Volvo 1999 Annual Report Download - page 24

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Volvo Trucks concluded coopera-
tion agreem ent with Schm itz
Cargobull. In February Volvo Trucks
concluded an agreement with Schmitz
Cargobull, the German
manufacturer of trailer
equipment, making it
possible for customers
to purchase and receive
service for a complete
trailer rig – truck and
trailer – at a Volvo truck
dealer. It will also be possible for Volvo to
offer financing of the complete rig through
existing financing operations.
Acquisition of Scania AB shares.
On January 15, as part of the Group’s
concentration on commercial products, Volvo
acquired 12.85% of Scania’s shares, carrying
13.47% of the voting rights.
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Volvo Aero concluded an agree-
ment with Boeing and acquired
Jet Support Corporation. In April Volvo
Aero concluded an agreement with Boeing,
the aircraft manufacturer, whereby Volvo
Aero’s subsidiary, The AGES Group, ac-
quired exclusive rights to market and sell
Boeing’s surplus new spare parts for Boeing
and McDonnell Douglas commercial aircraft,
initially for use in types of aircraft that are no
longer manufactured. Under terms of the
agreement – which is for a period of five years
with the possibility of an extension thereafter
– Boeing and The AGES Group will share
revenues from such sales.
As a consequence of the agreement with
Boeing, The AGES Group at the same time
acquired the operations of Jet Support
Corporation, an American company. The
acquired unit will strengthen The AGES
Group’s sales organization and will be
responsible for handling its products.
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FIRST QUARTER1999 SECOND QUARTER
Volvo Aero increased the holding
in The AGES Group. During the first
quarter Volvo Aero increased its holding in
The AGES Group, an American organization,
from 57% to 86%. Volvo Aero has been a joint
owner of The AGES Group since 1992.
Operations consist in part of the sale and
leasing of aircraft engines and aircraft and the
sale of spareparts to
aircraft engines and
aircraft. In recent years
Volvo Aero has
expanded its opera-
tions in the market for
after-sales and service;
together with the com-
pany’s business in the market for main-
tenance of commercial engines. The AGES
Group constitutes the base for continuing
expansion.
Divestm ents by Volvo Construc-
tion Equipm ent. In March, Volvo CE
entered an agreement regarding the sale of
Mecalac since Mecalac’s products are
designed for use in a limited number of
markets in Western Europe, with the result
that they are not compatible within Volvo CE’s
global sales strategy. In March, 65% of
Mecalac was divested and the remaining 35%
will be divested later on, according to the
agreement. In Canada, Volvo CE sold the
SuperPac and Pro Pav road surfacing
operations of its wholly owned subsidiary
Champion Road Machinery.
The sale of Volvo Cars to Ford
Motor Com pany was com pleted.
On March 31, following approval by Volvo’s
shareholders at a General Meeting on March
8, and by the pertinent fair trade authorities,
AB Volvo completed
the sale of Volvo Cars
to Ford Motor Company.
Under terms of the
agreement, Ford was
entitled to Volvo Cars
earnings beginning on
January 1, 1999. In addi-
tion to a dividend of SEK 17,670 M received
from Volvo Personvagnar Holding AB, AB
Volvo received SEK 10,328 M for the shares,
plus USD 2,330 M, of which USD 1,613 M
will be paid on March 31, 2001. In connection
with the sale Ford assumed financial net debts
amounting to SEK 4,812 M.
Volvo Aero increased its owner-
ship in Norsk Jetm otor. In March
Volvo Aero completed the acquisition of 67%
of the shares of Norsk Jetmotor, which
produces components for aircraft engines.
The sellers were the Norwegian Government
and Kongsberg Gruppen. The name of Norsk
Jetmotor was changed to Volvo Aero Norge
AS in connection with the acquisition. In June,
Volvo Aero acquired the shares of Volvo Aero
Norge AS that were held by Snecma, the
French manufacturer of aircraft engines. As a
result, Volvo Aero owns 78% of Volvo Aero
Norge AS. During the year Volvo Aero
together with Volvo Aero Norge AS supplied
components used in more than 80% of all
aircraft engines sold throughout the world to
aircraft carrying more than 100 passengers.
Volvo Aero holds interests as large as 10% in
engine programs in which it is participating.
Acquisition of Scania shares. On
April 30, AB Volvo increased its holding
in Scania to 20.04% of the voting rights in the
company and 20.94% of the share capital. As
a result, Scania is reported by AB Volvo as an
associated company.
Volvo CE ceased production of
excavators in Eslöv. The shutdown
was in line with the closure of operations
that are unprofitable or which are not
compatible with the company’s global
product strategy. Volvo CE’s development
and production of excavators is now
concentrated mainly in South Korea.
Fiscal year 1999
Significant events and structural transactions in 1999
Letter of intent on the sale of
Volvo Cars to Ford. A letter of intent
was signed on January 27, 1999 covering the
sale of Volvo Cars to Ford.
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The gain on the sale amounted to SEK
26.7 billion. On November 25, 1999
Sweden’s Supreme Administrative Court
confirmed the preliminary decision of the Tax
Board that AB Volvo’s sale of Volvo Cars did
not result in a taxable capital gain.
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