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56 Electrolux Annual Report 2004
Notes
Amounts in SEKm, unless otherwise stated
At year-end 2004, accounts receivable, net of provisions for doubtful
accounts, amounted to SEK 20,627m (21,172), representing the
maximum possible exposure to customer defaults. The book value
of accounts receivable is considered to represent fair value. The total
provision for bad debts at year-end was SEK 730m (1,012). Electrolux
has a significant concentration on a number of major customers primar-
ily in the US and Europe. Receivables concentrated to customers with
credit limits amounting to SEK 300m or more represent 31.5% of the
total accounts receivable.
Interest-bearing liabilities
At year-end 2004, the Group’s total interest-bearing liabilities amounted
to SEK 9,843m (12,501), of which SEK 3,940m (8,173) referred to
long-term loans. Long-term loans with maturities within 12 months,
SEK 3,896m, are reported as short-term loans in the Group’s balance
sheet. A significant portion of the outstanding long-term borrowings
has been made under Electrolux global medium term note program.
This program allows for borrowings up to EUR 2,000m. As of Decem-
ber 31, 2004, Electrolux utilized approximately EUR 627m (630) of the
capacity of the program.
The majority of total long-term borrowings, SEK 7,187m, are taken
up at the parent company level. Given the strong liquidity, Electrolux
does not currently maintain any committed credit facilities for short-
term borrowings, other than as back-up facility for the European
commercial-paper program, which amounts to EUR 150m. Electrolux
expects to meet any future requirements for short-term borrowings
through bilateral bank facilities and capital-market programs such as
commercial-paper programs.
At year-end 2004, the average interest-fixing period for long-term
borrowings was 1.3 years (1.1). The calculation of the average interest-
fixing period includes the effect of interest-rate derivatives used to
manage the interest-rate risk of the debt portfolio. The interest rate
at year-end for the total borrowings was 4,9% (4.9).
The fair value of the interest-bearing loans including swap transac-
tions used to manage the interest fixing was approximately SEK 10,127m.
The loans and the interest-rate swaps are valued marked-to-market in
order to calculate the fair value.
The table on the following page sets out the carrying amount of the
Group’s interest-bearing liabilities that are exposed to fixed and floating
interest-rate risk.
Note 17 Accounts receivable
Note 18 Financial instruments
Note 16 Inventories
Group Parent Company
2004 2003 2002 2004 2003 2002
Raw materials 3,787 3,111 4,017 118 118 147
Products in progress 493 598 778 105 47 15
Finished products 11,490 11,313 11,153 239 244 212
Advances to suppliers 63 37 71 — — —
Advances from customers –91 –114 –405 — — —
Total 15,742 14,945 15,614 462 409 374
Financial instruments is defined in accordance with the Swedish Finan-
cial Accounting Standard Council’s standard RR 27, which is based on
IAS 32. Additional and complementary information is presented in the
following notes to the Annual Report: Note 1, “Accounting and valua-
tion principles”, discloses the accounting and valuation policies adopt-
ed and Note 2, “Financial risk management”, describes the Group’s risk
policies in general and regarding the principal financial instruments of
Electrolux in more detail. Note 17, “Accounts receivable”, describes the
accounts receivables and related credit risks. The information in this
note highlights and describes the principal financial instruments of the
Group regarding specific major terms and conditions when applicable,
and the exposure to risk and the fair values at year-end.
Liquid funds
Liquid funds consist of cash on hand, bank deposits and other short-
term investments, of which the majority have original maturity of three
months or less. The table below presents the key data of liquid funds.
The book value of liquid funds is approximately equal to fair value.
Liquidity profile
2004 2003 2002
Investments with maturities
over three months 265 3,783 7,602
Investments and deposits with
maturities up to three months 7,675 8,207 6,698
Fair value derivative assets included
in short-term investments 762 612 —
Liquid funds 8,702 12,602 14,300
% of annualized net sales 7.7 11.3 11.8
Net liquidity 2,799 8,593 12,682
Fixed-interest term, days 61 64 48
Effective yield, % (average per annum) 2.4 4.4 4.4
For 2004, liquid funds amounted to 7.7% (11.3) of annualized net sales.
The net liquidity is calculated by deducting short-term loans from liquid
funds. As from year 2003, long-term borrowings maturing within 12
months are included in short-term loans.