Volvo 2006 Annual Report Download - page 130

126 Financial information 2006
The Volvo Group
Notes to consolidated financial statements
Note 31 Leasing
Volvo as a leaseholder
At December 31, 2006, future rental income from noncancellable
fi n a ncial and operating leases (minimum leasing fees) amounted to
31,808 (34,406; 25,181). Future rental income is distributed as fol-
lows:
Financial leases Operating leases
2007 8,725 3,900
2008–2011 15,338 6,091
2012 or later 281 344
Total 24,344 10,335
Allowance for uncollectible
future rental income (425)
Unearned rental income (2,446)
Present value of future rental income
related to noncancellable leases 21,473
Volvo as a lessee
At December 31, 2006, future rental payments (minimum leasing
fees) related to noncancellable leases amounted to 3,234 (4,396;
4,142).
Future rental payments are distributed as follows:
Financial leases Operating leases
2007 165 841
2008–2011 186 1,508
2012 or later 6 528
Total 357 2,877
Rental expenses amounted to:
2004 2005 2006
Financial leases:
Contingent rents (30) 0 0
Operating leases:
Contingent rents (27) (34) (38)
Rental payments (910) (1,000) (1,468)
Sublease payments 28 23 15
Total (939) (1,011) (1,491)
Book value of assets subject to fi nance lease:
2004 2005 2006
Acquisition costs:
Buildings 526 459 151
Land and land improvements 66 75 72
Machinery and equipment 236 198 114
Assets under operating lease 1,065 875 888
Total 1,893 1,607 1,225
Global actors like Volvo are occasionally involved in tax disputes of
different proportions and in different stages. On a regular basis
Volvo evaluates the exposure related to such disputes and, to the
extent it is possible to reasonably estimate what the outcome will be,
makes provisions when it is more likely than not that there will be
additional tax to pay.
Volvo is involved in a number of other legal proceedings 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 fi nancial condition of the Volvo Group.
Note 30 Cash-fl ow
Other items not affecting cash pertain to risk provisions and losses
related to doubtful receivables and customer-fi nancing receivables,
476 (602; 551), capital gains/losses on the sale of subsidiaries and
other business units neg. 281 (neg. 717; pos. 95), unrealized
exchange rate gains/losses on trade receivables and payables 143
(neg. 41; pos. 39), incentive program 258 write-down of shares in
Peach County Holdings Inc in 2005 and in 2004 revaluation of
shares in Scania AB and Henlys Group Plc amounting to – (550;
neg. 820), provision for industrial relocation and contractual pension
– (–; 530), IFRS transition effect – (–; neg. 177) and other 56 (21;
neg. 58).
Net investments in customer-fi nancing receivables resulted in
2006 in a negative cash-fl ow of SEK 5.2 billion (7.8; 7.4). In this
respect, liquid funds were reduced by SEK 26.0 billion (23.4; 19.4)
pertaining to new investments in fi nancial leasing contracts and
installment contracts.
Investments of shares and participations, net in 2006 amounted
to a negativ cash-fl ow of SEK 5.8 billion (positive 0.3; positive 15.1),
mainly related to the investment in Nissan Diesel. The net invest-
ments in 2004 are mainly related to the sale of Volvo’s holding of
B-shares in Scania.
Acquired and divested subsidiaries and other business units, net
in 2006 amounted to SEK 0.5 billion (0.6; negative 0.1).
During 2006 interest-bearing receivables including marketable
securities, net increased liquid funds by SEK 7.7 billion (decrease
1.3; decrease 6.4).
The change during the year in bonds and other loans decreased
liquid funds by SEK 2.6 billion (increase 3.6; decrease 8.8). New
borrowing during the year, mainly the issue of bond loans, provided
SEK 69.3 billion (41.6; 19.1). Amortization during the year amounted
to SEK 72.2 billion (33.4; 28.9).