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SAAB ANNUAL REPORT 2000
Saab is one of the world’s leading high-
technology companies, with its main
operations focusing on aerospace and
defense.The group covers a broad
spectrum of competence and capability
in systems integration.
Saab develops, manufactures and
delivers advanced products and services
for the defense market, as well as for
those commercial markets where there
is a clear demand for its capabilities.
The Group’s own strength and strategic
partnerships enable it both to compete
and to collaborate in international markets.
Saab is active in more than 20 countries
but research, development and produc-
tion are carried out principally in Sweden.
The Group has a total of approximately
15,000 employees.Total annual sales are
in the region of SEK 18,000 million. R&D
corresponds to about 25 percent of
turnover.
Saab is a knowledge company with a broad base of competen-cies in a number of high technology areas. Our employees arehighly educated and for many years Saab has been one of themost popular workplaces among students at Sweden’s institutesof technology.
The ability to develop military and commercial systems thatutilize and coordinate various competencies is Saab’s primarystrength.The company is a leader in advanced systems integra-tion – getting a variety of complex subsystems to work togeth-er. In today’s advanced defense systems, a multitude of complexsystems interact – all of them essential for the system as awhole to work properly.
Bringing together employees with all these competencieswill continue to be a major challenge for Saab.
Saab – Competencies
Information gathering Man/machine
Aerospace
Avionics Sensors
Communication Data fusion
Right information at the right time
Systems integration
Decision support
Network systems engineering Design
Materials technology
IT security Precision engagement
Presentation technology
Real-time simulation support
CONTENTS
Saab 2000 2
OPERATIONS
The defense market 6
Comment by the Chairman of the Board 9
Interview with the Chief Executive Officer 10
Saab Systems and Electronics 13
Saab Aerospace 18
Saab Technical Support and Services 22
Saab Bofors Dynamics 26
Saab Ericsson Space 30
Saab Aviation Services and
Other operations 34
The Saab share 36
Employees 38
Environmental report 41
FORMAL ANNUAL REPORT
Financial review 44
Income statement, balance sheet 55
and statement of cash flows 58
Notes to the financial statements 59
and accounting principles 59
Auditors’ report 73
Board of Directors and Auditors 74
Group Management 76
Addresses 77
Advanced command and control systems
The acquisition of Celsius has broadened Saab’s
opportunities to accommodate this change and
meet the needs of today’s military, primarily
through Celsius’ expertise in command and
control systems and decision support. For
decades, the company had developed and
produced command and control systems for
Sweden and the international market.
Saab’s competencies have grown – at the
same time that its presence in the international
market has strengthened.
2
Saab 2000 – Net Defence
New technology and new missions
The end of the Cold War has placed new demands on the military, particu-
larly with regard to its ability to take part in international missions. At the
same time, technological developments have facilitated new solutions.
The term Revolution in Military Affairs (RMA) was coined in the late
1990s to underscore this change.
Technologically, progress has been most clearly evident in three areas:
information gathering, decision support and precision engagement.
The ability to gather knowledge on the world around us
has become more advanced. Computer aided decision
support has become increasingly powerful. And we are
able to engage militarily with greater precision.
Furthermore, the opportunities to combine
defense systems in networks have
improved.
Net Defence
In 2000 Saab further concentrated its focus on the network
dimension of modern defense. Net Defence is Saab’s net-
work concept that is expected to play a more prominent
role for Western militaries and which was introduced at
the Farnborough International Air Show in July.
Networks – both commercial and military – allow
individual units to support each other. The whole is less
vulnerable than the sum of its parts, at the same time that
resources can be utilized optimally and concentrated
when needed.
A Net Defence is a defense in which each unit, whether
an aircraft, ship, radar station, tank or even an individual
soldier, can benefit from the knowledge and capacity of the
total system. The total defense system becomes more flexible
and less vulnerable - and most importantly more powerful.
3
Highlights of 2000
● The acquisition of Celsius is completed, with its operations part of the new organization as of March.The result is a stronger, more complete company with a sizable market presence and double thesales, bringing together a large portion of Sweden’s defense industry
● Conditional acquisition of 65 percent of Fokker Space, a leading independent supplier of aerospace equipment
● Swedish support for the European Meteor missile project
● Several key breakthrough orders, both exports and in Sweden– 28 Gripen aircraft to South Africa– Production order for the BAMSE air defense missile– Mobile combat training center to the Netherlands– New generation of naval command and control system
● Insurance solution for lease portfolio of regional aircraft
Command andcontrol systems
Electronic warfare
Avionics
Signature management
Simulation and training
Saab Systemsand Electronics
Military aviation
Future aero-space systems
Commercial programs
SaabAerospace
Technical services,operations andmaintenance
Maintenance and modificationof military andcommercial aircraft and helicopters
Aerial targettowing
Saab TechnicalSupport and
Services
Missile systems:– Land– Air– Sea
Anti-armor weapon
Underwater systems
Saab BoforsDynamics
Computer systems
Antenna andmicrowave technology
Control and separation systems
Saab EricssonSpace
Leasing and customer support forregional aircraft
Commercial aircraft mainte-nance
Niche companies
Saab AviationServices*
Other operations
* As of January 1, 2001
4
Group operations at a glancePro forma
2000 1999Net sales, SEK m. 17,840 18,018Share of exports, % 48 48
Operating income, SEK m. 1,533 1,125Operating margin, % 8.6 6.2Income after financial items, SEK m. 1,448 1,116Net income, SEK m. 1,038 735
Equity to assets ratio, % 18.2 12.8Order bookings, SEK m. 28,141 15,267Order backlog on December 31, SEK m. 41,091 29,891Capital expenditures in property,
plant and equipment, SEK m. 1,077 652Research and development, SEK m. 3,808 4,462
Earnings per share, SEK 9.75 6.90Dividend per share, SEK 1) 3.00 2.50
No. of employees at year-end 15,453 16,665
1)2000 Board proposal
“ Considering the integration work we have had toface, I am very pleased we were able to maintain positivetrends in income and order bookings. In fact, 2000 wasan all-time high for us in terms of orders received.
The positive order trend was enhanced by a number of breakthrough orders that advanced our strategic positions in important growth areas. ”
0
5,000
10,000
15,000
20,000
Net sales
98 99 00
SEK m.
Celsius
0
500
1,000
1,500
2,000
Operating income/operating margin
98 99pro forma
00
SEK m. %
Space
CelsiusAviationServices
Otheroperations
BoforsDynamics
TechnicalSupportand Services
Aerospace
Systems andElectronics
Sales per business area
Central and South America
AsiaAustralia, etc.
NorthAmerica
OtherEurope
OtherEU
Sweden
Sales per market
Order bookings
98 99pro forma
00
SEK m.
Celsius
0
10,000
20,000
30,000
40,000
Order backlog
98 99pro forma
00
SEK m.
Celsius
0
1,000
2,000
3,000
4,000
Research and development
98 99pro forma
00
SEK m.
Celsius
0
5,000
10,000
15,000
20,000
Employees
98 99pro forma
00
Celsius
0
5,000
10,000
15,000
20,000
25,000
0
5
10
15
20
5
Saab – over sixty years of high technologyWhen Svenska Aeroplan Aktiebolag was founded in April1937, its primary aim was to meet the need for a domesticmilitary aviation industry in Sweden.
When it began deliveries in 1941 of its first aircraft, thelight bomber and reconnaissance aircraft B17, Saab wasalready the dominant supplier to the Swedish Air Force.Through the modified J21R in 1947 and the introduction of the J29 Tunnan jet fighter in the late 1940s, Saab andSweden entered the jet age in a big way.
Since then Saab and the Swedish Air Force have followedeach other through various generations of military jet aircraftand introduced world-leading technology. Tunnan was followed in the fifties by Lansen and later by Draken(1960) and Viggen (1971).
In 1993 Saab began delivery of Gripen, the first and thus far the only fourth generation fighter aircraft in operationalservice, and took another major step in its development. In 1999 the first export order for Gripen was signed, withthe South African Air Force.
Military aircraft production led not only to commercialaircraft production, but also a number of other businessesand products. While Saab has always been an innovativeknowledge company, the step to industrial developmenthas never been far off.
In the forties the company today known as Saab Auto-mobile was spun off from Saab’s aircraft operations – oneof many successful commercial businesses that originatedfrom Saab. In the sixties Saab took part in the creation ofSweden’s computer, missile and space industries.
In 1969 Saab and Scania merged to form Saab-Scania, acompany combining aircraft and defense systems with the manufacture of automobiles and trucks. In 1990 SaabAutomobile was created, and in 1995 the current Scaniawas separated from Saab. Since then Saab has sharpenedits focus on high technology segments of the defense market.
After having been a wholly owned subsidiary of Investorsince 1991, Saab went public in its current form in 1998. Inconnection with the listing on the Stockholm Stock Exchange,BAE SYSTEMS of the UK acquired a 35-percent stake in Saaband became its second largest shareholder, after Investor.
In 2000 Saab acquired defense group Celsius and becamepart of over a century of Swedish defense industry history.Bofors, for example, has manufactured cannons since thesecond half of the 1800’s, and the defense electronics com-panies within SaabTech Systems and SaabTech Electronicshave their roots in Philips, Data Saab, Ericsson, AGA andSatt Electronics.
By acquiring Celsius, Saab has brought together a largepart of Swedish defense industry history and becomeSweden’s dominant company in the field. Its broad-basedproduct range is clearly focused on future defense needs.
B17 – light bomber andreconnaissance aircraft
J29 – “Tunnan”
J2IR – Sweden’s first jet aircraft
Gripen
Saab 92
Saab-Scania 1969–1995
Bill – antitank weapon
Carl-Gustaf
The defense market:Network defense and internationalizationModern defense: Increase in high tech investments
The end of the Cold War has brought with it a change in
the role of the military in many countries, not least of which
is Sweden. The previous threat of a mass invasion has been
replaced by a more multifaceted scenario, at the same time
that new responsibilities have come to the forefront. In its
most recent defense resolutions – in 1999 and 2000 – Sweden
underscored the new mission of the military in today’s soci-
ety and in particular the ability of Swedish forces to take
part in international missions. The same trend, especially
with regard to a strong international commitment, can be
seen throughout the West.
Concurrent with the changes in national security, rapid
technological developments have created new strategic
and tactical opportunities. In the same way that advanced
computer and information technology has become an
indispensable part of practically every area of civilian
society, it has also changed the way the military fulfills its
duties. Technology that facilitates a sweeping change in
military doctrine is already available or within close reach.
A change in perceived threats together with new technol-
ogy have led to a structural shift in defense procurements,
especially in Western Europe and North America. The high
technology content of defense systems and demands for
well-trained personnel have increased at the expense of
older, less advanced systems and the maintenance of high-
volume organizations.
The pattern of defense spending in Saab’s main markets
varied in the 1990s. A number of countries cashed in their
so-called peace dividend and implemented cutbacks, while
in other countries defense budgets changed little. In Sweden,
defense procurements remained relatively unchanged in the
1990’s, although a volume reduction is planned in the years
ahead. As a whole, procurements have remained fairly con-
stant, and all indications are that we will see a net increase
in defense budgets in the years to come. For one thing, it is
felt that after the 1990’s a number of countries, including the
U.S., are facing latent procurement needs. Secondly, because
of the shift toward high technology systems, an effective
modern defense will have to invest substantially in updates
and new technology.
More effective defense
In recent years the concept of Revolution in Military Affairs
(RMA) and Dominant Battlespace Awareness (DBA) has
figured importantly in the policy debate in which attention
has focused on the opportunities offered by information
technology.
This represents a major shift in military doctrine, where
Fundamental system structure
International modifications of existing systems
Existing systems are phased out
Network modifications of existing systems
Technology testing facilities Testing facilities
for complete systems
New systems based on net-centric architecture
Today’s military
Tomorrow’s military
2000 2025
Defense procurements in the West
After a decline in the mid-1990’s,Westerninvestments in defense materiel have againbegun to rise.The emphasis has shifted tohigh technology materiel, however, at theexpense of volume organizations and lessadvanced technology.
0
20
40
60
80
100USD bn
95 96 97 98 99 00 01 02
Non-NATO Europe
NATO Europe
USA and Canada
NATO prospects
A new Swedish defense takes shape
The transition to a net-centric Swedish defense will take place gradually asnew systems become incorporated and existing systems are adapted toserve in the new structure.Work is presently under way to develop testingfacilities for new net-centric systems. In 2000 Saab received its first ordersfrom defense agencies for so-called demonstrators.
6
technological advancements in systems for information
gathering, command and control, and precision engagement
have radically improved the means to efficiently manage
and organize our armed forces.
All military doctrine is based on the mission a defense
force must fulfill and the technology available to it. Future
doctrine will be no different, adapting to the role assumed
by the military, particularly in the international arena, and
access to new technology.
A military built to meet the threat of a mass invasion on
its home territory faces totally different threats than a mili-
tary that operates in a Europe without the Iron Curtain and
with a growing responsibility for peacekeeping missions
outside its borders.
In both military strategy and technological development,
growing importance is being placed on knowledge of the
world around us. Access to accurate, relevant and immedi-
ate information has become increasingly critical, at the same
time that the ways we gather, disperse and present that
information have improved. While firepower is still impor-
tant, precision is gradually supplanting volume.
These developments have deeply impacted the defense
debate internationally and in Sweden.
A flexible, net-centric defense system
The development of systems that support this approach and
the ability to participate internationally are two cornerstones
in the vision outlined in Sweden’s most recent defense
resolutions. Sweden’s aim is to develop a high technology,
net-centric defense that is flexible enough to accommodate
international missions.
A gradual shift is planned in the years ahead in what
more reasonably should be described as a development
process rather than a revolution, where the change is radical
7
Saab is developing the sophisti-cated net-centric defense of thefuture. By combining informa-tion, command and control, andprecision engagement systemsin networks, a defense becomesmore flexible, more efficient andless vulnerable. In a modernnet-centric defense, each unit -an aircraft, ship, vehicle or evenan individual soldier – obtainsthe information necessary for itto best fulfill its mission.Thenetwork consists of differentforms of military and civil infra-structure to transfer informa-tion wirelessly or through fixed-line broadband networks.
Net-centric defense
Information gathering
Databases
Battlespace awareness
Network
Precision engagementCommand and control
wireless…
broadband
electrical network…
8
THREE DIMENSIONS OF INTERNATIONALIZATIONIn recent years the defense industry hasundergone a major internationalization inimportant respects.This development hasboth political and industrial origins and hasimpacted the defense industry’s structureand cooperations.
For one thing, there is an obvious politicalinterest in strengthening ties particularlybetween Western European defense indus-tries. Secondly, cooperations have becomeincreasingly necessary in order to share the growing cost of developing advancedweapons systems. No country outside theU.S. can afford today to develop a significantweapons system or major weapons platformon its own.
ConsolidationA changing financial situation and strongpolitical will lead to a consolidation in theindustry’s structure during the latter half ofthe1990’s.This trend started in the U.S., butin recent years Europe’s defense industryhas also begun to take on new forms.
In Sweden, the most obvious example isSaab’s acquisition of Celsius, which broughttogether a significant portion of the coun-try’s defense industry in one company.Missile development was one area in partic-
ular where there was strong political pres-sure to concentrate the country’sresources.
Two centers of power have developed inEurope’s defense industry. One is the groupthat has built up around BAE SYSTEMS,with ties to Saab through BAE SYSTEMS’35-percent interest in Saab and their jointventure to export Gripen.The second isEADS (European Aerospace and DefenceSystems), the result of a merger betweenGermany’s DASA, France’s AerospatialeMatra and Spain’s CASA. It should be notedthat Saab cooperates and competes in vari-ous ways with both groups.
International projectsThe internationalization of the defenseindustry has resulted in more than justmergers and ownership ties between com-panies in different countries.Another impor-tant aspect is multinational cooperation onprojects that are too expensive for any onecountry to afford.
In missiles, international collaborationsare common. Saab, for example, participatesin METEOR and IRIS-T, where a half-dozenor more countries are sharing the develop-ment work.These types of cooperations areexpected to become even more commonthroughout the industry.
Policy changes and institutional structuresThrough its membership in the EU andPartnership for Peace, Sweden has strength-ened ties to its neighbors. In many respects,this has also contributed to important insti-tutional changes for the Swedish defenseindustry.The philosophy that shaped Swedenduring the Cold War has been replaced by a stronger emphasis on international coop-eration.
Two important steps in this developmentwere taken in 2000, when Sweden became a full member of the Western EuropeanArmaments Group (WEAG) and was one of the co-signers of a European frameworkagreement that facilitates cooperation andconsolidation in the defense industry.
WEAG shares research and developmentprojects and coordinates defense procure-ment. Including Sweden and the five othernations that became members in 2000,WEAG currently consists of 19 members.
In July 2000 Sweden, the UK, Germany,France, Italy and Spain signed the Letter ofIntent (LoI) agreement, a framework agree-ment concerning, among other things, theuse and protection of classified information,harmonization of military equipmentrequirements, and cooperation in researchand development.
and immediate. It is a process with a clear direction, how-
ever, in which existing systems are being adapted and
developed to operate in a network structure.
Even though Sweden is a relatively small country, it has
the opportunity to command a leading position in this area.
Sweden is far ahead of several larger nations in the deci-
sion-making process. Technologically, it possesses cutting-
edge expertise in both its industrial and defense sectors.
“Flygvapen 2000” (Air Force 2000) is an example of
a Swedish network already in operational service and
designed for both international missions and future
upgrades. The Air Force 2000 concept consists of a number
of subsystems that, taken together, provide a highly
advanced air defense system.
Among the systems at the core of this concept are Gripen,
the StriC air defense system from Saab and the ERIEYE air-
borne early warning radar system from Ericsson Microwave
Systems. These subsystems, which can function autonomous-
ly, have also been exported to countries that organize their air
force differently than Sweden. A key systems feature is that
they are adaptable to a network structure.
Sweden’s conversion to a net-centric defense is expected
to continue for the foreseeable future and figure decisively
in its defense spending. The military is planning to procure
a number of demonstrator projects in which the network con-
cept is coordinated with existing and future defense systems.
At the same time that current systems are being adapted, a
learning process is under way to concretely develop the
structures that will used by the military in 10–20 years.
For Saab, as a leading Swedish defense contractor, this
will mean good opportunities at home and internationally.
9
‘Saab is building the defense systems of the future’
A year of successful integration work and a clear focus
on modern military thinking. Here, Saab Chairman
Anders Scharp gives his view of the past year.
In 2000 the intensive integration work following the
acquisition of Celsius was our main focus at Saab. In one
fell swoop we more than doubled our sales and brought
together a large part of Sweden’s defense industry within
one company.
The integration work has had both positive and negative
sides. We have made faster progress than expected – espe-
cially in certain business areas – and have been able to real-
ize synergies. Cultural differences have been bridged
through a shared conviction that the acquisition made sense
and that there were good opportunities for us to strengthen
and complement each other technologically and industrially.
As a whole, the integration work has progressed accord-
ing to the plans that were set out when the acquisition was
presented in November 1999. The strategic rationale for the
acquisition has been reaffirmed and strengthened in the
process. We are well prepared for the future.
The new Saab is a stronger, more complete company, par-
ticularly in light of the developments we are seeing in the
defense industry in Sweden and internationally. Saab today
has a strong portfolio of products and attractive develop-
ment projects, particularly involving the net-centric defense
of the future. We have the capability to take part in the
“Revolution in Military Affairs” that is under way in
Sweden and around the globe.
Through BAE SYSTEMS’ ownership and cooperation in the
export of Gripen, Saab has a strong position in the indus-
try’s restructuring and will continue to be active in this area.
We have to be in a position to capitalize on all opportunities
for structural transactions and cooperations.
Further acquisitions – primarily within the business areas
– are important to good growth, especially if we are going
to strengthen our position in the areas we are focusing on.
We also have to be strong enough to develop leading part-
nerships with other companies.
Saab’s strategy is clear: We are focused on a number of
military growth markets, but we also have the ability to uti-
lize our competencies in commercial areas. As part of the
effort to create value for our shareholders, in the commercial
area we have successfully divested Marine Electronics and
Combitech Network. The insurance solution for our lease
portfolio of regional aircraft is also an example of how we
are creating value for Saab’s shareholders.
In line with Saab’s policy to distribute 20–40 percent of
income before tax to shareholders, the Board of Directors
is recommending a dividend for 2000 of SEK 319 m., or
31 percent of net income.
As a representative of the Board, I would lastly like to
express our gratitude to Saab’s employees. The past year
was one of considerable change. We have become twice as
large a company with a new structure and new products.
Some of our previous competitors are now our colleagues.
Integration work is never painless. But because we have
agreed on the logic of merger of Saab and Celsius, we have
been able to find solutions to problems both large and small.
From the day the acquisition was announced in November
1999 until today, we have made consistent progress. It
would never have been possible without the outstanding
efforts of all those who work for our company.
Anders Scharp
Chairman
Saab AB
10
The past year was one of major changes for Saab. The acquisition
of Celsius doubled sales and brought together a large portion
of Sweden’s defense industry within one company. Through
a number of strategic divestments, Saab further strengthened
its focus on select areas of the defense market. Saab President
Bengt Halse gives his view of the year and the challenges
the company faces.
How would you describe 2000 for Saab?
“The acquisition of Celsius naturally played a major role.
For many of us, it meant a big change – in ways both big
and small. Considering the integration work we have had
to face, I am very pleased we were able to maintain positive
trends in income and order bookings. In fact, 2000 was an
all-time high for us in terms of orders received.
The positive order trend was enhanced by a number of
breakthrough orders that advanced our strategic positions
in important growth areas.
The South African order for 28 Gripen aircraft we signed
in 1999 was registered in 2000, now giving us another refer-
ence customer for our continued sales work. In missile sys-
tems, the Swedish customer ordered our BAMSE air defense
missile and the multinational Meteor cooperation received
political approval.
Our command and control systems strengthened their
position through orders for a new generation of naval com-
mand system.
Training Systems received an important order from the
Netherlands for the Gamer mobile combat training center,
adding an important reference customer in the NATO mar-
ket. These were just a few examples that are strategically
important to Saab’s future.”
How is the integration work progressing?
“Obviously a huge acquisition like Celsius places great
demands on our employees and organization. During the
year we experienced both the positive and negative sides of
integration work, but as a whole I feel we have succeeded
beyond expectations. If we compare with other integrations
– internationally in the defense industry and in other
Swedish industries – we have maintained a high tempo and
a consistent focus.
During the year I met strong support for the integration
in every part of the company and at all levels. Our employ-
ees have done a fantastic job.
Celsius has given Saab strong capabilities in many areas,
such as information and command systems. We have
gained a broader product range and a stronger marketing
organization.”
What has the integration meant for the various parts of Saab?
“Our various parts have developed into a unified company
with a clear focus on a number of growth markets.
Dynamics has brought together Sweden’s missile industry
in a single organization and created a turnkey missile sys-
tems supplier. In the very first year Dynamics was able to
reverse a loss into a profit.
In the short term the greatest potential, we feel, is in the
Systems and Electronics business area. This is also an area
where we have a lot left to do. Last autumn a new manage-
ment accelerated the restructuring of the business area’s
operations in line with our objectives.
Technical Support and Services, Space and Aerospace
were able to continue with little change, although we also
see important synergy opportunities within and between
these business areas.”
When the Celsius acquisition was announced in November
1999, you said that Saab would focus primarily on military
growth markets. Are Saab’s markets growing?
“What we said then is even more true today. If you look at
both the Swedish and international market, the trend we
talked about in November 1999 has been further accentuat-
ed. The markets we focus on are either already in a growth
phase or have growth potential in the years ahead.”
Focus on growth markets
11
You have said that the business area managers are the heroes
of the new Saab. What did you mean by that?
“In a company like Saab, there are many heroes, but what
I wanted to get across is that each business area manager
has clear financial goals and the mandate to reach them.
Their ability to deliver will play a decisive role in the
success Saab has as a whole.
Saab now has a new structure. All the business areas
operate as industrial units with clear operating objectives
and essentially all the resources they need to achieve them.
Today’s business areas are also more homogenous and com-
parable in size than they were before. That’s why it was
natural to draw attention to them.”
Will you continue to make acquisitions?
“Yes, Saab will grow organically as well as through new
acquisitions. The business area and Group managements
both are constantly analyzing acquisition targets that could
help us to strengthen and develop our business.
Space’s conditioned acquisition of 65 percent of Holland’s
Fokker Space is an example of such an acquisition. It makes
us Europe’s leading aerospace equipment supplier and
gives us a good platform for our continued development as
a leading independent company in the area.”
How are you concentrating and focusing operations?
“One thing we are doing is divesting operations that don’t
fit our strategy.
This does not mean that they are necessarily unprofitable,
just that Saab – and the companies themselves – would not
benefit if we have to give them financial and other resources
that are needed in our core business. Selling mature opera-
tions is also a way to realize value for our shareholders.
In 2000 we divested Combitech Network, Traffic Systems,
Bofors Weapon Systems, two repair yards, two surface treat-
ment companies, an oil rig, a number of properties and the
electronics production plant in Karlskoga. In January of this
year we sold Marine Electronics to Emerson of the U.S.,
which was a perfect deal industrially and also generated
good value for our shareholders.
The biggest challenge now is to find a solution for Celsius
Aviation Services. Now that we have divided CAS up into
five parts, it will be easier to find structural solutions and
business opportunities. The divestment of Celsius Amtec
is an example of this.”
During the year you obtained an insurance policy for the
lease portfolio of regional aircraft. What does this mean?
“Basically what we did was eliminate the market risk in
the portfolio. We will still manage the portfolio, however, and
by doing so successfully help to improve the value of our
fleet of regional aircraft and add value for our shareholders.”
How would you characterize the defense market’s develop-
ment and Saab’s position?
“There is a common misconception that the defense
industry operates in a shrinking market. That isn’t the
case if you look at it from a global perspective and at the
type of systems and products we represent. The cutbacks
being made by the Swedish military, for example, are
mainly in operations.
In recent decades Saab, like many other companies in
the defense industry, has undergone a major transformation.
In addition to a rapid restructuring and rationalization, we
have transformed ourselves from a more traditional manu-
facturer to a modern knowledge company.
Among other things, our capabilities in advanced systems
integration have come to the forefront. This means not only
understanding advanced technology, but also being able to
get a series of complex systems to work together. Saab is
therefore well-positioned in light of the changes we are
seeing in the market.”
Has Saab taken on a stronger military focus?
“To me, Saab is first and foremost a high technology know-
ledge company. The fact that we are active in a number of
12
military growth markets is because our competencies clearly
have a military application and we understand the defense
market. It is our ‘home market.’
At the same time we have competencies and develop
technical solutions with commercial application. Most of
our business areas have sales and exports to commercial
markets, from commercial aircraft and IT consulting to
navigation systems and telecommunication satellites.”
What is your strategy for the commercial market?
“Saab is and will continue to be an open intellectual
environment where employees have the opportunity and
mandate to explore commercial areas of application for our
technologies. We are and will be an innovation-driven, open
organization. At the same time we can’t lose our financial
focus; we have to earn money doing what we do.
We have a business strategy that supports our core
– where development and production resources must
be available if we are to maintain our position in core
areas.
Commercial Aircraft Programs – where a large part of
development and production resources are currently devoted
to the production of Gripen – are important, for example, if
Saab is to be effective in military aviation. At the same time,
by serving as a partner in the development of the world’s
leading passenger aircraft we can develop our business and
improve our design, materials and production know-how.
We also have a more traditional spin-off strategy, where we
utilize technological breakthroughs within Saab for other
areas of application.
The challenge with both of these strategies is to manage
good ideas in an efficient, profitable manner. We can learn
a lot by participating in new markets, but we realize that
there are others with more experience and better opportuni-
ties. Partnerships are therefore a natural alternative when
we find commercial applications for our technologies. We
can add the competence we lack, spread the risk, reduce
the need for direct control from Saab and create value for
our shareholders.”
Looking ahead, when and how will Saab achieve its objectives
in terms of profitability and growth?
“If we look at growth, we doubled our sales through the
Celsius acquisition, and I see good prospects for further
organic growth and acquisitions in several of our business
areas. At the same time, of course, there is still some restruc-
turing left for us.
Due to the acquisition of Celsius, we currently are not
meeting some of the margin objectives we have set. As
I have said before, our goal is to reach them again within
three years. There is no reason to accept a lower level of
ambition.
As far as our income for 2000 is concerned, we are
pleased, despite the extraordinary allocations we had to
make in connection with the acquisition. We are headed
in the right direction.
We are now where we said we would be: Saab is focused
on the defense industry’s growth markets and we are in a
good position, by working along with our partners, to bring
our technologies to commercial markets where they are in
demand. We are financially strong and I feel we are succeed-
ing well in our ongoing efforts to recruit and develop
employees with cutting-edge competencies in all high tech-
nology areas of our company.
The future looks bright.”
13
Dan Jangblad:
“The Saab Systems and Electronics business area
comprises Saab’s capabilities in avionic systems and
systems and services for training, simulation, command
and control, electronic warfare and signature manage-
ment. Our customers can be found around the world
among air forces, armies and navies. Our breadth and
depth, particularly in command and control systems,
gives Systems and Electronics a strong position in the
Swedish military’s transformation from a defense against
mass invasion to a net-centric, flexible, proactive military
(Net Defence).
This new type of defense is being debated in a growing
number of countries and has battlespace awareness as
its key component. Since many of the business area’s
products involve the processing, presentation and, when
necessary, simulation and modeling of information, we
are convinced that the global market for our products will
grow. Our share of exports is already high (50 percent),
and as a world leader in several product areas we feel
there are good opportunities for continued profitable
growth.
In 2000 order bookings were very good, at the same
time that we began extensive integration work. This will
continue – in part to achieve economies of scale and in
part to prepare for exciting new business opportunities
in areas where our current operating areas converge.”
Saab Systems and Electronics comprises Saab’s compe-tencies in defense electronics, primarily with a focus onmodern, net-centric defense.The business area utilizes a broad range of technologies to develop offensive anddefensive systems for information defense.These systemsallow decision-makers – from the highest-ranking officerto an individual soldier – to see and hear while avoidingbeing seen or heard. Systems and Electronics also developsequipment for simulation and training.
SAAB SYSTEMS AND ELECTRONICS
99pro forma
00
SEK m. %
Operating incomeand operating margin
0
100
200
300
400
500
0
5
10
99pro forma
00
SEK m.
Netsales
0
1,000
2,000
3,000
4,000
5,000
Electronic warfare
Avionics
Command and control systems
Training and simulation
Signature management
Commercial systems
Operating areas
Share of Saab’s sales
Total, SEK 18,573 m., net
14
Command and control and information systems:
The right information at the right time
Establishing battlespace awareness requires systems that
collect and process various types of intelligence and present
them in real time. In today’s defense, these systems have
become increasingly important. With the right information
and decision support, the efficiency of a defense system can
be enhanced many times over.
Command and control and information systems that meet
the demands of a future crisis situation integrate a large
number of competencies and technologies. Sensors are used
to gather information, while so-called data fusion sifts out
the right information for the task at hand. Presentation tech-
nology – understanding the interface between man and
machine – plays a key role in ensuring that the right
information actually is understood by the decision maker.
In addition, everything must be done in real time. Those
who have to make a decision have to be able to do so based
on what is happening at that very moment.
The business area develops three types of command and
control systems: land-based, naval-based and vehicle-based.
They cover all types of weapons.
The main land-based system is STRIC, an air defense sys-
tem. STRIC supports the coordination of air combat forces
and, together with Gripen and other information gathering
systems, sits at the core of Sweden’s “Air Force 2000” concept.
Naval command and control systems are an area where
Systems and Electronics has been supplying the Swedish
military and navies around the world for decades. Saab is
a world leader in the field, and international demand is
expected to grow in the years ahead. On behalf of the
Swedish Navy, it is currently developing one of the world’s
most modern command and control systems, for the corvette
Visby.
Vehicle-based command and control systems are a market
with considerable potential. Warners, command and control
and fire control systems are increasingly being integrated in
combat vehicles and in the process adapting them to future
defense systems.
Command and control systems account for a fourth of
the business area’s total sales. Approximately 70 percent of
invoiced sales are exports, and as a whole the area’s growth
potential is good.
Electronic warfare: disrupt and deceive
The ability to establish battlespace awareness is determined
in large part by the information you have on your enemy,
on your own conditions, on the weather conditions, and so
on. But it is just as important to try to prevent the enemy
from accessing information. The less informed (or more
misinformed) that enemy is, the easier it is to gain battle-
space and tactical superiority.
Saab has extensive systems know-how in electronic
warfare, i.e. the ability to disrupt and in other ways deceive
one’s enemy.
Electronic warfare systems are available for all types of
combat forces as well as the protection of large fixed instal-
lations and infrastructure. Saab currently develops equip-
ment for all branches of the military and offers products
within the three main types of systems: jammers,
warners and decoys.
Jammers utilize electromagnetic radiation to disrupt
and confuse the enemy’s radar system. Systems and
Electronics has developed, among other things, the
EWS 39 electronic warfare system for Gripen.
Warners indicate when an enemy is trying with sensors,
for example, to localize a unit. For decades Saab has been
supplying radar warners and jammers for generations of
aircraft used by the Swedish Air Force and in recent years
has made breakthroughs in the international market.
In June 1999 Germany decided to equip its naval and
air force Tornados with radar warners from Saab. The order
is part of a mid-life upgrade that the Germany Navy’s fleet
of Tornados will undergo.
Decoys confuse and divert approaching missiles. Flares
and chaff are used, for example, to confuse the target-seek-
ing mechanisms in missile systems.
Saab is currently the market leader in this area and has
long been a major exporter of decoys. Harrier, Tornado,
Battlespace awareness: A cornerstone of Net Defence
SAAB SYSTEMS AND ELECTRONICS
The Air Force’s STRIC air defense system supports effective utilization of air combatforces and sits at the core of Sweden’s “Air Force 2000” modernization concept.
15
F-14 Tomcat, Viggen, Gripen, Jaguar, Mirage, Nimrod and
Eurofighter 2000 are all the aircraft for which Saab has
developed or is developing decoy systems. In addition,
Saab is a leading supplier of decoy dispensers for training
and tactical applications.
One of Saab’s key competitive advantages is its ability to
integrate jammer, warner and decoy systems. This assures
maximum results – the right countermeasure at the right time.
Electronic warfare accounts for one fifth of Systems and
Electronics’ total operations. Forty percent is exports, and
growth opportunities are good.
Signature management – staying invisible
Signature management – or advanced stealth systems – is
closely related to electronic warfare and consists of tech-
nologies and systems that allow fixed installations, vehicles
or even individual soldiers to avoid being seen by the naked
eye or with radar, UV or IR sensors. Modern signature man-
agement systems are developed from traditional camouflage
technology and utilize materials technology and an under-
standing of how today’s leading sensors work.
Saab commands leading-edge expertise in this field and
currently offers a product range covering a large part of the
electromagnetic spectrum, from ultraviolet light to radar.
In 2000 a major order was received from the Swedish
Defence Materiel Administration for the multispectral
mobile camouflage system for Leopard 2 tanks.
Products are sold in 40 countries and exports account for
approximately 80 percent of sales. The operations have con-
siderable growth potential.
Avionics – flight control
The trend in avionics systems is toward an increased use
of computer-guided electronics. Saab develops display sys-
tems, computer equipment, and electronic and mechanical
equipment for aircraft.
Operations are tied closely to the Gripen system and
include the development of Gripen’s EP-17 cockpit display
system, where four displays give the pilot access to various
forms of tactical information.
In 2000 two small but strategically important export
orders were received. One was from the U.S. helicopter
manufacturer Sikorsky, which ordered the development of
a rotor control system, an important breakthrough for Saab
in a new market. In addition, the Spanish Air Force has
decided to equip its EF-18a/B fighters with a digital solid-
state recorder (DiRECT) from Saab.
Avionics represents one fourth of the business area’s total
sales.
Simulation – education and training
Handling sophisticated defense systems requires education
and training under realistic conditions.
The growing need to be as well-prepared and trained
as possible, including for missions in foreign environments,
is driving demand for various forms of realistic simulation
systems.
Saab has extensive experience developing systems
that help combat forces train under realistic conditions.
Operations comprise laser simulator systems, combat
training centres, visual simulators and range equipment.
Laser simulation, currently Saab’s largest market, consists
of simulators that replace ammunition with laser light.
Saab has developed advanced simulator systems for
combat vehicles, anti-tank weaponry, small arms, helicop-
ters and personal detection vests for individual soldiers.
Saab’s BT 46 laser simulator system, which has set the world
standard, is a so-called two-way simulator that not only
records each firing and hit. The system also takes into
consideration the distance to the target as well as its
movements, providing the gunner feedback on where
and how the target was hit.
In 2000 BT46 was sold for the first time in a helicopter
application through a development contract for Germany’s
PAH-1 A1 anti-tank helicopter.
Combat training systems, which coordinate various types
of simulation equipment in an overall system, is a growing
new area. Saab has developed GAMER, which makes it pos-
sible to combine live training, combat operations, strategy
SAAB SYSTEMS AND ELECTRONICS
Design, development and delivery of:Target radar Tactical control systems Fire control systems
System integration of:
Anti-aircraft systemsReconnaissance radar
Equipment to distinguish friend from foe Radio intelligence system
Navigation radar
Gyro/navigation5-inch gun
Sonar
SaabTech Systems has supplied naval command and control systems for theAustralian Navy’s frigates. In addition to developing and providing subsystems fortactical control, fire control and target indication, the integration of a command andcontrol system also involves adaptation of existing systems.
16
and tactics. The system is modular, scalable and mobile and
can therefore be expanded when necessary. GAMER may be
used by units outside their home base, for example, on inter-
national missions.
The U.S. Army, which previously purchased a GAMER
system, has ordered three additional systems together with
a large number of personnel detection vests and laser simu-
lators for infantry weapons. The contract value is approxi-
mately SEK 400 million.
In 2000 the Royal Netherlands Army ordered a mobile com-
bat training center based on the GAMER concept. The contract
value is SEK 560 million, including on-site operational and
logistic support in the Netherlands for 15 years. The order is
an important breakthrough for GAMER in the international
market in general and the NATO market in particular.
Training and simulator systems represent approximately
one fifth of Systems and Electronics’ total sales, with exports
accounting for 92 percent.
Commercial operations
Systems and Electronics has a number of commercial
operations outside its core business of defense information
systems and electronics. Most originated as military technol-
ogy developed by the company, althrough in some cases
they are operations Saab acquired and which relate to its
core business.
The strategy with all commercial operations is to comple-
ment our own technology with capital and expertise from
outside partners.
In early 2001 Saab Marine Electronics was sold to
Emerson of the U.S. Saab Marine Electronics develops level-
gauging systems for tankers along with land-based equip-
ment used by the oil industry, among others. The company
originated from the radar-based level gauges that Saab
developed for missile systems in the 1970’s. Through the
divestment, Saab was able to realize significant value.
Saab Combitech Systems grew out of the real-time pro-
gramming competence needed for the computer system in
the Australian submarine project Saab Instrument was
involved in. Today Saab Combitech Systems is a consulting
firm specialized in the development of embedded real-time
systems and has a broad base of clients in digital TV,
defense, telecommunications, the automotive industry and
medical equipment. They include Ericsson, Gambro, Nokia,
auto manufacturers and aerospace contractors. Combitech
Systems has been profitable since its start in 1992 and today
has over 250 employees.
For the past decade Saab TransponderTech has been
developing transponder systems for customers in Sweden
and internationally. In 2000 the International Maritime
Organization (IMO), the United Nations’ specialized agency
responsible for improving maritime safety, decided to make
automatic information systems (AIS) mandatory on the
56,000 ships in the so-called Solas class. Saab Transponder-
Tech, the world leader in AIS, will have a major opportunity
to supply transponders to ships both in and outside the
Solas class. The system also has good prospects of achieving
the same standard status in aviation.
Highlights in 2000:
• Development of the command and control system for
Visby corvettes
• Order for mobile combat training center from the
Netherlands
• Order for air command and control system from
Southeast Asia
• Order for electric warfare equipment for Eurofighter
• Initial order for radar warners for the German Air Force’s
Tornado
• Order from Switzerland and Finland for fire control
equipment for CV 9030 combat vehicle
• Order for naval command and control center from the
United Arab Emirates
• Simulator order for the German Army’s PA-1-A1
helicopters
• Order for GAMER instrumented training system from
U.S. Army
• Development of uniform countermeasure technology
• Order for digital registration (DiRECT) from
Spanish Air Force
SAAB SYSTEMS AND ELECTRONICS
Saab’s BT 46 laser simulator fire and control system for the PAH-1 helicopter in the German AGDUS program.
17
“We are developing the world’s most mod-ern naval command and control systemand making the Visby corvette a hyper-modern weapon,” says Björn Gullbrand,the project manager at SaabTech Systemsresponsible for developing CETRIS, thecommand and control system that pro-vides the brains behind Sweden’s newVisby corvette.
Project management, which began in1998, includes responsibility for ongoingcontacts with the customer, but mostimportantly ensuring that 150-200 softwarecomponents are integrated according toplan in the command and control system,which in turn is integrated with other sub-systems into a total system.
“This is the largest command and con-trol system developed in Sweden and atremendous challenge,” Björn Gullbrandexplains. “It is not only unique in its per-formance, but also because of the largeshare of so-called COTS (Commercial Off-The Shelf) equipment we were able to use,i.e. components that aren’t developedspecifically for military purposes. Thisapplies to both computers and software.”
A modern naval command and control system provides the ship’s officers andother crew members with real-time infor-mation from its own and other sensors(radar systems, etc.). Access to largeamounts of data and real-time presentation– knowing what is happening when it hap-pens – require sophisticated data fusion (the ability to sift through and process data) and man/machine interaction (how data is presented to the user). In both of theseareas, SaabTech Systems has world-leadingcompetencies.
“Our value-added is in the developmentand adaptation of various components, par-ticularly the development of software andability to integrate a large number of sub-systems into a functional whole,” he contin-ues. “The real time aspect is critical. Youhave to be able to see what’s happeningright away, not fifteen seconds later.”
The ability to distribute information overdata links - a technology that has been usedby the air force for a relatively long timeand in the past 10-12 years has becomemore common in naval systems - makes itpossible to establish information superiority
at sea as well. The Visby system can workeffectively together or with support fromother systems.
“Because of its stealthy capabilities, theVisby corvette places special demands ona command and control system,” says
Björn Gullbrand. “We have to be able tokeep track of and in real-time present thevarious parameters that determine theship’s stealthiness. In addition, to supportthe corvette’s systems for underwater war-fare, we have equipped the presentationsystem with a three-dimensional underwa-ter map to help determine the underwaterlandscape in real-time.”
Currently around 200 employees areinvolved in development work. The sys-tem is scheduled to be in service on thecorvettes in 2003, and the project is keep-ing to its original timetable.
During his time at SaabTech Systems,Björn Gullbrand has held a number ofpositions. Apart from managing the devel-opment of the command and control sys-tem for Visby, he spent over four years atthe business area’s Australian unit as wellas on other international assignments.
The Visby corvette:Designing the world’s most modern naval command and control system
SAAB SYSTEMS AND ELECTRONICS
Björn Gullstrand has managed the development of the CETRIS command and controlsystem used in the Swedish Navy’s modern Visby corvettes.
SEK m.
99pro forma
000
100
200
300
400
500
0
5
10
Operating incomeand operating margin
%
99pro forma
00
SEK m.
0
1,000
2,000
3,000
4,000
5,000
Netsales
* external sales
Operating areas
Share of Saab’s sales
Total, SEK 18,573 m., net
Gripen
CommercialPrograms*
Future Products
18
Åke Svensson:
“As a supplier of the core components of a modern air
force, Saab Aerospace is on the cutting edge in the develop-
ment of future defense solutions. In Gripen, we have a sys-
tem that can stretch our customers’ defense capabilities
beyond that of a conventional aircraft.
Gripen today is a cornerstone in the Swedish defense.
We have secured our first export order and are confident
that we will succeed in a number of export markets.
Growth opportunities for the business area are mainly
a product of the growing need to replace older generations
of fighter aircraft and the demand for defense systems
that can do more than conventional fighters. We offer a
technology that raises the concept of a military aircraft
to a totally new level and a system that provides a unique
level of performance for the money.
Commercial air traffic is expected to increase in the
decades ahead, and we have a good opportunity to take
part in the development of aircraft that meet this rising
demand. By participating in commercial projects, we can
utilize and develop our competencies and the production
capacity in our plants.
With our current order backlog, Aerospace will be able
to generate a profit margin that meets Saab’s overall
objective in years to come. By focusing on long-term
growth, we can expect profit to further improve.”
Saab Aerospace develops entire aircraft and subsystemsfor the military market.The business area utilizes andintegrates the competencies needed to build world-leading military fighter aircraft that combine powerfulweaponry with advanced command and control andinformation systems.
Moreover, Aerospace serves as a partner and supplierto manufacturers of large commercial aircraft.
SAAB AEROSPACE
Gripen: A unique defense system
Gripen is built on a totally digital infrastructure, which
means that it can be continuously updated and enhanced.
The Gripen system will therefore remain the ultimate in mil-
itary aviation for several decades. Today’s customers are
buying a system that their air forces can grow and develop
with, and Saab has a product that will remain a world
leader for some time to come.
The Gripen system, which is Saab Aerospace’s most
important product, is the first – and to date the only –
fourth-generation multi-role fighter to enter service. Gripen
has a unique position as an integrated command and con-
trol, information and weapon system, and in several areas
has introduced new technological concepts and solutions.
Gripen is both multi-role and swing-role. This means
that a single aircraft can serve various types of missions.
In previous generations, there were three different types of
aircraft for intercept, attack and reconnaissance missions.
Swing-role means that the Gripen system not only can
conduct different types of missions, but that the pilot can
reconfigure the aircraft for new missions while in the air
by simply pressing a button.
Cost-efficient defense – a system to grow with
At the time the Gripen system was ordered, development
costs for fighter aircraft had followed a steadily climbing
curve. Since the first jet aircraft were introduced, each
succeeding generation had been more expensive. One of the
conditions set by the Swedish government when it ordered
Gripen was that this trend be broken.
In every respect, Gripen has met or surpassed the
demands initially made by the customer, and it has a
considerably lower lifecycle cost than older competing
systems. Gripen is a highly cost-effective defense system.
The financial advantages are not limited to the system’s
low total costs, but also are a factor of its versatility. Because
one Gripen can replace several older aircraft and play a
broader role in an overall defense, a potential enemy must
always prepare for the worst, assuming that all Gripens are
equipped to meet the enemy threat.
Gripen therefore has a greater practical impact at a lower
total cost.
At year-end 2000 a total of 98 Gripen had been delivered
to the Swedish Defence Materiel Administration, making it
a cornerstone in the future defense structure now taking
shape in Sweden. This is attributable to Gripen’s inherent
strength and ability to be integrated into a total defense
system. In two important respects Gripen is designed to
grow and develop with its customers. Because it can be
upgraded, it can be kept modern and adapted to changing
needs. In addition, it is designed for a net-centric defense, i.e.
a structure that can share information with other units
through the system’s data links.
Export market
Gripen’s international sales have been handled since 1995
by a joint venture with Saab’s British partner, BAE SYS-
TEMS. The combined international contacts and marketing
channels of these two companies give the Gripen sales
organization the strength it needs to compete with French,
American and Russian alternatives. Furthermore, the politi-
cal support of the Swedish government is reinforced by the
vital support of the British. Participation in a broad interna-
tional industrial and financial network through Investor’s
ownership of Saab has been another important factor in the
export efforts.
In December 1999 South Africa became the first foreign
customer for the Gripen system, ordering 28 aircraft for a
contract value of SEK 9.3 billion. This breakthrough order
has provided an important reference for the consortium’s
continued export work.
All of Gripen’s competitors – especially the U.S. F16 and
The air force technology of the future
SAAB AEROSPACE
Base battalion
Air tactical command
Operational management Anti-aircraft shipsCombat command
center
“Air Force 2000” is the nameof the air defense system that the Swedish military hasdeveloped.The core systemsconsist of Gripen, STRIC airdefense and ERIEYE long-rangeradar.The concept also inte-grates anti-aircraft units – inthe future the BAMSE missilesystem as well as a number of other radar systems andweapons platforms.
19
F18 and French Mirage – belong to the older third genera-
tion. The new aircraft expected to reach the market in the
future – the U.S. F22, Eurofighter and French Rafale – will
be heavier, more expensive and more costly to operate than
Gripen. The performance of the Gripen is already competi-
tive with that of the American Joint Strike Fighter, which
is not expected to enter service until after 2010.
In the decades ahead an estimated 2,000 fighters will have
to be replaced in the markets that are available to Saab.
In addition to constant analysis work, export activities
are being pursued actively in around ten countries, all of
them in different stages of modernizing their air forces.
Other potential countries are continuously monitored by
the organization that Saab-BAE SYSTEMS has built up.
In some markets, older second-generation fighters will be
replaced. In others, it is third-generation aircraft, in many
cases the F16, that will have to be replaced.
Future air defense
The Future Products business unit is responsible for devel-
opment work on future defense technology. In addition
to long-term work, the unit is developing technology to
support current operations, from production processes to
customer support.
Operations are clearly focused on net-centric defense -
and therefore on defense systems that integrate command
and control, information and weapon functions and which
can operate in networks.
One area that received a great deal of attention in 2000
was unmanned aircraft, so-called UAV’s (Unmanned Aerial
Vehicles). Saab is participating in a number of European
development projects to study opportunities for UAV’s,
with Future Products involved in various concept studies.
Other important areas include the Swedish and Nordic
helicopter procurement process and the maintenance of
Viggen and SK60.
Partner to the commercial aircraft industry
The Commercial Programs unit develops and manufactures
structures and subsystems for military and commercial air-
craft. Commercial Programs serves as an in-house supplier
of production services for Gripen and spare parts for the
regional aircraft previously manufactured by Saab as well
as an external partner and supplier to the two remaining
manufacturers of large commercial aircraft, Boeing and
Airbus Industrie.
Because of its roots in commercial aviation and the pro-
duction resources available through Gripen, Commercial
Programs qualifies as a supplier at the highest systems level,
tier two, where it has responsibility for specific parts of the
aircraft. In Saab’s case, it develops and manufactures complex
wing and floor structures and the main landing gear doors
for several aircraft in the Airbus family.
In December 2000 the final go-ahead was given to the
Airbus superjumbo A380. The A380 will be the world’s
largest aircraft, with room for over 650 passengers, and is
designed to meet the growing demand for commercial air
service that is expected for the foreseeable future.
For Commercial Programs, the A380 project under certain
conditions will provide an opportunity to expand the part-
nership with Airbus and take part in important aspects of
development and design work.
Development of a new military transport aircraft
The development of a new military transport aircraft, the
A400M, is another area where Saab has opportunities to
utilize its competence in the design and production of air-
craft. A400M is being developed by the Airbus Military
Company to replace the aging fleet of transport aircraft that
has been serving the needs of many of Europe’s militaries.
The half-dozen countries that are participating in the project
thus far have ordered slightly over 200 aircraft. Saab’s role is
first and foremost dependent on a Swedish decision to join
in the project.
Highlights in 2000:
• The first export order for 28 aircraft from South Africa
was finalized
• First Gripen flight with helmet mounted display
• The development on unmanned aerial vehicles (UAV’s)
received a great deal of attention
SAAB AEROSPACE
20
In 2000 Airbus decided to begin production of the new A380 superjumbo.
There are many different dimensions to the export of a defense system as complexas Gripen. The combination of product performance, political considerations,financing and industrial participationplaces special demands on the sales work.
In the early 1990’s Saab had contact withrepresentatives from South Africa, and inparticular the South African Air Force, inmany situations, including international air shows. Because of South Africa’s growing interest and clear indications thatit planned a major defense procurement,Saab and its partner, BAE SYSTEMS, established a campaign organization for South Africa.
From Saab’s end, the organization wasled by Kjell Möller, who, together with theBritish campaign manager, coordinated theresources that Saab and BAE SYSTEMS hadaccess to. Kjell Möller has been with Saabfor various lengths of time since 1996 and,through a long period at Dynamics in Linköping, has been with Gripen’s market-ing department since 1996. Today he is itsmanager.
“As a former competitive bicyclist, it’s natural to use the analogy of a race,” hesays. “In 1997 the South African Air Forcedecided it wanted the Gripen. In 1998 theirgovernment decided to proceed with finalnegotiations. In September 1999 we werepresented as part of the total procurementpackage and in December of the same yearthe contract was signed.”
Sales work of this type usually involvesa number of parallel processes. The abilityto find solutions for financing and in-dustrial participation often plays just as prominent a role as the aircraft’s per-formance.
“Without a product of the highest worldclass, there wouldn’t have been a marketfor us, but to be successful you also have to build confidence among a wider circle of interests, including politicians, business-men, union representatives and not least ofall the public,” says Kjell Möller. “The combination of the Gripen system and the industrial participation we were ableto offer made us very strong, but the political support from both Sweden and
the UK was also important. There is a big advantage being Swedish in SouthAfrica.”
In all, around 100 people have beeninvolved on site in South Africa at varioustimes to work on the campaign, in additionto others within and outside Saab’s organi-zation. During the final negotiations, 15-20people were there to support in variousways the negotiating team working on thecontract and ensure that all the interestedparties were on board.
“One thing is certain,” says Kjell Möller.“A deal like this one isn’t over until it’sover. What you thought was assured yes-terday might be open for discussion today.The competition is tight and there are somany puzzle pieces that it takes is endlessfootwork to get everything in place.
We now have a contract, but the cam-paign is continuing. The South Africancustomer is very competent and respectedand and we have gained a very valuableally when we are out in other export markets.”
Selling the Gripen:A long race
SAAB AEROSPACE
21
Kjell Möller (center), who was in charge of the Gripen campaign in South Africa,together with South African aircraft technicians during their training at Saab in Linköping.
99pro forma
00
Netsales
0
1,000
2,000
3,000
4,000
5,000SEK m.
99pro forma
00
%
Operating incomeand operating margin
0
100
200
300
400
500
0
5
10
SEK m.
Operating areas
Share of Saab’s sales
Total, SEK 18,573 m., net
Maintenance, incl. Nyge Aero
Technical services
System deliveries
22
Jan Eiborn:
“Saab Technical Support and Services is a high technol-
ogy service business with a broad base of competencies
and longstanding customer relations with both the
Swedish military and civilian customers in Sweden
and abroad.
Thanks to our ability to reach new markets with the
competencies we have developed within the business
area, we have been able to grow from our core at the
same time that we have made acquisitions.
The development of a modern net-centric defense
is creating opportunities for many parts of Technical
Support and Services. The consulting expertise we com-
mand, particularly with regard to IT and communications,
in combination with our understanding of the defense
market, gives us a strong position in this area.
Technical Support and Services’ responsibility for heli-
copter operations gives us a clear role within the overall
Group and is an important factor in developing coopera-
tions with the other business areas.
Our growth opportunities in the years ahead are good
but require that we continue to develop our competencies,
strengthen our consulting image and consolidate our
position as a service company.”
Saab Technical Support and Services provides sophisti-cated technical services, maintenance and customizedsystems solutions in information technology, electronicsand aviation technology.Technical Support and Servicesis also engaged in special flight operations services, pri-marily aerial target towing and testing of electronicwarfare equipment.The business area’s market consists of defense customers, government agencies and selectniches industry.
SAAB TECHNICAL SUPPORT AND SERVICES
23
Aircraft maintenance
The Saab Technical Support and Services business area is
dominated by Aerotech Telub, which is 57-percent owned
by Saab and 43-percent by the IT company TietoEnator. The
business area also comprises the aviation services company
Saab Nyge Aero. As of 2001 it also includes Aviocomp,
which is responsible for component maintenance for regional
aircraft within the business area. AerotechTelub comprises
a broad base of competencies that have been developed in
large part due to the unique situation with regard to mainte-
nance in the Swedish military.
Unlike in many other countries, the Swedish military has
been outsourcing a large part of its maintenance needs for
years. Basically, maintenance in Sweden is done at the front
and back level. The former is handled by the military’s own
personnel and consists of basic measures. The latter is partly
regional and partly central. The central back level is where
the most advanced maintenance is done on systems and
equipment, the majority of which has been handled for
decades by non-military companies. AerotechTelub has long
held a strong position in the Swedish market for military
maintenance.
AerotechTelub generates sales of approximately SEK 640
million in the maintenance segment. In addition to projects
from defense customers – the Air Force, Navy and Army –
the segment also includes maintenance of commercial air-
craft and helicopters and their equipment as well as mainte-
nance and calibration of various types of measurement
equipment. Customers can be found around the world and
include Embraer, Eurocopter and Scandinavian Airlines.
Technical services
To meet demand for maintenance services from the Swedish
defense and its other customers, AerotechTelub over time
has developed extensive expertise in various technical
services: aircraft and helicopters, tele-, data and radio com-
munications, command and control and information, sensors,
testing, simulation, calibration technology and logistics.
The competence AerotechTelub has added has been neces-
sary for it to retain its position as the Swedish defense’s
most important supplier of sophisticated maintenance ser-
vices and has paved the way for new markets and opera-
tions. Technical services are the largest operating segment
and currently account for half of AerotechTelub’s sales of
approximately SEK 1,100 million.
AerotechTelub’s range of technical services comprises all
stages of a project – from pilot studies, modeling and simu-
lation, procurement support, systems integration, and test-
ing and verification to operational support. Participation
in all these stages has helped the company build up
comprehensive know-how, which, in combination with
its broad-based technical competence, allows it to cost-
effectively integrate new solutions into existing systems.
Customers in the segment consist of the Swedish military,
industry and government agencies responsible for technical
infrastructure. In the years ahead good demand is expected
to continue throughout the entire area.
System deliveries
In the same way that AerotechTelub’s technical services origi-
nally grew out of the maintenance operations, its ability to
develop and provide customized systems solutions is a prod-
uct of the extensive competence it has gained in technical
services. Customized systems solutions are AerotechTelub’s
third operating segment. Unlike the technical services seg-
ment, where its consulting role is more pronounced, here
the company supplies a finished solution.
AerotechTelub offers customized systems solutions in
the areas of testing and calibration systems, training systems,
information systems, air traffic control and telecommunication
contract services.
The operating segment generates approximately SEK 500
million and accounts for 25 percent of AerotechTelub’s sales.
Its customers are in defense, government agencies with
responsibility for technical infrastructure and industry.
Defense contractors dominate among the industrial cus-
A versatile high technology service company
AerotechTelub maintains the Swedish military’s HKP 9-helicopters.
SAAB TECHNICAL SUPPORT AND SERVICES
tomers, although civil telecommunication and IT companies
represent a growing share.
Outsourcing, net-centric defense and exports
In a short-term perspective AerotechTelub’s growth oppor-
tunities in the defense market are primarily related to the
increasing complexity of defense systems. In the longer
term the growing interest in military outsourcing with be
a driving force. A positive, long-term relationship with the
Swedish defense, together with AerotechTelub’s extensive,
broad-based competencies, is essential to the company’s
opportunities to deliver technical services and customized
systems solutions to Sweden’s future net-centric defense.
Turnkey know-how and the ability to integrate new technol-
ogy and solutions in older systems are important success
factors in this area. Demand for civilian network structures
is creating similar business opportunities.
Because it provides maintenance and technical services
for the most advanced systems in the Swedish defense,
AerotechTelub is able to reach international markets when
these systems are exported. For example, AerotechTelub
services a large part of Gripen’s aftermarket, and each
new export transaction opens new business opportunities.
Ericsson ERIEYE radar system and SaabTech Electronics’
radar warner are other systems with major export potential
and where AerotechTelub can either provide maintenance
or supply services and testing systems so that maintenance
can be handled locally.
Saab Nyge Aero
Saab Nyge Aero is active in the maintenance and modifica-
tion of military and commercial aircraft and helicopters as
well as special flight operations services. Agency sales of
aircraft and spare parts is offered as well.
Nyge complements AerotechTelub in part because of its
maintenance responsibility for various aircraft, including all
SK60 aircraft and the Swedish Coast Guard’s aircraft, and in
part because of Nyge’s prominent position in special flight
operations.
With a fleet of 15 aircraft and operations in Norway,
Denmark, Austria and Greece, in addition to Sweden, Saab
Nyge Aero is one of Europe’s leaders in target towing. Special
flight operations also comprise advanced testing of electronic
warfare equipment for customers including the Swedish
defense and major defense contractors, including Saab.
In 2000 Saab Nyge Aero received a breakthrough order for
the modification of the amphibian aircraft from Canada’s Bom-
bardier Aerospace. The contract value is SEK 183 million and
adds an important reference customer in the efforts to market
Saab Nyge Aero as an international modification center.
Nordic standard helicopter
The Swedish government is currently involved in three
different procurement processes for helicopters for both
military and commercial applications.
In addition to its expertise in helicopter technology, the
Saab Group has extensive competence in helicopter systems
integration, avionics, integration of weapon systems,
modification of flight systems to Nordic conditions
and development of training systems. In order to bring
these resources together and concentrate Saab’s efforts
vis-à-vis the Swedish customer, helicopter operations are
being coordinated in Technical Support and Services.
Since September 1999 the governments of Sweden,
Norway, Denmark and Finland have been involved in a
procurement process for a Nordic standard helicopter that
will be used for, among other things, light transports, troop
transports and sea rescues. The procurement will include
100 percent offsets from the seller.
In the short term Saab’s role will be as a subcontractor, inte-
grating weapon and avionics systems in the helicopter, han-
dling some production, adapting the helicopters to Swedish
conditions and in other ways assisting in the procurement.
Highlights in 2000:
• Order for modification of amphibian aircraft from
Bombardier Aerospace
• Order for LS 10 command and control system for
Sweden’s tactical air command
• Order for testing system for the Leopard 2 tank from the
German company Krauss-Maffei Wegmann
• Completion of consulting services for the Öresund
Consortium in connection with the inauguration of the
Öresund Bridge between Sweden and Denmark
• Order for automatic weather observation systems
(AWOS) from Swedish Civil Aviation Administration
• Order for modification of Vertol helicopters from Swedish
Defence Materiel Administration
24
Civil air traffic control is one of the areas where AerotechTelub supplies customized solutions.
SAAB TECHNICAL SUPPORT AND SERVICES
25
A modern air force is a huge investmentand in order to benefit as much as possiblefrom every flight hour it must have power-ful evaluation tools. Today’s air forcerequires systems that can replay and evalu-ate each training flight in order to helppilots learn and build experience withinthe force.
Gripen is equipped with one of theworld’s most advanced systems for evalua-tion and analysis, UTA, which wasdesigned by AerotechTelub and has been an integral part of Gripen since 1998.
Stefan Storm was formerly the projectmanager for UTA and is now head of theMission Support Systems business unit,which means he is responsible for ensuringthat the systems integrated in UTA worktogether. His overall responsibilities alsoinclude the further development of thesystem together with the customer.
Stefan Storm has worked at Aerotech-Telub since his receiving his degree in computer engineering from LinköpingInstitute of Technology in 1988, beginning
as an engineering trainee. Since 1993 hehas served as project manager for UTA.
“UTA is a so-called debriefing system,which allows the pilot, together with hisinstructor, to evaluate a mission immedi-ately after its conclusion,” he explains.“You can see what went well, what mis-takes were made, who would have beenshot down and who would have success-fully completed his mission.”
When the Gripen system was developed,an advanced UTA was a requirement anda key to meeting the customer’s demandsfor high total cost efficiency. The systemwas procured in 1991 in competition andat a fixed price, with delivery in 1998.Development work began in 1996, runningparallel with the first deliveries of the sys-tem.
“There are several reasons why this is an advanced, cost-effective system,” saysStefan Storm. “We have succeeded indeveloping and integrating advancedCOTS technology (i.e. standardized equip-ment developed for the commercial mar-
ket), which means that we can get veryhigh performance at a relatively low cost.”
But there is also an important culturalexplanation: The Swedish customer is anexperienced user, which is reflected in itsfamiliarity with advanced technology, buteven more so in the fact that Swedish AirForce officers are willing to analyze theirmissions. It is acceptable to make mistakesand discuss them in order to improve.
Pre-flight planning is just as importantas post-flight evaluations. The system thatthe Swedish Air Force uses for planning iscalled PLA, and it too was developed inlarge part by AerotechTelub.
The next generation of systems will contain both pre-flight planning and post-flight evaluations. In Gripen, this systemwill be called MSS, Mission SupportSystem.
AerotechTelub’s aim is to work togetherwith Saab Aerospace to develop this sys-tem, which will help both Swedish andinternational Gripen users.
UTA: evaluation, training and analysis for a more efficient air force
SAAB TECHNICAL SUPPORT AND SERVICES
Stefan Storm, head of the project support unit at AerotechTelub and former projectmanager for Gripen’s advanced evaluation and training systems.
99pro forma
000
100
200
300
400
500%
Operating incomeand operating margin
0
5
10
SEK m.
99pro forma
000
1,000
2,000
3,000
4,000
5,000
Netsales
SEK m.
Operating areas
Share of Saab’s sales
Total, SEK 18,573 m., net
Air/Sea
Airdefense
Land
Infantry
Underwater
26
SAAB BOFORS DYNAMICS
Ingemar Andersson:
“2000 was a year of major changes for the Swedish missile
industry. In addition to implementing the largest struc-
tural change in our history, many difficult decisions were
made to create the conditions that will ensure the industry
remains competitive. Saab Bofors Dynamics’ employees
have played a key role in a tough but necessary restruc-
turing.
The coordination of Sweden’s collective resources and
the Swedish government’s decision to participate in inter-
national programs such as METEOR have strengthened
us internationally. At the same time we have continued
to develop our own cooperations – for example, with
Germany’s Diehl, in the development, production and
marketing of the RBS15 anti-ship missile.
It will take a few years before Bofors Dynamics reaches
the profitability objectives we use within Saab but in
2000 we took a big step in the right direction. We have
implemented a major restructuring and reversed a loss
into a profit.
Looking forward we have a number of projects with
good development potential. Our biggest challenge is to
reach out more to the export market with our product
portfolio.”
Saab Bofors Dynamics is a complete missile systems supplier and develops advanced systems for precisionengagement. Systems have been developed for theSwedish Army, Navy and Air Force as well as for the international market. Bofors Dynamics has the ability to develop high-quality weapon systems either on its own or as part of international cooperations. Systemsthat support and build a modern net-centric defense.
27
A coordinated Swedish industry
– restructured for the future
Saab Bofors Dynamics is a complete missile systems supplier.
The business area has a range of competencies to meet the
needs of the Swedish defense and which provide it with
good opportunities in the export market. Saab’s acquisition
of Celsius has brought the entire Swedish missile industry
together in one company. The coordination of Sweden’s
resources in this area was a strong desire of the Swedish
customer and facilitates considerable synergies. At the same
time the integration challenges have been great, as have
demands for industrial changes.
Bofors Dynamics currently offers weapons systems
through five business units: Air/Sea Missile Systems,
Air Defense Missiles, Land Missile Systems, Underwater
Systems and Infantry Weapons. Sixty percent of sales are
from missile operations (the first three units), while the
remaining 40 percent is divided fairly evenly between
the underwater and infantry units.
The restructuring and concentration of operations has led
to a reduction from 2,500 to 1,800 employees. In research
and development, redundancies have been identified and
savings implemented. New working methods are being
developed whereby development projects will be organized
by competence resources rather than geographically.
Development and production
The emphasis in Dynamic’s operations has shifted in recent
years to research and development. This is due to the long
cycles of development and production. A number of projects
in different stages are expected to reach production in a
few years. Even more emphasis is expected to be placed
on development, when important projects such as the
METEOR air-to-air missile go into development. The
business area’s future is dependent on its ability to maintain
good profitability in both development and production.
In both guided and unguided anti-armor systems, Bofors
Dynamics has a strong product range in series production,
with good exports and profitability. Among its systems are
Carl-Gustaf, AT4, STRIX and BILL 2.
The anti-armor weapon Carl-Gustaf has for decades been
a leader in its niche, shoulder launched infantry weapons,
and is used in over 40 countries. Over 800,000 of the light,
disposable AT4 anti-armor weapon and its successor,
AT4CS, which also can fire from inside buildings, have been
sold throughout the world. STRIX, a terminally guided anti-
armor projectile, is produced and exported to Switzerland,
among other countries. Other product areas have also had
export success. For example, the RBS70 air defense missile
has been exported to nearly 20 customers and used by
various branches of the military around the world.
National missile strategy
In 2000 Sweden drafted a national missile strategy. The deci-
sions to order series production of the BAMSE air defense
missile and proceed with Swedish participation in METEOR
are important elements of this strategy and directly impact
on Saab’s operations.
The order for series production of BAMSE not only means
that the business area can enter the production stage of a
Air-to-air
Air-to-surface
Cruise
Air defense
Anti-tank
Anti-ship
Anti-sub-marine
Saab Bofors Dynamics is a complete missile systems supplier and can offer a broad range of applications in the air, on land, at sea and underwater.
SAAB BOFORS DYNAMICS
A complete missile systems supplier
The Carl-Gustaf anti-armor weapon, the leader in shoulder launched supportweapons, is used in over 40 countries.
28
SAAB BOFORS DYNAMICS
In 2000 Sweden decided to participate in the development of the METEORlong-range air-to-air missile. Five other countries are also participating inthe project, which is expected to generate good international demand.
key development project, but also that BAMSE will serve as
the foundation of Sweden’s future air defense system. With
modifications, the system can also be developed for naval
use and is a principal part of the air defense system used
on Sweden’s new Visby class corvettes.
In the years ahead the goal is to design a similar national
strategy for underwater weapon and infantry systems –
areas where Saab has a strong development portfolio and
broad range of competencies.
System exports
Bofors Dynamics has two main opportunities in the inter-
national market – to sell existing systems to new customers
and to participate in international development projects.
The export opportunities for a project like BAMSE, for
example, are considerable.
The RBS15 anti-ship missile, which, in addition to Sweden,
is used by the Finnish Navy, among others, has good
prospects of reaching a broader international market. Since
1999 Saab Bofors Dynamics has cooperated with Germany’s
BGT to market RBS15 in the German market, where a deci-
sion is expected in 2001. In 2000 the business area broadened
its cooperation with BGT’s owner, Diehl - which is a partner
in the IRIS-T project – to also include the further develop-
ment and production of the RBS15.
Torpedo 2000, a heavyweight, high-speed torpedo, is
being developed for the Swedish military. The system has
also been ordered by Brazil and interest has been expressed
by a number of other potential buyers.
International cooperations
Development costs for new missile systems have steadily
risen and in the future it is unlikely that individual coun-
tries, aside from the U.S., will have the resources to develop
advanced systems for precision engagement on their own.
Cooperations between countries and companies will be
necessary. International projects facilitate specialization,
at the same time that participating companies can maintain
an understanding of the systems’ overall function.
Saab is currently taking part in a number of projects in the
development stage. The assignments for each participating
country’s companies are divided up based on the number of
systems/missiles the country is expected to buy. Moreover,
export markets open up outside the participating countries
once the product is in production.
Development work has been under way for some time on
IRIS-T, an air-to-air missile for short distances that is expect-
ed to reach the market in 2002 and replace the U.S.
Sidewinder. Sweden is one of six participating countries
in the IRIS-T project, for which Saab is developing, among
other things, the target seeker. In May 2000 the British gov-
ernment, one of the project’s most important partners, gave
its go-ahead to begin development of METEOR, a long-
range air-to-air missile that is designed to replace AMRAAM.
The Swedish government’s goal is to retain a 12-percent
share of the project.
Potential international demand for both IRIS-T and
METEOR is substantial. Taking part in and benefitting from
export work in this area is important to the business area’s
future growth and profitability.
For a number of years Dynamics has also participated
in the development of the TAURUS KEPD 350 heavyweight
long-range standoff missile. The customer is the German
defense and Germany’s LFK owns 67 percent of the project,
with the remaining 33 percent held by Dynamics. TAURUS,
which will be used on the Tornado and later the Euro-
fighter, has been successfully tested on the Gripen system.
Highlights in 2000:
• The business area succeeded in reversing a loss into a
profit and starting a positive trend
• The Swedish government ordered series production of
RMS23 BAMSE
• Decision to participate in the METEOR project
• Successful free flight of TAURUS at a test range in Vidsel,
Sweden
• Export success for anti-tank systems in France, among
other countries
29
After lengthy analysis work, the Swedishdefense decided in 1993 to procure amaneuverable air defense system to protectinfrastructure and military installations.Following a evaluation, Bofors Missiles wasawarded the contract to develop the systemnow called BAMSE.
Malte Saltin managed the BAMSE proj-ect prior to the merger between Saab andCelsius and is now head of the Air DefenseMissiles business unit, which includesBAMSE. He has worked for what is nowthe Saab Bofors Dynamics business areasince leaving the air force in the 1970’s.
“BAMSE is a unique system in itsmaneuverability and precision, and withits flexibility it can fill in a role in everymilitary that has to assume the possibilityof defending its borders against an airattack, specifically against cruise missiles,”he explains. “What’s more, we have anexcellent platform to develop a naval ver-sion of BAMSE.”
A project such as this one takes a long time– as much as 15-20 years from the first ideaby the customer until the system hasentered service.
In BAMSE’s case, it went from pilotstudy in 1991 to development order in1993 and series production in 2000. In 2001the system will be adapted to series pro-duction and a year later production willbegin. Beginning in 2003 the finished sys-tem will be delivered to the customer.
“Last year’s decision was very impor-tant,” says Malte Saltin. “It shows that theBAMSE system will play a key role inSweden’s air defense for the foreseeablefuture. And it gives us the go-ahead weneed to proceed to the next stage, to gofrom development to production.”
Dynamics’ new organization has pro-vided a welcome addition to the BAMSEproject in the form of added expertise.
“Today there are less than a dozen oldSaab employees working in Karlskoga,
and a number of them are involved in theBAMSE project,” he continues. “For thoseof us who have been part of the project,these new people have been a importantaddition, particularly in a resource-criticalstage of the project. I feel that we have cre-ated an organization that can handle theintegration work in a natural way.”
At the same time that preparations areunder way for the Swedish customer,BAMSE is being added to Saab BoforsDynamics’ international marketing efforts.Interest in the solution that BAMSE repre-sents is high and the market potential sig-nificant.
“The real work is just beginning in 2001,”says Malte Saltin. “The marketing depart-ment is out prospecting BAMSE’s potentialmarkets and we have already submittedbids to two interested customers. Theopportunities to sell the existing system, aswell as to develop a naval version togetherwith others, are very attractive.”
BAMSE: From idea to export
SAAB BOFORS DYNAMICS
Until the merger of Saab and Celsius, Malte Saltin was the project manager for BAMSE.He now heads the Air Defense Missiles business unit within Dynamics.
0
5
10
98 99 00 98 99 00
SEK m. SEK m. %
Netsales
Operating incomeand operating margin
0
250
500
750
1,000
1,250
0
25
50
75
100
125
Share of Saab’s sales
Total, SEK 18,573 m., net
30
Bengt Mörtberg:
“In 2000 Saab Ericsson Space achieved important
breakthroughs and made significant investments.
The acquisition of 65 percent of Fokker Space of the
Netherlands makes us Europe’s leading independent
space equipment supplier. We are strengthening our
position in and outside Europe and becoming the
world leader in our industry.
In stiff competition, Space was awarded important
orders from the two European satellite suppliers that
remain after the restructuring of recent years. In the
U.S. market, we further strengthened our presence by
opening an office in Los Angeles. We are now represent-
ed in both Washington, DC and on the west coast, a
center for the space industry.
Because of increased activity in the U.S. market and
the major development investments being made, Space
did not reach Saab’s overall margin requirements in
2000. With the acquisition of Fokker Space, we nearly
doubled in terms of both sales and personnel and sub-
stantially strengthened our position in the international
market. This, in combination with the fact that the in-
vestments we made during the year are bearing fruit,
will help us to achieve our financial objectives.”
Saab Ericsson Space is Europe’s leading independent spaceequipment supplier and is 60-percent owned by Saab and40-percent by Ericsson.The business area is the leader inthe development and production of computer systems,antennas and microwave electronics as well as control andseparation systems for satellites and other spacecraft.Slightly over 90 percent of sales are exports, and Space’sproducts are supplied to both public and private sector customers, primarily in Europe and North America.
SAAB ERICSSON SPACE
31
An industry in transformation
Like the defense industry, the space industry is undergoing
an international restructuring. Various constellations are
being created, with only a limited number of groups having
the ability to develop turnkey solutions for various types
of customers.
The restructuring has both financial and institutional rea-
sons. One is the rising cost of development and the other is a
strong desire from customers for a more structured industry.
Both the European and much larger American markets
have developed a structure with two to three leading com-
panies, a slightly larger group of more specialized compa-
nies and a relatively extensive group of niche providers.
Following the conditional acquisition of Fokker Space,
Saab Ericsson Space is the leader among a half-dozen
European companies with a broad base of competencies –
but with a clear focus on well-defined systems.
Fokker Space specializes in the manufacture of solar pan-
els and robotic instruments, including the European Robotic
Arm for the International Space Station (ISS). For Europe’s
Ariane launcher program, it is developing specialized struc-
tures. Fokker Space’s systems broaden the product range
and complement competencies in key areas.
Through the acquisition, the business area further
improves its opportunities to serve as an independent sup-
plier to major international space companies. Its indepen-
dence will help Space to broaden its market by developing
relationships with large companies on both sides of the
Atlantic and facilitate additional acquisitions.
In 2000 Space, in competition with its customers’ own
operations, was awarded important breakthrough orders
by Astrium and Alcatel, the two major satellite suppliers
resulting from Europe’s restructuring.
In the case of Astrium, the order was for microwave elec-
tronics (receivers) for the Intelsat-X, while the Alcatel order
was for central data management units for Eutelsat satellites.
In the process, Space has shown itself to be a competitive
supplier in the new industry structure now being created.
Ties to defense and telecommunication industries
Through its owners, Saab and Ericsson, Space has ties to the
defense and telecommunication industries that are unique to
the industry. Its owners also provide access to a broad base
of competencies that stretches beyond the company’s 1,000
employees, slightly over half of whom are master engineers
or PhD’s.
Through the contacts it has established with other Saab
and Ericsson operations, Space can benefit from their
development work while also raising the efficiency of its
own production. Among the concrete cooperations is one
with Ericsson Microwave Systems in the development of
microwave technology and the efficient use of production
resources.
Data communication and research
There have been a number of major investments in satellite-
based telecommunication and data communication in recent
years to receive considerable attention. Their limited suc-
cess, however, has resulted in a reluctance to invest in new
projects. Still, there is a broad consensus that space is an
important future channel for broadband communication.
Although the transmission capacity of individual satellites
will steadily improve in the years ahead, rising demand for
telecommunication and data traffic will be strong enough to
create a stable need for new satellites.
In the publicly financed research segment, development
and growth are reliant on political priorities. Space’s most
important end customer is the European Space Agency
(ESA), whose current programs include Galileo, a European
alternative to the U.S. GPA system; the METOP meteorologi-
cal system; the Rosetta scientific program, and the further
development of the Ariane launch vehicle.
Net-centric defense in space
In the military, satellite surveillance is often a powerful tool
for battlespace awareness and such systems are already an
integral part of the information defense of the major mili-
tary powers. Developments in information defense and the
expected importance of net-centric defense in future defense
systems are creating new opportunities for Space interna-
tionally.
Europe’s leading independent space equipment supplier
In 2000 microwave electronics were supplied to Intelsat-X.
SAAB ERICSSON SPACE
32
From a European and national perspective, the business
area will have the opportunity to provide Saab and Saab’s
customers with a space dimension to their net-centric
defense systems. The Swedish military, for one, has
expressed interest in making satellite technology a part
of its future defense.
Growth through higher market shares
and systems development
Improving its market shares is an important way for Space
to grow in certain areas, and systematic efforts are being
made to reach new customers with existing products. In
2000, for example, Astrium ordered microwave electronics
for Intelsat-X, which raised Space’s share of this market.
Work is being done in several product areas to integrate
related technology and systems with the systems that are
already being developed and marketed. The aim is to offer
larger, more complex solutions, increasing value for the
customer and giving Space the opportunity for profitability
and growth.
International investments
In 2000 exports again accounted for more than 90 percent of
the business area’s sales. While commercial order bookings
rose, sales remained unchanged at 45 percent. ESA account-
ed for 36 percent of sales and 39 percent of order bookings.
Projects are allocated based in large part on each member-
nation’s contribution to the ESA’s budget. In Sweden’s case,
this is approximately SEK 500 million. Space’s average con-
tract from ESA accounts for about two thirds of this.
Since 1995 the business area has owned an Austrian sub-
sidiary and through the Fokker acquisition is represented in
the Netherlands. Austria and the Netherlands are also sup-
pliers to ESA based on each country’s budget contributions.
To reach the U.S. market, Space has maintained an office
in Washington, DC for several years, and in the fall 2000 it
widened its presence to include Los Angeles. Raising U.S.
sales is one of the most important growth opportunities
for Space.
Highlights in 2000:
• Conditional acquisition of 65 percent of Fokker Space
of the Netherlands
• Opening of Los Angeles office
• Order for microwave electronics for Intelsat-X
• Contract for Spaceway satellite
• Order for 40 additional onboard computers for Ariane 5
• Ten-year contract with Lockheed Martin for new genera-
tion of satellite separation systems for Atlas rockets
Sales by customer segmentSEK m.
00999897960
250
500
750
Commercial
ESA
Gov’t agencies
SAAB ERICSSON SPACE
Solar panels for satellites are one of Fokker Space’s main product areas.
The Galileo positioning system, a project of the European Space Agency (ESA).
33
By opening an office in Los Angeles in2000, Saab Ericsson Space took anotherimportant step in its efforts in the U.S.market. As Europe’s leading independentspace company, Space is already a majorsupplier in certain niches, and by establish-ing a stronger presence in the U.S. marketit hopes to broaden and extend its cus-tomer base.
Håkan Andersson moved to Los Angelesin November and is one of the three peo-ple working at Space’s Los Angeles office.
“The U.S. is the world’s largest marketfor the products we are developing,” hesays. “By being here in California, whereimportant parts of the American spaceindustry are based, we have gained a better position.”
The Washington, DC office was openedback in 1993, to which Space has nowadded an office on Sepulveda Boulevard in El Segundo, Los Angeles, a stone’sthrow from Boeing Satellite Systems, TRWSpace Systems and the U.S. Air Force’sspace department.
“A large part of the commercial marketfor our products is here on the west coast,
and now we are closer to important currentand potential customers,” says HåkanAndersson. “Our Washington office oftenfills the role of administrative coordinatorfor our activities in North America,although it also works with institutionalcustomers such as NASA and the defensedepartment. Even though we are a relative-ly small organization, we are still able tocover the American space establishment.”
The Los Angeles organization is basedon Space’s operating areas: digital systems,mechanical systems (separation systems)and microwave technology. In addition toHåkan Andersson, there is Marino Poppé(from the Gothenburg operations viaSpace’s Austrian subsidiary) and MichaelE. Miller, who has over twenty years ofexperience in the U.S. space industry.
Håkan Andersson has been employed as a development engineer at Space since1994 and in recent years has been responsi-ble for hardware development in the com-puter systems area. His background indevelopment work and ties to Sweden and Europe are important.
“There are good growth opportunities
here in the U.S., particularly in data han-dling, where we are already engaged infar-reaching conversations with a numberof potentially interested customers,” hesays. “An important factor in this work is our strong reputation. We have anunblemished track record here in the U.S.and know the industry.”
Space’s separation systems have a verystrong position in the U.S. market, wherethey have been used for over twenty years.In microwave electronics and antennas, thecompany has recently begun to supplyBoeing and Lockheed Martin.
Since the mid-1970’s the commercial endof the U.S. space market has grown consid-erably, providing opportunities for foreigncompanies with high-quality products.
“There is still a significant differencebetween the commercial and institutionalworlds,” says Michael E. Miller. “We havenoticed, that Space’s strong position alsohelps us with institutional customers herein the U.S. The success and presence wehave in the commercial market hasheightened interest from NASA and other public institutions.”
The heart of the commercial space industry
SAAB ERICSSON SPACE
With its new office in Los Angeles, Saab Ericsson Space was established itself in theheart of the U.S. space industry. Håkan Andersson, Michael E. Miller and Marino Poppéall have extensive experience in the aerospace industry.
Space supplies antenna components and microwaveequipment for the ICO satellite developed by Boeing Satellite Systems.
34
Saab Aircraft Leasing and Saab Aircraft
A significant share of the over 500 Saab 340 and Saab 2000
regional aircraft that were manufactured by Saab until 1999
are managed by Saab Aircraft Leasing. The portfolio consists
of 273 Saab 340 and 29 Saab 2000.
The total value of the portfolio on and off the balance
sheet, excluding the 57 aircraft that are financed with non-
recourse funding, amounted to SEK 7.5 billon at year-end.
The provision to adjust the portfolio to market value
amounted to SEK 1 billion at year-end.
The portfolio gives Saab a direct financial interest in
ensuring that the value of the regional aircraft is maintained
and that they remain in demand by the market. Demand for
Saab 340 and Saab 2000 is dependent in part on overall
demand for aircraft in their respective classes and in part
on the company’s ability to arrange attractive alternatives
for airlines.
In 2000 Saab eliminated the market risk in the regional
aircraft portfolio through an insurance wrap. At a cost of
USD 37 million, Saab has hedged its lease revenue for the
next 15-year period and thereby eliminated its market risk.
Through continued effective management, Saab can maxi-
mize lease revenue and minimize its insurance premium.
During the year leases on 18 (52) Saab 340 and 0 (0) Saab
2000 were signed with new and existing customers. 7 (4)
aircraft were sold and at year-end 12 (6) were not contracted
to any operator. Due to contract violations, 6 (7) aircraft
were repossessed.
Regional air traffic is expected to increase in the years
ahead and both aircraft are strong in their respective classes.
Saab 340, for example, has a 30-percent market share.
To retain the value of the portfolio and meet the demands
made of Saab as the manufacturer of Saab 340 and Saab
2000, close cooperation is maintained with the customer
support organization, Saab Aircraft.
Saab Aircraft is the holder of the type certificates for Saab
340 and Saab 2000 and is responsible for the continued air-
worthiness of the aircraft. In addition to normal service and
maintenance support, Saab Aircraft provides spares, train-
ing, manuals and development work on new options and
modifications. The staff includes slightly over 400 employ-
ees, 310 of whom are in Linköping and 70 at the subsidiary
Saab Aircraft of America in Washington, DC.
Two thirds of sales consist of spares, while the rest is
service and maintenance. Saab Aircraft cooperates very
closely with Saab Aircraft Leasing to support Saab’s lease
customers.
As of 2001 Saab Aircraft and Saab Aircraft Leasing form
the core of a new business area, Saab Aviation Services.
Since the market risk in the portfolio has been eliminated,
operations can be concentrated on enhancing the portfolio’s
value. Through their close ties, Saab Aircraft and Saab
Aircraft Leasing can offer customers better service and
improve the efficiency of their management operations.
Celsius Aviation Services: Restructuring and divestment
Through its acquisition of Celsius, Saab took ownership of
a sizable commercial aircraft maintenance business, Celsius
Aviation Services (CAS). CAS, which is headquartered in
SAAB AVIATION SERVICES and OTHER OPERATIONS
Saab’s fleet of regional aircraft operates around the world. In 2000 the market risk in the lease portfolio was eliminated through an insurance policy.Through successful customer service, Saab can therefore focus on enhancing the value of the fleet.
As of 2001 Saab Aircraft, Saab Aircraft Leasing and the remaining parts of Celsius Aviation Services are includedorganizationally in a new business area, Saab AviationServices, as described below.
Washington, DC, is active in 30-odd locations around the
world, with an emphasis on North America. The U.S.
accounts for two thirds of sales, and Europe, Australia
and Southeast Asia the rest. Customers consist of air carriers
from around the world.
CAS offers a broad range of aviation services, from aircraft
maintenance, spares and jet engines to the sale of components
and development of wind tunnels and other testing systems.
The business area is also engaged in asset management.
CAS has around 1,500 employees and sales of SEK
3 billion in 2000. New contracts awarded during the year
included engine maintenance for U.S. military transport
aircraft.
Operations within CAS are divided by company.
AeroThrust Corp. of Miami, Florida overhauls the JT80
engine.
Celsius Aerotech Inc. in Nashville, Tennessee specializes
in component and airframe maintenance as well as aircraft
painting, particularly for regional aircraft.
Hawker Pacific Pty Ltd. in Sydney provides aircraft main-
tenance in Australia and New Zealand. It also handles air-
craft sales.
Aero Systems Engineering Inc. of St. Paul, Minnesota
develops, designs and builds testing systems for various
types of jet engines. Operations also comprise wind tunnel
technology and aerodynamic laboratory services.
Miami, Florida-based Celsius Amtec Corp., which is
primarily active in asset management, was divested in
February 2000.
Aviocomp AB in Linköping mainly provides component
maintenance for regional aircraft, although it also overhauls
entire aircraft.
As of 2001 Aviocomp is part of the Saab Technical Services
and Support business area.
After acquiring Celsius, Saab announced its intention to
find another owner for CAS. The reason is that the commer-
cial aviation maintenance industry is undergoing a transfor-
mation that is tightening demands on companies that hope
to develop a strong position and, as a result, on the ability
of their owners to provide financial and other resources.
For Saab, the majority of CAS’ operations fall outside
the growth areas it is focusing on. The divestment process
began in 2000, and efforts to find new owners for the remain-
ing parts of CAS are continuing.
As of 2001 the remaining parts of CAS are included in the
Saab Aviation Services business area.
Other operations: Focused divestments
In order to concentrate its resources, Saab is trying to find
new ownership solutions for operations that fall outside its
core areas. In the process, it is creating value for its share-
holders. A special team reporting directly to the executive
management is responsible for Saab’s divestment program.
The process is proceeding rapidly. In June the weapon
system and ammunition manufacturer Bofors Weapon
System was sold to United Defense, one of the largest
independent U.S. defense contractors. Through the sale,
Saab was able to participate in a transatlantic alliance in
an important niche and at the same time add value for its
shareholders.
In addition, a number of small businesses were divested,
including several shipyards, an oil rig, Kockum Industries’
wind power pylon operations, the surface treatment opera-
tions of Celsius Materialteknik and a number of properties.
Saab still has a portfolio of non-core businesses and
efforts to concentrate these operations will continue. Among
them are the remaining parts of Kockums Industries, the
gunpowder and explosives manufacturer Nexplo and
ammunitions maker Nammo.
35
Saab Aircraft’s customer service organization is responsible for maintaining a large part of the fleet of regional aircraft Saab manufactured.
Share capital
On December 31, 2000 Saab’s share capital amounted to SEK
1,703,354,800 and consisted of 100,005,372 listed Series B
shares and 6,454,303 unlisted Series A shares. Series A shares
have ten votes each, while Series B shares have one vote
each. In other respects, there are no differences between the
two classes. The par value per share is SEK 16.
The Series B share has been listed on the OM Stockholm
Exchange’s O list since 1998 and a trading lot consists of 100
shares. Approximately 47,500,000 Series B shares, correspon-
ding to 45 percent of the share capital and 29 percent of the
votes, are available via the stock market. Of the company’s
Series A shares, 4,207,123 are owned by Investor and
2,247,180 by BAE SYSTEMS. No changes have been made in
the share capital since the market listing in 1998.
Share performance and trading volume
Saab’s market capitalization amounted to SEK 8.3 billion at
year-end 2000. The price of the Series B share fell by 4.9 per-
cent during the year, compared with a 12-percent decline for
the Stockholm exchange’s general index. The share price at
year-end was SEK 78. The high price for the year, SEK 94.50,
was noted on March 20 and the low price, SEK 64.50, on
February 15.
During 2000 a total of 20,653,554 Series B shares were
traded, corresponding to 43 percent of the shares available.
Average daily turnover was 81,959 shares.
Beta shows how much a share fluctuates in relation to the
market as a whole. According to the OM Stockholm
Exchange’s calculations, the beta for Saab’s Series B share
was 0.57 at year-end, indicating that it fluctuated 43 percent
less than the market average. Saab’s stock covariance was
0.14, which means that 14 percent of the share’s price per-
formance is due to the market’s development as a whole.
Ownership structure
The total number of Saab shareholders decreased to around
41,000 at year-end. Swedish and international institutional
investors owned approximately 92 percent of the share capi-
tal and 95 percent of the votes. Individual Swedish investors
held approximately 8 percent of the share capital and 5 per-
cent of the votes.
At year-end shareholders outside Sweden owned approxi-
mately 54 (54) percent of the share capital and 47 (47) percent
of the votes. The share capital was divided among countries
other than Sweden as follows: 36 (37) percent in the UK, 16
(16) percent in the U.S. and 2 (1) percent in the rest of the
world.
Dividend and dividend policy
The Board of Directors is recommending that the Annual
General Meeting approve an increase in the dividend to SEK
3.00 (2.50) per share, corresponding to 31 percent (28) of net
income.
Saab’s long-term dividend policy is to distribute 20–40 per-
cent of income after tax.
Convertible debenture loan
In 1998 a convertible debenture loan was issued to Saab’s
employees. The loan totals SEK 254 million, which, after full
conversion, raises the number of Series B shares by 2,787,500,
corresponding to a dilution of 2.55 percent of the share capital
and 1.67 percent of the total number of votes. Conversions to
Series B shares are permitted between December 4, 2001 and
July 15, 2004 at a conversion price of SEK 91.
Saab on the Internet
Saab’s home page on the Internet provides information on
the company and the share and a means to contact the
Investor Relations department. The address is www.saab.se
The Saab share
J F M A M J J A S O N D J F M A M J J A S O N D J F
60
80
100
120
140
160
180
50
99 00 01(c)SIX
1,250
2,500
3,750
5,000
6,250
General index 000s of shares traded,(incl. aftermarket)
B-share, high/lowB-share, last paid
Shares and votes, December 31, 2000Number Percentage Number of Percentage of
Share class of shares of shares votes total votes
Series A 6,454,303 6.1 64,543,030 39.2Series B 100,005,372 93.9 100,005,372 60.8
Total 106,459,675 100.0 164,548,402 100.0
Distribution of shareholdingsNumber of Number of Percentage of Number of Percentage ofshares shareholders shareholders shares share capital
1 – 500 38,159 93.1 2,856,071 2.7501 – 1,000 1,538 3.8 1,292,497 1.21,001 – 5,000 996 2.4 2,189,042 2.15,001 – 10,000 129 0.3 996,966 0.910,001 – 50,000 105 0.3 2,330,376 2.250,001 – 100,000 23 – 1,522,193 1.4100,001 – 10,000,000 35 0.1 36,293,309 34.110,000,001 – 2 – 58,979,221 55.4
Total 40,987 100.0 106,459,675 100.0
Saab B, Jan. 2, 1999–Feb. 19, 2001
36
37
Series B share data
2000 1999 1998
Closing prices at year-end, SEK 78.00 82.00 85.00high for the year, SEK 94.50 91.50 90.50low for the year, SEK 64.50 58.00 57.00
Yield, % 3.8 3.0 2.4Price/equity, % 146 185 215
P/E ratio 8.0 9.3 9.9P/EBIT, multiple 5.4 7.9 10.0
Net sales,before conversion, SEK 167.60 85.00 77.50Net sales,after full conversion, SEK 163.30 82.90 75.50
Net income,before conversion, SEK 9.75 8.82 8.55Net income,after full conversion, SEK 9.50 8.60 8.35
Equity,before conversion, SEK 53.26 44.23 37.90Equity,after full conversion, SEK 54.22 45.43 39.25
Cash flow from operating activities,before conversion, SEK 13.20 -5.50 15.05Cash flow from operating activities,after full conversion, SEK 12.85 -5.40 14.70
Dividend (Board’s 2000 proposal), SEK 3.00 2.50 2.00Dividend /net income, % 31 28 23
Total dividend, SEK m. 319 266 213No. of shareholders 40,987 45,296 51,945
Largest shareholders
As of December 31, 2000 Number Percentage Percentageaccording to Securities of shares, of share ofRegister Center thousands capital votes
BAE SYSTEMS, UK 37,367 35.1 35.0Investor 21,612 20.3 36.1Wallenberg foundations 9,255 8.7 5.6Chase Manhattan Bank, USA1) 7,291 6.8 4.4Fidelity funds, USA 3,540 3.3 2.2State Street Bank & Trust Co., USA1) 3,215 3.0 2.0Nat’l Pension Insurance Funds 2,810 2.6 1.7AMF 2,200 2.1 1.3MFS funds, USA 2,007 1.9 1.2Skandia 1,087 1.0 0.7UBS Warburg Stockholm 697 0.7 0.4Meridian funds, USA 609 0.6 0.4FPG/AMFK 462 0.4 0.3Catella funds 453 0.4 0.3SHB funds 391 0.4 0.2Franklin-Templeton funds, USA 357 0.3 0.2
Subtotal,16 largest shareholders 93,353 87.6 92.0Other Swedish shareholders 10,283 9.7 6.3Other international shareholders 2,824 2.7 1.7
Total 106,460 100.0 100.0
Maximum dilution, convertibles 2,787,500 2.6 1.71) Nominee-registered, primarily U.S. funds
Analysts who follow Saab
Alfred Berg, StockholmPatric [email protected]
Aragon Fondkommission, StockholmClaes [email protected]
BNP Paribas, ParisOlivier [email protected] [email protected]
Carnegie, StockholmGustaf von [email protected]
Crédit Agricole Indosuez Cheuvreux, ParisRémi [email protected] [email protected]
Credit Suisse First Boston, LondonHarald [email protected]
Credit Suisse First Boston, New YorkPierre A. [email protected]
Deutsche Bank, ParisVirginie [email protected] [email protected]
Enskilda Securities, StockholmStefan [email protected]
Exane, ParisBertrand [email protected]ène Bischoffirè[email protected]
Goldman Sachs International, LondonSash [email protected]
HSBC, StockholmClaes [email protected]
Lehman Brothers, LondonColin [email protected] [email protected]
Merrill Lynch, LondonAndrew [email protected]
Morgan Stanley, LondonTim [email protected] [email protected]
Nordiska Fondkommission, StockholmHenrik [email protected]
Schroder Salomon Smith BarneyNick [email protected]
Société Générale, ParisPhilippe [email protected]
Swedbank, StockholmMats [email protected]
UBS Warburg, LondonPaul [email protected]
UBS Warburg, StockholmAnders [email protected]
Swedish and foreign shareholders% of capital
Investor
Wallenberg foundations
Others
Nat’l Pension FundsAMFSkandia
BAE SYSTEMS
Chase ManhattanFidelity funds
State Street Bank & Trust Co.MFS funds
Others
Swedish shareholdersForeign shareholders
38
Saab’s operations require world-leading competencies in a number
of areas. Without the ability to recruit, develop and retain quali-
fied employees, Saab would immediately lose its competitive edge
and development potential.
The acquisition of Celsius has greatly impacted human
resource work at Saab. Two previously competing businesses
are being integrated within a single organization, with all that
involves in terms of financial, social and cultural challenges.
The integration work has surpassed expectations and expe-
rience from both of the old organizations, has served as the
basis for HR work in the new organization. A new HR policy
has been drafted utilizing the collective experience of the
Group’s employees to underscore the values that Saab follows
in its work on workplace culture, leadership, competence
development, wages, equality and working environment.
A large part of the responsibility for HR issues at Saab is
delegated locally. The opportunities employees have for per-
sonal development are managed best at the local workplace or
by the individual company, where the needs are truly under-
stood.
At the Group level, the role is to develop a common set of
values that will help shape the working climate within Saab.
Responsibility at the Group level also includes management
planning and development, overseas employees, negotiating
policies and relations with students, schools of higher learning
and union organizations.
Within the framework of the Group’s values and policies,
the business areas have considerable freedom, based on their
situations, to develop their own HR policy. Practical aspects of
HR work are handled by the individual business units and
companies, where the conditions they face are the determin-
ing factor for employee development.
To keep employees informed of what is happening at Saab
and communicate its overriding values, the company works
actively with internal communication. During the year a new
Group-wide employee newsletter was introduced, and work
to create a Group intranet began.
To further improve information during the integration
stage, Saab is regularly distributing a video news program,
“Channel Saab,” with information on the organization.
Human resource development – growing with Saab
A strong recruiting program is necessary, but not enough to
meet long-term competency requirements. For Saab, it is just
Employees
HUMAN RESOURCE POLICY
In a knowledge company like Saab, the collective
competencies of the employees are the main competitive
advantage.
Saab’s development programs provide theopportunity for individual development forhundreds of employees in managerial positions.
992) 00
%
Employees turnover1)
%No. No.%
0
2,500
5,000
7,500
CategoriesAge distribution Education level1)Years of employmentat Saab
Professor, PhDCivil engineeringOther academicCollege level engineeringOther engineeringUpper secondary schoolOther 0
2.5
5
7.5
10
12.5
1) Sweden2) Excl. Celsius
1) Sweden2) Excl. Celsius
<5 5-10 10-25 >25992) 00Blue collarWhite collar
Blue collarwhite collarWomen
Men
99 000
500
1,000
1,500
2,000
2,500
<24
25-2
930
-34
35-3
940
-44
45-4
950
-54
55-5
9>5
90
25
50
75
100
0
25
50
75
100
Employee turnover is defined as thenumber of employees who in 2000terminated their employment or weretransferred within the Saab Group asa percentage of the total number ofemployees during the year.
as important to develop and retain the employees who are
already part of the company. In general, employees stay
with Saab for a relatively long time and employee turnover
is comparatively low.
Every employee should find development opportunities
within the Group. Skills development for both blue and
white collar employees is a high priority. Saab’s internal job
market is popular and gives employees the opportunity to
find careers within the company.
Day-to-day work is the most important way to develop
skills. An individual’s abilities and opportunities for devel-
opment are a natural element in a learning organization and
an important challenge for Saab.
Saab is a training-intensive company, where investments
in research and development are essential. Among other
things, the company has a program for around 30 post-grad-
uate students from various academic disciplines that pro-
vides them a network and helps in the transfer of competen-
cies between various parts of the organization.
Each year a Group-wide management development pro-
gram containing various activities provides hundreds of
employees in managerial positions the opportunity for
personal development. The program includes activities
for young employees with the potential for promotion as
well as senior managers with years of experience. Activities
are also offered at business area level.
The internationalization of Saab’s operations is impacting
HR, and a growing number of both blue and white collar
employees participate in crossborder cooperations and proj-
ects with employees from other countries and companies.
An important example is the Technology Transfer Program,
which is designed to transfer knowledge and competence to
countries that purchase Gripen. During the fall of 2000 a
group of South African aircraft technicians began a two-year
training program at an upper secondary school in
Linköping to study technical maintenance for Gripen.
Saab’s “industrial high school” in Linköping offers pro-
duction personnel the opportunity for continuing training
in technical areas as well as languages and supplementary
academic studies.
Promoting equality
Saab’s aim of achieving a better balance between male and
female employees has led to a targeted recruitment effort to
39
“In the future, information systems willhelp the military make decisions fasterand with greater precision. This posesmany interesting challenges. You have toaccount for the way the military oper-ates, our abilities as humans and theopportunities presented by technology.For me, being able to work toward mydoctoral degree in an exciting field is agreat opportunity for personal develop-ment. At the same time I hope it willgive Saab access to competence and con-tacts in the academic world.”
Klas Wallenius, doctoral student in the Department of Numerical Analysis andComputer Science at the Royal Institute of Technology and a participant in Saab’sindustrial doctorate program.
“Ruter Dam has given me the opportunity to develop both profession-ally and as a person. The program offers lectures and a series of semi-nars and we have visited around a dozen interesting companies.Executives from Sweden’s largest companies serve as mentors, and theprogram is distinguished by a high level of quality and professional-ism. It provides a wide network of contacts within Swedish business.”
Monica Brandett, finance manager at SaabTech Systems and a participant in the Ruter Dam program.
The cooperation with the “industrial high school” in Linköping is important in ensuring Saab access to skilled production personnel.
attract women to the company. A slightly upward trend in the
number of women is evident, although further efforts are
needed to reach the objective of having a similar ratio of
women to men as in the institutes of technology where Saab
mainly recruits. Saab’s commitment to the Ruter Dam manage-
ment development program for women, where Bengt Halse
serves as a mentor, is an important part of this work.
Recruitment: A popular employer
A strong recruitment position is essential to Saab if it is to
develop into a world-leading competence center in areas
that are critical to its competitivness.
Saab is considered a highly attractive employer among
groups that are important to the company’s competencies.
In annual surveys of future engineers and other university
students, Saab consistently ranks at the top. In the 2000 sur-
vey, three companies in the Saab Group were among the ten
most popular employers.
In recent years the Internet has started to play an increas-
ingly important role in Saab’s recruitment work. The
Jobspace on the company’s home page is an effective
channel to reach key target groups. Each month over 5,000
people visit Jobspace to find available job openings, help
with dissertations and so on.
To meet the need for qualified professionals, Saab cooperates
closely with schools in the cities where it has production
facilities. For example, it works with a school in Linköping
to offer practical training in aviation and industrial
technology as part of the company’s industrial education
program.
The academic community: A base for recruitment
and research cooperations
Saab has long maintained a close relationship with the aca-
demic community. Recruitment work is done in close coop-
eration with Sweden’s institutes of technology and universi-
ties. In research and development, many projects are carried
out with academic institutions, primarily technology insti-
tutes around the country.
For recruitment purposes, Saab participates in job fairs
and offers internships and assistance with postgraduate
work from qualified mentors. Representatives from Saab are
taking part in a development group for civil engineering
education run in cooperation with the Chalmers Institute
of Technology, Royal Institute of Technology, Linköping
Institute of Technology and Massachusetts Institute of
Technology.
Saab’s Technology Day (formerly Aerospace Day) is a
popular event that annually attracts around a thousand stu-
dents from institutes of technology in southern and central
Sweden to visit Saab. The Technology Day provides students
the opportunity to learn more about Saab and establish
contacts. For Saab, it is an important channel to come into
contact with its most important recruitment base.
The finals of Teknik-SM, a national competition for engi-
neering students sponsored by Saab, are held in conjunc-
tion with the Technology Day. The winning team receives
a trip to the U.S., including a visit to the MIT Medialab
in Boston, MA.
The Saab Advanced Trainee Program is another important
tool to recruit qualified employees. Each year a group of
recent engineering graduates is given the opportunity to
spend a year as trainees in various parts of Saab. The pro-
gram is one of several avenues to a successful career in the
Saab Group.
40
Job fairs at Sweden’s institutes of technology provide an opportunity for personal contact between Saab and prospective employees.Each year the company visits around 15 technology institutes.
Saab’s online career site, Jobspace, allows visitorsto check available jobs and internships and receiveassistance with dissertation work.
41
The introduction of environmental management systems has
progressed to different degrees within Saab’s business areas
and subsidiaries. Environmental work is being integrated as
far as possible with other operations. Environmental man-
agement systems are therefore often incorporated into estab-
lished quality assurance systems. It is the responsibility of
the managers of each business area and subsidiary to ensure
that the environmental policy is introduced.
During the year an environmental council was established
to handle Group-wide environmental issues. The members
of the council consist of environment managers from the
various business areas. Among its responsibilities, the coun-
cil will develop and follow up the Group’s environmental
policy and see to it that environmental information is made
available. The council is also an important forum for cooper-
ation on environmental issues between business areas.
Saab participates in the so-called Environmental Index, a
survey compiled by the business daily Finanstidningen and
the insurance company Folksam. The report for 1999
showed that the environmental impact from Saab’s opera-
tions per krona of sales was lower than the average for com-
panies in the survey. The information Saab provided main-
tained a “very high quality.” Saab is assisting to develop the
survey and has the goal of further improving its own results.
Important environmental issues
• Hazardous substances in operations and products
• Emissions in the air and water due to organic solvents
(VOCs) and metals, among other things
• Waste handling and treatment
• Use of raw materials and energy
• Soil contaminants
Research and development
In order to meet safety and technical performance require-
ments, companies in the aerospace and defense industries
have to use chemical substances that are classified as haz-
ardous to humans and the environment. Some of Saab’s
business areas have for a long time utilized a detailed
process to monitor and follow up their hazardous chemicals.
The same procedure is now being gradually introduced in
all companies in the Group that make extensive use of
chemicals.
Saab’s business areas have initiated several projects to
replace hazardous substances in their cleaning and surface
treatment processes and various paint systems. Projects are
under way to optimize processes that reduce emissions. The
substances with the highest priority are trichloroethylene,
VOCs, chromates and cadmium. Saab is also actively partic-
ipating in “GreenPack”, a project designed to environmen-
tally adapt electronics, and in another project that promotes
the recycling of composite materials. Several of these R&D
projects are conducted internationally in cooperation with
other organizations and within the framework of the EU’s
research programs. Total expenditures on these projects
exceed SEK 80 million, of which Saab’s share is approxi-
mately SEK 6 million. The company considers it a good
investment for the future to actively participate in develop-
ment work to find long-term, sustainable materials, compo-
nents and processes. Representatives from Saab also partici-
pate in various reference groups for environmentally related
R&D projects.
Environmental data 1999 and 2000
Saab’s most significant environmental impact is from its
plants in Linköping and Karlskoga, where a number of
ENVIRONMENTAL POLICY
Saab will comply with applicable environmental regulationsand through continuous improvements in its operations minimize the environmental impact of its plants, productionand products as far as is technically possible and financially reasonable. Environmental work will be actively pursued.
The business areas and subsidiaries that have operations or products that can impact the environment will maintain an environmental management system that complies with ISO 14001.
Employees will be kept informed and provided with the necessary training in environmental issues. Saab will show an openness and cooperate with customers, authorities andother parties with an interest in environmental issues.
Environmental report
Saab is actively working to reduce the environmental
impact of its operations and products. The guidelines for its
environmental work are established in the environmental
policy that was revised in 2000.
Chemicals are properlymonitored through use ofa computer-based system.
42
workshops manufacture aircraft and components, missile
systems, defense electronics and explosives and maintain
aircraft and equipment. Saab also has an airfield in
Linköping to test and deliver aircraft. The airfield handles
regular traffic as well. Saab is well prepared to handle any
emergency caused by fire or chemical spills. During the
year there were no accidents impacting the environment.
Soil contaminants
The Group has a number of locations where industrial pro-
duction has been carried out for years. Within these loca-
tions are areas that have been affected by soil contaminants.
Known contaminants have been found primarily at Bofors’
firing range (operated by Bofors Test Center) and the
Björkborn industrial area in Karlskoga, where Dynamics
and Nexplo Bofors are located. A special inspection program
has been established to monitor the spread of pollutants in
some lakes within the firing range. In addition to the inspec-
tion program, a series of extensive analyses was conducted
in 1998–2000 to monitor the scope and impact of soil
contaminants in these locations. The Råberga-Tannefors
industrial area in Linköping has an abandoned waste dump
that contains metal hydroxide wastes. Samples are regularly
taken to monitor the leaching of any metals.
Saab Systems and Electronics
Marine Electronics, which was divested in January 2001, is
ISO 14001 certified. Saab Barracuda Technologies and Saab
Training Systems are planning certification audits in 2001.
Active efforts to introduce environmental management
systems are also under way at Ericsson Saab Avionics and
SaabTech. Companies within Saab Systems and Electronics
have established objectives and programs to environmentally
adapt their product development, implement environmental
training, conserve raw materials and energy, replace
hazardous substances and ensure safe chemical handling.
Saab Systems and Electronics has introduced a new sys-
tem for sorting wastes at its plant in Järfälla and significantly
raised the level of recycling. Barracuda Technologies has
changed its production processes to eliminate a large share
of the cyclohexanone that is handles. Marine Electronics has
reduced the weight of its naval level gauges by 20 percent
and added a computer system to monitor chemicals. In
Jönköping, Ericsson Saab Avionics is investing SEK 6 million
in 1999–2002 in a new freon-free cooling system that utilizes
water from nearby Lake Vättern. Avionics has also added
a computer system to monitor its chemical products.
Saab Aerospace
Aerospace uses an environmental management system large-
ly adapted to ISO 14001. This system covers the entire busi-
ness area and has been introduced gradually, to ensure that
all areas are well-integrated. Environmental audits are con-
ducted in conjunction with quality audits. In 2000 and 2001
the environmental management system is being integrated
into the new quality system. A decision on possible ISO 14001
certification will be made in 2001. Aerospace has established
objectives and programs to replace trichloroethylene, VOCs,
cadmium and ozone-depleting coolants as well as conserve
energy, reduce the use of de-icing agents and improve waste
handling.
As part of the so-called cooling project during the period
1998–2002, additional cooling installations that contain ozone-
depleting refrigerants are being taken out of service and
replaced by a central cooling system. In total, SEK 110 million
is being invested in a new freon-free cooling system. Aero-
space’s database of chemical products was made available on
the business area’s intranet during the year. Several measures
have been taken to reduce the risk of spills/leakage in the
Saab Aerospace is gradually introducing electric vehicles for local transports.
Chlorinated VOCsVOCs Energy
The increase in the use ofchlorinated VOCs is due to increased productionvolumes at Aerospace andAviation Services.Togetherwith Technical Support andServices, they account forpractically all consumptionof chlorinated VOCs.
Nexplo accounts for morethan 75 percent of VOCemissions.The companyreduced its emissions in2000, however.
Because of the Group’snew structure, energyconsumption is still diffi-cult to evaluate. Manyunits are working activelyto reduce consumption.
99 00
GWh
Electricity Heating
0
50
100
150
200
250
99 00
Tonnes
0
10
20
30
40
50
99 00
Tonnes
0
100
200
300
400
500
43
handling of chemicals. Aerospace is gradually converting to
electric vehicles for local transports of passengers and goods.
Saab Technical Support and Services
In 2001 and 2002 the Technical Support and Services business
area will work on the modification and development of an
environmental management system according to ISO 14001.
Within parts of the business area, several measures have been
implemented to create an environmental management system.
The aim is to certify the system in early 2003. The business
area has established overall objectives and programs to under-
score environmental considerations throughout a product’s
lifecycle as well as for environmental training, emission reduc-
tions and efficient resource utilization.
AerotechTelub can offer turnkey solutions for the disposal
of materials and systems. This includes environmental inspec-
tions, disassembly, recycling and hazardous waste removal. In
addition, it conducts safety analyses in connections with waste
disposal.
Saab Bofors Dynamics
Bofors Test Center and parts of Dynamics are ISO 14001 cer-
tified. The goal is that Dynamics will have an ISO 14001
environmental management system for its entire operations
in 2001. In 1999–2000 the companies in question devoted a
great deal of effort to create environmental management
systems. Dynamics has established objectives and programs
for transports, hazardous substance replacements, explo-
sives incineration and replacements for ozone-depleting
refrigerants.
During the year Dynamics purchased a computer system
to monitor chemical products. Furthermore, investments
have been made to reduce emissions from the incineration of
the explosives in the Björkborn industrial area in Karlskoga.
Saab Ericsson Space
In 2000 Saab Ericsson Space completed its environmental
management system and conducted an ISO 14001 certifica-
tion audit. It expects to receive its 14001 certification in the
first quarter of 2001 for all Swedish operations. Austrian
Aerospace will be certified in 2001. Space has established
objectives and programs for chemical products, energy con-
sumption, travel, wastes and recycling.
During the year Space placed in operation a new com-
puter system to monitor chemicals. In the space field it is
especially important to use light materials and constructions
to reduce the energy and resource consumption at launch.
Furthermore, energy optimization in the satellite is a natural
part of product development.
Metop is a European satellite that monitors meteorologi-
cal and environmental conditions. Space has significant
commitments to Metop and made major deliveries during
the year.
Celsius Aviation Services
AeroThrust Corp. and Celsius Aerotech Inc. in the U.S. and
Hawker Pacific Pty Ltd in Australia have environmental
management systems that in some cases will soon be
adapted to ISO 14001. Objectives and strategies are in
place for waste handling and reducing water pollution
and VOC emissions from depainting and painting of aircraft
and components. Several companies have implemented
comprehensive measures to reduce their use and emissions
of both chlorinated and non-chlorinated VOCs.
Other operations
Nexplo Industries in Karlskoga uses an environmental
management system adapted to ISO 14001 but which is
not yet certified. The system used in Finland has been pre-
audited, with certification planned in 2001–2004. Applied
Composites and CSM Materialteknik have ISO 14001 certi-
fied their environmental management systems. Kockums
Industries has established an action plan for its environmen-
tal work. Nexplo Industries has established goals and pro-
grams to reduce VOC emissions, monitor water emissions,
identify solvent leaks and minimize wastes.
Nexplo Industries has reduced VOC emissions in both its
plants through improvements to its production processes.
The plant in Finland has significantly reduced its water
emissions. They have also purchased a computer system
to monitor raw materials, emissions and wastes. Kockums
Industries has reduced VOC emissions by changing its
paint system for wind power pylons.
Hans Muth is an environmental coordinator at Saab Bofors Support working on the design of a manmade wetlands at Björkborn industrial area.Any water that leaches from the explosives incinerator area can then be treated before flowing into the nearby river.
44
ANNUAL REPORT
Financial Review 45
Financial statements 57
Notes with accounting principles and
comments on the financial statements 61
Auditors’ report 73
Saab AB, Corporate Identity No. 556036-0793,registered office Linköping, has been listedon the O-list at the OM Stockholm Exchangesince 1998. The principal owners are InvestorAB with 20 percent of the shares, correspond-ing to 36 percent of the votes, and BAESYSTEMS, with 35 percent of the shares, corresponding to 35 percent of the votes. Theremaining 45 percent of the shares are tradedon the OM Stockholm Exchange.
Saab GroupSaab is one of the world’s leading high-tech-nology companies, with its main operationsfocusing on defense, aviation and space.Saab is active in more than 20 countries butresearch, development and production arecarried out principally in Sweden. During2000, Saab consisted of the business areasSaab Systems and Electronics, SaabAerospace, Saab Technical Support andServices, Saab Bofors Dynamics, SaabEricsson Space, Celsius Aviation Servicesand Other operations. From 2001 the leasingand customer support activities for Saabregional aircraft, together with parts ofCelsius Aviation Services, will form the business area Saab Aviation Services.
IMPORTANT EVENTS AND STRUCTURAL MEASURESAcquisition of the defense group CelsiusOn February 25, 2000, Saab stated that itwould be fulfilling the public offer for all theshares in Celsius AB, which it had made onNovember 16, 1999. The acquisition of Celsiusis equivalent to a doubling in the size ofSaab. By December 31, 2000, Saab had ac-quired ownership of all the shares in Celsius.During the year, Saab invoked compulsoryacquisition of the 47,471 shares outstandingafter the expiry of the offer, corresponding to0.2 per cent of the capital. The value of theseshares has not yet been determined but sinceSaab has provided collateral, ownership ofthe shares has now been transferred.
The shares in Celsius were acquired withthe company’s own funds. At year-end, thebook value of the shares in Celsius amountedto SEK 5 bn. The acquisition has broughtgoodwill of SEK 700 m., which will be writtenoff over a period of 20 years, resulting in anannual goodwill amortization of SEK 35 m.The goodwill amount has been adjusted partly for Celsius’ share of SPP’s company-related funds, provisions for restructuring
costs, effects of structural measures decidedearlier by Celsius and income from divest-ments carried out during 2000.
In connection with the extensive structuralmeasures made necessary through the ac-quisition of Celsius, a detailed review hasbeen made of certain major projects. It wasfound that certain development projects inthe torpedo and missiles operations from the former Celsius Group required furtherprovisions of SEK 488 m., which burdenedincome in the third quarter.
During the year, the integration and struc-turing process has entailed streamlining withthe aid of divestments, outsourcing, focusingand rationalization in the business areas, closure of the head office functions in Celsiusand new management structures. The fol-lowing operations outside the core businesswhich were included in the Celsius Grouphave been divested or agreed upon for divest-ment: Bofors Weapon Systems AB, the surfacetreatment companies Yttec AB and CelsiusNussbaum GmbH, the two repair shipyardsGötaverken Cityvarvet AB and Öresunds-varvet AB, electronics and mechanical compo-nents production in Karlskoga, wind pylonmanufacture at Kockums Industrier, the 49 percent holding in Australian SubmarineCorporation, the 30 percent holding in theLouisiana oil platform, and various proper-ties. In addition, the accredited calibrationlaboratory in Karlskoga was transferred onJanuary 1, 2001 and in February, CelsiusAmtec was sold to the Spanish companyIdustria de Turbo Propulsores, ITP andCelsius Materials Karlskoga AB was sold to Bodycote Polymer AB.
Other acquisitions and divestments during the yearIn November, Saab Ericsson Space pur-chased 65 per cent of the Dutch companyFokker Space, with access during 2001provided that all the necessary licenses areobtained and that due diligence is completedin a satisfactory manner. Fokker Space is calculated to have an annual turnover ofSEK 500 m. and employs 400 persons. SaabEricsson Space has also acquired a further 13 per cent of Austrian Aerospace, which itthereby owns to 90 per cent. AerotechTeluband Ericsson Saab Avionics have made anumber of minor acquisitions. Saab has alsoinvested SEK 21 m. in b-business partnersB.V., a European initiative in electronic
trading solutions between companies. Intotal, the investment may add up to aboutSEK 90 m in the future.
In January 2000, the streamlining of the former Combitech was completed with thesale of Combitech Traffic Systems to theAustrian company Kapsch with a capital gainof SEK 55 m. During 2000 and 2001, the strat-egy of realizing values from the commercialoperation generated from military technologyhas also continued with the divestments ofCombitech Network and Saab MarineElectronics. Combitech Network was sold forSEK 300 m. with a capital gain of SEK 297 m.,to American Computer Sciences Corporation,CSC, at the same time as we agreed on long-term co-operation and extensive productivityimprovements concerning our IT infrastruc-ture. During the first quarter of 2001, SaabMarine Electronics was sold to the Americanelectronics company Emerson for approxi-mately SEK 800 m., resulting in a capital gainof approximately SEK 650 m. and a positiveeffect on net cash in the same magnitude asthe purchase sum.
Financial risk insurance program for Saab Aircraft Leasing’s regional aircraft lease portfolioIn November, Saab entered into a financialrisk insurance program, which in practice isolate the performance of the lease portfoliofrom future market risk. During 15 years,from 2000, the policy provides a safeguardagainst risks such as market cycles, compe-tition, obsolescence and customer default. Thefinancial risk insurance program means thatlease income amounted to USD 1,170 m, afterdeduction of a first loss of 10 percent or USD130 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 theyear’s income. The insurance policy covers203 of the 302 aircraft in the portfolio. Of the99 Saab 340 aircraft not included in the policy,57 are funded with non-recourse long-termloans and 42 are covered by asset value insur-ance issued by EKN, the Swedish govern-ment agency for export guarantees. Saab willcontinue to actively manage the portfolio toenhance its value by maximizing income.
RestructuringIn December 1997, Saab decided to ceasemanufacture of regional aircraft and
Financial Review
45
allocated reserves totalling SEK 4,079 m. forrestructuring the industrial operation. Thereserve related to the originally calculatedloss for remaining production for the exist-ing order backlog, costs for phasing out per-sonnel and commitments towards suppliersand customers, calculated losses for contin-ued support activities for the aircraft fleet,and underabsorption of shared costs andoverheads. Restructuring is proceedingaccording to plan and reconciliation againstthe reserve takes place continuously. During2000, further structural measures have beencompleted, including commitments towardssuppliers. This has now enabled a more reli-able assessment of the costs and a decisionhas therefore been made on reversal of re-serves of SEK 246 m. (255) in the financialstatements for 2000. At the end of 2000, therestructuring reserve amounted to SEK 1,537m. after utilization of a total of SEK 1,841 m.and reversal of the reserve totalling SEK 701m. during 1998, 1999 and 2000. The view isthat remaining reserves are now well adaptedto the continued restructuring.
In connection with the decision to ceaseproduction of regional aircraft, a decisionwas also made to put a market value on theleasing portfolio held by Saab AircraftLeasing and to make a provision in order toadjust the book value to a calculated marketvalue. During 2000, the aircraft on the bal-ance sheet were written down by SEK 1,451m., of which SEK 989 m. against the loss riskreserve and the remaining portion againstother liabilities. At the end of 1997, the lossrisk reserve amounted to SEK 2,728 m. Dur-ing 1998, 1999 and 2000, the reserve has beenreduced by operating deficits of SEK 55 m.,SEK 35 m. and SEK 113 m. respectively. Dur-ing 2000, the insurance cost of SEK 528 m.and the write-down of aircraft on balancesheet of SEK 989 m. have been set against theloss risk reserve, which thereby amounted toSEK 1,008 m. at the end of 2000. No reversalsof the reserve to the income statement haveso far been made, since the remaining life ofthe leasing portfolio is about 15 years.
The restructuring costs resulting from theacquisition of Celsius are included in theacquisition analysis and do not affect Groupincome.
OPERATIONSBusiness area Saab Systems and Electronicsfocuses on command and control systems,
simulation systems, avionics, electronic war-fare and signature management, as well ascommercial operations of IT and electronics.The business area, which is Saab’s largestand accounts for 23 per cent of the Group’stotal sales, has good prospects of playing acentral part in the development towardsinformation defense. Operations are charac-terized by a high level of activity in theexport field, with sales to over 70 countries.The business area includes the business unitsSaabTech Systems, SaabTech Electronics,Ericsson Saab Avionics, Saab Training Systems,Saab Barracuda, Combitech Systems, SaabTransponderTech and the associated companyAvitronics Pty Ltd (49 per cent) in SouthAfrica, as well as a number of commercialspin-off projects. The most important prod-ucts of the business area are naval commandand control systems, the EWS39 electronicwarfare system for Gripen, electronic warfareequipment such as radar warners, jammersand decoys, the EP-17 cockpit display systemfor Gripen, the StriC air defense system, sig-nature management equipment, laser simula-tors and combat training centers for fire train-ing, combat operations, strategy and tacticsand automatic identification systems (AIS) forships and aircraft.
Order bookings have been very goodduring the year with several market and prod-uct breakthroughs both in Sweden and internationally, including a new generationnaval command and control systems, mobilecombat training centers for the Netherlandsand the USA, firing control systems forCombat vehicle 90 for Switzerland andFinland, and electronic warfare equipment forthe Eurofighter. During the autumn, the UNorgan for maritime issues, IMO, made a decision requiring automatic identificationsystems (AIS) to be installed on all vessels inthe Solas classification from July 1, 2002. Thisis positive for business prospects at SaabTransponderTech, which has already wonseveral important orders as a result. Majordeliveries by the business area during theyear included laser simulators for the USAand UK, further deliveries of display systemsand avionics to the Gripen, and final deliveryof sights to Combat vehicle 90 for Norway.
Business area Saab Aerospace, which hasthe overall system integration capability re-quired for building complete aircraft anddefense systems, develops and manufacturesmilitary aircraft systems and acts as a partner
and supplier in subsystems to manufacturersof large commercial aircraft. It accounts for 21percent of the Group’s total sales. The businessarea includes Gripen, Future Products and Com-mercial Programs. Products include the Gripen,an integrated and flexible information, com-mand and weapon system that will remainmodern for many years to come. Three squadrons of the world’s first fourth-genera-tion combat aircraft are now operative in theSwedish defense. During 2000, 17 Gripen air-craft were delivered to the Swedish Air Force,bringing the total to 98 out of the 204 orderedby the Defence Materiel Administration, FMV.
Saab collaborates with BAE SYSTEMS in ajoint venture for exporting the Gripen. In co-operation with the Swedish Government,possibilities have also been created for rent-ing Gripen aircraft to export customers. Inthe long-term work of marketing the Gripenfor export, information and offers have beensupplied during the year to several countriesin reply to formal enquiries. Marketing andsales work may cover a period of severalyears and is characterized by a long-termapproach where success leads to co-operationover several decades. In March 2000, the firstexport order for the Gripen was formallyreceived from South Africa, comprising 28aircraft with a value for Saab of SEK 9.3 bn.
Future Products carries on developmentwork concerning future defense technologyand during the year has participated in vari-ous concept studies regarding unmannedaircraft. Commercial Programs is a direct sup-plier of components and sub-assemblies toexternal customers such as Airbus andBoeing, and is an internal supplier to theGripen and a spare parts supplier to SaabAircraft. Since 1997, Commercial Programs hasbeen taking part in the concept study for theAirbus A380 “Superjumbo”. In December,Airbus made the final decision on develop-ing the A380 and Commercial Programs is nownegotiating on taking part in the project as apartner and subcontractor.
Business area Saab Technical Support andServices focuses on the growing market forhigh technology services in aviation, com-mand and control, information, communica-tions and sensors, and supplies these to bothmilitary and commercial customers. Thebusiness area accounts for 14 percent of theGroup’s total sales. The export share is 11percent and 74 percent of sales go to militarycustomers. The business area is dominated
46
by AerotechTelub, which was formed onJanuary 1, 2000, and is owned to 57 percentby Saab and 43 percent by TietoEnator.
The agreement between Saab and Tieto-Enator comprises a possibility for Saab toacquire TietoEnator’s shares in Aerotech-Telub at a price of SEK 1.2 bn from July 1,2001. If Saab does not utilize the option,TietoEnator is entitled from September 1,2001 to demand that Saab purchase all theshares at a price of SEK 1.1 bn. AerotechTelubis an advanced service company primarilyoriented towards technology services, opera-tion and maintenance, and customizedsystem solutions for testing, simulation, traf-fic management and information. Majordeliveries during the year included main-tenance equipment for the Gripen, mobilecommunications systems for the Norwegiandefense, and a traffic information portal forthe National Road Administration. In con-nection with the inauguration of theÖresund Bridge, a consultancy commissionfor the Öresund Consortium was concluded.The business area includes Saab Nyge Aero,with operations in the fields of aircraft main-tenance, target and special aviation, whichduring the year obtained a breakthroughorder for the modification of amphibious air-craft. An important delivery during the yearconsisted of four MD500 helicopters forFinland. From 2001, Saab Aviocomp, whichis primarily active in component maintenancefor commuter aircraft, and CSM Material-teknik are also included in the business area.Saab Technical Support and Services co-ordi-nates Saab’s operations in the helicopter field.
Saab’s operations in precision engagementhave been gathered in business area SaabBofors Dynamics, which develops and pro-duces missile systems, portable anti-armorsystems and underwater systems for use onland, sea and air. The business area accountsfor 13 percent of the Group’s total sales.Today, Saab Bofors Dynamics is a completemissile systems house with products such asair-to-air, air defense, anti-ship and groundtarget missiles, anti-armor and torpedoes.The business area has a long presence inmany export markets throughout the worldand in 2000 had sales to almost 40 countries.
During the year, intensive integrationwork has been carried on in the businessarea to realize cost synergies and focus thebusiness. This produced a visible effect fromthe third quarter. Saab Bofors Dynamics is
involved in several international collabora-tion projects in missiles, such as the six-nation project for the short-range air-to-airmissile IRIS-T and the Taurus air-to-groundmissile, together with the German LFK(Lenkflugkörpfersysteme GmbH). Both theIRIS-T and Taurus projects are at the end oftheir development phase and negotiationson production contracts have been started.Saab Bofors Dynamics is also a member ofthe industrial team behind the Europeanproject on the medium-range air-to-air missileMeteor. During 2000, the British Governmentannounced that it had chosen the Meteor andthe Swedish Defense Minister stated thatSweden would be taking part in the projectwith a share of about 12 per cent. The totalvalue of the project is estimated at SEK 100bn throughout its life. Negotiations on thedevelopment contract for the Meteor havebeen started between the industry and par-ticipating countries, and are expected to becompleted during 2001. Among the totallyinternally developed products are the RBS 23Bamse and RBS 70 anti-aircraft missilesystems, the RBS 15 anti-ship missile, theBILL 2 anti-armor missile, the Carl-Gustafmortar system and the AT4 anti-armor muni-tions. Development of the RBS 23 Bamse isin its final phase and successful test firingshave taken place. In July, the first serial orderfor the Bamse was received from FMV, withdeliveries from 2003. During the year, severalcountries have also shown an interest in theRBS 15 anti-ship missile and in December anagreement was signed with the German com-pany DIEHL on collaboration in production,maintenance and future upgrading for boththe German and the Swedish markets, as wellas the export market. Deliveries during theyear included the RBS 70 for Venezuela, BILL2 and upgraded RBS 15 for FMV, anti-armormunitions for France and Carl-Gustaf muni-tions for Norway. In September, a further suc-cessful test flight took place with the Taurusand during the year several test firings of theIRIS-T have been conducted from various air-craft.
Business area Saab Ericsson Space, whichis owned to 60 percent by Saab and 40 per-cent by Ericsson, develops and producescomputers, antennas, microwave electronicsand mechanical systems for the spaceindustry. Over 90 per cent of the businessarea’s sales go to export. Sales in commercialtelecommunications projects continued to
grow and during the autumn the secondsales office in the USA opened in LosAngeles in order to be closer to customers,mainly in the commercial telecommunica-tions industry. Other operations concernedpublicly financed projects within organiza-tions such as the European Space Agency(ESA), and bilateral and Swedish programs.
In November, 65 per cent of the Dutchcompany Fokker Space, which specializes inmanufacturing solar panels, robot-controlledinstruments and structures for launch rock-ets was acquired, with access during 2001provided that all the necessary permits areobtained and that the due diligence is com-pleted in a satisfactory manner. Saab EricssonSpace thereby became Europe’s largest sup-plier of space equipment. The Dutch indus-trial group Stork is the minority owner inFokker. The most important projects in theinstitutional market during 2000 have beenSPOT, a bilateral collaboration between Franceand Sweden in global observation satellites,and the ESA projects METOP concerningmeteorological satellites and ROSETTA, ascientific satellite. In the commercial market,the most important projects during the yearhave been participation in the telecommuni-cations satellite projects Eutelsat and Intelsat,work on the Ariane program and deliveriesof separation systems for a number of launchrockets. Order bookings during the yearhave been good and include equipment forSpaceway, the new generation of telecommu-nications satellites.
Celsius Aviation Services, CAS, is a com-mercial aircraft maintenance company focus-ing on the USA. CAS lies outside the strategyand orientation that Saab has chosen for thefuture. However, work on finding a newowner for CAS has proved more complexthan expected, partly because of the tradecycle. The structure of the operation has therefore been reviewed and from 2001 SaabAviocomp is included in business area SaabTechnical Support and Services, whilediscussions are in progress with potentialbuyers of other parts of CAS. In February2001, Celsius Amtec was sold. The resultfrom the divestment has been taken againstthe purchase analysis and will therefore notaffect the income. There will be a positiveeffect on net cash of close to SEK 500 m.Operations during the year have been affect-ed negatively by a general downturn intrade in those markets where CAS operates.
47
An important event during the year was thenew outline agreement signed with theAmerican defense on jet engine maintenance.
In Other operations, there are long-termcommitments in the form of the leasing port-folio and maintenance activities for Saabregional aircraft. There are also a number ofsmall niche companies, such as Nexplo,which specialises in explosives, andKockums Industrier, which operates in theheavy engineering industry. To manage thelong-term capital supply for these nichecompanies and to realize values, Saab isseeking structural solutions for several of theoperations. During the year, a number ofniche companies have been sold. Saab alsoholds 25 percent of the shares in the Germanshipyard Howaldswerke Deutsche Werft,HDW. Celsius acquired these in autumn1999 when Kockums AB was sold to HDW.At the same time, agreement was reached ona possibility for Saab to increase its sharehold-ing and on the right to sell its 25 per centholding. The right to sell can be exercisedduring the period January 1, 2001 – June 30,2002 at a fixed price of DEM 355 m. Otherowners in HDW are the German companiesBabcock Borsig and Preussag AG.
From 2001, the leasing and customer supportactivities for Saab regional aircraft and parts ofCelsius Aviation Services and Saab Air willconstitute business area Saab Aviation Services.
FUTURE DEVELOPMENTFormation of one of the world’s leadinghigh technology companiesThe European defense industry is character-ized by increasing competition and swellingresearch and development costs. This has ledto a consolidation and internationalization ofthe industry and the formation of large mul-tinational defense companies operating in aglobal market. Through the acquisition ofCelsius, Saab has created one of the world’sleading high technology companies with itsprincipal operations in aerospace and defense and has achieved the breadth of competence in high technology required tocontinue supporting its customers also in the future and to be their natural first choice.Through the acquisition, Saab has become amore comprehensive company in importantparts of the future defense – information gath-ering, decision support and precision engage-ment, greatly increased its activities in thearea of advanced services, which we consider
to be an interesting market for the future,and expanded its international presence.
Products and systemsWith the purchase of Celsius, Saab has broadened its product portfolio and now hasa very good position to meet the orientationenvisaged in the defense market, where several countries, among them Sweden, areincreasing their focus on information defense.In the international perspective, BAESYSTEMS’ partnership and part ownershipare of great importance. Today, Saab derivesconsiderable benefit from this link to the restof Europe and other international markets.
The excellent order bookings in 2000 and theacquisition of Celsius have further strength-ened Saab’s already strong order backlog,which now corresponds to more than twoyears invoicing. In systems and defenseelectronics, Saab currently has an internation-ally competitive center for the development of advanced defense systems, partly based oninformation technology, with a large exportshare. The order backlog for the Gripen is animportant base for future operations. Deliver-ies to the Swedish Air Force are taking place ata rate of about 17 aircraft per year, in additionto further development of the aircraft systemand routine maintenance and add-on orders.Deliveries of 28 Gripen aircraft to South Africawill begin in 2007. Commercial programs iscontinuing the build-up of new activities oriented towards collaboration with the majoraircraft manufacturers Airbus and Boeing. Theorder for the RBS 23 Bamse and the decisionon the Meteor have laid the foundation for aninternationally strong and enduring missileindustry within Saab. The decision on theMeteor is also extremely important for thelong-term export potential of the Gripen.During recent years, Saab has expanded bothorganically and through acquisitions in thearea of advanced technical services, which weconsider to be an interesting future market.The space industry is currently undergoingmajor structural changes. The main growthpotential is expected to be in the commercialmarket, while growth in the institutional market is expected to be moderate.
THE SAAB GROUP IN 2000SalesGroup sales doubled to SEK 17,840 m. (9,053,pro forma 18,018). The acquisition of Celsiusis the main reason for the increase. Sales
have increased or are on the same level aslast year for principally all companies exceptbusiness area Saab Bofors Dynamics. Ofsales 62 percent (pro forma 66) were relatedto defense. Sales to foreign markets amount-ed to SEK 8,523 m. (3,444) or 48 percent (38, pro forma 48) of total sales. Total exportsfrom the Group’s Swedish companiesincreased to SEK 5,123 m. (3,235). TheGroup’s export to the EU market amountedto SEK 2,583 m. (1,395) and total sales withinthe EU, excluding Sweden, were SEK 2,734 m.(1,493).
Sales by business areaPro forma
SEK m. 2000 1999 Change
Saab Systems & Electronics 4,364 4,294 2%
Saab Aerospace 3,921 3,964 -1%
Saab Technical Support
& Services 2,511 2,367 6%
Saab Bofors Dynamics 2,348 3,393 -31%
Saab Ericsson Space 713 676 5%
Internal sales -733 -797
13,124 13,897 -6%
Celsius Aviation Services 3,241 3,009 8%
Other operations 1,475 1,112
Saab Group 17,840 18,018 -1%
The sales increase in Saab Systems andElectronics is mainly attributable to simulationsystems and the commercial operations, whiledefense electronics was on a level with the proforma figure in the previous year. Sales ofSaab Aerospace were on a level with theprevious year for all three business units.During the year, 17 (16) Gripen aircraft wereinvoiced, which corresponds with the currentdelivery plan. Invoicing of one Gripen aircraftmore than in the preceding year was offset bya slower rate in the Swedish further develop-ment program. The sales increase in SaabTechnical Support and Services is attributableto acquisitions within AerotechTelub, as wellas to organic growth in the defense-relatedoperations and test systems for the telecom-munications industry. The sales decrease forSaab Bofors Dynamics, whose operations wereconcentrated during the year, is mainly attrib-utable to major deliveries of the STRIX during1999, for which there was no correspondingfigure in 2000, and fewer deliveries of anti-armor munitions. Sales of Saab EricssonSpace increased through higher volumes.Sales in Celsius Aviation Services wereunchanged in terms of US dollars compared
48
with the preceding year and the increase isthus attributable to the higher dollar rateduring 2000. Other operations increased mainly through volume expansion in customersupport to the fleet of Saab 340 and Saab 2000aircraft, which amounted to SEK 994 m. (666).
Sales by market area
SEK m. 2000 1999 Change
Sweden 9,317 5,609 66%
Other EU countries 2,734 1,493 83%
Other European
countries 608 512 19%
Total Europe 12,659 7,614 66%
North America 2,899 644
Central and South
America 464 21
Asia 764 546 40%
Australia, etc 997 217
Other markets 57 11
Saab Group 17,840 9,053 97%
OrdersGroup order bookings were all time high andamounted to SEK 28,141 m. (6,849, pro forma15,267). The order backlog at year-endamounted to SEK 41,091 m. (23,637, proforma 29,891), and includes military ordersworth SEK 38,300 m.
Order bookingsPro forma
SEK m. 2000 1999
Saab Systems & Electronics 5,523 4,126
Saab Aerospace 12,171 3,752
Saab Technical Support
& Services 2,672 2,099
Saab Bofors Dynamics 2,853 2,793
Saab Ericsson Space 765 706
Internal -612 -1,820
23,372 11,656
Celsius Aviation Services 3,408 2,607
Other operations 1,361 1,004
Saab Group 28,141 15,267
Order bookings for Saab Systems andElectronics, which were very good for mostbusiness units during the year, included firecontrol systems for combat vehicles forSwitzerland and Finland (SEK 750 m.) amobile combat training center for theNetherlands (SEK 560 m.), naval commandand control systems for Sweden and theUnited Arab Emirates (SEK 450 m.), laser
simulators and mobile systems for combattraining for the USA (SEK 400 m.), electronicwarfare equipment for the Eurofighter (SEK135 m.), air surveillance systems for acountry in South-east Asia (SEK 100 m.) multispectral mobile camouflage systems forthe Swedish Army’s Leopard 2 battle tanks(SEK 75 m.), digital recording equipment – including options – for F18 aircraft in theSpanish Air Force (SEK 65 m.) and furtherorders in the ANZAC (ships) and BCSS(Battlefield Command Support System) pro-grams for Australia. Order bookings for SaabAerospace comprised the first export orderfor the Gripen through South Africa’s orderfor 28 aircraft with associated equipment,training etc. with a value for Saab of SEK 9.3 bn. Order bookings also included furtherdevelopment, upgrading, separate ordersand spare parts for the Gripen. Order book-ings for Saab Technical Support and Servicesincreased heavily during the year owing toacquisitions and a very large number ofsmaller orders, including one from Bombardierfor modification of amphibious aircraft, another from Telia Mobile for participation inbuilding and installing base stations for
mobile radio telephony in Sweden, and orders for a new command and controlsystem for the Air Force Tactical Command,computerised test systems for the SwedishArmy’s Leopard 2 battle tanks and a newradio system for the Gripen. Order bookingsfor Saab Bofors Dynamics mainly comprisedthe first serial order from FMV for the Bamseanti-aircraft missile with a value of over SEK1 bn, as well as several export orders for AT4anti-armor munitions and munitions for theCarl Gustaf mortar. Saab Ericsson Space hasincreased its order bookings in 2000, as it hasdone every year since the formation of thepresent company. Order bookings included a supplementary contract for 40 onboard computers for the Ariane 5 launch rocket,onboard computers and antennas to Alcatelfor the Eutelsat satellites Atlantic Bird 2 andHotbird 6, microwave equipment for Hughesfor Spaceway – a new satellite-based systemfor broadband services, electronics for tele-communications satellites and further ordersfor both the European and American weathersatellite programs and the ROSETTA satellite,a scientific program organised by the ESA(European Space Agency) where the business
Income statementPro forma
SEK m. 2000 1999 1999
Sales 17,840 18,018 9,053
Cost of goods sold -13,427 -13,882 -6,363
Gross margin 4,413 4,136 2,690
Gross margin, % 24.7% 23.0% 29.7%
Marketing expenses -1,578 -1,390 -798
Administrative expenses -1,251 -1,309 -550
Research and development costs -860 -858 -604
Items affecting comparability 285 255 255
Other operating income 613 347 181
Other operating expenses -97 -65 -71
Share in income of associated companies 8 9 1
Operating income 1) 1,533 1,125 1,104
Operating margin 8.6% 6.2% 12.2%
Result from financial investments -85 -9 273
Income after financial items 1,448 1,116 1,377
Taxes -333 -352 -391
Minority interest -77 -29 -47
Net income 1,038 735 939
Earnings per share, SEK 2) 9.75 6.90 8.82
Earnings per share after full conversion, SEK 3) 9.50 6.73 8.601) Includes depreciation of -1,336 -1,311 -918
of which depreciation on leasing assets -534 -511 -511 2) Number of shares: 106,459,675 as per Dec. 31, 20003) Number of shares after full conversion: 109,247,175
49
area is participating with computer, massmemory and antenna systems. The commer-cial market’s share of order bookings increas-ed further during the year and amounted to53 per cent of the total. Order bookings forCelsius Aviation Services increased somewhatalso in US dollars and during the year a newlong-term outline agreement was signed withthe American defense for jet engine mainte-nance to a value of just over SEK 1 bn. Orderbookings for Other operations consistedmainly of spare parts and customer supportfor the fleet of Saab 340 and Saab 2000 aircraft.
Order backlogPro forma
SEK m. 2000 1999
Saab Systems & Electronics 8,689 7,250
Saab Aerospace 27,097 18,847
Saab Technical Support
& Services 1,253 778
Saab Bofors Dynamics 4,219 3,765
Saab Ericsson Space 816 764
Internal -1,997 -2,156
40,077 29,248
Celsius Aviation Services 540 338
Other operations 474 305
Saab Group 41,091 29,891
Number of aircraft in the order backlog
Number of aircraft 2000 1999
Gripen 134 123
Income and profitabilityThe increase in operating income is mainlyattributable to improved income for SaabSystems and Electronics, the effect of thestructuring work at Saab Bofors Dynamicsand capital gains from value realization ofcommercial spin-off companies totalling SEK353 m. During 1999, operating income includ-ed a reversal of the loss risk reserve for thebase contract for the Gripen of SEK 135 m.,for which there was no corresponding figurein 2000. Operating income includes a reversalof the reserve regarding phase-out of RegionalAircraft of SEK 246 m. (255). The year’s income regarding Regional Aircraft of SEK-593 m. (-771) has been set against thetermination reserve.
The increase in marketing expenses com-pared with pro forma 1999 has increasedbecause marketing activities in general havebeen more intensive in every business area
Operating income by business area% of Pro forma % of
SEK m. 2000 sales 1999 sales
Saab Systems & Electronics 289 6.6% 199 4.6%
Saab Aerospace 1) 333 8.5% 450 11.4%
Saab Technical Support & Services 167 6.7% 146 6.2%
Saab Bofors Dynamics 46 2.0% -39
Saab Ericsson Space 53 7.4% 65 9.6%
Corporate 340 -40
1,228 9.4% 781 5.6%
Celsius Aviation Services 157 4.8% 212 7.0%
Other operations 148 132
Saab Group 1,533 8.6% 1,125 6.2%
1) 1999 includes reversal of loss risk reserve of SEK 135 m.
Balance sheetPro forma
Dec. 31, Jan 1, Dec. 31,
SEK m. 2000 1999 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 liabilities 31,119 36,641 28,079
1)Advance payments from customers, gross 6,768 7,796 6,645
Less portion used, which has been reduced
from inventories -3,149 -3,165 -2,590
Advance payments from customers, net 3,619 4,631 4,055
50
Five year overview 1)
Pro forma Pro forma Pro formaSEK m., unless otherwise stated 2000 1999 1999 1998 1997 1996 1995
Saab Group
Order bookings 28,141 15,267 6,849 5,797 16,612 7,736 6,053
Order backlog at year-end 41,091 29,891 23,637 23,132 27,122 20,042 20,509
Sales 17,840 18,018 9,053 8,248 8,674 8.,159 7,925
Foreign market sales, % 48 48 38 41 51 54 60
Operating income 1,533 1,125 1,104 875 -5,316 -2,066 -399
Operating margin, % 8.6 6.2 12.2 10.6 neg neg neg
Operating margin before depr., % 13.5 10.7 17.1 14.7 neg neg 5,7
Income after financial items 1,448 1,116 1,377 1,218 -4,845 -1,572 271
before items affecting comparability 1,163 861 1,122 1,018 576 -353 271
Total assets 31,119 36,641 28,079 29,680 30,320 28,140 24,966
of which aircraft leasing operation 6,456 8,877 8,877 9,119 9,604 8,817 6,711
Operating cash flow -1,908 – -2,368 -1,105 -2,229 1,195 405
Capital employed, average 12,183 – 6,866 6,352 6,440 8,975 8,719
Return on capital employed, % 14.6 – 21.3 21.4 neg neg 5.0
before items affecting comparability, % 12.3 – 17.6 18.2 8.8 neg 5.0
Return on shareholders’ equity, % 20.0 – 21.5 25.6 neg neg 2.5
before items affecting comparability, % 16.1 – 17.3 21.6 2.4 neg 2.5
Profit margin before items affecting comparability, % 8.4 – 13.4 14.1 7.8 neg 5.5
Capital turnover rate 1.46 – 1.32 1.29 1.13 0.92 0.91
Equity/assets ratio, % 18.2 12.8 16.8 13.6 10.2 22.5 23.3
Interest coverage ratio, before items affecting comparability 4.47 – 13.9 7.88 6.76 neg 2.64
Earnings per share, SEK 9.75 6.90 8.82 8.55 – – –
Earnings per share after full conversion, SEK 9.50 6.73 8.60 8.35 – – –
Dividend, SEK 2) 3.00 – 2.50 2.00 – – –
Number of employees at year-end 15 453 16 665 8 031 7 891 7 716 8 110 8 474
1) For definitions of key ratios, see Note 42, page 72.2) 2000 proposed dividend.
51
this year. This should be seen in relation tothe excellent order bookings this year.Administrative expenses have decreasedcompared with pro forma as a result of theintegration work. Research and developmentcosts, which are on a level with pro formafor the previous year, derived mainly frombusiness areas Saab Systems and Electronicsand Saab Aerospace. Development costs forthe export version of the Gripen were on alevel with the previous year.
Other operating income consist mainly ofcapital gains following divestment of compa-nies SEK 356 m. (21), reversal of reserves corresponding to the deficit in Saab AircraftSEK 21 m. (47), trading income in Treasury
business SEK 45 m. (12), currency gains, etc.SEK 82 m. (57) and income from secondaryactivities such as insurance business, propertyrentals and sales of machines. Other operat-ing expenses include pension costs SEK 42 m. and capital losses SEK 17 m.
Items affecting comparability amounted toSEK 285 m. and consisted of company relatedfunds of SEK 527 m. received from SPP, rever-sal of reserves of SEK 246 m. concerningRegional Aircraft, and provisions mainlyregarding certain development projects in thetorpedo and missiles operation from the for-mer Celsius Group amounting to SEK 488 m.
Items affecting comparability in theprevious year concerned reversal of reserves
of SEK 255 m. regarding Regional Aircraft.Project interest on non-utilized advance payments, which is reported in operatingincome, amounted to SEK 172 m. (218).
The Saab Group has nominally received atotal of SEK 1,464 m. from SPP, of which SEK263 m. has been paid in cash. The remainingamount is reported as a short-term receivable,SEK 606 m., and a long-term receivable,which after discounting to present valueamounts to SEK 544 m. The portion of SPP’ssurplus relating to Saab has been taken torevenue during the year and has influencedincome by SEK 527 m. after discountingreceivables to present value. The portiontotalling SEK 827 m. which relates to the
former Celsius Group is included in the pur-chase analysis and has not influenced income.Taking into account discounting and adjust-ments for other acquisitions, surplus fundsreceived amount to SEK 1,354 m.
Net financial income and expensesamounted to SEK -85 m. (pro forma -9), ofwhich Saab Aircraft Leasing SEK 68 m. (74).The decrease is mainly attributable to lowerliquid funds. The decrease in net financialincome compared with the outcome in theprevious year is mainly due to the fact thatCelsius was purchased for cash, which corre-sponds to lost interest revenue of approxi-mately SEK 250 m. The income share inHDW, which amounted to SEK 30 m., isreported as financial income. The averagereturn on external investments amounted to4.72 percent (4.75) and the average liquiditywas SEK 5,400 m. (11,600). Income afterfinancial items amounted to SEK 1,448 m.(pro forma 1,116).
Current and deferred taxes amounted toSEK -333 m. (pro forma -352), correspondingto an effective tax of 23 per cent (pro forma32) on income after financial items. The deviation of the effective tax rate in certainyears from the Swedish tax rate of 28 percent is due to permanent differences in taxation and the fact that the Group hasoperations in countries, primarily the USA,
with higher tax rates than in Sweden. Seealso Note 14 Taxes, page 66.
Net income for the year was SEK 1,038 m.(939, pro forma 735), corresponding to anincome per share of SEK 9.75 (8.82, proforma 6.90).
Pre-tax return on capital employed was14.6 percent (21.3). Pre-tax return on capitalemployed before items affecting comparabil-ity was 12.3 percent (17.6). After-tax returnon shareholders’ equity was 20.0 percent(21.5). For definitions of key ratios, see Note42, page 72.
The improvement in operating income forSaab Systems and Electronics is mainly attrib-utable to the military systems business andthe phase-out of certain commercial develop-ment projects. Operating income of SaabAerospace is on a level with the previousyear, excluding the reversal of the loss riskreserve of SEK 135 m., which was made in1999. Also in 2000, income is burdened withhigh costs in regard to marketing and devel-opment for the export version of the Gripen.Operating income and operating margin
have improved somewhat during the yearfor Saab Technical Support and Services as aresult of the increased volume. Intensiveintegration work has been carried on duringthe year at Saab Bofors Dynamics to realizecost synergies and concentrate operations.This produced a positive result after threequarters. Operating income for Saab EricssonSpace deteriorated as a result of increasedefforts in the commercial telecommunica-tions market and associated internally fi-nanced development. Income from Groupactivities improved, primarily through capitalgains. The decrease in income of CelsiusAviation Services is mainly due to a poorermarket for engine operations in the USA andlower activity in the markets in South-eastAsia and Australia as a result of the strongerdollar. Operating income for Other opera-tions, excluding reversal of reserves inregard to Regional Aircraft, was somewhatbetter than in the previous year, but contin-ued to be negative SEK -98 m. (pro forma -123). Structuring work regarding several ofthese operations is in progress. Developmentin operations at Saab Aircraft and SaabAircraft Leasing followed the plans set up in1997, when the leasing portfolio was writtendown and provisions made for expectednegative income of Saab Aircraft. For SaabAircraft, income for the year before reversalsagainst the loss risk reserve amounted toSEK -21 m. (-47) and for Saab AircraftLeasing to SEK -113 m. (-35).
Financial objectivesIn the long term, Saab’s goal is to achieve anaverage operating margin of at least 15 per-cent before depreciation and at least 10 per-cent after depreciation. In 2000, the operat-ing margin before depreciation was 13.5percent (pro forma 10.7) and the operatingmargin after depreciation was 8.6 percent(pro forma 6.2). The profitability goal is areturn of at least 15 percent on shareholders’equity, based on the present interest level. In2000, the return on shareholders’ equity was20.0 (21.5) percent. The aim for equity/assetsratio is to exceed 30 percent for Saab exclud-ing regional aircraft activities. At the end of2000, the equity/assets ratio calculatedaccordingly amounted to 22.5 percent. Thefinancial objectives are unchanged comparedto prior the acquisition of Celsius and theaim is that the margins should be back onthe goal levels again within three years.
Finance and liquidityOf Goodwill, SEK 700 m. is attributable tothe acquisition of Celsius and the remainingamount primarily to Ericsson Saab Avionicsand AerotechTelub. Property, plant andequipment are used mainly in the core business. Of Lease assets, just under SEK 6 bn concerns the leasing portfolio and theremainder leasing assets within CelsiusAviation Services. Long-term interest bearingreceivables consist mainly of an oil platformand a receivable on SPP regarding company-related funds. Shares and securities includethe holdings in HDW, Nammo and Raufoss.Receivables regarding deferred taxes arereported net after deduction for deferred tax in untaxed reserves and relate mainly to unutilized tax deductions for provisionsmade. Inventories are reported net afterdeduction for utilized advance payments ofapproximately SEK 3 bn. Just over half ofOther receivables consists of customer recei-vables and the remaining amount includesVAT receivables and interim items. Otherprovisions consist mainly of the terminationreserve for Regional Aircraft, provisions inregard to the leasing portfolio and restruc-turing and project reserves in connectionwith the acquisition of Celsius. Other lia-bilities include supplier and VAT liabilities,and accrued costs.
Compared with the pro forma openingbalance, liquid funds less liabilities to creditinstitutions decreased by SEK -1,876 m. toSEK 3,942 m. (5,818). The decrease is net,consisting mainly of nominal SEK 1,464 m.in funds received from SPP and payment ofthe insurance premium for the leasing port-folio of regional aircraft of SEK 528 m., pay-ments regarding the phase-out of regionalaircraft manufacture of SEK 604 m., tax paidof SEK 648 m., repurchase of property inaccordance with agreements SEK 400 m. andpaid dividend of SEK 266 m., in addition tocontinued high utilization in the Gripen program.
The Group’s net liquidity after deductionfor allocations to pensions amounted to SEK415 m., compared with SEK 2,412 m. in proforma opening balance. Compared with theclosing balance in 1999, net liquidity has decreased by SEK 7,983 m., mainly due tothe above mentioned causes, the acquisitionof shares in Celsius during the year for SEK3.7 bn and the net liability taken over fromCelsius of SEK 1.8 bn.
52
Group equity/assets ratio amounted to 18.2percent compared with 12.8 percent in thepro forma opening balance and 16.8 percentat the end of 1999. The interest coverageratio, excluding items affecting comparability,was 4.47 (13.9). Shareholders’ equity amount-ed to SEK 5,670 m. (4,708), corresponding toSEK 53.26 (44.23) per share.
Cash flowThe cash flow analysis and the following comments apply to the period January 1– December 31, 2000, as if Celsius had alreadybeen included in the Group December 31, 1999.
Summary of cash flow statement
SEK m. 20001) 19992)
Cash flow from operating
activities
Income after financial items excl.
share in income of associated
companies 1,440 1,380
Depreciation and write-down
charged to income 1,336 918
Items affecting comparability -246 -255
Tax -648 -182
Cash flow from operating
activities before
changes in working capital 1,882 1,861
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
1) Pro forma 2000 as Celsius had been included in the Groupfrom the beginning of the year.
2) Pro forma 1999 as if Ericsson Saab Avionics had been included in the Group from the beginning of the year.
Group cash flow from operating activities continued to be good and amounted to SEK1,882 m. (1,861). Working capital decreased asa result of planned continued utilizationregarding the Gripen, which resulted in aheavy decrease in advance payments fromcustomers. Provisions have decreased, mainlyas a result of the year’s deficit in RegionalAircraft and Saab Aircraft Leasing totalling SEK706 m. and payment of the insurance premiumfor the leasing fleet of SEK 528 m. Lease obliga-tions have decreased as a result of sales of air-craft from the leasing portfolio. The cash flowfrom investments amounted to SEK -502 m. (-1,780). In 1999, investments in shares inCelsius AB accounted for SEK -1,267 m.Operating cash flow amounted to SEK -1,908 m. (-2,368), of which Regional AircraftSEK -593 m. (-404) and Saab Aircraft LeasingSEK -715 m. (218). The outflow is mainly dueto phase-out of Regional Aircraft production,payment of the insurance premium for theleasing fleet, payment of tax, repurchase ofproperty, payment of dividend and continuedhigh utilization in the Gripen program.
Capital expendituresThe year’s capital expenditures in property,plant and equipment, excluding lease assets,amounted to SEK 1,077 m. (447, pro forma652). Net investments including lease assetsand intangible fixed assets amounted to SEK494 m. (467), including lease assets of SEK -476 m. (83). Included in capital expendituresin Corporate is a re-purchase of a buildingaccording to agreement.
Pro forma
SEK m. 2000 1999
Saab Systems & Electronics 85 89
Saab Aerospace 137 157
Saab Technical Support
& Services 69 77
Saab Bofors Dynamics 57 71
Saab Ericsson Space 25 40
Corporate 633 128
1, 006 562
Celsius Aviation Services 40 48
Other operations 31 42
Saab Group 1,077 652
Research and developmentIn order to maintain a leading position in itsbusiness areas, the Group allocates consider-able resources to research and development,where about 3,000 persons are employed.Investments in research and development
are made primarily for customers in thebusiness areas Saab Systems and Electronics,Saab Aerospace and Saab Bofors Dynamics.The year’s expenditures for research anddevelopment amounted to SEK 3,808 m.(3,081, pro forma 4,462), of which SEK 2,948m. (2,477, pro forma 3,604) relates to custom-er funded development.
Pro forma
SEK m. 2000 1999
Saab Systems & Electronics 1,136 1,361
Saab Aerospace 1,513 1,907
Saab Technical Support
& Services 91 136
Saab Bofors Dynamics 788 796
Saab Ericsson Space 205 187
Celsius Aviation Services 6 6
Other operations 69 69
Saab Group 3,808 4,462
in percent of net sales 21.3 24.8
Internally funded development concernedmainly the export version of the Gripen,which was on a level with the previous year,and further development of the Gamersystem and the new generation of lasersimulators, upgrading of the RBS 70, furtherdevelopment of the AT4 munitions, technicaldevelopment in the area of space, mainly intelecommunications, and the development ofa new generation of separation systems.
Personnel At the end of 2000, the number of employeesin the Group was 15,453, compared with proforma 16,665 at the beginning of the year. Atyear-end 1999 the number of employees was8,031.
Proforma
Number 2000 1999 Change
Saab Systems & Electronics 3 023 3 081 -58
Saab Aerospace 4 146 4 196 -50
Saab Technical Support
& Services 2 794 2 705 89
Saab Bofors Dynamics 1 884 2 565 -681
Saab Ericsson Space 663 644 19
Corporate 161 233 -72
12 671 13 424 -753
Celsius Aviation Services 1 450 1 545 -95
Other operations 1 332 1 696 -364
Saab Group 15 453 16 665 -1 212
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FINANCIAL RISK MANAGEMENTThe Group’s operations are continuouslyexposed to financial risks through fluctuationsin exchange rates, interest levels, credit andliquidity. In addition, the complexity of thefinancial structure is increased since opera-tions to a large extent consist of long-termprojects. The overall policy for the businessunits is that the financial risks associatedwith operations should be minimized, i.e.financial risk neutrality should be sought.
Exchange rate risks are defined as the riskthat fluctuations in exchange rates will havea negative effect on Group income. Riskneutrality on the exchange rate side is achiev-ed through clauses in contracts or throughtransactions in the currency market withfutures or options. Exchange rate risks inbids at fixed prices in foreign currencies arehandled within the internal bank. Interestrisk is the risk of negative influence onGroup income as a result of fluctuations inmarket rates. Risk neutrality regardinginterest risks is achieved by seeking similarinterest terms on the assets and liabilitiesside of the balance sheet.
Saab Treasury is responsible for liquiditymanagement, internal banking and trading,and external handling of interest and ex-change rate risks. Operations are carried outon the basis of a finance policy establishedby the Board of Directors and are dividedinto four portfolios: liquidity management,internal banking, bidding portfolio and trad-ing.
Liquidity management is handledcentrally within the framework of an invest-ment policy determined by the Board ofDirectors of Saab AB. The investment policyis based on a benchmark, from which the following deviations are permitted in regardto duration and credit risk:
Bench- Min. Max.
mark risk risk
Government 80% 100% 40%
Housing (min A) 20% 0% 40%
Corporate (min A) – 0% 20%
Duration 15 mths 0 mths 27 mths
The lowest permitted rating for investments issingle A, according to Moody’s and/or S & Plong term ratings. Credit risk calculation isbased on actual and anticipated credit risk,according to recommendations from the Bank
of International Settlement (BIS). At December31, 2000, the risks of the opposite partiesamounted to SEK 4,038 m. (4,646), of whichhousing finance institutions SEK 766 m.(3,623).
In order to achieve the desired durationand return, interest options such as swapsand futures are used. At close of books, theduration was 13 months. During 2000, theaverage net liquidity was SEK 5,400 m.(11,600). The average return on external investments was 4.72 percent (4.75).
In order to optimize the Group’s externaltransactions and to monitor and overviewGroup transactions, all transactions are madethrough the internal bank. The internal banktakes no risks and all transactions madeagainst internal companies are made simulta-neously against external parties.
The Board of Saab AB has issued a riskmandate for trading in currencies and moneymarket instruments of SEK 20 m., expressedaccording to Value at Risk (VaR). VaR is a probability-based method, based on historicexchange rate fluctuations and correlations,and is established practice in the financialfield. The method measures the maximumloss during a certain number of days with acertain probability. Within Saab is used threedays and 99 percent probability. ThroughVaR, the risks for different types of assets canbe aggregated to a single measure of risk. Ifthe accumulated result during the year isnegative, the mandate is reduced by the corresponding amount. In 2000, trading income was SEK 45 m. (12). The average utilized risk mandate (VaR) during the yearamounted to SEK 6.6 m. (3.6).
During the year, the bidding portfolio wasadded as a result of an increasing trendtowards fixed price bids in foreign currencies.The purpose of the portfolio is to lower thegroup’s currency risk during the bidding period and to reduce the costs of hedging. Theoperating units can sign bidding insurancewith Saab Treasury when submitting a fixedprice bid. Saab Treasury handles the currencyrisk by combining forward agreements andoptions, based on the expected probability for the deal. The operation is controlled by a policy and a risk measure based on probability-weighted VaR as above.
Saab Treasury’s holdings of option, futuresand other securities per December 31, 2000were in nominal terms SEK 15,299 m. (15,695),distributed as follows:
Nominal amount in SEK m. 2000 1999
Interest swaps, SEK 2,250 3,750
Interest swaps, foreign 3,340 4,056
Futures, SEK 4,165 4,750
Currency options 248 20
Currency futures 5,296 3,119
Total 15,299 15,695
Futures and interest swaps in SEK are usedfor risk management in the liquidity port-folio, while interest swaps in foreign currenciesare used for interest risk management of theleasing portfolio. Other instruments are futures and options for the USD share of provisions for regional aircraft and firmorders for other business in the Group.
Risk management – insuranceRisk management has the task of identifying,assessing and limiting non-financial risks,preventing damage and undertaking respon-sibility for the Group’s central insurance purchasing. This purchasing takes place both on the open market and in the Group’sown insurance company, Lansen Försäkrings-aktiebolag.
All insurance signed in the Group’s owncompany is reinsured in the external marketon an Excess of Loss basis in order to limitthe company’s exposure for each claim.
During the year, financial risk insuranceaimed at safeguarding the Saab Group againstrisks attributable to the leasing portfolio ofregional aircraft was signed in LansenFörsäkringsaktiebolag. Lansen has reinsur-ance through a group of very well-reputedinsurance companies throughout the world.
In total, the Saab Group’s insurance pre-miums during the year amounted to SEK 69.2 m.(27.5), of which SEK 45.6 m. (18.3) was signedin the Group’s own insurance company.
Customer financeCustomer finance provides an important toolfor marketing the company’s products.Export customers are setting increasingdemands on finance. Normally, Saab actstogether with various banks and guaranteeinstitutions in seeking different solutions tomeet the customer’s needs. This is doneprimarily through the bank giving the buyercredit or through providing supplier credit.In order to limit risk exposure, the risks aresold on the market to banks and governmentguarantee institutions, such as the ExportCredits Guarantee Board in Sweden.
54
55
THE WORK OF THE BOARD OF DIRECTORSThe Board of Saab consists of nine memberselected at the Annual General Meeting without deputies and three members withdeputies appointed by the employee organizations. According to the shareholders’agreement between Investor and BAESYSTEMS, the parties each nominate threemembers to the Board. In addition to theconstitutive meeting, the Board has held six ordinary meetings during 2000.
At the Annual General Meeting on April 10,Anders Scharp, Marcus Wallenberg, Erik Belfrage, Tony Rice, George Rose, Björn Svedberg and Bengt Halse were re-elected. Peter Nygårds and Michael Rousewere elected new member of the Board toreplace Lars-Erik Englund and Kevin Smith,who had declined re-election.
During the year, the Board has given special attention to the following issues,among others:• The acquisition and integration of Celsius• The insurance solution for the leasing
portfolio of Saab 340 and Saab 2000 aircraft• Divestment of commercial spin-off
operations• Exports of the Gripen• Changes in the Swedish defense• Development in the European aerospace
industry• Business development of the Group
The work of the Board follows the workinginstructions that it has set up for its work.The working instructions and the specialPresident’s Instruction regulate the distri-bution of work between the Board and thePresident. According to the instruction ofwork approved by the Board, normally sixordinary meetings are held each year, inaddition to the constitutive meeting. Inaddition, the Board may meet whenevercircumstances so demand. According to theworking instructions, the company’s auditorshall be present at one meeting each year inconnection with approval of the company’sannual financial statements. The President’sInstruction sets out his duties and authori-zations and includes policies for investment,finance and reporting. With one exception,the Board has declined from appointing subcommittees. According to a decision by theconstitutive Board meeting, a subcommitteeconsisting of Anders Scharp, Marcus
Wallenberg and George Rose shall handleissues concerning remuneration to thePresident and certain leading company officials.
CONSEQUENCES OF THE EMU FOR THE GROUP EXPOSUREThe EMU has led to major structuralchanges, particularly in the financial sphere.Within the EMU, the exchange rate risk formember countries have been eliminated, thereby making it unnecessary to manageexchange rate risks in connection with invest-ments, offers and transactions. In the case of the Saab Group, the exchange rate risk hashowever remained, since the Swedish kronais floating against the Euro and other curren-cies. For the Saab Group, the introduction ofthe Euro has reduced exposure to a smallernumber of currencies. The Group’s exposureto the Euro is relatively low. The internation-al aerospace industry will continue to bedominated by trade in USD, which is theprincipal currency for the Group.
The Group’s EMU policy means that newcontracts are written in Euros instead ofnational currencies. The introduction of theEuro, however, has no effect on the Group’spreferences regarding invoicing currenciessince the USD and SEK are the Group’s principal currencies for this purpose. TheSaab Group has successively replaced transac-tions in national currencies with Euro. ForSaab AB and its Swedish subsidiaries, theaccounting currency will be the SEK as longas Sweden remains outside the EMU.
ENVIRONMENTParent company, Saab ABSaab AB carries on industrial operations thatare subject to licensing according to theEnvironment Act. Such operations concernthe manufacture of aircraft and aircraft com-ponents in Linköping and the aspects coveredinclude surface treatment processes, handlingof chemical substances, airport operation andsize of the manufacturing facilities. The envi-ronmental impact of the operations subject tolicensing arises primarily from emissions oforganic solvents to the atmosphere and ofmetals and deicing agents to water, the gene-ration of industrial wastes and the creation ofnoise causing disturbance to the surround-ings. The manufacturing operations are dominated by the category that is subject tolicensing. The Licensing Board granted the
license for aircraft manufacture for Environ-mental Protection in 1990. Saab AB has beengranted exemption from the Chemicals Inspectorate for using trichloroethylene until 2002.
GroupThe operations carried on by Saab BoforsDynamics AB, Saab Ericsson Space AB andCSM Materialteknik AB in Linköping are notsubject to licensing or notification accordingto the Environment Act, but are covered bythe license granted in 1990 for aircraft manu-facture and the collective operations of SaabAB at Råberga-Tannefors in Linköping. Theoperations of Saab Aircraft AB in Linköpingare subject to licensing according to theEnvironment Act and are also covered by thelicense relating to aircraft manufacture.
Saab Bofors Dynamics AB, Nexplo BoforsAB and Bofors Testcenter AB carry on opera-tions in Karlskoga which are subject to licens-ing according to the Environment Act. SaabBofors Dynamics AB also carries on suchoperations in Eskilstuna and Motala.AerotechTelub AB carries on similar opera-tions in Arboga and Linköping. In addition,SaabTech Electronics AB, Kockums IndustrierAB and Applied Composites AB carry onoperations subject to licensing in Järfälla,Malmö and Linköping.
The environmental influence from subsidi-aries subject to licensing consists primarilyof emissions of organic solvents to theatmosphere, emissions of metals, etc. to soiland water, generation of industrial wastesand creation of noise causing disturbance tothe surroundings.
The group has operations subject to notifi-cation in accordance with the EnvironmentAct at nine Swedish subsidiaries: SaabEricsson Space AB (Gothenburg), SaabMarine Electronics AB (Gothenburg), SaabAircraft AB (Arlanda), Saab Training SystemsAB (Huskvarna and Jönköping), EricssonSaab Avionics AB (Jönköping and Kista),AerotechTelub AB (Växjö), Saab AviocompAB (Linköping), Telub AB (Östersund) andApplied Composites AB (Ljungby). The environmental influence from the operationssubject to notification is very limited.
PARENT COMPANYSales of the parent company amounted toSEK 3,921 m. (4,933). Operating incomeamounted to SEK 838 m. (626).
56
Net financial income and expenses amountedto SEK 843 m. (1,147) and income after financial income and expenses was SEK 1,681 m. (1,773). Of the financial netSEK 743 m. (648) are group contributionsand 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 DISPOSITION OF EARNINGSAs shown in the consolidated balance sheet,unappropriated earnings of the Groupamount to SEK 2,734 m. (1,445), of whichSEK 1,038 m. (939) is income for the year.Allocations to restricted reserves are requiredin the parent company for SEK 0 (21) m. The Board of Directors and the Presidentpropose that the unappropriated earnings atthe disposal of the Annual General Meetingin the Parent Company, amounting to:
SEK m.
Unappropriated earnings carried forward 1,497
Income for the year 1,228
Total 2,725
Be disposed as follows:
Dividend, SEK 3.00 per share 319
To be retained in the business 2,406
Total 2,725
After the proposed disposition, shareholders’equity in the parent Company will be as follows:
SEK m.
Capital stock 1,703
Premium reserve 10
Revaluation reserve 500
Legal reserve 341
Unappropriated earnings 2,406
Total 4,960
The company’s policy is to issue a dividendof 20-40 percent of the Group’s net incomefor the year. The Board of Directors and thePresident propose that SEK 319 (266) m., orSEK 3.00 (2.50) per share, corresponding to31 (28) percent of the Group’s net income forthe year be issued as dividend. Equity/assetsratio of the Saab Group, excluding RegionalAircraft and Saab Aircraft Leasing, is currently22.5 (29.7) percent and after the proposeddisposition of earnings equity/assets ratiowill be 21.4 (28.5) percent.
REPURCHASE OF OWN SHARESThe Board of Directors will propose theAnnual General Meeting authorization forthe Board to decide on repurchase of thecompany’s shares up to 10 percent of thetotal shares outstanding. The purpose of theempowerment is to provide the Board withincreased scope for action in working with
the company’s capital structure and to enableacquisitions to be made where consideredappropriate. The mandate is proposed to bevalid until the next Annual General Meeting.Such repurchases may be effected over thestock exchange or through offerings to share-holders. It is also proposed that the Board’smandate include the possibility to transferrepurchased shares in accordance with cur-rent legislation.
For the income and financial position ofthe Group and the Parent Company seethe following income statements andbalance sheets, including notes with comments.
Pro formaSEK million Note 2000 1999 1999 2000 1999
Sales 3 17,840 18,018 9,053 3,921 4,933Cost of goods sold -13,427 -13,882 -6,363 -2,712 -3,700
Gross margin 4,413 4,136 2,690 1,209 1,233
Marketing expenses -1,578 -1,390 -798 -296 -371Administrative expenses -1,251 -1,309 -550 -400 -320Research and development costs -860 -858 -604 -311 -292Items affecting comparability 4 285 255 255 512 255Other operating income 5 613 347 181 171 136Other operating expenses 6 -97 -65 -71 -47 -15Share in income of assocated companies 8 9 1 – –
Operating income 9 1,533 1,125 1,104 838 626
Result from financial investmentsResult from other securities and receivables
accounted for as fixed assets 10 25 9 4 908 965Other interest income and similar profit/loss items 11 225 242 356 29 271Interest expenses and similar profit/loss items 12 -335 -260 -87 -94 -89
Income after financial items 1,448 1,116 1,377 1,681 1,773
Appropriations 13 – – – -148 -45
Income before tax 1,448 1,116 1,377 1,533 1,728
Taxes 14 -333 -352 -391 -305 -321Minority interest -77 -29 -47 – –
Net income for the year 1,038 735 939 1,228 1,407
Group Parent Company
57
Income statements
2000Pro forma
1999
SEK million Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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 400Operating 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 2Income after financial items 255 374 180 639 164 436 114 402
Net income 161 254 97 526 103 290 78 264Earnings per share, SEK 1) 1.51 2.39 0.91 4.94 0.97 2.72 0.73 2.48
1) Number of shares 106,459,675 as per December 31, 2000.
SALES AND INCOME PER QUARTER
Pro formaSEK million Note 2000-12-31 1999-12-31 1999-12-31 2000-12-31 1999-12-31
ASSETS
Fixed assets
Intangible fixed assetsOther intangible fixed assets 15 177 308 287 – –Goodwill 16 1,442 1,516 88 – –
1,619 1,824 375 – –
Tangible fixed assetsLand and buildings 17 3,321 2,799 1,711 1,223 1,246Plant and machinery 18 1,001 1,034 693 261 293Equipment, tools, fixtures and fittings 19 366 454 198 106 118Lease assets 20 6,502 8,963 8,236 – –Construction in progress and advance
payment for tangible fixed assets 21 24 52 13 5 9
11,214 13,302 10,851 1,595 1,666
Financial fixed assetsParticipations in Group companies 22 – – – 8,167 3,246Receivables from Group companies 23 – – – 24 1,019Participations in associated companies 24 779 839 12 3 5Other securities held as fixed assets 25 171 164 1,315 47 1,298Deferred tax receivables 26 1,440 1,093 507 1,143 1,238Other long-term receivables, interest bearing 27 1,345 1,180 – 424 –Other long-term receivables, interest free 27 976 751 752 – –
4,711 4,027 2,586 9,808 6,806
Total fixed asstes 17,544 19,153 13,812 11,403 8,472
Current assets
Inventories etc.Raw materials and consumables 1,924 2,015 680 203 294Work in progress 3,383 3,920 2,584 1,929 1,746Finished products and goods for resale 1,187 875 932 5 474Advance payments to suppliers 339 309 111 45 47Less utilized advance payments from customers -3,149 -3,165 -2,590 -1,847 -1,787
3,684 3,954 1,717 335 774
Current receivablesAccounts receivable 2,974 2,895 1,034 137 240Receivables from Group companies – – – 7,673 916Receivables from associated companies 196 442 263 190 247Other receivables, interest bearing 606 231 – 143 –Other receivables, interest free 948 1,733 192 123 66Prepaid expenses and accrued income 28 985 528 270 199 90
5,709 5,829 1,759 8,465 1,559
Short-term investments 29 3,121 6,094 9,766 3,082 9,736Cash and bank 1,061 1,611 1,025 372 483
Total current assets 13,575 17,488 14,267 12,254 12,552
Total assets 31,119 36,641 28,079 23,657 21,024
Group Parent Company
Balance sheet
58
SEK million Note 2000-12-31 1999-12-31 2000-12-31 1999-12-31
Assets pledged 40For own liabilities and provisions
Property mortgages 419 394 388 388Chattel mortgages 2,187 2,188 2,101 2,101Lease assets 2,025 2,255 – –Other long-term receivables 774 616 – –Accrued income 59 61 – –Bonds and securities 2,685 5,191 2,600 5,191Other assets 676 16 – –
Total assets pledged 8,825 10,721 5,089 7,6801) In addition to the above lease assets pledged, the balance sheet contains assets reported
in accordance with finance lease contracts. See note 20.
Group Parent Company
Assets pledged
Pro formaSEK million Note 2000-12-31 1999-12-31 1999-12-31 2000-12-31 1999-12-31
EQUITY AND LIABILITIES
Equity 30
Restricted equityCapital stock
(106,459,675 shares with a par value of SEK 16 each) 1,703 1,703 1,703 1,703 1,703Restricted reserves 1,684 1,560 1,560 – –Share premium reserve – – – 10 17Revaluation reserve – – – 500 500Legal reserve – – – 341 320
3,387 3,263 3,263 2,554 2,540Unrestricted equityProfit or loss brought forward 1,245 702 506 1,497 481Net income for the year 1,038 735 939 1,228 1,407
2,283 1,437 1,445 2,725 1,888
5,670 4,700 4,708 5,279 4,428
Minority interest in subsidiaries 821 752 206 – –
Untaxed reserves 31Accumulated excess depreciation – – – 451 478Tax allocation reserve – – – 234 95
– – – 685 573ProvisionsProvisions for pensions and
similar commitments 32 3,527 3,406 1,995 1,632 1,583Other provisions 33 3,821 6,606 5,042 1,538 2,378
7,348 10,012 7,037 3,170 3,961Long-term liabilitiesOther liabilities to credit institutions 34 996 2,406 101 57 60Liabilities to Group companies – – – 384 519Convertible debenture loan 35 228 217 217 244 237Lease obligations 36 3,637 4,239 4,197 – –Other long-term liabilities 36 568 975 947 – –
5,429 7,837 5,462 685 816Current liabilitiesLiabilities to credit institutions 37 967 675 80 35 48Advance payments from customers 3,619 4,631 4,055 1,620 3,247Accounts payable 1,254 1,383 665 277 260Liabilities to Group companies – – – 9,214 4,289Liabilities to associated companies – 195 10 – 10Income tax liability 427 492 462 241 394Other liabilities 38 574 886 575 78 389Lease obligations 279 394 394 – –Accrued expenses and deferred income 39 4,731 4,684 4,425 2,373 2,609
11,851 13,340 10,666 13,838 11,246
Total equity and liabilities 31,119 36,641 28,079 23,657 21,024
Group Parent Company
59
SEK million 2000-12-31 1999-12-31 2000-12-31 1999-12-31
Contingent liabilitiesGuarantees to the insurance company Pensionsgaranti (FPG) 271 36 52 28Sureties for Group companies – – 4,375 3,154Sureties for others 1) 7,977 5,194 2,631 2,566Sureties for associated companies 209 – 118 –Less amount shown as liability
in the balance sheet 2) -2,851 -3,034 – –
Total contingent liabilities 5,606 2,196 7,176 5,7481) Of this amount, USD 490 m. (559) comprises guarantees for sureties of lease agreements related to 162 (162) Saab 340 and Saab 2000 aircraft.2) Of the above sureties in the parent company, 42 aircraft (41) equivalent to USD 166 m. (207) have been accounted for as lease assets in the Group. In the balance sheet,
USD 162 m. (183) has been accounted for as liability related to a provision for future deficits according to valid leasing contracts.
Group Parent CompanyContingent liabilities
Balance sheet
Pro forma1) Pro forma2)
SEK million 2000 1999 2000 1999
Cash flows from operating activitiesOperating income 1,533 1,104 838 626
Depreciation and write-down 1,336 918 161 165Items affecting comparability -246 -255 -246 -255Dividend from associated companies -8 -1 – –
2,615 1,766 753 536
Financial income 250 360 937 1,232Dividend from associated companies – 4 – 4Financial expenses -335 -87 -94 -89Tax paid -648 -182 -167 -111
Cash flow from operating activities beforechanges in working capital 1,882 1,861 1,429 1,572
Change in working capitalIncrease (–)/Decrease (+) in inventories etc. 270 524 439 419Increase (–)/Decrease (+) in current receivables 320 8 -6 20Increase (+)/Decrease (–) in advance payments -1,012 -1,136 -1,627 -996Increase (+)/Decrease (–) in current liabilities -627 -506 -693 619Increase (+)/Decrease (–) in other long-term liabilities 15 -48 – –Increase (+)/Decrease (–) in lease obligations -717 -362 – –Increase (+)/Decrease (–) in provisions -1,537 -929 -594 -779
Change in working capital -3,288 -2,449 -2,481 -717
Cash flow from operating activities -1,406 -588 -1,052 855
Cash flow from investmentsInvestments in intangible fixed assets -59 -104 – –Investments in tangible fixed assets -911 -280 -90 -115Investments in lease assets 476 -83 – –Investments in financial fixed assets 43 -1,285 -3,668 -2,151Increase in long-term receivables -51 -28 – –
Cash flow from investments -502 -1,780 -3,758 -2,266
Operating cash flow -1,908 -2,368 -4,810 -1,411
Other itemsDividend to shareholders -266 -213 -266 -213Minority interest in subsidiaries -8 11 – –Deferred tax -13 -7 – –Translation differences 198 -51 – –Change in equity – – -36 -37Group contribution given – – -153 -123
Total -89 -260 -455 -373
Decrease in net liquidity -1,997 -2,628 -5,265 -1,784
FinancingRaised loans – 119 – 97Amortization of liabilities -1,118 – -19 –Increase in long-term interest-bearing receivables -165 – -424 –Increase in short-term interest-bearing receivables -375 – -143 –Increase in provisions for pensions and convertible debenture loan 132 30 58 9
Cash flow from financing -1,526 149 -528 106
Cash flow for the year -3,523 -2,479 -5,793 -1,678Cash and bank, short-term investments, receivables
from Group companies at the beginning of the year 7,705 13,270 7,346 9,024Cash and bank, short-term investments, receivables
from Group companies at year-end 4,182 10,791 1,553 7,346
1) Proforma 2000 as Celsius had been included in the Group from the beginning of the year.2) Proforma 1999 as if Ericsson Saab Avionics had been included in the Group from the beginning of the year.
Group Parent Company
Statement of cash flows
60
With accounting principles and commentson the financial statementsAmounts in SEK m. unless otherwise stated
Pro forma financial statementsCelsius is included in the Saab Group as fromJanuary 1, 2000. The pro forma figures for thewhole year 1999 and the quarters of 1999,refers to the Saab Group including Celsius, as if Celsius had already been included in theGroup from January 1, 1999. In connectionwith major restructurings during the year, thepro forma figures have been adjusted.
The pro forma figures for the years 1995and 1996 refers to changed accounting principles regarding lease contracts and Saab Aircraft Leasing.
General accounting principlesThe company follows the recommendationsissued by the Swedish Financial AccountingStandards Council (Redovisningsrådet) andthe recommendations, which will apply from2001. The recommendations of the SwedishFinancial Accounting Standards Councilcomply in all material respects with the principles of the International AccountingStandards Committee (IASC). In comparisonto the previous year, the accounting principles are unchanged.
In conformance with the legislation onannual accounts, the income statement isclassified according to function, pursuant tointernal reporting.
The functions are as follows: Cost of goodssold comprises costs for goods handling and manufacturing, including salaries andmaterial costs, purchased services and costs of premises, and depreciation on fixed assets.Administrative expenses relate to costs for theBoard, company management and corporatestaff functions. Marketing expenses comprisecosts for the company’s own sales organiza-tion, including sales subsidiaries, advertisingand exhibitions. Research and developmentcosts are reported separately and comprisecosts for new and further development of products, see below. Other operating incomeand expenses relate to secondary activities,exchange rate differences on items of an operating character and capital gains/lossesfrom sales of tangible fixed assets. Utilizationof provision for covering the loss in Saab Air-craft (Customer Support) is included in otheroperating income. Also included is incomefrom Saab Aircraft Leasing, which however iszero for the years 1999 and 2000 after utiliza-tion of provision, and at group level also capitalgains/losses from divestment of subsidiaries.
1999, the financial statements of the ParentCompany, Saab AB, included the Swedishsubsidiary Saab Aircraft AB, which opera-tions were conducted on commission onbehalf of Saab AB. This agreement is nowcancelled.
Consolidated accounts statementsThe consolidated accounts comprise the Parent Company and all subsidiaries and associated companies in Sweden and abroad.Subsidiaries are companies in which the Parent Company directly or indirectly ownsmore than 50 percent of the voting rights of theshares, and companies where the Parent Com-pany owns shares and is entitled to appoint ordismiss more than half the members of theboard or where the Parent Company otherwisehas a decisive influence and a significant sharein the income generated from their operations.Associated companies are companies in whichthe Parent Company directly or indirectly hasa long-term ownership interest and where thevoting rights are between 20 and 50 percent.
The consolidated statements are preparedin accordance with the purchase method ofaccounting. This means that a subsidiary’sassets and liabilities are accounted for atmarket value according to an analysis of theacquisition. If the acquisition value of theshares in the subsidiary exceeds the estimatedmarket value of the company’s net assets,after analysis, the difference is consideredGroup goodwill. Depending on the degree of restructuring required in the newly pur-chased company, provision is made in the acquisition analysis for anticipatedcosts to be allocated to a structural reserve.
Associated companies are accounted for inaccordance with the equity accounting met-hod. This means that the book value of theshares and participations in associated compa-nies is valued in the consolidated balance sheetat the Group’s share in the equity of the associ-ated companies after adjusting for the Group’sshare of surplus or deficit value, respectively.Thus, consolidated income includes onlySaab’s share in the income of the associatedcompanies, provided this does not result in anegative book value of the shares. The holdingin HDW is reported in the balance sheet as afinancial asset at acquisition cost increased byaccrued income. The income is reported in theincome statement as financial income.
Minority interest comprises the minorityshare in net income and shareholders’ equity.
Companies acquired during the year areincluded in consolidated income for the period following their acquisition. Income of companies sold during the year is notincluded in consolidated income, instead theresult is included in the capital gain or loss.
Unrealized intra-Group profits and internal transactions are eliminated. Prices of internal Group supplies of goods aredetermined by applying commercial principles and market prices.
Foreign subsidiaries and associated companiesIntegrated foreign operations’, subsidiaries’and associated companies’ financial state-
ments are translated to Swedish kronorusing the monetary method. The financialstatements for the independent foreign subsidiaries within Saab Aircraft Leasing,Saab Ericsson Space, Celsius Aviation Services and Celsius Pacific are translated toSwedish kronor using the current method.
Under the monetary method, monetaryitems are translated at the year-end rate,while non-monetary items are translated at the rate in effect on the acquisition date.Inventories, property, plant and equipmentand shareholders’ equity are translated atthe acquisition date rate and other assets and liabilities at year-end rate. With theexception of consumption of goods anddepreciation of property, plant and equipment,which are translated at the acquisition daterate, income and expenses are translated at a weighted average exchange rate for theyear. The translation difference on monetaryassets and liabilities is included in net incomefor the year and is reported in the incomestatement as follows. The portion of thetranslation difference attributable to operatingitems, primarily trade accounts receivableand payable, is included in operating income. The portion of the translation difference attributable to interest-bearingitems is included in financial income andexpenses.
With the current rate method, assets andliabilities are translated at the year-endexchange rate, while income and expensesare translated at the average exchange ratefor the year. The translation difference, thatarises in part when translating the net assetsof foreign companies at a different rate at the beginning of the year than at year-endand in part when net income is translated at other than the year-end rate, is reporteddirectly in shareholders’ equity in the balance sheet.
Sales and incomeSales and income are reported at delivery ofproducts, and services at the time the majorityof risks and rights are transferred to the purchaser. Sales include the sale value lessVAT (Value-Added Tax), specific sales taxes,returns and trade discounts.
For long-term development contracts, revenue is recognized in pace with completionaccording to the Percentage of completionmethod. From the calculated total revenue fora project, including interest on advances, adeduction is made during the respective period in an amount corresponding to theincurred costs as a proportion of the calculat-ed total costs at the end of the period. In lengthy delivery contracts for military aircraft,revenue is recognized in pace with deliveries.Changes in anticipated total revenues andcosts per contract are reported in the sameperiod as they are noticed.
Notes
61
Gross marginFor orders whose manufacturing cost isfinanced to a significant extent by advancesfrom customers, the effect of advance-pay-ment financing on interest is reported ingross margin. See Note 11.
Depreciation principles for fixed assetsDepreciation according to plan is based onthe historical cost and estimated useful lifeof an asset. Write-down is applied in the caseof a permanent fall in value. Depreciationaccording to plan, including depreciation ongoodwill, is distributed by function, accord-ing to the way the asset is used.
The following depreciation plan is used:Intangible fixed assetsCapitalized expenditure on R&D, etc. 5 yearsComputer software, non-standard 5 yearsGoodwill and other intangible assets 5–20 years
Tangible assetsProperty 20–25 yearsAircraft 25 yearsRevaluation of property 20 yearsLand improvements 20 yearsMachine and other technical installations 5–10 yearsComputers, equipment, tools and installations 3–10 years
The difference between the above deprecia-tion and fiscal depreciation is, in legal entities,reported as accumulated excess depreciation,which is included in untaxed reserves.The difference between the above depreciationand fiscal depreciation is, in legal entities,reported as accumulated excess depreciation,which is included in untaxed reserves.
Research and development expendituresThe Group’s definition of expenditures forresearch and development conforms withthat used by Statistics Sweden.
Expenditures on internal research anddevelopment are normally booked as costswhen they are incurred. No developmentcosts carried forward remain on the Group’sbalance sheet.
For the development and manufacture ofthe Saab 340 and Saab 2000 commercial air-craft, Saab AB and the Swedish Governmenthave reached special agreements wherebythe Government participates in the projectson commercial terms. Saab has received atotal of SEK 1,476 m. for the years 1980–94.The amounts received have been reported asincome at the same rate as expenditureswere incurred for the projects. According tothe agreements, compensation for theGovernment’s risk-taking was to be paid bySaab in the form of royalties based on theprojects’ revenues and income. In a supple-mentary agreement between Saab and the
Swedish Government signed in December1997, payment to the Government will insteadbe based on income from the customer support operation after production has beenterminated. Income of the year has not resulted in any payment according to theagreement during 2000.
Guarantee costsCalculated costs for product guarantees areaccounted for in connection with sales of aproduct.
Items affecting comparabilityRecommendation No. 4 of the Swedish Financial Accounting Standards Councilimplies that the effects on income of specialevents and transactions of significance arespecified within the respective income concept.Examples of such events and transactions arecapital gains/losses when divesting businessareas and major fixed assets, write-downsand restructuring costs. As item affectingcomparability is reported the reverse of partof the restructuring reserve for closing theproduction of regional aircraft and for theyear 2000 also pension re-funds received fromSPP and provision for certain developmentprojects from the former Celsius Group.
Hedging commercial flowsExchange differences on forward contractsrelated to contracted future currency flowsare reported in the same period as theunderlying flow.
Non-contracted flows concerning provisionsfor restructuring costs where settlement ismade in foreign currency are hedged so that no exchange rate difference occurs upon settlement.
Valuation principles, etc.Assets, provisions and liabilities have beenvalued at the purchase value unless otherwisestated in the following.
InventoriesThe inventory is valued at the lower ofacquisition value according to the first in,first out principle and actual value. For internally produced semi-manufactured and finished goods, the acquisition valueconsists of direct manufacturing costs and a reasonable markup for indirect manufacturing costs.
Inventories include advances to suppliers.From 1999, inventories are reported net, less customer advances, which means thatadvances from customers in each project areset off against incurred costs.
ReceivablesAfter individual valuation, receivables havebeen valued in the amounts in which theyare expected to be received.
Convertible debenture loanDuring the autumn 1998, a convertible debenture loan to the Group’s employees wasissued. The loan bears interest below marketinterest, which means that the loan is a liabilitywith implicit interest. The convertible deben-ture loan has been accounted for in accordancewith Recommendation No. 3 of the SwedishFinancial Accounting Standards Council.
LeasingRecommendation No. 6 of the SwedishFinancial Accounting Standards Councilimplies a classification of the lease contractsinto finance and operating categories.
A finance lease implies that the lessee,even if he does not receive the legal rights of ownership of an object, in all significantrespects enjoys the financial rewards andaccepts the risks associated with the object.Objects possessed in accordance with afinance lease are reported in the lessee’sbalance sheet as a fixed asset and the commit-ment to pay leasing charges in the future isreported as a liability. The lessor’s balancesheet reports his net investment in the leasecontract, i.e. the present value of future leas-ing charges, as a receivable.
In an operating lease, the financialrewards and risks linked with ownershipmainly affect the lessor, who reports theobject as a fixed asset.
For anticipated or real deficits according to lease contracts related to aircraft financeoperation carried on by Saab Aircraft Leasing,provisions are made with the discountedpresent value of the calculated deficit. Since the leasing portfolio is regarded as afinancial asset, which in principle must bedivestable at a given point in time, a marketvaluation of the lease contracts is also made.Surpluses and deficits between leasecontracts in the portfolio are thereby offset.
Other rented assets, for example personalcomputers, are capitalized and accounted foras assets (lease assets) and the commitmentto pay leasing charges in the future is report-ed as a liability (lease obligations) if the leases transfer virtually all benefits and risksto the Group. Rentals for other leases arecharged against earnings over the lease term.
Receivables and liabilities in foreign currencyReceivables and liabilities in foreign currencyhave been valued at the year-end exchangerate. Exchange rate differences in short-termreceivables and liabilities are included inoperating income, while differences in financial receivables and liabilities are reported among financial items.
Receivables and liabilities hedged by forward contracts are valued at the currentforward rate.
62
Short-term investmentsIn accordance with the Annual Accounts Act,short-term investments are valued at thelower of acquisition value and actual value.
TaxesTaxes as reported in the income statement,consists of paid tax and deferred tax.Deferred tax represents the differencebetween fiscal valuation and the valuationin the accounts of assets and liabilities, butonly if the difference is of a temporarynature. Deferred tax is also calculated on
unutilized tax losses to be carried forward.If the calculations result in a deferred tax
receivable, this is only accounted for as anasset if it in all probability, is expected to berealized.
Deferred tax is calculated in accordancewith the latest decided tax rate.
For income taxes the Company appliesRecommendation No. 9 of the SwedishFinancial Accounting Standards Council.The recommendation has, however, not beenfully applied in legal entities regardingappropriations.
Untaxed reservesTax regulations in Sweden and certain othercountries permit allocations to specialreserves. In this manner, companies, withincertain limits, can apportion and retain earnings in their business without subjectingthem to immediate taxation.
Untaxed reserves are not subject to taxation until they are utilized. However, inthe event the business should incur a loss,the reserves, sometimes within certain limits,may be utilized to cover such a loss withoutthe payment of tax. The total value of theuntaxed reserves can therefore be consideredrisk capital, because any losses to a signif-icant extent can be covered through use of the reserves.
In the Group’s balance sheet, untaxed reserves are divided into shareholders’ equityand the deferred tax liability. In the incomestatement, tax attributable to the year’s changein untaxed reserves is reported as deferred tax.
Transaction with related partiesTransaction with related parties, are done byapplying commercial principles.
Group informationOf the Parent Company’s sales, 4 percent (4)concerned sales to companies within the SaabGroup, while 21 percent (25) of the ParentCompany’s purchases were from subsidiaries.
Exchange rates for SEK used in the financial statements
Year-end rate Average rateCountry Currency 2000 1999 2000 1999
Australia AUD 1 5.28 5.56 5.32 5.33Austria ATS 100 64.37 62.23 61.25 64.04Belgium BEF 100 21.96 21.23 20.89 21.85Canada CAD 1 6.36 5.87 6.15 5.56Denmark DKK 100 118.70 115.05 113.08 118.52Euro EUR 1 8.86 8.56 8.43 8.81Finland FIM 100 148.96 144.03 141.75 148.22France FRF 100 135.02 130.55 128.49 134.35Germany DEM 100 452.85 437.84 430.93 450.59Italy ITL 100 0.46 0.44 0.44 0.46Japan JPY 100 8.32 8.34 8.50 7.29Malaysia MYR 1 2.51 2.24 2.40 2.18The Netherlands NLG 100 401.91 388.59 382.46 399.91Norway NOK 100 107.15 106.05 103.90 106.01Singapore SGD 1 5.50 5.12 5.29 4.87Spain ESP 100 5.32 5.15 5.07 5.30UK GBP 1 14.22 13.80 13.84 13.37USA USD 1 9.54 8.52 9.13 8.26
63
NOTE 1 – EMPLOYEES AND PERSONNEL COSTS
Average no. of employees
of whom of whom2000 men 1999 men
Parent CompanySweden 4,187 81% 4,752 84%France 1 100% 4 100%UK 1 100% 2 100%South Africa 1 100% 1 100%Austria 1 100% 1 100%
Total in the Parent Company 4,191 81% 4,760 84%
Average no. of employeesof whom of whom
2000 men 1999 men
SubsidiariesSweden 9,146 80% 3,008 83%USA 815 84% 102 75%Australia 479 90% 9 67%Finland 210 70% – –Austria 122 80% 120 83%Netherlands 106 94% – –Singapore 79 77% 15 73%Denmark 65 86% – –Germany 38 92% 12 92%UK 29 72% 8 90%India 19 89% 1 100%Norway 19 89% 31 87%United Arab Emirates 6 100% – –Russia 6 67% 10 90%Canada 5 100% 4 100%Japan 5 100% 1 100%South Africa 5 40% 3 50%
Note 1, cont. of whom of whom2000 men 1999 men
Bahrain 4 75% 3 100%Thailand 3 100% 1 100%Chile 2 50% 2 50%France 1 100% – 0%South Korea 1 100% 1 100%Malaysia – – 1 100%
Total in subsidiaries 11,165 80% 3,332 83%
Group total 15,356 81% 8,092 83%
Salaries, other emoluments and social security expenses
2000 1999Salaries Social Salaries Social
and other security and other securityemoluments expenses emoluments expenses
Parent company 1,301 641 1,359 642of which pension costs 1) 163 1) 107
Subsidaries 3,946 1,646 1,123 463of which pension costs 568 111
Saab Group 5,247 2,287 2,482 1,105of which pension costs 2) 731 2) 218
1) Of the Parent Company’s pension costs, SEK 7 m. (4) relates to the Boardof Directors and the President including deputies and executive vice presidents. The company’s outstanding pension commitments to theseamount to SEK 70 m. (80), of which SEK 65 m. (70) relates to previousmanaging directors including deputies.
2) Of the Group’s pension costs, SEK 55 m. (9) relates to the Boards ofDirectors and the President, including deputies and executive vicepresidents. The Group’s outstanding pension commitments to theseamount to SEK 91 m. (88) of which SEK 65 m. (70) relates to previousmanaging directors including deputies.
Salaries and other emoluments distributed per country and between Membersof the Board etc. and other employees in the Group.
2000 1999
Board & Other Board & OtherPresident employees President employees
Parent CompanySweden 10 1,286 11 1,343
(of which bonus, etc.) 2 – 1France – 1 2South Africa – 2 – 2Austria – 1 – 1UK – – – 1
Total Parent Company 10 1,290 11 1,349(of which bonus, etc.) 2 – 1 –
Subsidiariesin Sweden 62 3,038 23 951
(of which bonus, etc.) 3 – 3 –
Subsidiariesoutside SwedenUSA 38 382 1 55Australia 4 193 – 4Austria 3 49 3 47Finland 3 47 – –Netherlands 1 31 – –Denmark 2 24 – –Singapore 2 16 1 2UK 2 14 7 5Germany 2 11 1 6Norway 2 7 1 5Japan 1 3 – 1Canada 1 2 – 2South Africa – 2 1 1Chile 2 – 1 –France – 1 – –India – 1 – –Thailand – 1 – –Bahrain – – – 1Malaysia – – – 1Russia – – – 2Total Subsidiaries 125 3,822 39 1,083
(of which bonus, etc.) 27 – 3 –
Total Group 135 5,112 50 2,432(of which bonus, etc.) 29 – 4 –
NOTE 2 – INFORMATION ON REMUNERATIONTO LEADING COMPANY OFFICIALS
In accordance with a resolution of the Shareholder’s Meeting, the fees tothe members of the Board amount to SEK 1,800,000, consisting of SEK700,000 to the Chairman and SEK 275,000 to each of the other membersof the Board elected by the Shareholders’ Meeting, with the exception ofthe President. The Members of the Board nominated by BAE SYSTEMS – Michael Rouse, Tony Rice and George Rose – all of whom areemployees of BAE SYSTEMS, have declined their Board fees withrespect to the BAE SYSTEMS company policy applied.
The President and CEO has received salary, bonus and other benefitstotaling SEK 7,105,440, of which bonus SEK 1,975,000.
In the event of termination of employment by the company, the President will receive a salary and pension benefits for a period of sixmonths (period of notice). Subsequently, the President will receive a termination payment amounting to two years’ salary, based on the currentfixed salary. If the President has not entered alternative employmentwithin 18 months, he will recieve a further year’s termination payment.Salary during the period of notice and termination payment will bededucated from income received from another employer during the same period.
The retirement age for the President is 60.The President has a bonus based pension plan. The pension cost for
Saab AB consists of pension bonuses amounting to 35 percent of the fixedsalary as long as the President remains an employee of the company. To this must be added the cost of pension bonuses according to the ITPplan. The pension plan for the President has been complemented with apersonal warrant program. The President has been allocated 370,000personal warrants in Saab AB. The warrants provide entitlement to theacquisition of existing Series B shares at a redemption price of SEK 94per share and may be utilized during the period 1 January 2003 to 31 December 2005. The costs of the program has reduced the income.
In the case of other leading officials, the benefits according to the ITPplan are applicable after the age of 65. For certain subscribers to the ITPplan is the regulation, that pension benefits, based on salary segmentsbetween 20 and 30 base amounts, also will be payable on salary segmentsabove 30 base amounts.
Furthermore, certain leading officials are entitled, or obliged if thecompany so requests, to retire on pension at the age of 60, or in certaincases 62. The retirement pension up to the ordinary pension age of 65 is70 percent of the salary at the time of retirement.
For certain other leading officials, pensions have been agreed in accordance with special rules. These state that a pension may be paid as a supplemented retirement and surviving dependants’ pension of 20per cent of the salary in force upon retirement at the age of 65. The ruleshave been replaced by a new pension plan, whereby a premium-basedsupplement of the ITP level of salary portions greater than 20 baseamounts and that the agreements on early retirement have a premium-based level. New agreements will follow the premium-based pension plan.
NOTE 3 – SALES BY BUSINESS AREA AND MARKETGroup Parent Company
Pro forma
2000 1999 2000 1999
Sales by business areaSaab Systems and Electronics 4,364 4,294 – –Saab Aerospace 3,921 3,964 3,921 3,856Saab Technical Support & Services 2,511 2,367 – –Saab Bofors Dynamics 2,348 3,393 – –Saab Ericsson Space 713 676 – –Less internal sales -733 -797 – –
13,124 13,897 3,921 3,856Celsius Aviation Services 3,241 3,009 – –Other Operations 1,475 1,112 – 1,077
Saab Group 17,840 18,018 3,921 4,933
Sales by market Actual
Sweden 9,317 5,609 3,822 3,854Other EU Countries 2,734 1,493 62 220Other European countries 608 512 – 345Total Europe 12,659 7,614 3,884 4,419North America 2,899 644 37 176Central and South America 464 21 – –Asia 764 546 – 273Australia, etc 997 217 – 63Other markets 57 11 – 2
Saab Group 17,840 9,053 3,921 4,933
NOTE 4 – ITEMS AFFECTING COMPARABILITYGroup Parent Company
2000 1999 2000 1999
Allocated pension re-funds from SPP 527 – 266 –Project provisions related
to the former Celsius Group -488 – – –Revaluation of leasing porfolio
related to Regional Aircraft 246 255 246 255
Total 285 255 512 255
64
65
NOTE 5 – OTHER OPERATING INCOME
Group Parent Company
2000 1999 2000 1999
Capital gain from sale of subsidiary 356 21 – –Trading income 45 12 45 12Royalty 43 – 43 –Exchange rate differences 36 10 28 13Utilization of reserve for
Customer Support 21 47 – 47Capital gain from sale of fixed assets 20 – 2 –Income from secondary operations 14 44 – –Guarantee fees – – 50 47Other 78 47 3 17
Total 613 181 171 136
NOTE 6 – OTHER OPERATING EXPENSES
Group Parent Company
2000 1999 2000 1999
Cost of change in pension regulation -42 – -42 –Disposals of tangible fixed assets -17 -5 – -3Capital loss from sale of subsidiaries – -35 – –Write down of participation
in other companies – -9 – –Other -38 -22 -5 -12
Total -97 -71 -47 -15
Aircraft financeIncome statement Saab Aircraft Leasing
2000 1999
Leasing revenue 1,766 1,707Interest revenue 240 278Other revenue 91 107
Total revenue 2,097 2,092
Leasing expenses -791 -722Interest expenses -559 -660Depreciation -460 -469Other expenses -400 -276
Total expenses -2,210 -2,127Utilization of loss risk reserve 113 35
Operating income – –
Balance sheet summary, Saab Aircraft Leasing2000 1999
AssetsLease assets 5,917 8,130Receivables, Group companies 1,253 1,800Receivables 1,135 920Liquid funds – 4
Total assets 8,305 10,854
Equity and liabilitiesEquity 1,964 1,599Provisions 1,046 3,114Lease obligations1) 3,903 4,482Other liabilities 1,392 1,659
Total equity and liabilities 8,305 10,854
1) Of which long-term obligations 3,637 4,197
The income statement and balance sheet for Saab Aircraft Leasing aremainly dollar-related since aircraft sales and leasing contracts are alwaysmade in USD. The conversion rates used in the financial statements areshown on page 63.
During 2000, the aircraft on the balance sheet were written down bySEK 1,451 m., of which SEK 989 m. against the loss risk reserve and theremaining portion against other liabilities. Total value of the portfolio on and off balance sheet, excluding the 57 aircraft financed with non-recourse funding, amounted to SEK 7.5 bn at year-end. The reserve,
adjusting the portfolio to market value, amounted to SEK 1 bn at year-end. Net value of the portfolio amounts to SEK 6.5 bn, which is coveredby the insurance taken during the year.
NOTE 7 – LEASE CONTRACTS
Operating lease contracts
Group
Premises and Machines andOutcome buildings equipment1999 29 182000 21 60
Contracted 2001 17 462002 13 362003 12 232004 12 52005 4 42006 and onwards 6
Total contracted 64 114
Parent Company
Premises and Machines andOutcome buildings equipment1999 7 152000 7 29
Contracted2001 4 242002 1 202003 14200420052006 and onwards
Total contracted 5 58
Aircraft for lease
Payments PaymentsOutcome to lessors from airlines1999 791 8782000 783 879
Contracted2001 778 8262002 754 7702003 699 7212004 680 6672005 602 5882006 and onwards 3,040 3,172
Total contracted 6,553 6,744
The above commitments relate to lease of Saab 340 aircraft placed withAmerican investors and operators.
Finance lease contractsAircraft for lease
2000 1999
Acquisition value 2,323 2,379Accumulated depreciation -779 -677Write-down for the year -725 –
Residual value according to plan 819 1,702
Depreciation for the year 130 141Leasing fees for the year 348 268Contracted future leasing fees 1) 1,862 1,9931) The above finance lease contracts relate to 34 (35) Saab 340.
2000 1999
MUSD 154 188MDEM 53 52MJPY 1,929 1,915
The amounts are hedged through deposits and/or other financial instruments in the respective currency.
NOTE 8 – DEPRECIATION ON TANGIBLE AND INTANGIBLE FIXED ASSETS
Group Parent Company
2000 1999 2000 1999
Depreciation according to plan by assetOther intangible fixed assets -47 -41 – –Goodwill -136 -16 –Land and buildings -120 -67 -43 -41Plant and machinery -295 -227 -94 -100Equipment, tools, fixtures and fittings -123 -56 -24 -24Lease assets -534 -511 – –
-1,255 -918 -161 -165
Write-down
Other intangible fixed assets -81 – – –-81 – – –
Total -1,336 -918 -161 -165
NOTE 9 – OPERATING INCOME BY BUSINESS AREA
Group Parent CompanyPro forma
2000 1999 2000 1999
Operating income by business areaSaab Systems and Electronics 289 199 – –Saab Aerospace1) 333 450 333 431Saab Technical Support & Services 167 146 – –Saab Bofors Dynamics 46 -39 – –Saab Ericsson Space 53 65 – –Corporate 301 -40 -7 -60
1,189 781 326 371Celsius Aviation Services 157 212 – –Other Operations -98 -123 – –Items affecting comparability 285 255 512 255
Saab Group 1,533 1,125 838 626
1) Including reversal of loss risk reserve SEK 135 m.
NOTE 10 – INCOME FROM SECURITIES ANDRECEIVABLES HELD AS FIXED ASSETS
Group Parent Company
2000 1999 2000 1999
Capital gain from sale of subsidiary – – 270 23Capital gain from sale of
other participations 26 4 1 4Income from restructing
within the Group – – – 388Dividend and Group contributions
received – – 743 644Dividend received from
associated companies – – – 4Write-down of participations
in Group companies – – -106 -98Exchange differences -1 – – –
Total 25 4 908 965
NOTE 11 – OTHER INTEREST INCOME AND SIMILARPROFIT/LOSS ITEMS
Group Parent Company
2000 1999 2000 1999
Interest income, Group companies – – 2 1Interest income, other 381 571 145 468Dividend from others 2 – – –Translation and currency differences 14 3 – –Less project interest, accounted
for as a gross margin -172 -218 -118 -198
Total 225 356 29 271
NOTE 12 – INTEREST EXPENSES AND SIMILAR PROFIT/LOSS ITEMS
Group Parent company
2000 1999 2000 1999Interest expenses, Group companies – – -3 -24Interest expenses, convertible
debenture loan -12 -11 -12 -11Interest expenses, others -202 -14 -20 -5Interest on pension debt -121 -62 -59 -49
Total -335 -87 -94 -89
NOTE 13 – APPROPRIATIONS, OTHER
Parent company
2000 1999
Difference between book depreciation and depreciation according to plan– Land and buildings -12 -11– Plant and machinery 3 5
Tax allocation reserve -139 -39Total -148 -45
NOTE 14 – TAXESGroup Parent company
2000 1999 2000 1999
Current tax expenses -667 -184 -167 -111Deferred tax 334 -207 -96 -175Tax related to Group contribution given – – -42 -35
Total -333 -391 -305 -321
Percent 2000 1999
Swedish Income taxe rate 28 28Non-deductible expenses 6 5Non-taxable income -10 -1Restructuring within the Group 0 -3Other -1 -1
Group tax rate 23 28
NOTE 15 – OTHER INTANGIBLE FIXED ASSETS
Group Parent company
2000 1999 2000 1999
Accumulated acquisition valueAt beginning of year 356 136 – –Acquisition of companies 79 220 – –Total 435 356 – –
Accumulated depreciation according to planAt beginning of year -69 -28 – –Acquisition of companies -61 – – –Depreciation for the year -47 -41 – –
Total -177 -69 – –
Accumulated write-downsAt beginning of year – – – –Write-down for the year -81 – – –
Total -81 – – –
Residual value according to plan carried forward 177 287 – –
66
67
NOTE 16 – GOODWILL
Group
2000 1999
Accumulated acquisition valueAt beginning of year 104 –Purchases 1,511 104Sales and disposals of
business operations -22 –Translation difference for the year 1 –
Total 1,594 104
Accumulated depreciation according to planAt beginning of year -16 –Depreciation for the year -136 -16
Total -152 -16Residual value according to plan carried forward 1,442 88
NOTE 17 – LAND AND BUILDINGSGroup Parent company
2000 1999 2000 1999
Accumulated acquisition valueAt beginning of year 1,740 1,691 1,128 1,084Purchases 732 146 59 71Acquisition of companies 1,989 38 – –Sales and disposals -124 -135 -6 -27Translation differences for the year 23 – – –
Total1) 4,360 1,740 1,181 1,128
Accumulated depreciationaccording to planAt beginning of year -667 -650 -520 -505Acquisition of companies -899 -11 – –Sales and disposals 46 61 3 26Depreciation for the year -120 -67 -43 -41Translation differences for the year -11 – – –
Total -1,651 -667 -560 -520
Accumulated net revaluationAt beginning of year 638 674 638 674Acquisition of companies 10 – – –Depreciation for the year -36 -36 -36 -36
Total 612 638 602 638
Residual value according to plancarried forward 3,321 1,711 1,223 1,246
Tax assessment value, buildings (Sweden) 1,126 801 437 536Tax assessment value, land (Sweden) 431 223 184 184
1) Acquisition value includes capitalized interest of 11 11
No property is possessed via finance lease contracts.
NOTE 18 – PLANT AND MACHINERY
Group Parent Company
2000 1999 2000 1999
Accumulated acquisition valueAt beginning of the year 2,220 1,893 1,068 1,056Purchases 230 331 63 88Acquisition of companies 1,440 279 – –Sales and disposals -229 -217 -54 -76Re-classifications 1 -66 1 –Translation differences for the year -4 – – –
Total 3,658 2,220 1,078 1,068
Accumulated depreciationaccording to planAt beginning of year -1,527 -1,329 -775 -748Acquisition of companies -1,010 -163 – –Sales and disposals 178 180 52 73Re-classifications – 12 – –Depreciation for the year -295 -227 -94 -100Translation differences for the year -3 – – –
Total -2,657 -1,527 -817 -775
Residual value according toplan carried forward 1,001 693 261 293
No assets are possessed via finance lease contracts.
NOTE 19 – EQUIPMENT, TOOLS, FIXTURES AND FITTINGS
Group Parent Company
2000 1999 2000 1999
Accumulated acquisition valueAt beginning of year 872 1,014 659 771Purchases 118 52 12 10Acquisition of companies 1,072 – – –Sales and disposals -280 -194 -1 -122Translation differences for the year 5 – – –
Total 1,787 872 670 659
Accumulated depreciationaccording to planAt beginning of year -674 -764 -541 -639Acquisition of companies -876 – – –Sales and disposals 247 146 1 –Re-classifications – – – 122Depreciation for the year -122 -56 -24 -24Translation differences for the year 4 – – –
Total -1,421 -674 -564 -541
Residual value according toplan carried forward 366 198 106 118
No assets are possessed via finance lease contracts.
NOTE 20 – LEASE ASSETS
Group Parent Company
2000 1999 2000 1999
Accumulated acquisition valueAt beginning of the year 10,671 10,681 – –Purchases 656 202 – –Acquisition of companies 629 – – –Sales and disposals -1,515 -427 – –Re-classifications – 66 – –Translation differences for the year 416 149 – –
Total 10,857 10,671 – –
Accumulated depreciationaccording to planAt beginning of year -2,435 -2,017 – –Acquisition of companies -19 – – –Sales and disposals 124 112 – –Re-classifications – -12 – –Depreciation for the year -535 -511 – –Translation differences for the year -39 -7 – –
Total -2,904 -2,435 – –
Accumulated write-downsAt beginning of year – – – –Write-down for the year -1,451 – – –
Total -1,451 – – –
Residual value according toplan carried forward 6,502 8,236 – –
Assets possessed via finance lease contracts
Calculated acquisition value of the assets 2,323 2,559Leasing fees paid during the fiscal year 348 314Contracted future leasing fees 1,862 2,077
NOTE 21 – CONSTRUCTION IN PROGRESSAND ADVANCE PAYMENTS FORTANGIBLE FIXED ASSETS
Group Parent Company
2000 1999 2000 1999
At beginning of year 13 91 9 23Acquisition of companies 14 – – –Re-classifications -27 -91 -5 -23Accrued expenses during the year 24 13 1 9
At year-end 24 13 5 9
NOTE 22 – PARTICIPATIONS IN GROUP COMPANIES
Parent Company
2000 1999
Accumulated acquisition valueAt beginning of year 3,377 2,495New issues/shareholders´ contribution 59 801Purchases 5,156 192Sales -184 -111
Total 8,408 3,377
Accumulated write-downsAt beginning of year -131 -121Write-downs for the year -110 -98Divestments – 88
Total -241 -131
Book value at year-end 8,167 3,246
Specification of Parent Company´s participationsin Group companies
No. of Share BookSubsidiary / Corp. ID no. / Reg. Office shares in % valueCelsius AB, 556194-4652, Stockholm 28,066,038 100.0% 5.040AerotechTelub Holding AB, 556206-7131, Arboga 2,850 57.0%AerotechTelub AB, 556218-6790, Arboga 500,000 100.0%Celsius Test Systems AB, 556251-3290, Stockholm 30,000 100.0%
Celsius Metech AB, 556080-0210, Arboga 60,000 100.0%Celsius Metech Oy, 570.990, Finland 1,200 100.0%Celsius Metech A/S, 252.561, Denmark 5,000 100.0%Celsius Metech GmbH, HRB 5173, Germany – 100.0%
Telub Holding AB, 556153-9924, Stockholm 9,152,108 100.0%AerotechTelub Contracting AB, 556246-0419, Arboga 5,000 100.0%AerotechTelub Communications A/S, A/S 249345, Denmark – 100.0%
AerotechTelub Information och Media AB, 556003-5312,Växjö 10,000 100.0%AerotechTelub Internservice AB, 556089-6721,Växjö 40,000 100.0%
Telub AB, 556273-3146,Växjö 100 100,0%Bofors Carl Gustaf AB, 556210-8661, Karlskoga 500,000 100.0%Celsius Automotive AB, 556393-6144, Järfälla 15,000 100.0%Celsius Aviocomp AB, 556347-9251, Linköping 163,000 100.0%
Celsius Aviocomp Nordic AB, 556124-1976, Stockholm 1,000 100.0%Celsius Aviocomp Engineering AB, 556244-5139, Stockholm 900 100.0%
Celsius AvioComp Holding B.V., Netherlands 40 100.0%Airvo B.V., Netherlands 40 100.0%Celsius AvioComp Netherlands B.V., Netherlands 40 100.0%R.I.A.S. B.V., Netherlands 100 100.0%
Celsius Inc., USA 10 100.0%Bofors Weapon Systems Inc., USA 1,000 100.0%CelsiusTech Inc., USA 1,000 100.0%KKRV Inc., USA 1,000 100.0%Celsius Holding Florida Corp., USA 10 100.0%
AeroThrust Corp., USA 100 100.0%Celsius Amtec Corp., USA 100 100.0%
Celsius Aerotech Inc., USA 1,000 100.0%Aero Systems Engineering Inc. (ASE), USA 3,522,073 80.0%
Celsius Invest AB, 556164-6588, Stockholm 1,720,000 100.0%C C Ejendommen A/S, Denmark 100 100.0%AB Götaverken, 556205-5615, Göteborg 3,000,000 100.0%Götaverken Regalia AB, 556249-8583, Göteborg 500 100.0%Götaverken Rig AB, 556292-3044, Göteborg 1,000,000 100.0%ASJ Ltd, Cayman Island 100 100.0%
Götaverken Netherlands B.V., Netherlands 40 100.0%Götaverken International N.V., Curacao 10 100.0%Bounty Corp., Liberia 1 100.0%
Celsius Materialteknik CMT AB, 556354-6349, Linköping 20,000 100.0%Celsius Materials Karlskoga AB, 556291-8382, Karlskoga 4,000 100.0%Applied Composites AB ACAB, 556326-2988, Linköping 10,000 100.0%AB AmTech Inspection i Karlstad, 556440-5214, Linköping 1,000 100.0%
Celsius Weapon Systems AB, 556258-2352, Stockholm 10,000 100.0%Cromarty Ltd, Ireland 2 100.0%Servanda Insurance Co Ltd, Cayman Island 2,000,000 100.0%
Kockums Holdings AB, 556036-4100, Malmö 48,000 100.0%Kockums Engineering AB, 556277-1658, Malmö 2,000 100.0%Alpha Thames Engineering Ltd, United Kingdom – 100.0%
Kockums Industrier AB, 556277-1674, Malmö 5,000 100.0%Narvik Verkstedsindustri A/S, Norway 2,000 100.0%
Nexplo Industries AB, 556559-8801, Karlskoga – 60.0%Nexplo Bofors AB, 556267-9372, Karlskoga 250,000 100.0%Saab Bofors Test Center AB, 556035-3558 Karlskoga 7,200 9.0%NEXPLO Bofors Inc., USA 1,000 100.0%
Nexplo Vihtavuori Oy, Finland 160,000 100.0%Saab Bofors AB, 556267-9455, Karlskoga 3,000,500 100.0%Saab Bofors Industrier AB, 556016-3247, Karlskoga 4,156 100.0%Wikers AB, 556014-2126, Karlskoga 26,212 100.0%CGTEC AB, 556093-3698, Karlskoga 1,000 100.0%Företagshälsovården i Karlskoga AB, 556536-1242, Karlskoga 2,750 55.0%
Saab Bofors Dynamics AB, 556264-6074, Karlskoga 500,000 100.0%Saab Bofors Support AB, 556016-3247, Karlskoga 176 66.0%Bofors Personalbutiker AB, 556338-1564, Karslkoga 1,000 100.0%
Saab Bofors Test Center AB, 556035-3558, Karlskoga 48,400 61.0%Saab Bofors Missile Corporation AB, 556147-5905, Karlskoga 5,000 100.0%
Saab Bofors Underwater Systems AB, 556439-6884, Karskoga 250,000 100.0%Bofors S A Marine AB, 556040-3916, Landskrona 31,000 100.0%
Saab Communication AB, 556181-4418, Stockholm 21,000 100.0%Saab Microtech AB, 556241-6627, Göteborg 10,000 100.0%Saab Pacific Pty Ltd, Australia 9 100.0%Saab Pacific Development Pty Ltd, Australia 4,050,000 100.0%Hawker Pacific Pty Ltd, Australia 1,000,000 100.0%Hawker Pacific (Australia) Pty Ltd, Australia 10,500,001 100.0%Australian Aerospace Pty Ltd, Australia 5,608,483 100.0%Hawker Pacific Asia Pte Ltd, Singapore 1,300,000 100.0%Hawker Pacific (Malaysia) Sdn Bhd, Malaysia 200,000 52.0%
68
69
Note 22, cont.No. of Share Book
Subsidiary / Corp. ID no. / Reg. Office shares in % valueHPP Aviation Services Inc., Australia – 100.0%
Saab Systems Pty Ltd, Australia 500 100.0%Bofors Australia Pty Ltd, Australia 2,000 100.0%Bofors Underwater Systems Australia Pty Ltd, Australia 2 100.0%
SaabTech AB, 556244-5683, Järfälla 170,000 100.0%Frozen Island System Development AB, 556484-7555, Järfälla 100 100.0%Transponder Tech i Skandinavien AB, 556168-6923, Järfälla 100 100.0%CelsiusTech New Zealand Ltd, New Zealand 360,000 100.0%
SaabTech Electronics AB, 556017-4848, Järfälla 150,600 100.0%Saltbadlödning i Järfälla AB, 556081-8113, Järfälla 2,000 100.0%Linus AB, 556235-8159, Järfälla 1,000 100.0%
SaabTech International AB, 556267-8994, Stockholm 50,000 100.0%SaabTech Norge A/S, Norway 50 100.0%SaabTech Canada Ltd, Canada 25,765 100.0%SaabTech Deutschland GmbH, Germany – 100.0%SaabTech Finland Oy, Finland 50 100.0%Bofors (UK) Ltd, United Kingdom 10,000 100.0%Celsius Japan K K., Japan 48,000 100.0%SaabTech Danmark A/S, Denmark – 100.0%SaabTech SE Asia Pte Ltd, Singapore – 100.0%
SaabTech Systems AB, 556363-6785, Järfälla 2,051,230 100.0%CelsiusTech Naval Systems AB, 556207-5753, Järfälla 1,000 100.0%Celsius Tech Systems (M) SDN BHD, Kuala Lumpur 100,000 100.0%
SaabTech Vetronics AB, 556169-8431, Järfälla 200,000 100.0%Sanguistech AB, 556090-7213, Karlskoga 20,000 100.0%Shipknow AG, Schweiz 240 100.0%YDAB i Härnösand AB, 556295-6390, Härnösand 88,000 100.0%
Saab Dynamics AB, 556055-9691, Linköping 1,000,000 100.0% 167Ericsson Saab Avionics AB, 556460-1655, Stockholm 501 50.1% 12EMC Service Elteknik AB, Göteborg 400 100.0%
Saab Ericsson Space AB, 556134-2204, Göteborg 90,000 60.0% 71Saab Ericsson Space Fastighets AB, 556230-7404, Göteborg 1,000 100.0%Saab Ericsson Space Inc., USA 100 100.0%Austrian Aerospace GmbH, Austria – 90.0%
Saab Training Systems AB, 556030-2746, Huskvarna 150,000 100.0% 42Saab Training Systems GmbH, Germany 4,000 100.0%Saab Training Systems UK Ltd, United Kingdom 100,000 100.0%Saab Training Inc., USA 200 100.0%Saab Training Systems Canada Ltd, Canada 300,000 100.0%
Saab-Scania Combitech AB, 556036-0207, Linköping 1,100,000 100.0% 120Saab Nyge Aero AB, 556043-5413 5,000 100.0%Norsk Flygtjenste A/S, Norway 1 100.0%Saab Helikopter AB, 556026-9945, Nyköping 4,800 100.0%
Barracuda Technologies AB, 556045-7391, Gamleby 200.000 100.0% 70Barracuda Camoflage (P) Ltd, India 81,400 74.0%Barracuda Technologies Pty, Australia 75,000 100.0%Barracuda Technologies S.A., France 4,996 99.9%Barracuda Technologies Canada Inc, canada 100 100.0%
Saab Holding B.V., Netherlands 180 100.0% 106Saab Marine Holding AB, 556147-5863, Linköping 1,000 100.0%Saab Marine Electronics AB, 556043-5124, Göteborg 15,000 100.0%Saab Tank Control Vertriebs GmbH, Germany 1 100.0%Saab Marine (UK) Ltd, United Kingdom 100,000 100.0%Scanjet Clean AB, 556291-2427, Sjöbo 1,020 51.0%Saab Marine Electronics Singapore Pte Ltd, Singapore 306,000 51.0%Saab Tank Control (UK) Ltd, United Kingdom 1,740 58,0%Saab Tank Control (India) Ltd, India 27,000 60.0%Saab Systems Inc., USA 300,000 100.0%Saab Mep AS, Norway 10,603 54.5%SF-Control OY, Finland 200 100.0%Saab Marine Electronics Middle East, Bahrain 198 99.0%Saab Tank Control WLL (Middle East), United Arab Emirates 900 60.0%Saab Marine RU, Russia 54 54.0%
Combitech Systems AB, 556258-8862, Jönköping 3,250 65.0% 2Saab TransponderTech AB, 556535-9790, Linköping 1,000 100.0% 13Saab Aircraft AB, 556062-7647, Linköping 100,000 100.0% 10Saab Holdings U.S. Inc., USA 1,000 100.0% 168Saab Aircraft of America Inc., USA 1,001,000 100.0%
Saab Aircraft Leasing Holding AB, 556124-3170, Stockholm 30,000 100.0% 2 203Saab-Scania Rental AB, 556056-9807, Stockholm 1,000 100.0%Saab Aircraft Leasing AB, 556020-4231, Stockholm 11,000 100.0%Fairbrook Inc., USA 100 100.0%Fairbrook Leasing Inc., USA 100 100.0%Lambert Leasing Inc., USA 100 100.0%Saab Aircraft Leasing Inc., USA 100 100.0%
2000 Aircraft Credit AB, 556464-6031, Stockholm 787,000 80.0%SF340 Leasing AB, 556258-8847, Stockholm 1,000 100.0%Swedish Aircraft Two KB, 916691-1494, Linköping – 50.3%Swedish Aircraft Three KB, 916694-4364, Linköping – 100.0%Aero Three AB, 556258-8920, Stockholm 1,000 100.0%
Note 22, cont.No. of Share Book
Subsidiary / Corp. ID no. / Reg. Office shares in % valueSwedish Aircraft Four KB, 916694-4372, Linköping – 50.3%
Swedish Aircraft Holdings AB, 556573-7805, Stockholm 1,000 100.0%Saab Xperientia AB, 556147-5855, Jönköping 56,450 64.7% 30Saab Hangaren Förvaltning AB, 556031-8759, Linköping 20,000 100.0% 2Lansen Försäkrings AB, 516401-8656, Linköping 100,000 100.0% 10Saab Air AB, 556061-1732, Linköping 25,000 100.0% 3Saab Treasury AB, 556147-5939, Linköping 30,000 100.0% 3Saab Fond AB, 556025-1356, Linköping 10,000 100.0% 1Saab International AB, 556378-6275, Linköping 2,000 100.0%Saab International AB (Chile) Ltda, Chile – 100.0%Saab South Africa (Pty) Ltd, South Africa – 100.0%Saab Aerospace Marketing Services GmbH, Austria – 100.0%
Saab Military Aircraft Ltd., United Kingdom 100 100.0%Saab Aircraft International Ltd, United Kingdom 100,000 100.0%
Nyge Aero Norden AB, 556496-1844, Nyköping 141,000 100.0% 14CSM Materialteknik AB, 556517-3951, Linköping 40,000 100.0% 5Saab Combitech AB, 556108-8799, Jönköping 500,000 100.0% 60Dormant companies, real estate companies etc. 15
Book value at year end 8,167
NOTE 23 – RECEIVABLES FROM GROUP COMPANIES
Group Parent Company
2000 1999 2000 1999
Accumulated acquisition valueAt beginning of the year – – 1,019 162Additional receivables – – 24 1,019Cleared receivables – – -1,019 -162Book value at year-end – – 24 1,019
NOTE 24 – PARTICIPATIONS IN ASSOCIATED COMPANIES
Group Parent Company
2000 1999 2000 1999Accumulated acquisition valueAt beginning of year 12 79 5 17Purchases 855 3Divestments -105 -65 -2 -12Re-classification -13Translation differences for the year 10Net income of the year 20 -5Book value at year-end 779 12 3 5
Specification of the Group´s participations in associated companiesAdjusted equity/
Share Net income BookAssociated company/Corp. ID no./Reg. Office in %1) of the year2) value
Industrikompetens i Östergötland AB,556060-5478, Linköping 33.0 4 / 1 4
Triangle Equipment AS, Norway 25.8 8 / -2 8Fortum Service Industripartner AB,
556422-3419, Karlskoga 40.0 4 / 0 4Avitronics (Pty) Ltd, South Africa 49.0 33 / -2 33Autoliv Celsius AB, 556561-0788, Stockholm 50.0 0 / 0 0Howaldtswerke-Deutsche Werft Aktiengesellschaft, Germany 25.0 626 / 15 626
Nammo A/S Norway 27.5 104 / 8 104
Book value at year-end 7791) Share in % relates to equity.This is equal to the share of the votes of the total number of shares.2) Adjusted equity relates to the owned share of the company´s equity, including equity in untaxed
reserves. Net income of the year relates to the owned proportion of the company´s income aftertax, including the portion of equity in the year´s change in untaxed reserves.
70
NOTE 25 – OTHER SECURITIESHELD AS FIXED ASSETS
Group Parent Company
2000 1999 2000 1999
Accumulated acquisition valueAt beginning of year 1,315 24 1,298 7Purchases 354 1,294 20 1,294Divestments -38 -3 -4 -3Write-downs -193 – – –Re-classifications -1,267 – -1,267 –
Book value at year-end 171 1,315 47 1,298
Specification of the Group´s other securities held as fixed assets
Number Share BookCompany of shares in % valueArbustum AB 15,000 6.9 6Ariane Space Participation, France 1,621,745 0.8 –Aviation Financial Services AG, Switzerland 100 20.0 –b-business partners B.V 100,000 – 21Booforsen Fastighets AB,
556381-0539, Karlskoga 2,750 50.0 9Crossair Ltd Co, Switzerland 6 – –EMC Väst AB 25 2.1 –Gesällschaft für Weltraumfragen GmbH, Austria 0 6.8 –
IG Försvarslogistik AB 400 33 –Industrigruppen JAS AB 3,000 41.42 3Intospace GmbH, Germany 0 1 –Kitron ASA, Norway 50,524,800 11.2 27Länsteknikcentrum AB 300 1.8 –Natech Production A/S 50,300 16.6 5Raufoss Ammunisjionsfabrikker A/S 1,125,000 15 56Saab Smaaland Project Venture AB 330 33 –Societe Ariane Space, France 3,862 0.8 13Taurus Systems GmbH, Germany 1 33.0 4Trigon Blue Cross Blue Shield 4,606 – 1WAH Nobel, Ltd Pakistan 217,125 48.0 15Tenant-owners rights – – 6Other 5
Book value at year-end 171
NOTE 26 – DEFERRED TAX RECEIVABLE/TAX LIABILITY
Deferred tax receivable relates to the tax result arising from the assump-tion that assets and liabilities are disposed of at book residual values.The deferred tax relates to the following assets:
Group Parent Company
2000 1999 2000 1999
Deferred tax receivablesInvestments in subsidiaries 587 625 625 625Reserves for future expenses 1,552 1,039 683 788Re-classification of leasing contracts 175 117Loss carry-forward 885 289Other 68 77
Total 3,267 2,147 1,308 1,413
Deferred tax liabilitiesRevaluation of building 165 175 165 175Fiscal excess depreciation 1,413 1,402Tax allocation reserves 106 59Valuation of receivables and liabilities 106Other 37 4
Total 1,827 1,640 165 175
Deferred tax receivable net 1,440 507 1,143 1,238
Deferred tax liability on untaxed reserves in the Parent Company 192 161
NOTE 27 – OTHER LONG-TERM RECEIVABLES
Group Parent Company
2000 1999 2000 1999
Interest-bearingAt beginning of year – – – –Additional receivables 1,345 – 424 –
Book value at year-end 1,345 – 424 –
The interest bearing long-term receivables in the Group relates mainly tothe present value of lease payments for the oil-rig Petrobras XXIII, SEK657 m., and receivables regarding allocated surplus from SPP, SEK 544 m.SPP-surplus in the Parent Company amounts to SEK 41 m.
Interest freeAt beginning of year 752 721 – –Additional receivables 224 31 – –
Book value at year-end 976 752 – –
The interest free receivables relates mainly to depositions attributable toSaab Aircraft Leasing.
NOTE 28 – PREPAID EXPENSES AND ACCRUED INCOME
Prepaid expenses and accrued income in the Group amounted to SEK985 m. (270) and in the Parent Company to SEK 199 m. (90). In theGroup SEK 382 m. relates to accured income in accordance to the percentage of completion method, and SEK 90 m. (100) is attributed to accrued leasing fees for Saab Aircraft Leasing.
NOTE 29 – SHORT-TERM INVESTMENTS
Group Parent Company
2000 1999 2000 1999
Interest-bearing securities 3,121 9,766 3,082 9,736
Total 3,121 9,766 3,082 9,736
The market value on interest-bearing securities amounted to SEK 3,128 m.(9,766) in the Group and SEK 3,089 m. (9,736) in the Parent Company.
Financial investments are made in Swedish Government bonds andhousing bonds. The investment policy means that the fixed interest termmust be 0–27 months to avoid excessive fluctuations as a result ofinterest changes. At year-end, the average interest terms was 8 months.
NOTE 30 – EQUITYThe shares in the Parent Company are divided into two series, class Aand class B. Both classes of shares carry equal rights, with the exceptionthat each class A share is entitled to ten votes and each share of class B isentitled to one vote. Each share carry a nominal value of SEK 16.
Number of shares as per December 31, 2000:
Number Number of Number ofof shares shares in % votes in %
Shares class A 6,454,303 6 39Shares class B 100,005,372 94 61
106,459,675 100 100
During 1998, the Parent Company issued a convertible debenture loanwith a nominal value of SEK 254 m. The conversion price is set to SEK91 and conversion to shares of class B is possible from December 4, 2001to July 15, 2004. After full conversion the number of class B shares willincrease by 2,787,500 and the capital stock will increase by SEK 45 m.
71
Note 30, cont.
Equity in the Group has changed as follows during the year:Profit or Net income
Capital Restricted loss carried for thestock reserves forward year Total
At beginning of year 1,703 1,560 1,445 4,708Dividend to shareholders -266 -266Allocation to statutory
reserve 21 -21 0Utilization of premium
reserve -7 3 -4Utilization of equity method
reserve -3 3 0Shifting between restricted
and unrestricted equity 79 -79 0The years translation
differences etc 34 160 194Net income for the year 1,038 1,038
Total at year-end 1,703 1,684 1,245 1,038 5,670
Specification of restricted reservesRe- Equity Transla-
Share Equity valua- share of tion-premium method tion- Legal untaxed differences
reserve reserve reserve reserve reserves etc. Total
At beginning of year 17 5 500 338 551 149 1,560Allocation to statutory
reserve 21 21Utilization of
premium reserve -7 -7Utilization of equity
meathod reserve -3 -3Change in equity in
untaxed reserves 81 81Change in
statutory reserve -2 -2The years translation
differences etc. 34 34
Total at year-end 10 2 500 357 632 183 1,684
Equity in the Parent Company has changed as follows during the yearCapital Restricted Profit or Loss Net Income
stock reserves brought forward for year Total
At beginning of year 1,703 837 1,888 4,428Dividend to shareholders -266 -266Allocation to statutory reserve 21 -21 0Utilization of premium reserve -7 3 -4Group contribution given to
subsidiaries net after tax -107 -107Net income for the year 1,228 1,228Total at year-end 1,703 851 1,497 1,228 5,279
NOTE 31 – UNTAXED RESERVES
Group Parent Company2000 1999 2000 1999
Accumulated excess depreciationLand and buildings 430 463 288 313Machinery and equipment 394 379 163 165Lease assets 1,998 2,729 – –
Tax allocation ReservesAllocated 1994 – 16 – –Allocated 1995 11 24 – –Allocated 1996 14 7 – –Allocated 1997 17 11 – –Allocated 1998 83 78 56 56Allocated 1999 76 75 39 39Allocated 2000 179 – 139 –
Contingency reserve 16 15 – –Foreign untaxed reserves 1 1 – –
Total 3,219 3,798 685 573
Of the Groups untaxed reserves SEK 901 m. (1,063) consists of deferred taxes.
NOTE 32 – PROVISIONS FOR PENSIONS ANDSIMILAR COMMITMENTS
Provisions for pensions in the balance sheet correspond to the equivalentpension obligations actuarially computed.
Group Parent Company
2000 1999 2000 1999Provision for pensionsFPG/PRI pensions 2,890 1,774 1,438 1,370Other pensions 201 103 90 95Other pension liabilities 436 118 104 118Total 3,527 1,995 1,632 1,583
Of which with credit guarantees FPG/PRI 2,924 1,810 1,472 1,406
Assets pledged for this liability amounted to SEK 855 m. (831). See note 40.The Pensions Registration Institute (PRI) is a public organization respons-ible for the administration of employee pensions. Other pension liabilitiesrelate to conditional commitments not covered by social security legislation.
NOTE 33 – OTHER PROVISIONS
Group Parent Company
2000 1999 2000 1999
Costs of restructuring Regional Aircraft 1,537 2,376 1,537 2,376Other provisions for restructuring and
project losses. 1,068 – – –Reserves for anticipated deficit in
future leasing operations 1,008 2,637 – –Other 208 29 1 2
Total 3,821 5,042 1,538 2,378
NOTE 34 – LONG-TERM LIABILITIES TO CREDIT INSTITUTEGroup Parent Company
2000 1999 2000 1999
Due date 1–5 year from closing day 798 62 18 21Due date more than 5 years from closing day 198 39 39 39
Total 996 101 57 60
NOTE 35 – CONVERTIBLE DEBENTURE LOAN
During 1998, the Parent Company issued a convertible debenture loanwith a nominal value of SEK 254 m. Of the total loan, debenturesamounting to SEK 231 m. were sold to employees while SEK 23 m. weresold to the wholly owned subsidiary Saab Hangaren Förvaltning AB.This is to enable sale of convertible debentures at current market valueto new employees. The convertible debenture loan, which bears a fixedannual interest rate equal to STIBOR less 0.45 percent, will be possible toconvert to Saab shares of class B from December 4, 2001 to July 15. 2004at a conversion price set to SEK 91. The loan will fall due on July 30,2004 if not converted. A capital discount amounting to SEK 10 m. (17)has been calculated compared to a fixed market rate of 5,5 (5) percent.The capital discount has in the financial statements of both the Groupand the Parent company been accounted for as restricted reserves, sharepremium reserve. The capital discount is expensed as interest during theterm of the loan.
Group Parent Company
2000 1999 2000 1999
Convertible debenture loan 254 254 254 254Capital discount -10 -17 -10 -17Holdings within the Group -16 -20 – –
Total 228 217 244 237
72
NOTE 36 – OTHER LONG-TERM LIABILITIES
Group Parent Company
2000 1999 2000 1999
Lease obligations 3,637 4,197 – –Other long-term liabilities 568 947 – –
Total 4,205 5,144 – –
Liabilities with due date more than 5 years from closing day amount toSEK 1,774 m. (3,203). Security provided for leasing commitmentsamounted to SEK 2,025 m. (2,255) and for other liabilities SEK 774 m.(616). See note 40. Other liabilities consists mainly of prepaid leasing fees.
NOTE 37 – SHORT-TERM LIABILITIES TO CREDIT INSTITUTES
Group Parent Company
2000 1999 2000 1999
Approved credit limit 783 43 633 43Unutilized portion -676 -43 -633 -43
Utilized portion 107 – – –Short-term borrowing 860 80 35 48
Total 967 80 35 48
NOTE 38 – OTHER LIABILITIES
Group Parent Company
2000 1999 2000 1999
Value added tax (VAT) 197 74 31 51Personnel liabilities 162 91 45 43Depositions regarding
leasing operations 138 63 – –
Debt regarding acquired shares – 292 – 292Other 77 55 2 3
Total 574 575 78 389
NOTE 39 – ACCRUED EXPENSES AND DEFERRED INCOME
Group Parent Company
2000 1999 2000 1999
Accrued expensesCost of customer commitments
in Regional Aircraft 1,021 1,234 1,021 1,234Reserve for remaining
costs in military business 302 438 107 188Vacation pay liability 581 316 169 165Social security expenses 372 248 151 117Claims reserve 49 47 – –Expected invoices 222 123 50 50Personnel liabilities 193 106 31 29Earlier redundancy 198 99 163 93Accrued interests 167 102 134 102Guarantee reserve 36 25 6 8Accrued leasing costs 217 234 – –Accrued currency differences 102 228 – –Other 420 316 21 12
Deferred incomeLeasing fees 51 88 – –Advance invoicing 800 821 520 611
Total 4,731 4,425 2,373 2,609
NOTE 40 – ASSETS PLEDGED
Group Parent Company
2000 1999 2000 1999
Guarantees provided for own liabilitiesand provision
for pensions commitmentsChattel mortgages 436 437 350 350Real estate mortgages 419 394 388 388
to credit institutesOther assets 676 – – –
for lease obligationsLease assets 2,025 2,255 – –
for other long-term liabilitiesLong-term receivables 774 616 – –Bank deposits 115 217 30 201
for accrued expensesAccrued income 59 61 – –
for advance payments from customersChattel mortgages 1,751 1,751 1,751 1,751
Bonds and other securities 2,570 4,990 2,570 4,990
Total 8,825 10,721 5,089 7,680
NOTE 41 – AUDITORS’ FEES
Group Parent Company
2000 1999 2000 1999
Ernst & YoungAudit assignments 11 4 3 2Other assignments 3 1 1 1
KPMGAudit assignments 2 1Other assignments 2 3 2 3
Price WaterhouseCoopersAudit assignments 4 2Other assignments 8 1 1
Total 30 12 7 6Audit assignments 17 7 3 2Other assignments 13 5 4 4
NOTE 42 – DEFINITIONS OF KEY RATIOS
Pre-tax return on capital employedOperating income increased by financial income as a percentage ofaverage total assets less non-interest-bearing liabilities and deferredtax liability.
After-tax return on equityNet income for the year as a percentage of average equity. When calculating return on equity before items affecting comparability, a tax rate of 28 percent has been used.
Profit marginOperating income before items affecting comparability increased with financial income as a percentage of sales.
Capital turnoverSales divided by average capital employed.
Equity/assets ratioEquity in relation to total assets.
Interest coverageOperating income before items affecting comparability increased withfinancial income, divided by financial expenses.
Earnings per shareNet income for the year divided by the number of shares.
73
We have audited the annual accounts, the consolidated accounts,the accounting records and the administration of the board of directors and the managing director of Saab AB for the year 2000.These accounts and the administration of the company are theresponsibility of the board of directors and the managing director.Our responsibility is to express an opinion on the annual accounts,the consolidated accounts and the administration based on ouraudit.
We conducted our audit in accordance with generallyaccepted auditing standards in Sweden. Those standards requirethat we plan and perform the audit to obtain reasonable assurancethat the annual accounts and the consolidated accounts are free ofmaterial misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the accounts.An audit also includes assessing the accounting principles used andtheir application by the board of directors and the managing direc-tor, as well as evaluating the overall presentation of information inthe annual accounts and the consolidated accounts. As a basis forour opinion concerning discharge from liability, we examined sig-
nificant decisions, actions taken and circumstances of the companyin order to be able to determine the liability, if any, to the companyof any board member or the managing director. We also examinedwhether any board member or the managing director has in anyother way acted in contravention of the Companies Act, the AnnualAccounts Act or the Articles of Association. We believe that ouraudit provides a reasonable basis for our opinion set out below.
The annual accounts and the consolidated accounts have been prepared in accordance with the Annual Accounts Act and, thereby,give a true and fair view of the financial position of the company’sand the group’s financial position and of the results of operations inaccordance with generally accepted accounting principles in Sweden.
We recommend to the general meeting of the shareholders thatthe income statements and the balance sheets of the parent company and the group be adopted, that the profit for the parent company be dealt with in accordance with the proposal in the administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year.
Auditors’ Report
Linköping, February 16, 2001
Gunnar Widhagen Caj Nackstad
Authorized Public Accountant Authorized Public AccountantErnst & Young AB KPMG Bohlins AB
To the general meeting of the shareholders of Saab ABCorporate Identity No 556036-0793
Linköping, February 16, 2001
Anders ScharpChairman
Marcus Wallenberg Erik Belfrage Peter Nygårds Anthony Rice
George Rose Michael Rouse Björn Svedberg
Ragnar Ludvigsson Lars Olsson Gunnar Holm
Bengt HalseManaging director
Anders ScharpChairman since 1990, born 1934.Chairman of Atlas Copco AB andAB SKF. Chairman of SwedishEmployers’ Confederation. Boardmember of Investor AB and theFederation of Swedish Industries.Shares in Saab: 31,000Convertibles in Saab: –
Marcus WallenbergDeputy Chairman since 1993and Board member since 1992,born 1956.Deputy Chairman of Telefonaktie-bolaget L M Ericsson. Board memberof AstraZeneca PLC,AstraZenecaAB, Investor AB, Scania AB, StoraEnso Oyj, SAS Representative andThe Knut and Alice WallenbergFoundation.Shares in Saab: 67,977Convertibles in Saab: –
Erik BelfrageBoard member since 1991,born 1946.Director of SEB, SkandinaviskaEnskilda Banken. Chairman of TheSwedish Institute of Management(IFL),The Swedish Institute of Inter-national Affairs (UI) and the Centrefor European Policy Studies (CEPS).Board member of SAS, SAS SverigeAB and the International Council ofSwedish Industry (NIR). Member ofthe Trilateral Commission.Shares in Saab: 7,242Convertibles in Saab: –
Peter NygårdsBoard member since 2000,born 1950.President of SKB (Swedish Nuclear Fuel and Waste Manage-ment Co.). Board member of theAdvisory Board to the NationalBoard of Civil Defence and theSwedish Environmental ResearchInstitute.Shares in Saab: –Convertibles in Saab: –
Michael (Mike) P RouseBoard member since 2000,born 1948.Group Managing Director,International Partnerships BAE SYSTEMS.Shares in Saab: –Convertibles in Saab: –
Björn SvedbergBoard member since 1998,born 1937.Board member of, among others,Gambro and Investor AB.Shares in Saab: 1,100Convertibles in Saab: –
Bengt HalsePresident, CEO and Board membersince 1995, born 1943.Board member of Chalmers University of Technology and of AU-System.Shares in Saab: 15,000Convertibles in Saab: SEK 182,000Options in Saab: 370,000
Gunnar HolmBoard member since 2000,born 1949.Deputy Chairman of the GraduateStaff Association, Saab BoforsDynamics, Linköping.Shares in Saab: –Convertibles in Saab: SEK 68,250
Board of Directors and Auditors
74
Anthony (Tony) RiceBoard member since 1998,born 1952.Group Managing Director,Ventures of BAE SYSTEMS.Non Executive Director ofTelewest Plc.Shares in Saab: –Convertibles in Saab: –
George RoseBoard member since 1998,born 1952.Finance Director of BAE SYSTEMSand Non Executive Director ofLattice Group PlcShares in Saab: –Convertibles in Saab: –
Ragnar LudvigssonBoard member since 1995,born 1946.Chairman of the Engineering Wor-kers’ Union, Saab AB, Linköping.Shares in Saab: –Convertibles in Saab: SEK 119,574
Lars OlssonBoard member since 1995,born 1937.Chairman of the Industrial SalariedEmployees’ Association,Saab AB, Linköping.Shares in Saab: 2Convertibles in Saab: SEK 91,000
Deputy Board members
Auditors
Deputy Auditors
Conny HolmDeputy since 1995, born 1947.Chairman of the EngineeringWorkers’ Union of the Saab unitsin Jönköping.Shares in Saab: 100Convertibles in Saab: SEK 91,000
Rolf EnquistDeputy since 2000, born 1943.Chairman of the EngineeringWorkers’ Union (SEKO),AerotechTelub AB, Linköping.Shares in Saab: –Convertibles in Saab: –
Lars HöökDeputy since 2000, born 1944.Member of the Industrial SalariedEmployees’ Association,AerotechTelub AB,Arboga.Shares in Saab: 400Convertibles in Saab: –
Gunnar WidhagenAuditor since 1993, born 1938.Authorized Public AccountantErnst & Young AB
Caj NackstadAuditor since 1991, born 1945.Authorized Public AccountantKPMG Bohlins AB
Björn FernströmAuditor since 1993, born 1950.Authorized Public AccountantErnst & Young AB
Bo RibersAuditor since 1993, born 1942.Authorized Public AccountantKPMG Bohlins AB
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Group Management
Corporate ExecutiveCommittee
Bengt HalsePresident and CEO, born 1943.Employed 1995.Shares in Saab: 15,000 Convertibles in Saab: SEK 182,000Options in Saab: 370,000
Göran SjöblomExecutive Vice President, born 1943.Employed 1995.Shares in Saab: 17,500 Convertibles in Saab: SEK 182,000
Dave HewitsonGroup Senior Vice President,born 1948. Employed 1999.Shares in Saab: –Convertibles in Saab: –
Jan NygrenGroup Senior Vice President,born 1950. Employed 2000.Shares in Saab: –Convertibles in Saab: –
From left: Göran Sjöblom, Bengt Halse, Dave Hewitson and Jan Nygren.
Peter SandehedSenior Vice President.Treasury, born 1952.Employed 1981.Shares in Saab: - Convertibles in Saab:SEK 182,000
Per ErlandssonSenior Vice President.Legal, Secretary to theBoard, born 1947.Employed 1980.Shares in Saab: 3,125Convertibles in Saab:SEK 182,000
Lars WahlundSenior Vice President.Financial Control,born 1953. Employed 1983.Shares in Saab: 100 Convertibles in Saab:SEK 182,000
Mats LindmanSenior Vice President.Human Resources, born1945. Employed 1986.Shares in Saab: 250 Convertibles in Saab:SEK 182,000
Jan NygrenGroup Senior Vice Presi-dent,.Communication, born1950. Employed 2000.Shares in Saab: – Convertibles in Saab: –
Per Ove MorbergGroup Senior Vice President, born 1942.Employed 1971.Shares in Saab: –Convertibles in Saab: –
Gert SchyborgerGroup Senior Vice President, born 1940.Employed 1996.Shares in Saab: 1,250 Convertibles in Saab:SEK 182,000
Corporate functions
Heads of business areas
Dan JangbladSenior Vice President. SaabSystems and Electronics,born 1958. Employed 2000.Shares in Saab: – Convertibles in Saab: –
Åke SvenssonSenior Vice President. SaabAerospace, born 1952.Employed 1976.Shares in Saab: - Convertibles in Saab: SEK 182,000
Jan EibornSenior Vice President. Saab Technical Support and Services,born 1944. Employed 1984.Shares in Saab: – Convertibles in Saab: –
Ingemar AnderssonSenior Vice President.Saab Bofors Dynamics,born 1951. Employed 1982.Shares in Saab: 3,000Convertibles in Saab: –
Bengt MörtbergSenior Vice President.Saab Ericsson Space,born 1951. Employed 1996.Shares in Saab: – Convertibles in Saab: SEK 182,000
Christer PerssonSenior Vice President. CelsiusAviation Services,born 1949. Employed 1993.Shares in Saab: – Convertibles in Saab: –
Addresses
Saab ABSE-581 88 Linköping, SwedenTel: +46-13-18 00 00Fax: +46-13-18 18 [email protected]
Saab ABP.O. Box 70373SE-107 24 Stockholm, SwedenTel: +46-8-700 67 77Fax: +46-8-700 67 [email protected]
Saab Systems and ElectronicsSE-175 88 Järfälla, SwedenTel: +46-8-580 840 00Fax: +46-8-580 322 [email protected]
Saab AerospaceSE-581 88 Linköping, SwedenTel: +46-13-18 00 00Fax: +46-13-18 54 [email protected]
Saab Technical Support and ServicesSE-732 81 Arboga, SwedenTel: +46-589-800 00Fax: +46-589-61 16 [email protected]
Saab Bofors DynamicsSE-691 80 Karlskoga, SwedenTel: +46-586-810 00Fax: +46-586-857 [email protected]
Saab Ericsson SpaceSE-405 15 Gothenburg, SwedenTel: +46-31-735 00 00Fax: +46-31-735 40 00
Celsius Aviation Services1800 Diagonal Road, Suite 230Alexandria,VA 22314, USATel: +1 (703) 683 0007Fax: +1 (703) 549 [email protected]
FINANCIAL INFORMATIONThe following financial information will be released in the financial year 2001:April 26 Interim report January-March July 12 Interim report January-June October 19 Interim report January-September February 14, 2002 Full-year report 2001
ANNUAL GENERAL MEETINGThe Annual General Meeting will be held at 6:00 p.m. onWednesday, April 4, 2001 at Saab in Linköping.
NOTIFICATIONShareholders must notify the company of their intentionto participate in the meeting not later than 12:00 noon onFriday, March 30, 2001:• by telephone: +46-13-18 20 55 • by fax: +46-13-18 33 50 • by mail: Saab AB, Avd CU-MV,
SE-581 88 Linköping, Sweden• online: www.saab.se
(follow the instructions on the home page)
Please indicate your name, personal or corporate registra-tion number (Swedish citizens or companies), address andtelephone number. If you are attending by power of proxy,registration certificate or other authorization, please sub-mit your documentation well in advance of the meeting.
Shareholders or their proxies may be accompanied at theAnnual General Meeting by a maximum of two people.Theymay only attend, however, if the shareholder has notified thecompany as indicated above.
RIGHT TO PARTICIPATEOnly shareholders recorded in the share register main-tained by VPC AB (the Swedish Securities Register Center)on Friday, March 23, 2001 are entitled to participate in themeeting.
Shareholders registered in the names of nomineesthrough the trust department of a bank or a brokeragefirm must temporarily re-register their shares in their ownnames to participate in the meeting. For this re-registra-tion to be recorded in the share register by March 23,2001, nominees must be notified several business days inadvance.
DIVIDENDThe Board of Directors is recommending a dividend of SEK3.00 per share and Monday,April 9, 2001 as the record dayfor the dividend.With this record day, VPC is expected todistribute the dividend on Thursday, April 12, 2001.
Financial information can be ordered from:Petra Svensson, telephone +46-13-18 70 70www.saab.se
Contacts:Jan Nygren, Group Senior Vice President, CommunicationTelephone +46-13-18 19 99, e-mail [email protected] Kammeby, Investor Relations Telephone +46-13-18 71 25, e-mail [email protected]
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Saab AB (publ) SE-581 88 Linköping, SwedenTel +46-13-18 00 00 www.saab.se
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