Scania annual report 2003

NOTE 17 Other provisions
During 2003, the Scania Group’s provisions changed as follows:
Miscel-
Legal laneous
Product Restruc- and tax proviobligations
turing disputes sions Total
1 January 1,317 60 234 698 2,309
Provisions during the year 1,053 118 89 561 1,821
Provisions used
during the year –534 –80 –59 –335 –1,008
Provisions reversed
during the year –54 –2 –9 –21 –86
Exchange rate differences –70 –2 –6 –16 –94
31 December 1,712 94 249 887 2,942
Provisions for factory warranties on vehicles sold during the year are based
on the terms of factory warranties and the projected quality situation. For
other product obligations, the provisions reflected the net amount of funds
set aside and provisions used.
Provisions for restructuring were largely related to the reorganisation
of production at Ferruform AB, Sweden.
“Miscellaneous provisions” include provisions for asset appraisal in
South America. They also include provisions for possible losses on
service agreements and residual value obligations.
Of the above provisions, about SEK 1,700 m. are expected to be
utilised within twelve months.
NOTE 18 Interest-bearing liabilities
Borrowings for Customer Finance are effectively matched against
contracted payment flows with regard to currencies and interest rate
refixing periods. Other borrowings mainly occur in each respective
local currency.
Short- and long-term borrowing,
distributed by currency 1 2003 2002 2001
SEK 9,012 9,159 12,593
EUR 14,859 17,268 14,549
GBP 549 670 1,698
USD 308 609 1,806
Other currencies 1,479 1,741 2,766
Total 26,207 29,447 33,412
Of which, attributable to
Customer Finance 21,781 20,952 21,691
Borrowings excluding
Customer Finance 4,427 8,495 11,721
1 Does not take into account currency hedging, which has been used to match
borrowings by currency to funding requirements by currency.
The above loans fall due
for repayment as follows 2003
2004 5,380
2005 3,605
2006 4,015
2007 6,759
2008 5,608
2009 and thereafter 840
Total 26,207
For further information on Scania’s borrowing programme and financial
risk management, see Note 33.
Net debt 2003 2002 2001
Cash, bank balances and
short-term investments 1,916 4,339 4,107
Short-term borrowings –5,380 –6,933 –14,504
Long-term borrowings –20,827 –22,514 –18,908
Total –24,291 –25,108 –29,305
Of which, attributable to
Customer Finance –21,644 –20,800 –21,515
Net debt Vehicles and Service –2,647 –4,308 –7,790
NOTE 19 Accrued expenses and prepaid income
2003 2002 2001
Customary accrued expenses
and prepaid income 1 4,045 3,897 3,440
Prepaid income in operating leases 2,893 2,306 2,271
Accrued financial items 310 567 431
Total 7,248 6,770 6,142
Of the above prepaid income in operating leases, approximately
SEK 900 m. is expected to be recognised as revenue within twelve
months and approximately SEK 50 m. later than after five years.
1 In 2003, SEK 1,798 m. was attributable to employee-related accrued
expenses. SEK 965 m. to prepaid income for repair and service agreements
and SEK 1,282 m. to miscellaneous accrued expenses and prepaid income.
NOTE 20 Assets pledged
2003 2002 2001
Real estate mortgages 142 191 231
Other 33 – 2
Total 175 191 233
In 2003, all collateral was pledged to credit institutions and was divided
between SEK 30 m. (10) in short-term borrowings, SEK 133 m. (181)
in long-term borrowings and SEK 12 m. (0) as collateral for the liabilities
of others.
NOTE 21 Contingent liabilities
2003 2002 2001
Contingent liability related
to FPG credit insurance 29 27 27
Contingent liability related to FPG credit
insurance (associated companies) – – 159
Loan guarantees 97 43 92
Discounted bills and contracts 42 72 140
Other guarantees 427 380 437
Total 595 522 855
In addition to the above contingent liabilities, the Group has issued
vehicle repurchase guarantees worth SEK 418 m. (493 and 804,
respectively) to customers’ creditors.
Repurchase obligations related to guaranteed residual values
in operating leases amounted to SEK 5,925 m. (6,077 and 7,413,
respectively).
Legal and tax disputes
The Swedish local tax authority has denied a request for deduction of
a loss of SEK 2.9 billion. This decision will be appealed. The total effect
on earnings may total a maximum of SEK 575 m. if the deduction is
disallowed in its entirety. No provision has been made.
The Group is party to legal proceedings and related claims that
are normal in its operations. However, Scania management has made
the assessment that the ultimate resolution of these proceedings will
not have any material impact on the financial position of the Group.
NOTE 22 Lease obligations
As a lessee, Scania has entered into financial and operating leases.
Operating Future minimum Of which, related to
leases lease payment leases on premises 1
2004 178 108
2005 136 103
2006 116 99
2007 106 94
2008 89 85
2009 and thereafter 539 539
Total 2 1,164 1,028
1 Firm obligations related to leases on premises were expensed in the
amount of SEK 109 m. during 2003.
2 Refers to operating leases where the commitment exceeds one year.
ANNUAL REPORT 2003
66