,680 1,168 (957) (1,597) (1,691) 626 2,771 1,089 1,498 18-1 9 and notes on page 23.

Volvo Trucks 1,069 1,606 2,736 2,058 1,114 941 (61 9) 585 4,051 5,073 878 Return on operating capita!

Volvo Buses 104 179 286 228 53 (166) 71 313 318 405 331 For the years 1986-1988 figures refer to

Volvo Construction Equipment 2 717 1,162 return on capital.

Volvo Penta 178 223 161 93 20 (113) (76) 125 223 212 (27) Return on operating capital is calculated as

operating income divided by averaga operating

VolvoAero 228 227 240 248 8 202 305 143 60 103 153 capit.al. Operating capital is calculated as operat-

Other and eliminations 88 287 898 (68) (35) (103) 108 121 63 (106) (376) ing assets (inventories, receivables and Iong-

Interest income on receivables term assets) less noninterest-bearing current

and advances included above, liabilities. This key ratio is used only for operat-

and provision for employee bonus i ng seeters not for the Volvo Group.

as weil as earparate expenses (688) (776) The return on capital ratio was calculated by

Automotive operations 6,553 6,057 7,001 3,727 203 (836) (1 ,902) 1,913 7,486 7,493 3,619 income divided by average net assets. Current cost depreciation was charged against operat-

Discontinued operations, etc (224) 405 90 1,090 364 1,885 1,531 91 ing in come. N et assets included total assets

Group total 6,329 6,462 7,091 4,817 567 (836) (1 ,902) 1,913 9,371 9,024 3,710 less noninterest-hearing current liabilities.

Property, plant and equipment were included at current replacement cos~ net

Operating margin

1. Nonrecurring items in 1992, 1993 and 1995 that

SEKM 1990 have been excluded from operating income amount

1986 1987 1988 1989 1991 1992 1993 1994 1995 1996 to:

Volvo Cars 15.5 11.2 7.0 2.8 (2.4) (4.3) (3.8) 1.1 3.8 1.3 1.8 1 ,450 In 1992 rortaining to restructuring costs

Volvo Trucks 6.7 9.0 10.5 7.1 4.1 3.4 (2.4) 1.7 8.8 9.9 2.0 (whereof Cars 07, Trucks 270, Penta 108, Aero

- -· -

^{~ ...}

-· --

^{~ .. 44 and} Other and eliminations 221);

Volvo Buses 5.9 8.9 8.5 6.2 1.3 (4.3) 1.6 5.7 5.2 5.3 3.9

1,600 in 1993/rertaining to a provision for excess

Volvo Construction Equipment 2 12.3 9.1 value in Volvo rucks, which is included in Other

Volvo Penta 8.5 9.4 6.2 3.4 0.7 (4.4) (3,0) 4.2 6.0 5.5 (0.7) and el imlnatlons;

VolvoAero 13.6 11.4 9.6 9.4 0.3 5.5 8.9 3.9 1.7 2.7 3.7 1,215 in 1995 pertaining to gains onthesale of

subsidiaries within Fortes, 3,032, and write-down of 1,817 of acquired shares in Volvo Construction

Return on operating capital

Equipment, which is included in Other and elimina- tians.

2. The Operating margin and Return on operating

SEKM 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 capita! are based on full-year values in 1995.

Rgures for Volvo Construction Equipment according

Volvo Cars >25 >25 >25 14 neg neg neg 4 21 8 12 to US GAAP for the years 1991-1 995, calculated

-

^.

-- - --

at USD average rates for the respective years are:

Volvo Trucks 13 24 >25 >25 21 12 neg 8 >25 >25 10

Volvo Buses 12 23 >25 18 4 neg 5 18 22 18 12 Operating income (SEK M): (193), (436}, 502,

1,621, 1,679.

Volvo Construction Equipment >25 23 Operating margin (percent): (2.3), (5.5), 52, 13.4,

Volvo Penta 14 18 16 13 5 neg neg 11 19 17 neg 12.3.

Volvo Aero 17 14 17 17 neg 12 22 11 5 ^{13 19}

24

Financial statistics by operating seetar

Capital expenditures for property, plant and equipment

SEKM 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 See changes in accounting principles on pages Volvo Cars

. ?P~?.-

^{-_3,4!j~- - • 2,140 3,594 3,051 1,413 1,562 2,072 1,596 2,540 4,425} 18-1 g and notes on page 23.

-~--

--

·--... ---· · - · ^{~ .~}

.... ..

^...._ ....

Volvo Trucks 484 628 932 820 1,073 786 912 725 979 2,072 2,589

1. Figures for Volvo Construction Equipment according --- ···---~----~···-- ... ... ---·---.. -· ---·· --- ·----·--·-- .

Volvo Buses _.. 67 37 92 206 116 114 101 64 54 124 199 to US GMP for the years 1 991-1995, calculated at

... -~---~-. .. --- - ----· USD average rates for the respective years are:

Volvo Construction Equipment1 204 286

---·-

--

^{----· .. --} Capita! expenditures (SEK M): 326, 17 4, 164,

Volvo Penta 104 73 77 104 43 36 24 35 96 79 67 193,316.

Volvo Aero 133 146 240 490 156 258 199 157 170 180 173 Research and development costs (SEK M): 393,

Other and earparate 348, 300, 380, 4 19.

159 267 403 Assets calculated at year·end rates (SEK M):

capita! expenditures 239 243 51- 608 117 412 227 387

6,626, 6,838, 6,485, 7, 113, 8,865.

Automotive operations 3,074 3,582 3,532 5,822 4,598 2,874 2,915 3,465 3,122 5,586 8,142

2. Volvo Trucks assets includes both VolvoTrucks and

Disconti nu ed operations, etc 351 282 416 459 1,152 905 58 Volvo Buses.

Group total 3,425 3,864 3,948 6,281 4,598 2,874 2,915 3,465 4,274 6,491 8,200

Leasing and company vehicles 400 1,200 1,000 1,352 1,678 2,495 2,585 3,851

Research and development costs

SEKM 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Volvo Cars 2,953 2,925 3,478 4,329 4,851 3,895 3,346 2,462 2,502 4,561 4,901

-----··----··· . -- .... -·-

Volvo Trucks _1~1 q_5 __ 1,0~8 1,006 1,245 1,525 1,870 2,258 1,365 1,399 1,760 2,078 ----·-·-

....

--· - ----

Volvo Buses 107 159 209 181 213 256 251 240 265 306 343

...

--- --- ·-

Volvo Construdi<_?_~ !=qu1pm~ntl 221 555

.

-

Volvo Penta 115 128 124 127 178 180 166 154 148 177 183

~' ~·-.

-

VolvoAero 104 95 100 151 150 163 129 144 111 96 93

Other 47 47 36 73 114 50 28 21 22 30 36

Automotive operations 4,431 4,442 4,953 6,106 7,031 6,414 6,178 4,?8.6. _4!44~ x.~51 __ _{8!_18~}

· -

Discontinued operatio~s, _etc: . 132 179 186 70 30 157 138 20

Group total 4,563 4,621 5,139 6,176 7,061 6,414 6,178 4,386 4,604 7,289 8,209

Assets

Corporate assets

SEK M 1986 1987 1988 1989 1990 1991 1992 1998 1994 1995 1996 Up to 1990, corporate assets consist of liquid

Volvo Cars 15,656 15,992 19,805 23,914 24,265 26,202 36,770 39,799 39,811 42,572 49,298 funds, investments in bands, restricted deposits Volvo Trucks 2 9,~73_ 9,740 11,710 13,434 14,138 _2~,3~ 5 2~,295 29,224 35,255 40,330 42,388 in the Bank of Sweden and investments in

- ^{-~ ..} ---- ^..

_

·-- --... . ^·-~ shares. As of 1991 corporate assets are distri-

Volvo Construction Equipment1 8,865 9,433

- -- - -

^{-~--· ...} buted among the respective business segments.

Volvo Penta 1,485 1,570 1,571 1,610 1,742 1,716 1,689 1,965 2,054 1,922 1,983

VolvoAero 2,194 2,229 3,008 3,579 4,093 5,638 5,870 4,922 5,021 5,3~?. 6,695_

.

-

Other and eliminations . - .-~·~3_5_ ^{7,057 10,234 10,279 13,819 48,877 47,383 58,606 20,648 7,178 26,630}

, Il

Financial statistics

by

operating sector

Number of employees at year·end

SEKM 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 See nates on page 23.

Volvo Cars 32,850 34,050 34,280 34,610 33,630 29,570 28,450 26,800 29,080 31,050 29,600 1. Nu m ber of employees at year-end for Volvo Volvo Trucks 17,260 18,490 21,460 22,310 20,550 20,290 19,480 17,780 19,790 21,670 21,160 Construction Equipment for the years 1991-1994:

Volvo Buses 740 810 2,800 2,810 3,690 3,050 2,620 2,610 2,600 3,620 3,750 8,540, 6,670, 6,350, 6,840.

y~vo Construction Equipment1 7,610 7,300

Volvo Penta 2,600 2,650 2,620 2,550 2,190 2,040 1,540 1,420 1,540 1,570 1,420

- ---

VolvoAero 3,450 3,550 3,760 3,800 4,000 4,420 4,290 4,040 3,770 3,890 3,740

----··- ^--~· --- ^.,.__ -·-· -·---·-····--·-·-··-·---- -

Other 6,500 6,500 4,160 4,310 4,740 4,210 3,740 3,350 2,350 2,600 3,350

A_u~omotive operations 63,400 66,050 69,080 70,390 68,800 63,580 60,120 56,000 59,130 72,010 70,320

Discontinued operations, etc 9,750 9,300 9,530 8,300 17,640 16,420 7,040 10

Group total 73,150 75,350 78,610 78,690 68,800 63,580 60,120 73,640 75,550 79,050 70,330 of which, in s...ied;n--·· - . - - ·-' --- ^..

54,310 55,440 54,970 54,740 47,260 42,960 39,130 43,980 44,880 47,000 43,330 - ----.-----·------·- ...

outside Sweden 18,840 19,910 23,640 23,950 21,540 20,620 20,990 29,660 30,670 32,050 27,000

Salaries, wages and other remuneration (including social costs)

SEKM 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

13,012 14,106 15,434 16,875 17,865 17,654 16,857 19,489 24,156 27,248 25,997

26