Volvo 2001 Annual Report Download - page 77

73
Other items not affecting cash pertain to surplus funds
from SPP – (–508; –), capital gains on the sale of sub-
sidiaries and other business units, –829 (–573; –26,900),
risk provisions and losses related to doubtful receivables
and customer-financing receivables 1,541 (522; 766)
and other –173 (–120; 17).
Net investments in customer-financing receivables
resulted in 2001 in a negative cash flow of SEK 3.7 billion
(4.5; 7.1). In this respect, liquid funds were reduced by
SEK 16.6 billion (15.5; 14.2) pertaining to new investments
in financial leasing contracts and installment contracts.
Investments in shares and participations, net in 2001
amounted to SEK 3.9 billion, mainly related to the sale of
Volvo’s holding in Mitsubishi Motors Corporation. Invest-
ments in shares and participations, net, in 2000 amount-
ed to SEK 1.6 billion, of which SEK 1.3 billion was attrib-
utable to additional investments in Scania. Net invest-
ments in shares and participations during 1999 of SEK
25.9 billion pertained in entirety to future investments, of
which the acquisition of shares in Scania AB and
Mitsubishi Motors Corporation amounted to SEK 23.0
billion and SEK 2.3 billion, respectively.
Acquired and divested subsidiaries and other business
units, net in 2001 amounted to SEK 13.0 billion mainly
pertained to the final payment of SEK 12.1 billion from
the sale of Volvo Cars, divestment of the insurance oper-
ation in Volvia and acquired liquid funds within Mack and
Renault V.I.
During 2001 and 2000 net investments in loans to
external parties contributed SEK 0.2 billion and SEK 0.3
billion, respectively to liquid funds. Net investments dur-
ing 1999 in loans to external parties amounted to SEK
3.2 billion, of which SEK 2.0 billion pertained to payment
of the convertible debenture loan in Henlys group and
SEK 1.3 billion new investment in corporate bonds.
The change during the year in bonds and other loans
generated liquid funds of SEK 6.2 billion (8.1; 16.3).
New borrowing during the year, mainly the issue of bond
loans and a commercial paper program, provided SEK
31.4 billion (19.5; 19.0). Amortization during the year
amounted to SEK 25.2 billion (11.4; 23.0).
1999 2000 2001
Discounted bills 467 443 345
Guarantees:
Bank loans and trade bills – associated companies – 48 67
Bank loans – customers and others 909 1,516 3,067
Recourse obligations 46 66 2,145
Tax claims 2,754 2,071 1,151
Other contingent liabilities 2,490 2,645 3,666
Total 6,666 6,789 10,441
Note 27 Contingent liabilities
Note 28 Cash flow
The amount shown for guarantees to customers and
others pertaining to bank loans, 3,067 (1,516; 909)
includes the unutilized portion of credit facilities, 99
(623; 31). Recourse obligations pertain to receivables
that have been transferred (customer-financing opera-
tions), less reduction for recognized credit risks. Tax
liability pertains to actual or anticipated actions against
the Volvo Group for which provisions are not considered
necessary.
Legal proceedings
In March 1999, an FH 12 Volvo truck was involved in a
fire in the Mont Blanc tunnel. The tunnel suffered consider-
able damage from the fire, which continued for 50 hours;
39 people lost their lives in the fire, and 34 vehicles were
trapped in the tunnel. It is still unclear what caused the
fire. The Mont Blanc tunnel has been closed since the
fire.
An expert group has been appointed by the Commer-
cial Court in Nanterre, France, to investigate the cause of
the fire and the damage it caused. At present, it is not
possible to anticipate the result of this investigation or
the results of certain other French investigations now in
progress regarding the fire. One of the investigations is
being carried out by an Investigation Magistrate appointed
to investigate potential criminal liability for the fire. In
December 2000 an expert committee assisting the In-
vestigation Magistrate filed a report on the events. Certain
companies and individuals have formally been placed
under investigation. At this stage, no Volvo entity, executive
or employee has been placed under investigation.
A lawsuit has been filed with the Commercial Court in
Nanterre by the insurance company employed by the
French company that operates the tunnel against certain
Volvo Group companies and the trailer manufacturer in
which it demands compensation for the losses it claims
to have suffered. The plaintiff has requested that the court
postpone its decision until the expert group submits its
report. Certain Volvo Group companies have further been
involved in proceedings before the Civil Court of Bonneville
instigated by the French Tunnel operating company
against Bureau Central Francais, the owner of the truck
and its insurers. These proceedings partly overlap with
the proceedings in the Commercial Court of Nanterre.
Volvo Group companies are also involved in proceedings
regarding matters in connection with the tunnel fire
before courts in Aosta, Italy, and Brussels, Belgium. Volvo
is unable to determine the ultimate outcome of the
litigation referred to above.
AB Volvo and Renault SA have entered into arbitra-
tion regarding the final value of acquired assets and lia-
bilities in Renault V.I. and Mack. This process could result
in an adjustment in the value of the transfer. Any such
adjustment will affect the amount of acquired liquid
funds and Volvo's reported goodwill amount. The out-
come of this arbitration cannot be determined with cer-
tainty. However, Volvo believes that the outcome will not
lead to an increase in goodwill.
Volvo is involved in a number of other legal proceed-
ings incidental to the normal conduct of its businesses.
Volvo does not believe that any liabilities related to such
proceedings are likely to be, in the aggregate, material to
the financial condition of the Group.