profit and financial position in summary

• • • •

~ ~ h i s ^{I s at l ant i c} _ c_ o ~ n_ t_ a _l _ n ~ e_ r ~ l_ i _ n _ e ~~~~~~~~~~~~~~- ! - - _ ~ _ . _ ~ ~~

Atlantic Container Line has been the leading earriar of containers, roll-on/roll-off cargo and automobiles between North America and North Europe since the mid-sixties.

Since 1990, ACL has been a Swedish company. lts operational headquarters are located in south Plainfield, New Jersey, USA. ACL went

public in September, 1994 when it was Iisted on the Oslo stock Exchange, the major exchange in Seandinavia for shipping companies.

ACL's main weekly service is operaled with five of the world's largest combination container-roll-on/roll-off vessels. In addition to those vessels, the company has slot exchanges with other Iines, enabling ACL to offer five transallantic sailings each week. ACL also offers relay container and roll-on/roll-off services between North America and Africa, the Mediterranean and southeast Asia. Extensive intarmodal trans- portation and electronic data interchange are integral parts of the services offered.

In 1996, ACL transporled 211 ,000 TEUs (twenty-foot equivalent units) of cargo, corresponding to about 1,800,000 tons.

ACL's equipment fleet consists of 14,000 containers, 3,800 chassis and other roll-on/roll-off equipment.

The average number of employees in Europe and North America during 1996 was 348 persons.

ACL is represenled in 25 locations in North America and more than 30 locations in Europe.

Total operating income in 1996 was SEK 2,150 million, 4% lessthan the year before when adjusted for difference in the USD rate of exchange.

profit and financial position in summary

1996 1995 Operating profit after depreciation SEK million 301 204

Net profit SEK million 214 122

Equity/asset ratio % 41 31

Return on capital employed % 19 13

im p o rt ant

Alliances, mergers lmproved sailing and restrueluring schedule implemented characterized the in February 1996 worfd's main liner resu/ting in im proved frades in 1996. refiability and sa vings.

conten t s

2 To Our Shareholders 6 One Ship Fits All B Customer Profiles 12 l nnovation and Qua l ity 14 Transatlantic Services 15 The Fleet

16 Safety and the En vi ronment

17 Legal Structure and Number of Employees 18 Share l niorrnatian

19 Summary of Group Performance 20 The Board of Di rectors,

the Executive Committee and Auditors

e v en t s

ACL receives award Delivery of Orders p/aced for 300 Purchase of for the "best on-time 2,600 chassis. new 40 ft. high-cube ATLANTIC CARTIER.

performance" in the reefer containers and

trade. Purchase of 1,800 900 new 40 ft. high- Two more vessels 20 ft. containers. cube dry containers. achieved /SM

certification.

21 Directors' Report 24 lncome statements 25 Balance Sheets

26 statements of Changes in Financial Position 27 N otes to the Financial statements

40 Proposed Treatment of the Unappropriated Earnings 41 Auditor's Report

42 Shareholders Annual General Meeting

Project to streamline Centralization of ACL moved up to the customer service commercial Main list at the Oslo tunelians and develop operations to one Stock Exchange.

new software initiated. office per country completed.

• • to our sha r eho l ders • •

... ACL

We are delighted to report a marked improvement in ACL's performance for 1996. Our pre-tax profit almost doubled and we continued to reduce ou r debt in Iine with ou r targets. We are quite optimistic ab out the year ahead. ACL con·

tinues to gain financial strength and make significant strides in operational cost-efficiency. Many more people have recognized the exceptional value the company offers and the positive diraction it has taken. This has resulted in a doubling of the num- ber of our shareholders, enabling the company to move from the SMB list (Small- and Mid-sized Businesses) to the Mai n list of the Oslo Stock Exchange.

During the past year, the global shipping environment was marked by the continuation of stability on the Atlantic and by overcapacity on the Asian trades, leading to mergers and structural changes. The current trends indicate that there are an increased number of con- tainer carriers who lack any real service differentiation, thereby forcing them to compete on the basis of price alone. As these trends continue, ACL benefils from the fact that we operate a specialized service with very unique vessels. We offer ou r customers direct ca Ils at unique ports and a transit time and frequency package unrnatehed by our competition. In addition, ACL's concentration is solely on its care business and we are devoted to being the

easiest carrier to do business with. These components of our operationar strategy are the

key factors in the farmula for our success.

A great deal of hard work came to fruition for ACL during the past year. In February 1996, we changed the schedule of our main North Atlantic service, dropping two port calls per voyage. Simple as this may seem, it resulted in a dramatic increase in our schedule relia- bility- placing ACL's sh i ps among the best on-time performers in the trade. lt also yielded savings in port charges and the virtual elimi- nation of overtime stevedoring costs. The ongoing activities of our logistics and trade management groups have resulted in further improvements in our round-trip equipment utilization, leading to the reduction of our land side costs for transpartatian and positioning.

We continue the quality process of maintaining the highest technical standards of our vessels and equipment. During the summer of

1997, all of o ur vessels will be drydocked for classification inspection and preventive maintenance work. Ou r equipment rep l a cement

program for 1997 calls for a brand new fleet of high-cube reefers and 900 new high-cube dry containers.

• _ACL's

administrative centralization process continued during the year with the consolidatian of our operations in the United States,

• ^··,

Canada and Germany. Today, there is one service center per country, where we have Concentrated our best commercial experts. Despite the ciasing of local offices, we have been ab le to enhance o ur levels of customer service with highly trained professionals who can quick·

ly and effectively respond to our customers' requests. lt is therefore not surprising to nate that ACL took first place in Distribution Magazine's 1996 industry survey of customer service and quality.

Dur process review and refinement project, known internally as streamline, is beginning to revolutionize the way ACL does business with our customers and our suppliers. Since the latter half of 1995, several cross-functional and multinational teams have been con- ducting critical process reviews of our work flow and have then transformed their innovative ideas into a systems blueprint. Subsequent work on systems development for a new customer service and documentation software has pragressed according to schedule, and will be implemented during the latter part of 1997. This software, and the new processas which accompany it, will dramatically simplify present work processes and enable us to offer our customers a much faster and more customized service.

We look forward to 1997, which marks ACL's thirtieth anniversary as Europe's first containership

operator. The market environment

remains quite stable. Strong U.S. market demand should bring westbound volumes back and the continued growth in eastern Europe should boost both ou r RDRD and container utilization eastbound. Thus, all of the the economic and political factors appear to favor anoth- er good year in 1997 for ACL and its shareholders.

Laoking ahead, regulatory developments will inevitably produce some changes in how liner shipping operates, but it is still too early to prediet what the exact impact will be. We are confident, however, in our ability to quickly adapt to any new regulatory conditions.

Cumpetitors will come and go, but we see no major threats to our niche markets at this time. In this atmosphere, we plan to build on our successes, further strengthen our financial position and fine tune our operation even more. Thiswill enable us to take full advantage of apportunities as they present themselves in the years ahead.

Olav Rakkenes

Chairman ~ _President :: ::: q-

o n e s h i p fits a ll

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mveling north by "" fium Malmö, tho •onthornmo"

ci~

of s-doo, ;, """" '""'"

J

two fulldaysto reach the fanning village ofBrännland, the borne of Ålö-Maskiner.

Located about 18 lcilometers west of Umeå and less than 400 kilometers south of the Arctic Circle, Ålö-Maskiner is one of the northemmost manufacturers in the world.

When Karl-Ragnar Åström took over thefamilyfarm in 1945, he quickly recognized the fact that mechanization would vastly increase its productivity. He saw a front loader on a tractor in an American magazine and decided that he would build one of his own - the first to be made in Sweden. In three short years, Åström's toader was ready to be commercially manufactured. And so AJö-Maskiner, a Swedish success story, was created. The rest is history.

At first, productian of the loader was on a small scale. In 1958, Ålö introduced the world's first drive-in front-end loader, fittingly narned Quicke. Because of its unique capabilities, the Quicke rapidly became a household name to farmers not only in Sweden but also throughout Europe. Today, Ålö-Maskiner has expanded its salestomarkets in North and South America, Japan, Australia and New Zealand and is the world's leading man-

ufacturer of front loaders.

In 1949, Ålö-Maskiner did not have to be cancerned about logistical distribution or other complexities invalved in the transport of its products. However, the exporting

f

demands of the nineties and upcoming new millennium are quite different. Since our factory is located in a remote area and we have to get our products quickly and efficiently to our markets, reliable modes of transportatio n are a major concern for our logistics managers.

Within Europe, we use trailers in combined truck and railway transportation.

Overseas, we ship in 20 ft. and 40 ft. containers. White the Ål ö product is not a perishable item, transport time and reliable information on departures and arrivals is very important to us and our customers. Ålö is extremely cost-conscious in all of our operations and we constantly eval- nate not only pricing but value-added services that our suppliers can offer us.

It was ACL who showed us how to use high-cube containers to load more units than in a conventional container, without any increased freight costs. ACL is better equipped with high-cube containers than the other shipping companies. In addi-

tion to o tiering us our choice of equipment, ACI.:s quality service, weekly sailings, quick transit times and reliability allow us the flexibility to adjust our delivery . "· • schcdules on short notice to meet the demands of our customers. We have been

very pleased with our cooperation with ACL.

Per-Olov Dahlström Sales Office Manager Ålö-Maskiner

f

n

orth Dakota is situated exactly in the middle of North America. We are com- pletely landlocked and many of the people here have never seen an ocean. While some places have experienced a population explosion, North Dakota still has room to spare.

The winters are Iong and cold and when the wind blows over the plains, one wonders how anyone could even survive, l et alone prosper here. For some, i t can be considered a bard, iso- lated lifestyle hut for the majority of the people ofNorth Dakota, it just makesus strongerand more creative.

To illustrate this fact, thirty-five years ago, the Melroe family took an idea, added some ingenuity and set their inventive wheels in motion. Today, Melroe Ingersoll-Rand is an industry leader in agricultural and construction equip- ment worldwide. Headquartered in Fargo, Melroe's fac- tories are in Gwinner and Bismarck, North Dakota with a major warehouse facility in Belgium.

Melroe is the world ]eader in skid steer loaders.

Our products are used in a variety of ways, including excavation, landscaping and material movement. We export con-

siderable volumes to Europe, The Far East, Australia and Latin America, using both containers and flatbed trailers. We also

f

deliver hundreds of truckJoads per month to our customers throughout North America.

Since we prefer to transport our skid steer loaders wheeled and fully assembled, ACU; combination RORO and container capability have made them an ideal transportation partner for us for the last eighteen years. ACI.:s fleet of flatbed trailers allow us to move our products directly from the factory floor to fmal destination, minimizing packaging and labor costs, and eliminat- ing the time otherwise required for dismantling and reassembly.

When we do have a special transport requirement, ACI:s sales and customer service team constanfly have creative solutions to get the job done. We can always count on ACU;

schedule reliability, equipment availability and on-time delivery.

With a business partner like ACL, it doesn't matter that we are located thousands of roiles from our customers. We know that when a Melroe product is in ACI:s hands, it will be de livered in the same condition as when it left our plant. That service dependability has com- plemented the overall quality of ourproducts, helping us to keep our customers satisfied.

Sherman S. Wehlander Melroe

logersoU-Rand

f i nnova ti on and qua li ty

As we approach our thirtieth year anniversary, it is interesting to note the ma ny innovations that ACL has made over the years. Although we have witnessed many dramatic changes in the maritime industry during this time, ACL is still recognized as a trade leader. We have carefully navigated through the most turbulent waters and have secured the company against vialent storms. ACL's people, pioneering spirit, innovative actions, quality service and operations have contributed to our success in the firstthirty years and have made us into a stronger, solid company for the new millennium ahead.

These are some of the milestones which mark the successful growth of Atlantic Container Line.

Tl!t maliiiiii lOJIII ' '

act· ,

Afl.Jiiri/1: SJ'M, In l'irsl 700 TEU capacity RORO!Contallltrsllljl in the world. 1t .s the first of four 1st generatron {G-l l vessels .

,, .. tllett llU 111 .-. lllllrld lbt G 1 III•

a-2 r..-.ts

ar~; , •• a..~b, pltased out

Slot nctnmges With attler Iines enailte ACL to offer five weekly sailings between Europe and North America.

&Cl tntr~trn Ilie hllt

illtel'lftoo~n transp fll1 systtm, Route Code, a door-to-door servrce offertng a throup-tanff

to fre quent

s!lljlpers.

... tnJdut!&.

~te lnd

•tllln and C'OIIf.,lltf storap m one faclllty.

A pUbile offermg for ACL flY parent company Bilspellilion is successful and ACL is ltsted on the Oslo Stock Excltange.

Att N\ttl~ lll

n.,..t

!\~If

alftli!l! sil. 1100 n.o capacrty. 2nd generallOn (G-2) RORO!Contaillersltips ta its fleet.

Wltll the pun:ltase of the ATlANTIC CUNVEYOR and ATlANTIC CARTIER, ACL acquires tull OWilershrp of tts vessel fleet.

ACI. lltCGIII11 tht ~Jy

carl'ief WiUIIIICIIbpie sailmgs eacll weelc. to every . major port m Europe.

ACL cOfiSOiidates op8f8tioltt wrtlt ont eostomer service center per country m Narth Amenca and Europe, All European offices ISD 9002 certified with North America certrtu:ation forth- coming.

Atl stJrta Ils a..n lamnnal and $\aveGOrmt operatllll!l.

ACL's qvabty process reVIeW anll retinament prQillct tavolutronizes the way 1t conducts busmess, uffering a faster and rnore customized service to

ea~h shipper.

r. t

transa tl an t i c se r vic e s

Halifax Halifax

New York New York

Baltimore Norfolk

Portsmouth Savannah

New York Norfolk

Halifax New York

Liverpool Halifax

Antwerp Antwerp

Bremerhaven Thamesport

Göteborg Bremerhaven

Antwerp Rotterdam

Liverpool

Charleston Wilmington

Houston Charleston

New Orleans Baltimore Miami

Antwerp Newport News New Orleans

Thamesport New York Houston

Bremerhaven Antwerp Charleston

Le Havre Hamburg Wilmington

Bremerhaven Antwerp

Felixstowe Bremerhaven

Le Havre Felixstowe

the fleet

ATLANTIC CARllER

Built 1985 Yard

Chantier NorMed

Ra g

Bahamas

ATLANTIC CONCERT

Buil t 1984 Yard

Kockums

R ag

Swedish

.

^~-

ATLANTIC COMPANION

Built 1984 Yard

Kockums

R a g

Swedish

ATLANTIC CONVEYOR

Built 1985 Yard

Swan Hunter

R ag

Bahamas

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ATLANTIC COMPASS

Bui l t 1984 Y ard

Kockums

Ra g

Swedish

Technical Specincations

All five vessels were lengthened to current capacity in 1987.

Tonnage: 51,648

DWT

at max draft 57225 GRT, 21175 NRT Dimensions: Length 292 M, breadth 32.26 M,

design d raft 9. 75 M, max draft 11.64 M Cargo Capacity: 3,100 TEU (divided into container capacity of 1,850 TEU, RORO capacity of about 1,000 TEU and dedicated automobile capacity

of about 300 TEU)

i'

1 J·

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safe t y a n d t h e env i ronment

ACL's environmental policy states that the highest international standards for vessel and operational safety shall be adhered to or exceeded where possible. This is why ACL, through ou r ship managers, Transocean Ship Management, started implementation of the ISM Code (International Management Code for the Safe Operation of Ships and for Pollution Prevention) six years before it will become a requirement. Three of ou r vessels have already received the i r certification and the remaining two vessels will be certified du ring 1997.

Much emphasis is placed on this certification and its audits because the single most important factor under ACL's control for proteetron of the environment is the safety of our vessels.

Parallel to this process, all of our vessels will be undergoing a stocktaking of all environmental aspects of their operation. Means and standards for measuring their influence on the environment will be established, and thereatter an economic evaluation will be made on how to limit the influence on the environment. In assessing this, Transocean Ship Managementwill adopt an ISO 14000 approach.

Our environmental policy further states that ACL is committed to preserving the global environment by providing and developing effi- cient transpartatian services that avoid negative impacts on the environment. Therefore we strive continuously to improve the utilization of all resources in order to minimize fuel and energy consumptian and to minimize empty position i ng of equipment and vehicles.

Environmental issues are handled by the respective functional areas and local offices of our organization. Vendors are encouraged to

supplyservices and products that are environmentally friend ly. Review of adherence to the environmental policy will take place in con-

junction with quality audits.

le a structure and number of en1ployees

ATlANTIC CONTAINER UNE AB

t 111lll .l,

• I l

legal structure

Act SHJPDWH~S HO~I)II\IS LTD,t

ATlA!ItTIC ~ONJAIHER UNE

fU~OI'l IJY

, AlUHTlC CONfAtNER UNE

JW~Drl4 1\S

Afl AN liC CONT~IpjER LINE LTD

number of employees

·~ r---~

• " ,, 11

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^u L t

r f

~

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1:1

25

20

15

10

5

(

^{.~ "}

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j sh a .r e i n forma ti o n

total share capita: and shares Totalshare capita! amounted to SEK 325 million and restricted reserves amounted to SEK 219 million. Total shareholders' equity was SEK 865 million at the end of 1995. The total number of shares

is 6,500,000 and total equity

pershare was thus SEK 133. The nominal value per share is SEK 50.

trad!ng ot the shares The share is trading in lots of 100. Liquidity in the share increased during the year and with that, the

num-

ber of shareholders grew. As a result in October 1996, the ACL share could move to the Main list on the Oslo Stock Exchange from its SMB list (Small- and Mid-sized Businesses). Total

share turnover

in 1996 was

196%

of the average number of shares Iisted in the Norwegian VPS. The highest that the share was traded in 1996 was NOK 129 and the lowest was NOK 67. During the first six weeks of 1997 the share has been traded at NOK 159 at the highest and NOK 120 at the lowest, with a volume turnover of 28% of the shares list-

ed

in VPS.

number of

sharsho~dsr-a

The majority of the

shares are Iisted in the Norwegian VPS system but there are same shares held in

custody in Sweden and on ly Iisted in the Swedish VPC system and thus not traded on the Oslo Stock Exchange. There were a total of 849 share- holders, of which 795 are Norwegian, as of February 14, 1997.

USD NOK

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ACL share price end of week

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OBX shipping index (re·allgnedl

1995 1996 1997

1995 1996 1997

sur n m a rv o 'f g r o u p per f orm a n .

i~""~

. ,

"'

(SEK millions) 1996 1995 1994

INCOME STATEMENTS

Operating income 2,148 2,372 2,427

Operating expense (1,701) (2,016) (2,071)

Gross operating profit 447 356 356

Depreciation (146) (152) (154)

Net operating profit 301 204 202

Interest income 34 39 32

l nterest expense (90) (124) (169)

Exchange gains/losses (10) 3 (28)

lncome before taxes 235 122 37

Taxes (deferred) (21)

o

⁽³⁾

Net profit/loss 214 122 34

BALANGE SHEETS

Cash and short-term investments 366 335 294

Other current assets 238 219 232

Financial fixed assets 110 150 180

Other fixed assets 1,394 1,477 1,601

Total assets 2,108 2,181 2,306

Current liabilities 213 209 216

Current portion of financialliabilities 237 239 221

Long-term financial liabilities 697 955 1,216

Provisions 96 109 122

Shareholders' equity 865 669 531

Total liabilities and shareholders' equity 2,108 2,181 2,306

KEY RATIOS

l nterest c over ra tio (times) 3.4 2.0 1.2

Equity/Asset ratio ^(%} 41 31 23

Return on capita! employed ^(%) 19 13 12

Net financial interest bearing debt (SEK million) 424 674 920

Equity/Share (SEK) 133.08 102.92 81.69

Share price !SEKl 133.00 85.00 70.00

Dividend (SEK) 11.00 2.75

o

Price/Earning ratio (times) 4.04 4.54 4.90

Cash flow/Share (SEK) 58.68 42.22 n/a

Net profit/Share !SEKl 32.95 18.72 14.29

Average number of shares outstanding (000) 6,500 6,500 2,380

Operating margin!TEU (USD) 316 227 207

Total littings in TEU (000) 211 220 223

SEK!USD average 6.71 7.13 7.72

SEK!USD at December 31 6.89 6.69 7.46

SEK!NOK at Oecem ber 31 1.07 1.05 1.10

e

1993

2,450 (2,177)

273 (171)

102 20 (259)

(56) (193)

63 (130)

149 539 27 1,735 2,450 212 196 1,854 124 64 2,450

0.4 3 6 1,477 64.00 n/a n/a n/a n/a (130) 1,000

153 230 7.78 8.33

1992

2,016 (2,285)

(269) (159) (428) 5 (204)

(10) (637) 117 (520)

54 434 462 1,922 2,872 945 176 1,570 114 67 1,927

(2.0) 3 -18 1,530 67.00 n/a nia n/a nia (520) 1,000 (171) 270 5.81 7.10

definitions

lnt~rau Cover Ratior Nol Ooet.JIIIIIIIIItOfiC piiiS 111l1ltn1 IIICCMIIe dl'flftd bJ

ln~tell IIP!IIU pllll liCkliiii lolln!/1aun Equity/Assel Aalio:

s-.atM!ohkn' IPQUitt as a JIIIICint.fiR at m..t ^IIYI\.

Return on ~pital Employed:

Hol o..-r.Jtln& p1ollt phn lc1trreu MICiftll d1·1it1" ~ tot.tl 11\IIU IH\ IIOO·inttJ0\1 bi4Tfll1! llabJIIIIH

Hel F'in:melal Interest Bnrinr Debt:

fin•uciaf li•brilllts ll!U tlK!I lOd firunt1JI DUt'l\

Price/Earninz Ral.io:

SII.Jit Phtt .11 rnl1 llf yr.t•

diYIOtlllly 1111 prghll'r.hall

C:~th Flow/Share:

"tl IIlMII piUI deft"H~d 10111!~ ~nd drprecillt•on rlltii1Pd by numbtr

or U101r•~

Oprn<!tina M;ngin:

lfiOU. OJl«IOiiOII J!fOhl III USQ cllfided lir hl!allln•n~' '" HU1 TEU:

Tweuty to111 l.qur-rahml Urut Toliil liitifii!S:

All urao wamerm conv11rtet1 to TtUJ.

f J

th e board of di r acto-rs

Olav Rakkenes

&ötebo'l!, bom 1945 Chairman

Board me m ber and chairman since 1989

Chairman and CEO of ACL AB Chairman of TACA

and Chairman of the U.S. Alfairs Section of CENSA

Member of the Board of l. Lauritzen AIS

Shareholding: 38,180 sharos Synthetic options: 40,000 '

Peter Carlsson

Godatminc, Surrey, bom 1937 Board member since 1994 CEO and rnember of the Board of Rederi AB Ttansrnafk.

Member of the Board of AB Wilh. Becker and Through Transport Mutual fns. Assoc. Ud.

Håkan Larsson

G5teborg, barn 1947 Board member since 1990 CEO and mernber of the Board of Bilspedition Transport &

Logistics {BTl) AB Chairrnan of the Swedish International Freight Assoc.

Mernber of the Board of 8&11, Bytock & Nordsjalrakt AB, Frontline AB, Scribona AB, Swedish Road Ernployers' Assoc.

and SE-Banken Western Region

Christer Olsson

Stockholrn, barn 1945 Board member since 1994 CEO and rnember of the Board of Walleaius lioes AB Ch airman of the Swedish Shipowners' Assoc.

Me m ber of the Board of Bilspedition Transport & Logistics (BTLJ AB, and stolt-Nieisen SA

Andrew Abbott

Barn 1952

Executive Vice President Trades Shareholding: 36,180 •hares Synthetic options: 25,000

Conrad De Zego

Barn 1940

Executive Vice President Operations Synthetic options: 25,000

Olav Rakkenes

Born 1945 Chairman and CEO Shareholding: 36,180 Syntiletic options: 40,000

Dan Axel Rosen

Bom 1947 Chief Financial Officer Shareholding: 38,180 shares Synthetic options: 25,000

Bernhard Ryding

Barn 1937 President

Shareholdlna: 36,1!'~es

Bernhard Ryding

New York, barn 1937 Board rnember since 1991 President of ACl AB Sharelwlding: 36,180 s hares Synthetic options: 40,000

Jon-Aksel Torgersen

Oslo, barn 1952 Board merober since 1994 CEO of Aslrup Fearnley AIS

deputy board member

Thomas Sjöström

Marstrand, born 1943 Board member since 1994 Chief Financial Officer

Bilspedition Transport & Logistics (BTLJ AB

aud!t or

Coopers & Lybrand AB, Göteborg

Authorized Public Accountants lndividual Audilor in char~te:

Gunnar Hjalmarsson

Olle Gunnarsson

Authorized Public Accountanl Coopero & Lybrand AB, Göteborll

directors' report

The Services Provided

ACL provides liner services in the Atlantic basin, between ports in Northern Europe and the North American Atla,ntic and Gult Coasts. Five ful ly owned, modern liner vessels are operated by ACL.

The vessels have a unique design which gives high flexibility to efficiently handie many different kinds of cargo and are purpose·

built for ACL's trading pattern and cargo composition. They can carry a combination of containerized cargo, that is handled lift·on lift·off (LOLO), rollable cargo, that is handled roll·on roll·off (ROROJ and cars that are also handled RORO.

The vessels are employed in ACL's Iong established weekly ser·

vice pattern. A small portion of ACL's LOLO capacity is chartered · out on a fixed basis, and the ear capacity is charted out on a Iong·

term basis.

Through slot exchange with other Lines, ACL is able to offer, in total, 5 sailings per week for LOLO cargo, which not only supple- ments ACL's port coverage on the North Atlantic but also offers alternative day-of -the·week sa i l i ngs and i m proved transit ti mes.

In cooperation with other regional carriers, ACL is also able to offer shipments of containers via Europe to other parts of the world such as the Eastern Mediterranean, the Black Sea, the Arabian Gulf, the Canary Islands, East Africa and West Africa. To most of these destinations as weil as to southeast Asia shipment of RORO cargoes can also be offered

.

.

As part of ACL's total transport concept and in addition to the sea borne transportation, ACL offers integrateq road, ra il and feed·

er connections in order to provide intermodal door-to-door trans- portation.

ACL provides a total logistics system door to door, including an advanced EDI·based information system. ACL ·focusses on bal- ancing outbound cargo flows with inbound flows to optimize equip-

ment utilization, achieve efficiencies and avoid negative impacts for the environment.

The Market

A soft US dollar throughout most of the year and slow going in many European economies made for reduced growth in the overall North Atlantic container trade for 1996. In the westbound direc- tion it is estimated that volumes were 3% lower than the year before. Eastbound growth in 1996 leveled out and volumes were

l

about the same as in 1995. The westbound container trade was still fargerthan the eastbound but the imbalance (westbound/east·

bound) was reduced to 6% from 9% in the previous year.

r .

ACL's carryings of container cargo decreased about 2%, RORO carryings increased by 3% and the carrying of cars decreased by 17%, which had been anticipated.

The me m bers of the Trans·Atlantic Conference. Agreement (TAGA) implemented rate increases of approximately 5% for con- tainers in the US-Europe trade at the beginning of the year. On an overall basis price levels are far from satisfactory for container transpartatian but remained stable during the year.

Average rates in ACL's overall catgo rnix were samewhat higher eastbound fhan westbound, and campared to 1995 the ~verage rate of all cargoes was 2% higher. ACL carried a total of 211,000 Twenty-foot Equivalent Units (TEUs), down from· 220,000 in

1995.

Operations

On an overall basis ACL's volume development was stable, resulting in an average utilization in the container segment of 82%

{87%), in the.RORO segment of 79% (71 %>and in the ear segment

; ·

Total Tumover

Dthers·

Automobiles · (5%) (6%)

'

income statements

Consolidated Parent Company

(SEK millions) Year Ended December 31 Notes 1996 1995 1996 1995

Sales 2,119.5 2,337.7 2,115.1 2,322.9

other operating income 28.2 34.5 28.4 27.3

Operating expenses (1,700.4) (2,015.8) (1,742.8) (2,007.9)

Gross operating profit 447.3 356 .. 4 400.7 342.3

Amortlzation and depreciation

Vessels 9 (92.9) (93.7) (68.0) (86.2)

other 9 (53.2) (59.0) (48.1) (54.0)

Operating profit 301.2 203.7 284.6 202.1

.

Financial income and expense

Dividend received or anticipated 20.5

Interest income 34.2 39.3 33.3 37.9

l n terest expense (89.8) (123.6) (74.5) (121.7)

Foreign exchange gains/losses, net (10.3) 2.6 (15.2)

<PAJ

lncome before taxes 235.3 122.0 248.7 117.9

iAppropriations 23 (55.7) 0.7

Taxes (deferredl 3 ^(21.1) 0.1 {7.9) (0.1)

Net profit _/ 214.2 122.1 185.1 118.5

1-

balance sheets

Consolidated Parant Company

(SEK millions) At December 31 Nates 1996 1995 1996 1995

Assets

Current assets -·· ,.·.

Cash 33.0 69.5 0.2 40.9

Short-term investments 4 332.8 265.5 332.8 265.5 ::i:

Accounts receivable 5 113.1 114.2 84.8 59.8

Prepaid expenses and accrued income 77.3 62.0 86.0 53.6

Financial receivables 40.0 35.0 40.0 35.0

l riventories 7.9 7.7 7.9 7.7

Total current assets 604.1 553.9 551.7 462.5

Fixed assets

Financial fixed assets 6,7,8 110.4 150.6 241.9 227.9

Deferred taxes 20.6 12.7 20.6

Deferred development costs ·9,10 2.7 3.1 1~9 1.3

Deferred dry-docking costs 9,11 4.5 12.1 4.5 12.1

Vessels 9,12 1,235.6 1,314.5 805.0 1,093.3

Equipment 9,13 145.8 119.6 141.6 114.2

Buildings 9,14 5.4 6.9

Total fixed assets 1,504.4 1,627.4 1,207.6 1,469.4

Total assets 2,108.5 2, 181.3_ 1,759.3 1,931.9 •l

l

Liabilities, Provisions and Shareholders' Equity ^{) l}

Current liabilities

Accounts payable 15 ' 104.0 96.6 91.1 80.2

Accrued expenses and deferred income 108.8 112.5 71.4 68.6

Current portion of loans and finance lease obligations 16,17 236.9 239.0 254.3 275.4

Total current liabilities 449.7 448.1 416.8 424.2

i

tong-term liabilities l

Loans and finance Jease obligations 16,17 697.4 955.5 400.5 780.8

Long-term tax liability 0.5

Total long-term liabilities 697.9 955.5 400.5 780.8

Provisions 18,19 95.9 108.9 62.3 61.4

Untaxed reserves 23 47.0

Shareholders' equity 20

Share capita! 325.0 325.0 325.0 325.0

Restricted/legal reserves 218.5 184.5 177.4 177.4

Retainad earnings 107.3 37.2 145.2 44.6

N et profit for the year 214.2 122.1 185.1 118.5

Total shareholders' equity 865.0 668.8 832.7 665.5

Total liabilities, provisions and shareholders' equity 2,108.5 . 2,181.3 1,759.3 1,931_.9

Pledged assets 21 1,465.4 1,572.9 1,034.3 1,347.4

"

Contingent liabilities 22 151.6 171.8 488.8 352.4

statements of changes in financial position

Consolidated , Parent Company

(SEK millions) Year En,ded December ,31 1996 -1995 - 1996 1995

Operation

Cash from gross operating profit 422.4 329.1 375.9 314.9

Change in working capital (23.9) 7.7 (27.4)- 25.8

Operating cash flow 398.5 336~8 348.5 340.7

Operating investments

Purchases of equipment (72.3) (24.3) (70.1) (22.7)

Deferred costs (1.3) (1.3) (l. O) (1.7)

Proceeds from sale of assets 9.8 6.4 8.8 6.4

Contributlons to/dividends from subsidiaries (3.6) (6.7)

Het cash from operating investments · (63.8) (19.2) (65.9) (24.7)

..

Net flow from operations ' '334.7 317.6 282.6 316.0

Financing and financial investments

Dividend paid to shareholders (17.9) (17.9)

Amortizatio·ns on vessel loans and finance lease obligations (186.4) (167.0) (155.3) (167.0)

other changes in financial receivabh!s ~nd liabilities {44.0) (25.0) (41.6) (16.5)

lnterest, net (55.6) {84.3) (41.2) (83.8)

Het cash from financing and financial investments {303.9) (276.3) (256.0) (267.3)

Net increase in cash and short-term investments 30.8 41.3 26.6 48.7

Cash and short-term investments at January l 335.0 293.7 306.4 257.7

Cash and short-term investments at December 31 365.8 335.0 333.0 306.4

-,

notes to the financial statements

Nate 1. Accounting Policies

The Directors' report and the financial statements have been prepared in accordance with Swedjsh accounting regulations and practices. In addition, future changes in the Swedish regulations on the format of the financial statements and disciasure require-

·ments have, to same extent, !:>een recognized, and finance leases have been reflected in the balance sheets.

The accounting policy for revenue and expense recognition has been changed as of 1996, from a full completion of voyages in the tinandal year to a pro rata of total voyage days before and after December 31. The effect of the policy change has-been adj4sted in the restaled Shareholders' Equity as per January l, 1995. Since there were tax losses which have been utilized agairist this effect, and the benefits from those losses have not been recognized, the amounts credited directly to retained earnings are calculated dis- regardlog the tax effects (See Nate 20).

Significant accounting policies applied by ACL are as follows:

Consolidatian Principles

Fixed Assets

Tangible fixed assets are stated at historical east. Costs incurred for dry-docking of vessels are capitalized and amortized over the normal dry~docking interval. Certaln EDP development costs are capitalized, and amortized over three years.

Depreciation is recorded on the straight-line basis over the esti- maled economic Iifetimes of the various classes of assets.

Leases

Assets leased under externa! agreements that transfer to ACL substantially all the risks and rewards incident to ownership (finance leases) have been capitalized. At the inception of the

t

lease, both the asset and the liability are recorded in the balance sheet at present value of the future rentals. The asset is depreci- ated using the depreciation policy for similar fixed assets. Lease rental payments aretreatedas comprising a capital element, which is applied to reduce the liability outstanding, and an interest ele- ment, which is charged to income.

Rental costs for lease agreements other than finance leases (i.e.

The consolidaled finanda l statements are prepared according to operating leases) are charged to income over the period of the the recommendations of the Swedish Financial Accounting lease on a straight-line basis.

'standards Council regatding consolidated accounts. These rec- ommendations are substantially the same as International Accounting standards. The purchase accounting method is used.

The consolidaled accounts are comprised of Atlantic Container Line AB and afi the campanies in which Atlantic Container Line AB controls more than 50% of the voting rights, e!ther directly or indi- rectly. Shareholdings in associated companies, in which the Group's voting rights amount to at least 20% and a maximum of 50% and over which the Group exercises considerable influence,

Short-Term lnvestments

Short-term investments, acquired as an investment of funds exceeding the current working capita! requirements, are stated at the lower of east or market value determined on a portfolio basis.

Forward Contracts

The results from currency forward contracts, effectively reducing the currency risk of expected future transactions, are split into an interest element and a currency element. The interest element is accounted for over the contract duration and the currency element is recognized in the periods when the hedged transactionstake place.

The results from bunker future contracts, reducing the price ri'sk of expected bunker purchases, are accounted for over the contract duration.

Foreign Exchange

Vessels and Vessel Financing

\

The m arket -val u e for the typ e of vessels which are operated by ACL is quoted in U.S. dollars, and the most significant portion of the·revenue earned by the vessels is denominated in U.S. dollars.

For those reasons the vessels are financed in U.S. dollars. The financing is accordingly designaled as a hedge of the currency risk related to the vessels and the long-term part is therefore reported, using the exchange rate at the date of which the financing was raised. Th.e· exchange losses arising from the short-term part of financing are recognized as expenses in the current year (See Note 17).

Other Monetary Assets and Liabilities

Foreign currency monetary assets and Jiabilities, except for the

Recognition of Freieht Revenues and Expenses

Revenues and expenses related to a voyage are recognized usi'ng a pro rata of total voyage days before and after December 31.

Retirement Benefil Costs

There are

two

principle types of retirement benefit plans within ACL:

~ Defined contribution plans, whereby contribution~ are paid to funds, e.g. government or private insurarice companies, and the funds assume the retirement benefit obligations. Contributions du e for a particular period equal the costs for the services rendered in that period, and are accordingly recognized as expenses in the same period.

- Defined benefit plans, whereby ACL is obliged to provide reti're- ment benefits determined through various formulas, and retains the obligations whether they are funded or not. Actua~ial present values of obligations under defined benefit plans are calculated periodically, and. the expenses related to benefits earned are rec- ognized. Where a defined benefit plan is unfunded, the actuarially determined present value of the retirement benefits is recorded as a provision in the balance sheet, while the liability and related assets are recorded on a net basis in the case of a defined benefit plan which is funded.

vessel financing, are reported using the exchange rat.e at the bal- laxes ance sheet date, and exchange differences are recognized as

income or expenses _in the period in which they arise.

Foreign Subsidiaries

When transiating the financial statements of the foreign sub- sidiarias for incorporation in the Consolidated financial statements, the assets and liabitities are transialed at the exchange rate at the balance sheet Qate, while the income and expense items are trans- latad at the average exchange r<~te for the period. These transla-

Current as weil as deferred taxes have been included in income tax expense. The expected effects of temporary differences have been recognized in the balance sheet as deferred taxes at the tax rates that are expected to apply when the temporary differences reverse. Deferred tax assets arising from the carry forward of unused tax losses are not recognized in the balance sheet.

Note 2. Num ber of Employees

The average number of employees, salaries and remunerations per country is distributed as follows:

Salaries and

Number of Employees Remunerations

Consolidated Parent Company Consolidated Parent Company

Total of which Total Total of which Total

(SEK millions) ' 1996 ^{wo men} 1995 1996 wo men 1995 1996 1996

Göteborg 33 12 36

stockhol m 3 l 3

Sweden 36 13 39

o o o

^10.3

Norway 2 2 3 . 0.7

The Netherlands 59 13 72 21.2

Germany 38 13 44 12.6

United Kingdom 61 12 61 13.2

Canada 20 8 23 20 8 23 6.0 6.0

United States 129 44 136 129 44 136 69.3 69.3

Other 3 l 3 0.4

Total 348 106 381 149 52 159 133.7 75.3

Salaries and remunerations

Members of the Board of Directors

and Managing Directors 10.7 6.2 9.6 5.7

Other employees 123.0 138.6 65.7 63.8

Total salaries and remunerations 133.7 144.8

75.3

69.5

Payroll overheads 37.9 33.0 18.4 18:7

The Executive Management wasofferedan incentive program starting May 7, 1996 and is running through May 7, 1999. The valua- tion of the stock price was made by an independent Broker on May 2, 1996. A total allocation of 155, 000 synthetic stock options has been granted to five Executives, the stock price will be coinpared to anassessed value of NOK 97:90 at May 7, 1999, if the share price exceeds the assessed value at this time, the Executives will be compensated for the difference; The effect on the 1996 result is calcu- lated to MSEK 6.3

Note 3. laxes

All income of the Parent Company is taxable in Sweden due to the tax treaty between Sweden and the United States. The tax rate in Sweden is 28%. The details of reported income tax expense are explained as follows:

Consolidated Parent Company

(SEK millions) 1996 1995 1996 1995

lncome before laxes 235.3 122.0 248.7 117.9

lncome tax calculated at 28% (65.9) (34.2} (69.6} (33.0)

Effects arisi ng from

Appropriations (Nate 23) 15.5 . (0.2)

Ut il ization of carried forward tax losses 48.9 30.0 48.9 30.0

Other (4.1} 4.3 (2.7} 3.1

Reported income tax expense (deferred) (21.1) 0.1 (7.9} (0.1)

At December 31·, 1996, the Parent Company had tax losses amounting to SEK 138.5 million; the estimated related tax benefits of SEK 38.9 million has not been recognized. The tax authorities have questioned SEK 133.0 million of the tax losses. These tax losses may

be carried forward indefinitely. ·

The result of the Swedish tax authorities' questioning might be, besides lower tax losses, that taxes and related interest of approxi- mately SEK 73 million· would be due. The former Parent Company of ACL, Rederiaktiebolaget Transatlantic, has guaranteed to campen-

sate ACL for such a tax charge. ·

Note 4. Short-Term lnvestments

(SEK millions}

Time deposils Ma.rketable seeurities

Total short-term inveslmenls

Note 5. Accounts Receivable

(SEK ll)illions} '

Accounls receivable - trade Receivables from subsidiaries Other short-term receivables

Total occounls receivable

Consolidated

1996 1995

282.0 216.0 50.8' 49.5 332.8 265.5

Consolidated

1996 1995

103.6 99.1

9:5 15.1

113.1 114.2

Parenl Company

1996 1995

282.0 216.0

50.8 49.5

332.8 265.5

Paren! Company

1996 1995

33.9 37.0

48.7 21.8 2.2 l.

O

84.8 59.8

l

Note 6. Financial Fixed Assets

(SEK millions)

lnvestment in subsidiaries (Note 7) Long-term receivables from subsidiaries Other investments (Note 8)

Other long-tj!rm receivables Total financial fixed assets

Note 7. lovestments in Subsidiaries (Parent Company On ly)

(SEK millions)

Atlantic Container Line Ltd Atlantic Container Line Sweden AB Atlantic Container Line Europe BV Atlantic Container lnc.

Atlantic Container Line Bahamas lnc.

Atlantic Container Line UK Ltd.

ACL Shipowners Holding, lnc.

Atlantic Companion AB · TOTAL

l) C/osed do~n 1996-ACL AB was parent

Note 8. Other lovestments

(SEK millions)

Other i nvestrnents:

BRF Wallerius, Göteborg lntis BV

Columbus lntermodal Joint Venture TOTAL

l)

No. of

Shares %

200 0.66 49.5

No. of

Shares %

12 100

10,000 100

4,000 100

100 100

2 100

750 100

, 2 100

4,980 100

Nominal Currency Value

SEK

NLG 100

USD 998

Consolidated

1996 1995 ^· Parent Comj:1any

1996 1995

37.9 96.6

40.2. 43.4

4.2 2.2 1.5

106.2 ---=-14..:..:8:..:..4..:..._.:_----"10~5::.:_. 9=--- --=-14;...;4..:..:. 3:...,_

110.4 150.6 241.9 227.9

Nominal Book Value

Currency Val u e 1996 1995

USD 12 13.9 13.9

SEK 1,000 1.2 1.2

NLG 4,ÖOO 15.6 15.6

USD 5.0 6.8

USD 0.0 0.0

GBP 750 2.2 2.2

USD 0.0 0.0

SEK 498 0.5.

37.9 40.2

Book Value

Consolidated Parent Company

1996 1995 1996 1995

1.5 1.5

0.0 0.0

2.7 2.2

4.2 2.2 1.5

(

Note 9. Amortization and Depreciation of Fixed Assets

(SEK millions)

Deferred development costs Deferred dry-docking costs Vessels

Equipment Buildings

Total amortization and depreciation

Estimated Economic Life

3 years

3 years 25 years 3-10 years 20 years

Consolidated

1996 1995

(1.7) (1.7)

(7.6} (7.7) (92.9} {93.7) (42.3} (49.1)

(1.6) (~

{146.1} (152.7)

Parent Campa~

1996 l 95

(0.4) (0.4)

(7.6} (7.7)

{68.0} (86.2) (40.1) (45.9)

(116.1) (140.2)

Since the vessels were acquired by ACL a few years after they were built, the depreciation rate has been adapted, meaning that the vessels wi11 be fully depreciated 25 years after the originål detivery date .

. Note 1 O. Deferred Development Costs

(SEK millions)

Balance at January l Additions

Amortization

Balance at December 31

Note 11. Deferred Dry-Docking Costs

(SEK millions)

Balance at January l Additions

Dispasals Amortization

Balance at December 31

- - - -

Consoiidated

1996 1995

3.1 1.3 (1.7)

2.7

3.5 1.3 {1.7}

3.1

-

Consolidated

1996 1995

12.1 19.8

(7.6) (7.7)

4.5 12.1

Parent Company

1996 1995

1.3 1.0 (0.4)

L9

1.7 (0.4)

1.3

Parent Company

1996 1995

12.1 19.8

(7.6)

'

^(7.7}

4.5 12.1

,

Note

~

2. Vessels

(SEK millions)

-~~---~--~--~

Cost, owned

Accumulated depreciation

'Cost, chartered

Accumulated depreciation

Total book value December 31

Note 13. Equipment

(SEK millions)"

Cost, owned

Accumulated depreciation

Cost, leased

Accumulat~ depreciation Total book value December 31

Note 14. Buildings

(SEK millions)

C ost

Accumulated depreciation Book value on December 31

Consolidated

1996 1995

1,624.0 1,300.7 (388.4) (212.5) 1,235.6- 1,088.2

323.3 (97.0) 226.3 i,235.6 1,314.5

Consolidated

1996 1995

213.0 157.7

(129.4) (99.5)

83.6 58.2

164.2 215.7

{102.0) (154.3)

62.2 61.4

145.8 119.6

Consolidated

1996 1995

8.7 (3.3)

5.4

8.5 (1.6)

6.9

Parent Company

-1996 1995

990.8 990.8 (185.8) (123.8)

805.0 867.0

323.3 (97.0) 226.3 805.0 1,093.3

Parent Company

1996 1995

199.5 141.3 (120.1) (88.5)

79.4 52.8

164.2 215.7 (102.0) (154.3)

62.2 61.4

141.6 114.2

Parent Company

1996 1995

Note 15. Accounts Payable

"

(SEK millions)

Accounts Payable - trade Payables to subsidiaries Other payables Total accounts payable

Con so l idated 1996 1995

98.7 92.7

5.3 3.9

104.0 96.6

Parent Company 19Q6 . 1995

60.7 48.3

30.0 31.6

0.4 0.3

, 91.1 80.2

ACL has entered into loan agreements for vessel financing, stlpulating prior approval by the lender of major change in corporate control nf thP Comoanv. i.e. 50% ot more.

Note 17. Vessel Financing

Vessel financing is designated as a hedge of the currency risk related to the fair value of the vessels, and is therefore reported using the exchange rate at the date on which the financing was raised. The debt in the consolidated balance sheets can be specified as follows:

Vessel loans

Charter party obligations classified as f i nance leases Total vessel financing

Debt (USD millions)

1996 1995

$121.0

$121.0

$119.0 . $38.7

$157.7

l

Reported Amount (SEK millions)

1996 1995

800.3 780.7 246.0 800.3 1,026.7

Unrecognized Exchange Loss (SEK millions) 1996 . 1995

33.3 15.1

12.7

33.3- 27.8

In accordance with the accounting policies applied, the exchange losses on the short-term part of the vessels financing are recognized as expenses in the current year. During

1996,

expensed exchange losses from vessel financing amounted to SEK

9.7

million

(1995 -

SEK

11.1

million}, and were included in foreign .exchange gainsllosses in the consolidated income statement ·

Nate 18. Provisions

Consolidated Parent Company

($EK millions) 1996 1995 1996 1995

Pensions (Nate 19) 33.9 47.6 0.3 O. l

Post retirement health benefits 25.6 22.7 25.6 22.7

Deferred compensation 6.6 6.3 6.6 6.3

Other provisions 29.8 32.3 29.8 32.3

Total provisions 95.9 108.9 62.3 61.4

Note 19. Retirement Benefil Costs

Pensions and other retirement benefit obligations are reported as provisions in the consqlidated balance sheet as per December 31, 1996 totalling SEK 66.1 million. ACL has employees primarily in the United States, the Netherlands, Germany, United Kingdom, and Sweden. Pension arrangements are different from country to country. The following provides a selection of information about the plans in each respective country.

Employees of ACL in the United States are provided pension benefits through a defined benefit plan. As employees retire, annuities are purchased on their behalf and such employees are released from the plan with no further obligation to ACL. Pension liabilities are actuarially determined, assuming a discount rate of 7.0% and a rate of increase in compensation levels of 4.5% for the calculation at December 31, 1996. The plan assets (SEK 116.4 million) and the calculated tiability (SEK 98.1 million) and an unrecognized transi- tional asset, .including an unrecognized gain (SEK 18.6 mi·llion) are accounted for in the balance sheet for 1996 as a net obligation of SEK 0.3. The transitional asset will be amortized over the average service Iife of the covered group (14.4 years).

In the view of the Company, there are no significant unrecorded net liabilities with respect to pensions or other retirement benefit obligations.

Set forth in the table below is tM number of persons included in the retirement benefit plans; the 1996 expense and calculated tia- bility in respect to the countries.

Defined Benefit Plans (SEK millions)

United States

-pensions (see above)

- post retirement health benefits - deferred com pensati on Germany (pension) The Netherlands {pension) Total defined benefit plans

Defined Contributian Plans (SEK millions)

The Netherlands United Kingdom Sweden Gerrna ny

Total defined contribution plans

- - - -

Act i ve Ernployees - - - -

129 128 18 6

Active Employees 54 60 36 14

lnactive 1996 Calculated Discount Employees Ex pen se liabi lities Rate - - -

260 O. l 98.4 7.0%

129 3.1 25.6 7.0%

l 6.6 7.0%

16 1.3 13.6 6.0%

60 2.1 20.0

6.6 164.2

lnactive 1996 Employees Expense 1.8

26 0.8

0.6 0.2 3.4

Note 20. Shareholders' Equity

All the shares issued by Atlantic Container Line AB have equat voting rightsand participation in the company's net assets and profits.

A Swedish company is required to transfer 10% of the profit for the year to its legal reserve until the legal reserve amounts to 20% of the total share capita!. The amount, which is available for distribution to the shareholders of the Parent Company, consists of the lower of the retained earnings in the Parent Company's balance sheet or the consolidated balance sheet, after the required transfers to legal reserves have been taken inta consideration. However, a dividend may not be declared which, in view of the Parent Company's or the Group's consolidaHon needs, liquidity or financial position in other respects, would be contrary to generally accepted business practices.

Retained earnings at January·l, 1995 have been restated to reflect the retroactive applicaiton of a change in accounting policies (see Note 1).

The changes in shareholders' equity are explained as follows:

Consolidated · (SEK millions)

Balance at January l, 1995

Effect of change in accounting policy (Note l) Transtation gainsllosses on consolidatian

Transfer to restricted reserves from retained earnings Retained Earnings

Net profit 1995

Restated balance at December 31, 1995

Transtation gainsllosses on consolidatian

Transfer to restricted reserves from reta i ned earni ngs Paid dividend

Retained earnings Net profit 1996

Balance at December 31, 1996

Parent Company (SEK millions)

Balance at January l, 1995

Effect of change in accounting policy (Note l) Net profit for 1995

Restated balance at December 31, 1995 Paid dividend

Net profit for 1996

Balance a~ December 31, 1996

Nu m ber of Shares 6,500,000

6,500,000

6,500,000

Share Restricted Capital Reserves

325.0· 179.7

(1.5) 6.3

325.0 184.5

0.1 33.9

325.0 218.5

Share Legal

Capita! Reserve

- - -

325.0 177.4

325.0 177.4

325.0 177.4

Reta i ned Total Earnings Equlty

26.2 530'.9

18.9 18.9

(1.6) (3.1)

_(§dl 0.0

37.2

122.1 122.1

159.3 668.8

(0.2) (0.1)

(33.9) 0.0

(17.9 (17.9)

107.3

214.2 214.2

321.5 865.0

Reta i ned Total Earnings ·Equity

25.7 528.1

18.9 18.9

118.5 118.5

163.1 665.5

(17.9) 07.9)

185.1· 185.1

330.3 832.7

Note 21. Pledged ' Assets

Book value of pledged assets:

(SEK millions)

Owried Vessels

Assets under finance leases:

Vessels Equipment

Financial assets as collateral for vessel loans Otherfinancial pledged assets

Loan balance against pledged assets

Consoi idated

1996 1995

1,235.5 1,088.2 226.3

62.2 61.4

166.0 190.0

1.7 7.0

1,465.4 1,572.9 867.8 1,102.3

Parent Company

1996 1995

805.0 867.0

226.3

62.2 61.4

166.0 190.0

1.1 2.7

1,034.3 1,347.4

525.7 906.5

The nominal value of pledged vessel mortgages with respect to the owned vessels amounts to SEK 1,143.4 million (1995- SEK 829.4 million).

Note 22. Contiogent Liabilities

(SEIS millions)

NYSA guarantees*

Guarantees in favor of subsidiaries Tax authorities cia im (Note 3)

1996 78.6 73.0 151.6·

Consolidated 1995 . 98.8 73.0 171.8

Parent Company

1996 1995

78.6 98.8

337.2 180.6

73.0 73.0

488.8 352.4

*

ACL is a member of the New York Shipping Association (NYSA) and has according to an old contract with the other NYSA members, a contingent liability with respect to the l nternational Longshoremen's Association's pension plan. If ACL ceases to ca l l at t~ e Port of New York, anamount of approximptely USD 11.4 million (1995 USD 14.8 million) will become payable.

r

Note 23. Appropriations and Untaxed Reserves

Swedish tax regulations state that campanies that wish to claim certain of the tax incentives available in Sweden, mustrecord charges in their books equivalent to the gross amount of these incentives.

Accordingly the Parent Company income statement includes changes in untaxed reserves, classified as appropriations. In the consol- idated financial statements, however, the untaxed rese~es are allocated between deferred taxes and restricted reserves.

Contributions between Swedish companies within a group may under certain conditions affect taxable income. In order to facilitate that effect, some of the shareholders' contributions are recognized in the Parent Company income statement, classified as appropriations.

In the consolidated financial statements these contributions are eliminated. '

Appropriations

(SEK millions)

Change in untaxed reserves

Shareholders' contributions affecting taxabte income

Received by subsidiaries ·

Shareholders' contributions not affecting taxable income Total appropriations.

Untaxed Reserves

(SEK millions)

Difference between values resulting fFOm the accounting policies applied, and the net book value, with respect to vessels

Foreign exchange reserve Total

Balance at

Jan. 1 Change 1995 in 1995

0.8 (0.8)

0.8 (0.8)

Parent Company . Balance

· at Jan. l

1996

Parent Company

1996 1995

(47.0)

(8.2) (0.5) (55.7)

Change in 1996

(47.0)

(47.0)

0.8

(0.1)

0.7

Balance at Dec. 31 1996

(47.0)

(47.0)