Atlas Copco - Annual Report 1999

THE BOARD OF DIRECTORS’ REPORT
ATLAS COPCO GROUP
SEK 13,894 m. (873), mainly related to the RSC acquisition.
Net cash flow for the year, including SEK 832 m. (787) for the
dividend and SEK 4,125 m. for the new issue of shares, equaled
SEK –8,188 m. (489).
The Group’s net indebtedness (defined as the difference
between interest-bearing liabilities and liquid assets) ended at
SEK 19,325 m. (10,052), of which SEK 1,450 m. (1,940) was
attributable to pension provisions. The decrease in pension
provisions reflected the creation of a pension trust in Sweden
during 1999 that is not consolidated in the Group’s accounts.
The SEK 522 m. capitalization of the fund simultaneously
reduced liquid assets and thus did not affect reported net
indebtedness. The debt/equity ratio (defined as net indebtedness
divided by shareholders’ equity) was 92 percent (65).
Summary Cash Flow Analysis
1999 1998
Operating cash surplus after tax 4,595 4,162
of which depreciation added back 2,616 1,876
Change in working capital 20 –557
Cash flow from operations 4,615 3,605
Investments in tangible fixed assets –3,281 –2,447
Sale of tangible fixed assets 1,079 991
Company acquisitions/divestments –13,894 –873
Cash flow from investments –16,096 –2,329
Dividends paid –832 –787
New issue of shares 4,125 –
Net cash flow –8,188 489
Shareholders’ equity
At December 31, 1999, Group shareholders’ equity, including
Personnel
1999 1998
Average number of
employees, total 24,249 23,857
Sweden 2,532 2,633
Outside Sweden
Business areas
21,717 21,224
Compressor Technique
Construction and
8,288 8,565
Mining Technique 4,123 4,572
Industrial Technique 7,133 7,831
Rental Service 4,572 2,773
Other 133 116
The average number of employees in the Atlas Copco Group
increased in 1999, by 392 to 24,249 (23,857). The proportion of
employees in Swedish units was 10 percent (11). See also Note
2. At year-end, the Group had a total of 26,134 employees
(23,393). For comparable units, the number of employees
decreased by 928 during the year.
Option plan
In 1997, an option plan was introduced providing the possibility
of annual grants of call options on Atlas Copco shares for 25–30
8 ATLAS COPCO 1999
Inventories
SEK m. %
7,000
35
6,000
5,000
4,000
3,000
2,000
1,000
0
95 96 97 98 99
Inventories as % of
revenues
Inventories, SEK m.
minority interests, totaled SEK 21,077m. (15,465). Shareholders’
equity per share was SEK 101 (84). Equity represented 39 percent
(42) of total assets.
To strengthen the Group’s capital base and enhance financial
flexibility following the acquisition of Rental Service Corporation,
the Extraordinary General Meeting held on September 6,
1999, approved the issue of new shares with primary priority
right to existing shareholders. The new shares were issued at a
subscription price of SEK 160 per share at a ratio of 1:7. In October
1999, the issue provided the company with net proceeds of
around SEK 4.1 billion.
executives within the Group.
The options have had a term of
Employees, average
five years and give the option
holder the right to purchase
30,000
existing shares. Accordingly,
the exercise of the options will
25,000
not result in any dilution of the
holdings of current sharehold-
20,000
ers. Based on the Group’s performance
in 1999, the Board of
15,000
Directors have decided to grant
options corresponding to a
10,000
total amount of SEK 6.0 m.
(4.8), excluding social fees. The
5,000
Company’s cost is not affected
by changes in the stock price, as
0
95 96 97
the option plan is financially
Sweden
hedged. The option plan is currently
being reviewed in view of
changes in the structure of the
Outside Sweden
Group, and recent tax changes in Sweden.
30
25
20
15
10
5
0
Customer Receivables
SEK m. %
10,000
25
8,000
6,000
4,000
2,000
0
95 96 97 98 99
Customer receivables as % of
revenues
Customer receivables SEK m.
98
99
20
15
10
5
0