SAAB: The 2000 Report
STOCKHOLM, Sweden--Feb. 16, 2001--
-- Order bookings amounted to SEK 28 billion.
-- Sales amounted to SEK 17,840 m. (9,053, pro forma 18,018).
-- Operating income increased to SEK 1,533 m. (1,104, pro forma 1,125).
-- Earnings per share amounted to SEK 9.75 (8.82, pro forma 6.90).
-- After-tax return on shareholders' equity 20,0% and pre-tax
return on capital employed 14,6%.
-- Proposed dividend per share: SEK 3.00 (2.50). In addition, the
Board has today decided to propose to the Annual General Meeting that
up to 10 per cent of the company's own shares be made repurchasable.
-- Conditional acquisition of a 65% holding in the Dutch company
Fokker Space.
-- Financial Risk Insurance Program for the regional aircraft
lease portfolio.
-- Divestment of aircraft engine lease operation in the U.S.
Comment by the President
"The past year has involved major changes for Saab and has been
characterized by intensive integration, among other things. The
acquisition of Celsius doubled sales and gathered large parts of the
Swedish defense industry under Saab. Against this backdrop, it is
pleasing that we have been able to maintain good income and order
development with an all-time high in both earnings per share and order
bookings.
Order bookings amounted to SEK 28 billion and the order backlog at
the end of the period was SEK 41 billion. This corresponds to over two
years' invoicing. The good level of order development is also
strengthened by a series of breakthrough orders signifying strategic
advances in important growth areas.
At the same time, we are continuing to streamline the Group.
Divesting mature businesses, such as Combitech Network, is also a way
of realizing values. In January this year, we sold Marine Electronics
to the American company Emerson, an industrially perfect deal that
also generated excellent value for our shareholders.
As expected, the fourth quarter was a strong quarter for our core
business. At the same time, several activities in Other operations
have been divested and in February this year we sold Celsius Amtec,
which was part of Celsius Aviation Services. During the quarter, we
also implemented an insurance solution for the leasing portfolio of
regional aircraft. The insurance means that in practice we have
eliminated the market risk in the portfolio and that further
administration can be concentrated on increasing the value of our
aircraft fleet and thereby the value for Saab's shareholders.
We are able to look back on a busy and successful year. Our core
business has a clear focus and we have recently decided to set up a
Venture Capital function to help our business areas realize further
value from our technical know-how. After delivering a strong
performance with a record high earnings per share in the year 2000, I
look forward to a performance this year at least on the same level,
after a somewhat slow start for the operations."
Important events and structural measures
Acquisition of the defense group Celsius
In February 2000, Saab stated that the company would fulfil the
public offer for Celsius and on December 31, 2000 Saab became the
owner of all the shares in Celsius. At year-end, the book value of the
shares in Celsius amounted to SEK 5 billion. The acquisition has
brought goodwill of SEK 700 million, which will be written off over a
period of 20 years. The goodwill amount has been adjusted partly for
Celsius' share of SPP's surplus, provisions for restructuring costs,
effects of structural measures decided earlier by Celsius and income
from divestments carried out during 2000.
In connection with the extensive structural measures necessitated
through the acquisition of Celsius, a detailed review has been made of
certain major projects. We then found that for certain development
projects in the torpedo and missiles operations from the former
Celsius Group further provisions of SEK 488 m. were necessary. These
provisions were charged to income in the third quarter.
During the year, the integration and structuring process has
entailed streamlining with the aid of divestments, outsourcing and
rationalization in the business areas, closure of the head office
functions in Celsius and new management structures. During the fourth
quarter, the following operations have been divested: the surface
treatment companies Yttec AB and Celsius Nussbaum GmbH, wind pylon
manufacture at Kockums Industrier and the 49 per cent holding in
Australian Submarine Corporation. In addition, the accredited
calibration laboratory in Karlskoga was transferred on January 1, 2001
and in February Celsius Amtec and Celsius Materials Karlskoga AB were
sold.
Other acquisitions and divestments during the fourth quarter
In November, Saab Ericsson Space purchased 65 per cent of the
Dutch company Fokker Space, with access during 2001 provided that all
the necessary licenses are obtained and that the due diligence will be
finalized in a satisfactory way. Saab Ericsson Space has also acquired
a further 13 per cent of Austrian Aerospace, which is thereby owned to
90 per cent. During the first quarter of 2001, Saab Marine Electronics
was sold to the American company Emerson for approximately SEK 800
million, resulting in a capital gain of approximately SEK 650 million
and a positive effect on net cash in the same magnitude as the
purchase sum.
Financial risk insurance program for Saab Aircraft Leasing's regional
aircraft lease portfolio
In November, Saab entered into a financial risk insurance program,
which in practice isolate the performance of the lease portfolio from
future market risk. During 15 years, from 2000, the policy provides a
safeguard against risks such as market cycles, competition,
obsolescence and customer default. The financial risk insurance
program means, that lease income amounted to USD 1,170 m. after
deduction of a first loss of 10 percent or USD 130 m. is now insured.
The transaction cost, including fees to advisers, was USD 37 m. after
tax and is covered by current provisions: therefore, it has not been
charged to the year's income. The insurance policy covers 203 of the
302 aircraft in the portfolio. Of the 99 Saab 340 aircraft not
included in the policy, 57 are funded with non-recourse long-term
loans and 42 are covered by asset value insurance issued by EKN, the
Swedish government agency for export guarantees. Saab will continue to
actively manage the portfolio to enhance its value by maximizing
income.
Business areas
During 2000, Saab consisted of the business areas Saab Systems and
Electronics (formerly Infomatics), Saab Aerospace, Saab Technical
Support and Services, Saab Bofors Dynamics, Saab Ericsson Space,
Celsius Aviation Services and Other operations. From 2001 the leasing
and customer support activities for Saab regional aircraft, together
with parts of Celsius Aviation Services, will form the business area
Saab Aviation Services.
Saab Systems and Electronics
The business area focuses on command and control systems,
simulation systems, avionics, electronic warfare and signature
management as well as commercial operations in IT and electronics.
Operations are characterized by high activity in the export field with
sales to over 70 countries. Order bookings during the year have been
very good for most of the business units, with several market and
product breakthroughs both in Sweden and internationally, and totaled
SEK 5,523 m. (pro forma 4,126). During the fourth quarter, order
bookings were SEK 2,257 m. and included fire control systems for
combat vehicles for Switzerland and Finland (SEK 750 m.), marine
command and control systems for the United Arab Emirates (SEK 250 m.),
laser simulators and mobile systems for combat training for the USA
(SEK 400 m.), electronic warfare equipment for the Eurofighter (SEK
135 m.) air surveillance systems for a country in South-east Asia (SEK
100 m.), and further orders within the ANZAC (ships) and BCSS
(Battlefield Command Support System) programs in Australia. In
November, the UN organ for maritime issues, IMO, made a decision
requiring automatic identification systems (AIS) to be provided on
vessels in the Solas classification from 1 July 2002. This is very
positive for business potentials at Saab TransponderTech, which has
already won several important orders as a result of that decision.
Saab Aerospace
Business area Saab Aerospace develops and manufactures military
aircraft systems, and is a partner and supplier in subsystems for
manufacturers of large commercial aircraft.
The business area produces the Gripen, an integrated and flexible
information, command and weapon system that will remain modern for
many years to come. Three squadrons of the first of the world's fourth
generation combat aircraft are now operative in the Swedish defense.
During 2000, 17 aircraft were delivered to the Swedish Air Force,
bringing the total to 98 out of the 204 ordered by the Defence
Materiel Administration, FMV.
In March, the first export order for the Gripen was formally
received from South Africa, comprising 28 aircraft with a value for
Saab of SEK 9.3 billion. Saab has been taking part in the concept
study for the A380 Airbus Superjumbo since 1997. In December, Airbus
made the final decision to develop the A380 and Saab is now
negotiating on participation in the project as a partner and
subcontractor. Order bookings were SEK 12,171 m. (pro forma 3,752), of
which SEK 575 m. in the fourth quarter included further development
and add-on orders for the Gripen.
Saab Technical Support and Services
The business area focuses on the growing market for high
technology services in aviation, command and control, information,
communications and sensors, and supplies these to both military and
commercial customers. The export share is 11 per cent and 74 per cent
of sales refer to military customers. The business area is dominated
by AerotechTelub, which was formed on January 1, 2000 and is owned to
57 per cent by Saab and 43 per cent by TietoEnator. AerotechTelub is
an advanced service company primarily oriented towards technical
services, operation and maintenance, and customized system solutions
for testing, simulation, traffic management and information. The
business area also includes Saab Nyge Aero, which is active in
aircraft maintenance, aerial target towing and special flight
operations. During the year, Saab Nyge Aero won a breakthrough order
for modification of amphibious aircraft. Order bookings, which
amounted to SEK 2,672 m. (pro forma 2,099), increased strongly during
the year due to acquisitions and a large number of smaller orders.
During the fourth quarter, order bookings amounted to SEK 585 m. From
2001, Celsius Aviocomp, which is primarily active in component
maintenance for commuter aircraft, and CSM Materialteknik form part of
the Business area.
Saab Bofors Dynamics
Saab's activities in precision engagement have been gathered under
business area Saab Bofors Dynamics, which develops and produces
missile systems, portable anti-armor systems and underwater systems
for land, sea and air applications. The business area has a long
presence in many export markets throughout the world and in 2000 sales
were distributed among almost 40 countries. During the year, intensive
integration work has been carried on in the business area to realize
cost synergies and focus the business. This produced a visible effect
from the third quarter. Both the international collaboration projects,
IRIS-T and Taurus, are at the end of their development phase and
negotiations have been started concerning production contracts.
Negotiations between the industry and participating countries on the
development contract for the Meteor have also been initiated.
Development of the RBS 23 Bamse is in its final phase and successful
test firings have taken place. During the year, several countries have
shown an interest in the RBS 15 anti-ship missile and in December an
agreement was signed with the German company DIEHL on collaboration in
production, maintenance and future upgrading for both the German and
Swedish markets, as well as the export market. Order bookings amounted
to SEK 2,853 m. (pro forma 2,793), of which SEK 245 m. in the fourth
quarter.
Saab Ericsson Space
Business area Saab Ericsson Space, which is owned to 60 per cent
by Saab and 40 per cent by Ericsson, develops and manufactures
computers, antennas, microwave electronics and mechanical systems for
the space industry. More than 90 per cent of sales go to export. Sales
to commercial telecommunication projects continued to grow. Other
operations comprised publicly financed projects for organizations such
as the European Space Agency (ESA) and bilateral and Swedish programs.
In November, 65 per cent of the Dutch company Fokker Space was
acquired, with access during 2001. The company specializes in
manufacture of solar panels, robot-guided instruments and structures
for launch rockets. The acquisition makes Saab Ericsson Space Europe's
largest subcontractor in space equipment. The acquisition, however,
implies that all the necessary licenses are obtained and that the due
diligence will be finalized in a satisfactory way. During 2000, the
most important projects in the institutional market were SPOT, which
is a bilateral project between France and Sweden in global observation
satellites, and the ESA projects METOP for meteorological satellites
and ROSETTA, a scientific satellite. In the commercial market, the
most important projects during the year have been participation in the
Eutelsat and Intelsat telecommunications satellites, work in the
Ariane program and deliveries of separation systems for a number of
launch rockets. Order bookings, which were good during the year,
amounted to SEK 765 m. (706), of which SEK 264 m. during the fourth
quarter including computers for the Ariane 5.
Celsius Aviation Services
Celsius Aviation Services, CAS, is a commercial aircraft
maintenance company with its focus on the USA. CAS lies outside the
strategy and orientation chosen by Saab for its future. However, the
work of finding a new owner for CAS has proved more complex than
expected, partly as a result of the trade cycle. The structure of the
business has therefore been reviewed and from 2001 Celsius Aviocomp
forms part of the business area Technical Support and Services. For
several of the other companies, discussions are in progress with
potential buyers and in February 2001 Celsius Amtec was sold to a
Spanish company. The result from the divestment has been taken against
the purchase analysis and will therefore not affect the income 2001.
There will be a positive effect on net cash of close to SEK 500 m.
During the year, operations have been negatively influenced by a
general business downturn in those markets where CAS operates. Order
bookings amounted to SEK 3,408 m. (2,607) and it is an increase also
in USD.
Other operations
Other operations comprises long-term commitments in the form of
the leasing portfolio and maintenance activities for Saab's regional
aircraft. There are also a number of niche companies. In order to
ensure a long-term capital supply for these niche companies and to
realize values, we are seeking structural solutions for several of
these businesses. Order bookings for Other operations amounted to SEK
1,361 m. (pro forma 1,004) and related mainly to spare parts and
customer support for the fleet of Saab 340 and Saab 2000 aircraft.
Future development
Creation of one of the world's leading high-tech companies The
European defense industry is characterized by increasing competition
and swelling research and development costs. This has led to a
consolidation and internationalization of the industry and the
formation of large multinational defense companies operating in a
global market. Through the acquisition of Celsius, Saab has created
one of the world's leading high-tech companies with operations focused
on defense, aviation and space. At the same time, Saab has become a
more comprehensive company in important parts of the future defense,
greatly expanding its operations in the field of advanced services and
increasing its international presence.
Products and systems
In systems and defense electronics, Saab now has an
internationally competitive center for developing advanced defense
systems, based partly on information technology, with a large share of
exports. The order backlog for the Gripen is an important base for
future operations. With the order for the RBS 23 Bamse and the
decision on the Meteor, the foundation is laid for an internationally
active and firmly established missile industry at Saab. The decision
on the Meteor is also extremely important for the long-term export
potential of the Gripen. During the past years, Saab has grown both
organically and through acquisitions in the field of advanced
technical services, which we consider to be an interesting future
market. The space industry is currently undergoing major structural
changes where the growth potential is expected to lie in the
commercial market while growth in the institutional market is expected
to be moderate.
Sales, income and orders
Sales
Group sales doubled to SEK 17,840 m. (9,053, pro forma 18,018).
The acquisition of Celsius is the main reason for the increase. Sales
have increased or are on the same level as last year for principally
all companies except business area Saab Bofors Dynamics. Of sales 62
percent (pro forma 66) were related to defense. Sales to foreign
markets amounted to SEK 8,523 m. (3.444) or 48 percent (38, pro forma
48) of total sales.
The sales increase in Saab Systems and Electronics is mainly
attributable to simulation systems and the commercial operations,
while defense electronics was on level with the pro forma figure in
the previous year. Sales of Saab Aerospace were on level with the
previous year for all three business units. During the year, 17 (16)
Gripen aircraft were invoiced, which corresponds with the current
delivery plan. Invoicing of one Gripen aircraft more than previous
year was offset by a slower rate in the Swedish further development
program. The sales increase in Saab Technical Support and Services is
attributable to acquisitions within AerotechTelub, as well as to
organic growth in the defense-related operations and test systems for
the telecommunications industry. The sales decrease for Saab Bofors
Dynamics, whose operations were concentrated during the year, is
mainly attributable to major deliveries of STRIX during 1999, for
which there was no corresponding figure in 2000, and fewer deliveries
of anti-armor munitions. Sales of Saab Ericsson Space increased
through higher volumes. Sales in Celsius Aviation Services were
unchanged in terms of US dollars compared with the preceding year and
the increase is thus attributable to the higher dollar rate during
2000.
Other operations increased mainly through volume expansion in
customer support to the fleet of Saab 340 and Saab 2000 aircraft,
which amounted to SEK 994 m. (666).
Income and profitability
The increase in operating income, which amounted to SEK 1,533 m.
(1,104, pro forma 1,125), is mainly attributable to improved income
for Saab Systems and Electronics, the result of structuring work at
Saab Bofors Dynamics and capital gains from value realization of
commercial spin-off companies totaling SEK 353 m. During 1999,
operating income included a reversal of the loss risk reserve for the
base contract for the Gripen of SEK 135 m., for which there was no
corresponding figure in 2000. Operating income includes a reversal of
the reserve regarding phase-out of regional aircraft of SEK 246 m.
(255).
The improvement in operating income for Saab Systems and
Electronics is mainly attributable to the military systems business
and the phase-out of certain commercial development projects.
Operating income of Saab Aerospace is on level with the previous year,
excluding the reversal of the loss risk reserve of SEK 135 m. which
was made in 1999. Also in 2000, income is burdened with high costs in
regard to marketing and development for the export version of the
Gripen. Operating income and operating margin have improved somewhat
during the year for Saab Technical Support and Services as a result of
the increased volume. Intensive integration work has been carried on
during the year at Saab Bofors Dynamics to realize cost synergies and
concentrate operations. This produced a positive result after
three-quarters. Operating income for Saab Ericsson Space deteriorated
as a result of increased efforts in the commercial telecommunications
market and associated internally financed development. Income from
Group activities improved, primarily through capital gains. The
decrease in income of Celsius Aviation Services is mainly due to a
poorer market for engine operations in the USA and lower activity in
the markets in Southeast Asia and Australia as a result of the
stronger dollar. Operating income for Other operations, excluding
reversal of reserve in regard to Regional Aircraft, was somewhat
better than in the previous year, but continued to be negative SEK -98
m. (pro forma -123). Structuring work regarding several of these
operations is in progress. Development in operations at Saab Aircraft
and Saab Aircraft Leasing followed the plans set up in 1997. For Saab
Aircraft, income for the year before reversals against the loss risk
reserve amounted to SEK -21 m. (- 47) and for Saab Aircraft Leasing to
SEK -113 m. (-35).
The year's income regarding Regional Aircraft of SEK -593 m.
(-771) has been set against the termination reserve. Project interest
on non-utilized advance payments, which is reported in operating
income, amounted to SEK 172 m. (218).
The increase in marketing expenses compared with pro forma 1999
has increased because marketing activities in general have been more
intensive in every business area this year. This should be seen in
relation to the excellent order bookings this year. Administrative
expenses have decreased compared with pro forma as a result of the
integration work.
Research and development costs, which are on level with pro forma
last year, derived mainly from business areas Saab Systems and
Electronics and Saab Aerospace. Development costs for the export
version of the Gripen were on level with last year.
Other operating income consist mainly of capital gains following
divestment of companies SEK 356 m. (21), reversal of reserves
corresponding to the deficit in Saab Aircraft SEK 21 m. (47), trading
income in Treasury business SEK 45 m. (12), currency gains, etc. SEK
82 m. (57) and income from secondary activities such as insurance
business, property rentals and sales of machines. Other operating
expenses include pension costs SEK 42 m. and capital losses SEK 17 m.
Items affecting comparability amounted to SEK 285 m. and consisted
of company related funds of SEK 527 m. received from SPP, reversal of
reserves of SEK 246 m. concerning Regional Aircraft, and provisions
mainly regarding certain development projects in the torpedo and
missiles operation from the former Celsius Group amounting to SEK 488
m. Items affecting comparability in the previous year concerned
reversal of reserves of SEK 255 m. regarding Regional Aircraft.
Net financial income and expenses amounted to SEK -85 m. (pro
forma -9), of which Saab Aircraft Leasing SEK 68 m. (74). The decrease
is mainly attributable to lower liquid funds. The decrease in net
financial income compared with the outcome in the previous year is
mainly due to the fact, that Celsius was purchased for cash, which
corresponds to lost interest revenue of approximately SEK 250 m. The
income share in HDW, which amounted to SEK 30 m., is reported as
financial income. The average return on external investments amounted
to SEK 4.72 per cent (4.75) and the average liquidity was SEK 5,400 m.
(11,600). Income after financial items amounted to SEK 1,448 m. (pro
forma 1,116).
Current and deferred taxes amounted to SEK -333 m. (pro forma
-352), corresponding to an effective tax of 23 per cent (pro forma 32)
on income after financial items. The deviation of the effective tax
rate in certain years from the Swedish tax rate of 28 per cent is due
to permanent differences in taxation and the fact that the Group has
operations in countries, primarily the USA, with higher tax rates than
in Sweden.
Net income for the year was SEK 1,038 m. (939, pro forma 735),
corresponding to an income per share of SEK 9.75 (8.82, pro forma
6.90). Pre-tax return on capital employed was 14.6 per cent (21.3).
Pre-tax return on capital employed before items affecting
comparability was 12.3 per cent (17.6). After-tax return on
shareholders' equity was 20.0 per cent (21.5).
Order bookings
Group order bookings were all time high and amounted to SEK 28,141
m. (6,849, pro forma 15,267). Order bookings during the fourth quarter
amounted to SEK 5,043 m. The order backlog at year-end amounted to SEK
41,091 m. (23,637, pro forma 29,891), and includes military orders
worth SEK 38,300 m.
Liquidity, finance and investments
Finance and liquidity
Compared with the pro forma opening balance, liquid funds less
liabilities to credit institutions decreased by SEK -1,876 m. to SEK
3,942 m. (5,818). The decrease is net, consisting mainly of nominal
SEK 1,464 m. in funds received from SPP and payment of the insurance
premium for the leasing portfolio of regional aircraft of SEK 528 m.,
payments regarding the phase- out of regional aircraft manufacture of
SEK 604 m., tax paid of SEK 648 m., repurchase of property in
accordance with agreements SEK 400 m. and paid dividend of SEK 266 m.,
in addition to continued high utilization in the Gripen program. The
Group's net liquidity after deduction for allocations to pensions
amounted to SEK 415 m., compared with SEK 2,412 m. in pro forma
opening balance. Compared with the closing balance in 1999, net
liquidity has decreased by SEK 7,983 m., mainly due to the above
mentioned causes, the acquisition of shares in Celsius during the year
for SEK 3.7 bn and the net liability taken over from Celsius of SEK
1.8 bn.
Group equity/assets ratio amounted to 18.2 per cent compared with
12.8 per cent in the pro forma opening balance and 16.8 per cent at
the end of 1999. The interest coverage ratio, excluding items
affecting comparability, was 4.5 (13.9). Shareholders' equity amounted
to SEK 5,670 m. (4,708), corresponding to SEK 53.26 (44.23) per share.
Cash flow
The cash flow analysis and following comments apply to the period
January 1 - December 31 2000, as if Celsius had already been included
in the Group December 31, 1999. Group cash flow from operating
activities continued to be good and amounted to SEK 1,882 m. (1,861).
Working capital decreased as a result of planned continued utilization
regarding the Gripen, which resulted in a heavy decrease in advance
payments from customers. Provisions have decreased, mainly as a result
of the year's deficit in Regional Aircraft and Saab Aircraft Leasing
totaling SEK 706 m. and payment of the insurance premium for the
leasing fleet of SEK 528 m. Lease obligations have decreased as a
result of sales of aircraft from the leasing portfolio. The cash flow
from investments amounted to SEK -502 m. (-1.780). In 1999,
investments in shares in Celsius AB accounted for SEK - 1,267 m.
Operating cash flow amounted to SEK -1,908 m. (-2,368), of which
Regional Aircraft SEK -593 m. (- 404) and Saab Aircraft Leasing SEK
-715 m. (218). The outflow is mainly due to phase-out of Regional
Aircraft production, payment of the insurance premium for the leasing
fleet, payment of tax, repurchase of property, payment of dividend and
continued high utilization in the Gripen program.
Capital expenditures
The year's capital expenditures in property, plant and equipment,
excluding lease assets, amounted to SEK 1,077 m. (447, pro forma 652).
Net investments including lease assets and intangible fixed assets
amounted to SEK 494 m. (467), including lease assets of SEK -476 m.
(83). Included in capital expenditures is a re-purchase of a building
according to agreement.
Research and development
The year's expenditure on research and development amounted to SEK
3,808 m. (3,081, pro forma 4,462), of which SEK 2,948 m. (2.477, pro
forma 3.604) relates to development paid for by customers.
The internally funded research and development concerned mainly
the export version of Gripen, which was on level with last year, and
further development of the Gamer system and the new generation laser
simulators, upgrading of the RBS 70, further development of the AT4
munitions, technical development in the area of space, mainly in
telecommunications, and the development of a new generation of
separation systems.
Personnel
At the end of 2000, the number of employees in the Group was
15,453, compared with 16,665 at the beginning of the year. At year-end
1999 the number of employees was 8,031.
Restructuring
In December 1997, Saab made the decision to end production of
regional aircraft and allocated a reserve for restructuring the
industrial operation. Restructuring is proceeding according to plan.
During 2000, a further number of structural measures were completed,
among others commitments to suppliers. This has enabled a more
reliable assessment of the costs and a decision has therefore been
made on reversal of the reserve of SEK 246 m. (255) in the 2000
financial statements. At year-end 2000, the restructuring reserve
amounted to SEK 1,537 m. The view is that remaining reserves are now
well adapted to continued restructuring.
In connection with the decision to cease production of regional
aircraft, a decision was also made to put a market value on the
leasing portfolio of Saab Aircraft Leasing and to make a provision in
order to adjust the book value to calculated market value. During
2000, the aircraft included in own balance sheet were written down by
SEK 1,451 m., of which SEK 989 m. against the loss risk reserve and
the remaining portion against other liabilities. During 2000, the
insurance cost of SEK 528 m. has also been set against the loss risk
reserve, which thereby amounted to SEK 1,008 m. at the end of 2000. No
reversals of the reserve have been made so far, since the leasing
portfolio has a remaining life of about 15 years.
The restructuring costs, related to the acquisition of Celsius are
included in the purchase analysis and has not affected Group earnings.
Parent Company
Sales and income
Sales of the parent company amounted to SEK 3,921 m. (4,933).
Operating income amounted to SEK 838 m. (626). Net financial income
and expenses amounted to SEK 843 m. (1,147) and income after financial
income and expenses was SEK 1,681 m. (1,773). Of the financial net SEK
743 m. (648) are group contributions and dividends. After
appropriations of SEK -148 m. (-45) and paid and deferred tax of SEK
-305 m. (-321), net income for the year amounted to SEK 1,228 m.
(1,407).
Proposed dividend and repurchase of own shares
The Board of Directors long-term dividend policy is for 20-40
percent of the Group's net income to be distributed. For 2000, the
Board of Directors and the President propose to distribute to the
shareholders SEK 3.00 (2.50) per share or a total of SEK 319 m. (266),
corresponding to 31 (28) percent of the Group's net income. April 9,
2001 has been proposed as the record date and the dividend is expected
to be distributed, April 12, 2001.
Further, the Board of Directors will propose the Annual General
Meeting authorization for the Board to decide on repurchase of the
company's shares up to 10 percent of the total shares outstanding. The
purpose of the empowerment is to provide the Board with increased
scope for action in working with the company's capital structure and
to enable acquisitions to be made where considered appropriate. The
mandate is proposed to be valid until the next Annual General Meeting.
Such repurchases may be effected over the stock exchange or through
offerings to shareholders. It is also proposed that the Board's
mandate include the possibility to transfer repurchased shares in
accordance with current legislation.
Annual General Meeting
The Annual General Meeting will be held at Saab, Linköping on
Wednesday, April 4, 2001 at 18.00. Saab's revised annual report will
be available at the company's head office in Linköping. The printed
Annual Report will be distributed upon request to shareholders from
March 5, 2001.
Ownership
Saab's principal owners are Investor AB, BAE SYSTEMS, the
Wallenberg foundations, Fidelity funds, 3rd AP fund, AMF, MFS funds
and Skandia.
Accounting Principles
The report has been drawn up in accordance with earlier accounting
principles. Celsius is included in the Saab Group as from January 1,
2000. For comparability pro forma figures are published, which refers
to the Saab Group including Celsius for the whole year 1999 and the
quarters of 1999. The pro forma figures have been adjusted during the
year in connection with major restructurings of the Group
Linkoping February 16, 2001
Bengt Halse
President and Chief Executive Officer
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Dates for financial information:
Interim Report for January - March will be published on April 26, 2001
Interim Report for January - June will be published on July 12, 2001
Interim Report for January - September will be published on October
19, 2001
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The 2001 Report will be published on February 14, 2002.
International teleconference:
Today, Friday 16 February, 15.00.
Contact Marita Sidentel. +46 13 18 71 49 for registration and further
information.
Telephone interview with President Bengt Halse:
Today, Friday 16 February, approx. 16.00. +46 13 18 71 75
Contact Anders Stalhammar, Press Officer
The 2000 Report can also be accessed on the Internet at www.saab.se
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Sales by business area
Pro 4th Q Pro forma
SEK m. 2000 forma Change 2000 4th Q
1999 1999
Saab Systems & 4,364 4,294 2% 1,369 1,419
Electronics
Saab Aerospace 3,921 3,964 -1% 1,204 991
Saab Technical Supp & 2,511 2,367 6% 851 718
Serv
Saab Bofors Dynamics 2,348 3,393 -31% 846 1,394
Saab Ericsson Space 713 676 5% 195 170
Internal sales -733 -797 -174 -261
13,124 13,897 -6% 4,291 4,431
CAS 3,241 3,009 8% 885 839
Other operations 1,475 1,112 351 349
Saab Group 17,840 18,018 -1% 5,527 5,619
Sales by market
SEK m. 2000 1999 Change
Sweden 9,317 5,609 66%
Other EU countries 2,734 1,493 83%
Other European 608 512 19%
countries
Total Europe 12,659 7,614 66%
North America 2,899 644
Central and South 464 21
America
Asia 764 546 40%
Australia, etc 997 217
Other markets 57 11
Saab Group 17,840 9,053 97%
Operating income by business area
Per- Per- Pro
centage Pro centage 4th Q forma
SEK m. 2000 of forma of 2000 4th Q
sales 1999 sales 1999
Saab Systems & 289 6.6% 199 4.6% 131 141
Electronics
Saab Aerospace 333 8.5% 450 11.4% 95 189
Saab Technical Supp & 167 6.7% 146 6.2% 61 45
Serv
Saab Bofors Dynamics 46 2.0% -39 45 -16
Saab Ericsson Space 53 7.4% 65 9.6% 9 14
Corporate 340 -40 31 -58
1,228 9.4% 781 5.6% 372 315
CAS 157 4.8% 212 7.0% 52 62
Other operations 148 132 233 23
Saab Group 1,533 8.6% 1,125 6.2% 657 400
Income statement
Pro Pro
forma 4th Q forma
SEK m. 2000 1999 2000 4th Q 1999
1999
Sales 17,840 18,018 5,527 5,619 9,053
Cost of goods sold - - -4,123 -4,347 -6,363
13,427 13,882
Gross margin 4,413 4,136 1,404 1,272 2,690
Marketing expenses -1,578 -1,390 -484 -400 -798
Administrative expenses -1,251 -1,309 -413 -347 -550
Research and development costs -860 -858 -257 -288 -604
Items affecting comparability 285 255 252 43 255
Other operating income 613 347 159 108 181
Other operating expenses -97 -65 -16 2 -71
Share in income of associated 8 9 12 10 1
companies
Operating income 1) 1,533 1,125 657 400 1,104
Result from financial -85 -9 -18 2 273
investments
Income after financial items 1,448 1,116 639 402 1,377
Taxes -333 -352 -99 -138 -391
Minority interest -77 -29 -14 0 -47
Net income 1,038 735 526 264 939
Earnings per share, SEK 2) 9.75 6.90 4.94 2.48 8.82
Earnings per share after full 9.50 6.73 4.81 2.42 8.60
conversion, SEK 3)
1) Includes depreciation of -1,336 -1,311 -417 -367 -918
of which depreciation on -534 -511 -144 -158 -511
leasing assets
2) Number of shares: 106,459,675
as per Dec. 31, 2000
3) Number of shares after full
conversion: 109,247,175
Sales and income per quarter Pro forma
2000 1999
SEK m. 1st 2nd 3rd 4th 1st 2nd 3rd 4th
Q Q Q Q Q Q Q Q
Sales 4,187 4,150 3,976 5,527 3,896 4,970 3,533 5,619
Operating income 247 409 220 657 192 406 127 400
Operating margin 5.9% 9.9% 5.5% 11.9% 4.9% 8.2% 3.6% 7.1%
Net financial
income 8 -35 -40 -18 -28 30 -13 2
Income after 255 374 180 639 164 436 114 402
financial items
Net income 161 254 97 526 103 290 78 264
Earnings per share,1.51 2.39 0.91 4.94 0.97 2.72 0.73 2.48
SEK 1)
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1) Number of shares: 106,459,675 as
per Dec.31 2000.
Five year overview
Pro Pro
forma forma
SEK m., unless otherwise 2000 1999 1999 1998 1997 1996
stated
Saab Group
Order bookings 28,141 15,267 6,849 5,797 16,612 7,736
Order backlog at year-end 41,091 29,891 23,637 23,132 27,122 20,042
Sales 17,840 18,018 9,053 8,248 8,674 8,159
Foreign market sales, % 48 48 38 41 51 54
Operating income 1,533 1,125 1,104 875 -5,316 -2,066
Operating margin, % 8.6 6.2 12.2 10.6 neg neg
Operating margin before 13.5 10.7 17.1 14.7 neg neg
depr., %
Income after financial items 1,448 1,116 1,377 1,218 -4,845 -1,572
before items affecting 1,163 861 1,122 1,018 576 -353
comparability
Total assets 31,119 36,641 28,079 29,680 30,320 28,140
Of which aircraft leasing 6,456 8,877 8,877 9,119 9,604 8,817
operation
Operating cash flow -1,908 - -2,368 -1,105 -2,229 1,195
Capital employed, average 12,183 - 6,866 6,352 6,440 8,975
Return on capital employed, 14.6 - 21.3 21.4 neg neg
%
before items affecting 12.3 - 17.6 18.2 8.8 neg
comparability, %
Return on shareholders' 20.0 - 21.5 25.6 neg neg
equity, %
before items affecting 16.1 - 17.3 21.6 2.4 neg
comparability, %
Profit margin before items
affecting comparability, % 8.4 - 13.4 14.1 7.8 neg
Capital turnover rate 1.46 - 1.32 1.29 1.13 0.92
Equity / assets ratio, % 18.2 12.8 16.8 13.6 10.2 22.5
Interest coverage ratio,
before items affecting 4.5 - 13.9 7.88 6.76 neg
comparability
Earnings per share, SEK 9.75 6.90 8.82 8.55 - -
Earnings per share after 9.50 6.73 8.60 8.35 - -
full conversion, SEK
Dividend, SEK1 3.00 - 2.50 2.00 - -
Number of employees at year- 15,453 16,665 8,031 7,891 7,716 8,110
end
12000 proposed dividend.
Key ratios
Pro Long-term
2000 forma 1999 goal
1999
Operating margin before 13.5% 10.7% 17.1% 15%
depreciation
Operating margin after depreciation 8.6% 6.2% 12.2% 10%
Pre-tax return on capital employed 14.6% - 21.3% -
After-tax return on shareholders' 20.0% - 21.5% 15%
equity
Dividend, share of profit 31% - 28% 20-40%
Equity/assets ratio, excl Regional 22.5% 18.2% 29.7% 30%
Aircraft and SAL
Equity/assets ratio 18.2% 12.8% 16.8% -
Balance sheet
Pro
Dec. forma Dec. 31,
SEK m. 31, Dec. 31, 1999
2000 1999
Assets
Goodwill and other intangible assets 1,619 1,824 375
Property, plant and equipment, etc. 4,712 4,339 2,615
Lease assets 6,502 8,963 8,236
Long-term interest bearing receivables 1,345 1,180
Shares, etc. 950 1,003 1,327
Deferred tax receivables 1,440 1,093 507
Inventories, etc. 3,684 3,954 1,717
Short-term interest bearing receivables 606 231
Other receivables 6,079 6,349 2,511
Cash and marketable securities 4,182 7,705 10,791
Total assets 31,119 36,641 28,079
Shareholders' equity and liabilities
Shareholders' equity 5,670 4,700 4,708
Minority interest in subsidiaries 821 752 206
Provision for pensions 3,527 3,406 1,995
Other provisions 3,821 6,606 5,042
Liabilities to credit institutions 1,963 3,081 181
Convertible debenture loan 228 217 217
Lease obligations 3,916 4,633 4,591
Advance payments from customers, net 1) 3,619 4,631 4,055
Other liabilities 7,554 8,615 7,084
Total shareholders' equity and 31,119 36,641 28,079
liabilities
1Advance payments from customers, gross 6,768 7,796 6,645
Less portion used, which has been -3,149 -3,165 -2,590
reduced from inventories
Advance payments from customers, net 3,619 4,631 4,055
Personnel by business area
Pro
Number 2000 forma Change
1999
Saab Systems & 3,023 3,081 -58
Electronics
Saab Aerospace 4,146 4,196 -50
Saab Technical Supp & 2,794 2,705 89
Serv
Saab Bofors Dynamics 1,884 2,565 -681
Saab Ericsson Space 663 644 19
Corporate 161 233 -72
12,671 13,424 -753
CAS 1,450 1,545 -95
Other operations 1,332 1,696 -364
Saab Group 15,453 16,665 -1,212
Summary of cash flow statement
SEK m. 20001) 19992)
Cash flow from operating activities
Income after financial items excl.
share in 1,440 1,380
income of associated companies
Depreciation and write-down charged to 1,336 918
income
Items affecting comparability -246 -255
Tax -648 -182
Cash flow from operating activities
before 1,882 1,861
changes in working capital
Working capital
Inventories etc. 270 524
Receivables 320 8
Advance payments from customers, net -1,012 -1,136
Other liabilities -612 -554
Lease obligations -717 -362
Provisions -1,537 -929
Change in working capital -3,288 -2,449
Cash flow from operating activities -1,406 -588
Investments in intangible fixed assets -59 -104
Investments in shares etc. 43 -1,285
Investments in tangible fixed assets -911 -280
Investments in lease assets 476 -83
Change in long-term receivables -51 -28
Cash flow from investments -502 -1,780
Operating cash flow -1,908 -2,368
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1) Change compared to pro forma balance sheet as per December 31,
1999.
2) Change compared to pro forma balance sheet as per December 31,
1998.
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Order bookings and order backlog by business area
Order bookings Order backlog
Pro Pro
SEK m. 2000 forma 2000 forma
1999 1999
Saab Systems & 5,523 4,126 8,689 7,250
Electronics
Saab Aerospace 12,171 3,752 27,097 18,847
Saab Technical Supp &2,672 2,099 1,253 778
Serv
Saab Bofors Dynamics 2,853 2,793 4,219 3,765
Saab Ericsson Space 765 706 816 764
Corporate/internal -612 -1,820 -1,997 -2,156
23,372 11,656 40,077 29,248
CAS 3,408 2,607 540 338
Other operations 1,361 1,004 474 305
Saab Group 28,141 15,267 41,091 29,891
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