Electrolux 1997 Annual Report Download - page 29

Capital expenditure and R&D costs
Capital expenditure in 1997 amounted
to SEK 4,329m (4,807), of which SEK
591m (527) referred to Sweden. Total
capital expenditure thus corresponded
to 3.8% (4.4) of net sales.
Of the major investments author-
ized during the year, almost 40%
referred to plants, of which a large share
was in new markets. Investments in IT
and communication accounted for about
20% and new products for over 15%.
Costs for research and development
in 1997 amounted to SEK 1,585m
(1,580), corresponding to 1.4% (1.4)
of net sales.
Changes in Group structure
All shares in the Gränges subsidiary
were distributed to Electrolux share-
holders as of May 20, 1997. Each share
in Electrolux, whether A- or B-, entitled
the holder to a half-share in Gränges.
The distribution of Gränges reduced
the Group’s equity by SEK 1,783m and
total assets by SEK 5,594m. Gränges
was listed on the O -list of the Stockholm
Stock Exchange as of May 21. The com-
pany has been retroactively eliminated
from the Group’s accounts for 1997.
In 1996, Gränges had sales of SEK
8,400m and about 6,800 employees.
A final agreement on divestment
of Husqvarna Sewing Machines was
reached at the beginning of April. This
divestment generated a capital gain of
SEK 604m. The agreement stipulated
transfer to the buyer retroactively as of
January 1, 1997, so that this operation
has also been eliminated from the
accounts for 1997. In 1996, Husqvarna
Sewing Machines had net sales of SEK
850m and about 700 employees.
The operation in goods protection,
with annual sales of SEK 250m and
about 230 employees, was divested as
of June 30. This divestment generated a
capital gain of approximately SEK 50m.
At the end of January, 1998, an
agreement was reached on divestment of
the operation in agricultural implements
as well as the Group’s stake in the SIA
group. The former operation had sales of
SEK 267m and 250 employees in 1997.
The SIA group, which markets and sells
items for interior decoration, had sales
of SEK 535m and about 270 employees
in 1997. Both divestments are scheduled
for completion during March, 1998
and will be effective retroactively as
of January 1, 1998.
In November, an additional 67,720
million non-voting preferential shares
in Electrolux do Brasil S.A., formerly
Refripar, were acquired through a pub-
lic bid for a total of BRL 137 million
(approximately SEK 900m). Electrolux
stake in the company thus amounts to
99.9% of the voting shares and 82.9%
of the non-voting preferential shares,
corresponding to 91.03% of the share
capital. Prior to the bid, Electrolux
owned 99.9% of the voting and 4%
of the non-voting shares, corresponding
to 50% of the share capital.
In December, the Group acquired
S.C. Samus S.A., the leading producer
of cookers in Romania, with annual
sales of approximately SEK 150m and
2,200 employees.
Litigation regarding pension liabilities
In April 1997, a trial was concluded in
a litigation regarding pension liabilities
against the Electrolux US subsidiary
White Consolidated Industries Inc.,
which has been in progress since 1991
in a Federal court in Pittsburgh, Penn-
sylvania.
The plaintiff is a government
agency, the Pension Benefit Guaranty
Corporation (PBGC), responsible for
the payment of defaulting pension obli-
gations. The PBGC alleges a principal
purpose to evade pension liabilities in a
divestment by White Consolidated in
1985, the year before White Consoli-
dated was acquired by Electrolux.
PBGC is seeking to hold White Consol-
idated liable for the underfunding in
certain pension plans which the PBGC
estimated in March, 1997 to be approxi-
mately USD 177 million, including
interest. Electrolux believes that the
PBGC action is devoid of merit, and
has therefore made no provision.
A verdict in the case has not yet
been announced.
25
Electrolux Annual Report 1997
Capital expenditure in 1997 amounted to
SEK 4,329m, corresponding to 3.8% of net sales.
Outside Sweden
Sweden
8988 90 91 92 93 94 95 96 97
Capital expenditure
SEKm
0
2,000
3,000
4,000
5,000
6,000
1,000