Atlas Copco 2008 â tough ending to a record year Annual Report ...

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Financial statements, atlas copco group9. Financial income and expense2008 2007Interest income– held-to-maturity investments 14 11– assets held for trading 21 –– bank deposits 101 154– loans and receivables 255 356Dividend income– other financial assets 1 1Change in fair value– financial assets to fair value through profit orloss 1 377 25Capital gain– disposal of available-for-sale financial assets 33 134– gain on repatriation of subsidiary equity 939 –– other financial assets – 7Financial income 2 741 688Interest expense– financial liabilities measured at amortized cost –1 510 –907– liabilities held for trading –36 1– derivatives for fair value hedge – 3– pension provision, net –88 –71Net foreign exchange loss –126 –54Change in fair value– financial assets to fair value through profit orloss – 49 –285– ineffective part of fair value hedge –33 –4– related to other liabilities –1 583 –20Impairment loss– loans and receivables –10 –19– financial assets available-for-sale – –864The following table presents the net gain or loss by the financial instrumentcategory:2008 2007Net gain/loss on– financial assets to fair value through profit orloss 4 578 –478– loans and receivables, incl. bank deposits 347 549– available-for-sale financial assets 33 –730– held-to-maturity investments 14 11– other liabilities –5 545 –812– fair value hedge –33 –1Other financial expense–606 –1 461– interest expense on pension provisions, net –88 –71Net finance costs –694 –1 532The gain on financial assets to fair value through profit or loss includeforeign exchange gains of 3 265 while foreign exchange losses of 3 391 areincluded in loss on other liabilities.Financial expense –3 435 –2 220Net finance costs –694 –1 532Interest expenses have increased due to the increased borrowings in thesecond quarter of 2007 and slightly higher interest rates under the firstthree quarters of 2008.The change in fair value gain of 1 377 is mainly due to the sharpdecrease in interest rates at the end of 2008 resulting in a large fair valuegain on interest rate swaps which have been designated as hedging instrumentsin a fair value hedge. The related losses on the long-term loansincluded in the hedge are included in the change in fair value of 1 583 onother liabilities. The change in fair value from financial instrumentsentered into in connection with the personnel stock option programsamounted to –49 (25).The gain of 939 represents accumulated translation differences, previouslyreported in equity, on the portion of equity in subsidiaries which wasrepatriated in the fourth quarter 2008 and accordingly was reclassified tothe income statement.The gain on disposal of available-for-sale assets was from the sale ofshares in the divested rental business operations and include 33 (15) previouslyrecognized in equity.In 2007, an impairment charge of 864 was recorded on the right tonotes received in connection with the divestment of the rental businessoperations.The above financial income and expenses include the following inrespect of assets (liabilities) not at fair value through profit or loss:2008 2007Total interest income on financial assets 370 521Total interest expense on financial liabilities –1 510 –90756 Atlas Copco 2008
10. TaxesIncome tax expense 2008 2007Current taxes –3 194 –3 434Deferred taxes 88 316–3 106 –3 118The following is a reconciliation of the companies’ weighted average taxbased on the national tax for the country as compared to the actual taxcharge:2008 2007Profit before tax 13 112 10 534Weighted average tax based on national rates –4 077 –3 371– in % 31.1 32.0Tax effect of:Non-deductible expenses –201 –90Imputed interest on tax allocation reserve –10 –13Withholding tax on dividends –45 –30Tax-exempt income 1 306 611Adjustments from prior years:– current taxes 47 19– deferred taxes –79 107Effects of tax losses/credits utilized 21 17Change in tax rate, deferred tax 25 25Tax losses not valued –68 –384Other items –25 –9The effective tax rate amounted to 23.7% (29.6). The capital restructuringexecuted in the end of 2006 and the tax-exempt gain in connection withrepatriation of equity in subsidiaries contribute positively to the lowereffective tax rate. The stronger foreign exchange rates have also contributedto the relative increase in tax-exempt income.Previously unrecognized tax losses/credits and deductible temporarydifferences which have been recognized against current tax expenseamounted to 21 (17). No material unrecognized tax losses/credits or temporarydifferences have been used to reduce deferred tax expense. There isno significant deferred tax expense arising from a write-down of a previouslyrecognized deferred tax asset.Deferred taxes relating to temporary differences between carryingvalue and tax base of directly held shares in subsidiaries and associatedcompanies have not been recognized. For group companies, the ParentCompany controls the realization of the deferred tax liability/asset andrealization is not in the foreseeable future. The following reconciles the netliability balance of deferred taxes at the beginning of the year to that at theend of the year:Change in deferred taxes 2008 2007Net balance, Jan. 1 9 –29Business acquisitions –58 –530Divestment, discontinued operations 50 25Charges to profit for the year 88 316Tax on amounts recorded to equity 2 401 228Translation differences 45 –1Net balance, Dec. 31 2 535 9Income tax expense –3 106 –3 118Effective tax in % 23.7 29.6The deferred tax assets and liabilities recognized in the balance sheet are attributable to the following:Deferred tax assets and liabilities 2008 2007Assets Liabilities Net balance Assets Liabilities Net balanceIntangible assets 43 643 –600 124 473 –349Property, plant and equipment 294 756 –462 240 707 –467Other financial assets 210 –210 3 147 –144Inventories 879 7 872 679 6 673Current receivables 100 41 59 128 117 11Operating liabilities 331 4 327 210 3 207Provisions 233 1 232 161 12 149Post-employment benefits 231 12 219 205 13 192Borrowings 1 645 1 645 48 1 47Loss/credit carry forwards 511 511 51 51Other items 326 384 –58 237 598 –361Deferred tax assets/liabilities 4 593 2 058 2 535 2 086 2 077 9Netting of assets/liabilities –1 903 –1 903 – –1 254 –1 254 –Net deferred tax balances 2 690 155 2 535 832 823 9Other items primarily include tax deductions (tax allocation reserve etc.) which are not related to specific balance sheet items.At December 31, 2008, the Group had total tax loss carry-forwards of 3 331 (1 483) of which no deferred tax assets had been recognized of 1 450(1 307) as it is not considered probable that future taxable profit will be available from which the Group can utilize the benefits. There is no expiration datefor utilization of the tax losses for which no deferred tax assets have been recorded.Atlas Copco 2008 57
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Atlas Copco2008 - tough ending to a
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• Strong order growth in most are
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Revenues by business areaRevenues b
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Page 11 and 12: TargetsFinancial targetsAtlas Copco
Page 13 and 14: StructureThe Group is organized in
Page 15 and 16: New divisionEffective January 1, 20
Page 17: 80 000Revenues and marginsMSEK %286
Page 22 and 23: administration reportconcentrated t
Page 24 and 25: administration reportEnvironmental
Page 26 and 27: ADMINISTRATION REPORTCompressor Tec
Page 28 and 29: administration reportThe Compressor
Page 30 and 31: administration reportConstruction a
Page 32 and 33: administration reportThe Constructi
Page 34 and 35: administration reportIndustrial Tec
Page 36 and 37: administration reportThe Industrial
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Page 82 and 83: Financial statements, parent compan
Page 98 and 99: Audit ReportTo the Annual Meeting o
Page 100 and 101: Sustainability ReportAtlas Copco’
Page 102 and 103: SUSTAINABILITY REPORTRoles and resp
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Page 106 and 107: SUSTAINABILITY REPORT10080604020050
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SUSTAINABILITY REPORTIn 2008, CO 2
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SUSTAINABILITY REPORTwinter and coo
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SUSTAINABILITY REPORTNo. of acciden
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SUSTAINABILITY REPORTBusiness Partn
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SUSTAINABILITY REPORTShareholdersTh
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SUSTAINABILITY REPORTSustainability
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Corporate Governance ReportThe Boar
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Corporate Governance ReportBoard of
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Corporate Governance ReportGroup St
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Corporate Governance ReportGroup Ma
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Corporate Governance ReportRemunera
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Corporate Governance ReportBusiness
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The Atlas Copco ShareAt December 31
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the atlas copco shareOwnership stru
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Five Years in SummaryMSEK 2004 1) 2
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Financial InformationWelcome to the
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We are committed to yoursuperior pr
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