SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2004
Alfa Laval Special Finance AB
(Commission File No. 333-13690)
(Translation of Registrants' Names Into English)
Rudeboksvagen 1,
Lund,
Sweden
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
---
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): _____.
[Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): _____.
[Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.]
Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934:
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-_____.
Enclosure: -Interim report July 1 - September 30, 2004 of Alfa Laval Special
Finance AB.
<Page>
[GRAPHIC OMITTED]
Alfa Laval Special Finance AB
Interim report July 1 - September 30, 2004
"During the third quarter 2004 the order intake increased by 15 percent,
excluding exchange rate variations, compared to the same period 2003, which
means that it was the fourth consecutive quarter for Alfa Laval with a strong
increase.
The EBITA-margin in the third quarter was 11.1 percent. The margin has been
negatively affected mainly by exchange rate variations and a high portion of
capital sales. The EBITA-margin has been improved excluding exchange rate
variations compared with last year. During the third quarter we have in addition
seen the beginning of an improvement of the price level.
During the third quarter it was encouraging to note the positive development of
order intake in both Germany and Italy."
Lars Renstrom, President and CEO, Alfa Laval Special Finance
Summary of the third quarter 2004:
- Order intake increased to SEK 3,866 (3,463) million, meaning an
increase by 14.8 percent excluding exchange rate variations.
- Net sales increased to SEK 3,838 (3,426) million, meaning an increase
by 15.3 percent excluding exchange rate variations.
- Adjusted EBITA was SEK 427 (431) million, including adverse foreign
exchange effects of SEK 81 million.
- Adjusted EBITA-margin was 11.1 percent (12.6).
- Result after financial items increased to SEK 297 (190) million.
- Cash flow from operating activities was SEK 297 (375) million.
Summary of the first nine months 2004:
- Order intake increased to SEK 11,969 (10,395) million, meaning an
increase by 19.2 percent excluding exchange rate variations.
- Net sales increased to SEK 10,820 (9,823) million, meaning an increase
by 14.3 percent excluding exchange rate variations.
- Adjusted EBITA increased to SEK 1,232 (1,166) million, including
adverse foreign exchange effects of SEK 224 million.
- Adjusted EBITA-margin was 11.4 percent (11.9).
- Result after financial items increased to SEK 767 (540) million.
- Result after tax increased to SEK 444 (366) million.
- Earnings per share increased to SEK 54.25 (44.67).
- Cash flow from operating activities was SEK 983 (858) million.
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 2 (15)
Outlook for the fourth quarter 2004
During the fourth quarter 2004 we expect an order intake on the same high level
as during the same period 2003.
In comparison with 2003, the EBITA-margin will continue to be strongly affected
by exchange rate variations and the large portion of capital sales, meaning that
we expect EBITA to be on the same level as the fourth quarter 2003 in absolute
terms.
Earlier published outlook (August 16, 2004):
The continued recovery in the market that Alfa Laval predicted in the Year End
Report in February 2004 has been fulfilled during the first six months. Based on
the outcome for the first half of 2004 we believe in a very strong increase in
orders received during the full year 2004.
We assess that the EBITA-margin, excluding currency effects, will be improved.
Alfa Laval's former CEO and President Sigge Haraldsson retired on September 30
and the new CEO and President Lars Renstrom took up his duties as of October 1.
The interim report has been issued on October 21, 2004 by the Board of
Directors. The interim report has not been subject to review by the company's
auditors.
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------
SEK millions, unless July 1 - July 1 - Jan 1 - Jan 1 -
otherwise stated Sept 30 Sept 30 Sept 30 Sept 30
2004 2003 2004 2003 2003 2002 2001
- -------------------------------------------------------------------------------------------------------------
Order intake 3,866 3,463 11,969 10,395 14,145 14,675 15,894
- -------------------------------------------------------------------------------------------------------------
Net sales 3,838 3,426 10,820 9,823 13,909 14,595 15,830
- -------------------------------------------------------------------------------------------------------------
Adjusted EBITDA 1) 486 501 1,422 1,384 1,925 2,091 2,141
- -------------------------------------------------------------------------------------------------------------
Adjusted EBITA 2) 427 431 1,232 1,166 1,632 1,760 1,740
- -------------------------------------------------------------------------------------------------------------
Adjusted EBITA - margin 2) 11.1% 12.6% 11.4% 11.9% 11.7% 12.1% 11.0%
- -------------------------------------------------------------------------------------------------------------
Result after financial items 297 190 767 540 817 460 373
- -------------------------------------------------------------------------------------------------------------
Return on capital employed 3) 24.5% 21.9% 22.2% 20.3% 18.5%
- -------------------------------------------------------------------------------------------------------------
Return on equity capital 3) 15.5% 15.1% 14.6% 4.7% 10.1%
- -------------------------------------------------------------------------------------------------------------
Solidity 33.5% 29.9% 30.0% 28.6% 20.6%
- -------------------------------------------------------------------------------------------------------------
Debt ratio, times 0.42 0.60 0.55 0.79 1.57
- -------------------------------------------------------------------------------------------------------------
Cash flow from operations 297 375 983 858 1,489 2,047 1,976
- -------------------------------------------------------------------------------------------------------------
Investments 101 33 217 123 259 277 275
- -------------------------------------------------------------------------------------------------------------
No. of employees (units) 4) 9,460 9,072 9,358 9,125 9,259
- -------------------------------------------------------------------------------------------------------------
</Table>
1) Adjusted EBITDA - "Earnings before interests, taxes, depreciation,
amortisation of goodwill and step up values and comparison distortion
items."
2) Adjusted EBITA - "Earnings before interests, taxes, amortisation of
goodwill and step up values and comparison distortion items.
3) Calculated on a 12 months' revolving basis. The new issue of shares in
June 2002 has changed the basis for the calculation of return on equity
capital, which has affected the comparison figure.
4) Number of employees at the end of the period.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------
Alfa Laval Special Finance AB Visiting address: For more information, please contact:
PO Box 73 Rudeboksvagen 1 Mikael Sjoblom, Investor Relations Manager
SE-221 00 Lund Phone: + 46 46 36 65 00 Phone: +46 46 36 74 82,
Sweden Website: www.alfalaval.com Mobile: +46 709 78 74 82,
Corporate registration number: E-mail: mikael.sjoblom@alfalaval.com
556587-8062
</Table>
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 3 (15)
Management's discussion and analysis
Orders received
Orders received amounted to SEK 3,866.1 (3,462.9) million for the third quarter.
Excluding exchange rate variations, the order intake for the Group was 14.8
percent higher than the third quarter last year.
Orders received amounted to SEK 11,969.4 (10,394.7) million for the first nine
months. Excluding exchange rate variations, the order intake for the Group was
19.2 percent higher than the same period last year.
Orders received from the after market "Parts & Service" has continued to develop
positively and increased by 7.9 percent compared to the corresponding period
last year excluding exchange rate variations. Its relative share of the Group's
total orders received decreased to 24.2 (26.8) percent due to the large increase
in capital sales.
Order backlog
The order backlog at September 30, 2004 was 5,214.6 (4,407.7) million. Excluding
exchange rate variations, the order backlog was 22.7 percent higher than the
order backlog at September 30, 2003 and 33.3 percent higher than the order
backlog at the end of 2003.
Net sales
Net sales amounted to SEK 3,837.5 (3,426.3) million for the third quarter.
Excluding exchange rate variations, the invoicing was 15.3 percent higher than
the third quarter last year.
Net sales of the Alfa Laval Special Finance Group amounted to SEK 10,819.7
(9,823.0) million for the first nine months. Excluding exchange rate variations,
the invoicing was 14.3 percent higher than the period January to September last
year.
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 4 (15)
Comments on the Income Statement
As a basis for comments on the various main items of the income statement,
please find below a comparison between July - September and January - September
for 2004 and 2003 and January - December for 2003 and 2002:
Income statement analysis
<Table>
<Caption>
July 1- July 1- Jan 1 - Jan 1 - Jan 1 - Jan 1 -
Sept 30 Sept 30 Sept 30 Sept 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- -------------------------------------------------------------------------------------------------------------------
Net sales 3,837.5 3,426.3 10,819.7 9,823.0 13,909.3 14,594.9
Adjusted gross profit 1,348.7 1,318.9 3,949.8 3,850.8 5,235.8 5,651.7
- - in % of net sales 35.1 38.5 36.5 39.2 37.6 38.7
Expenses * -863.1 -817.4 -2,527.4 -2,467.1 -3,310.6 -3,560.7
- - in % of net sales 22.5 23.9 23.4 25.1 23.8 24.4
Adjusted EBITDA 485.6 501.5 1,422.4 1,383.7 1,925.2 2,091.0
- - in % of net sales 12.7 14.6 13.1 14.1 13.8 14.3
Depreciation -58.8 -70.7 -190.9 -217.6 -293.1 -331.3
Adjusted EBITA 426.8 430.8 1,231.5 1,166.1 1,632.1 1,759.7
- - in % of net sales 11.1 12.6 11.4 11.9 11.7 12.1
Amortisation of goodwill ** -120.6 -124.1 -365.5 -369.6 -494.1 -506.7
Comparison distortion items 47.5 - 34.0 3.6 5.6 -29.2
-------------------------------------------------------------------------------
EBIT 353.7 306.7 900.0 800.1 1,143.6 1,223.8
- -------------------------------------------------------------------------------------------------------------------
</Table>
* Excluding comparison distortion items
** Including amortisation of step-up values
The first nine months generated a gross profit of SEK 3,727.8 (3,622.4) million.
Excluding the amortisation of SEK 222.0 (228.4) million on step up values, the
adjusted gross profit is SEK 3,949.8 (3,850.8) million. This corresponds to 36.5
(39.2) percent of net sales.
Sales and administration expenses amounted to SEK 2,326.0 (2,269.4) million.
Excluding exchange rate variations and the acquisition of bioKinetics, sales and
administration expenses were 3.5 percent higher than the corresponding period
last year, which is considerably less than the increase in sales volume.
The costs for research and development has amounted to SEK 288.0 (267.5)
million, corresponding to 2.7 (2.7) percent of net sales.
Adjusted EBITDA amounted to SEK 1,422.4 (1,383.7) million for the first nine
months. The adjusted EBITA amounted to SEK 1,231.5 (1,166.1) million. The
adjusted EBITA
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 5 (15)
margin was 11.4 (11.9) percent. The adjusted result after tax, excluding
amortisation of goodwill and step-up values and the corresponding tax, is SEK
6.59 (6.37) per share.
The result has been affected by comparison distortion items of SEK 34.0 (3.6)
million. These are reported gross as a part of other operating income and other
operating costs, see summary on page 12. During September 2004 the property in
Kenosha, USA, has been divested for SEK 45.3 million with a realised loss of SEK
- -1.9 million. On July 7, 2004, the property in Madrid, Spain, was divested for
SEK 265,1 million with a realised gain of SEK 49,4 million. The divestment of
the Tri-Lad operations in Canada has generated a loss of SEK -15.0 million and
the sale of a minor property in Brazil has resulted in a realised gain of SEK
1.5 million. On February 26, 2003 the property in Newmarket, Canada was sold for
SEK 20.0 million, with a realised gain of SEK 3.6 million.
Divisional reporting
Equipment division
The Equipment division consists of six customer segments: Comfort &
Refrigeration, Fluids & Utility Equipment, Marine & Diesel, OEM (Original
Equipment Manufacturers), Sanitary Equipment and the aftermarket segment Parts &
Service.
<Table>
<Caption>
July 1- July 1- Jan 1- Jan 1- Jan 1- Jan 1-
Sept 30 Sept 30 Sept 30 Sept 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- -------------------------------------------------------------------------------------------------------
Orders received 2,137.0 2,000.5 6,665.8 6,015.0 8,069.9 8,092.6
Order backlog * 2,092.1 1,677.2 1,598.9 1,564.5
Net sales 2,105.0 1,981.2 6,086.2 5,751.1 7,841.8 8,129.6
Operating income 256.7 258.4 772.3 734.0 1,010.9 1,098.8
- -------------------------------------------------------------------------------------------------------
</Table>
* At the end of the period.
Orders received and net sales (all comments are after adjustment for exchange
rate fluctuations)
Orders received increased by 14.2 percent and net sales increased by 9.5 percent
during the first nine months 2004 compared to the corresponding period last
year.
All segments served by the Equipment division have developed strongly. The most
significant growth is found within the "OEM" and "Marine & Diesel" segments.
Parts & Service has continued to grow also in the first nine months of 2004.
Operating income (all comments are after adjustment for exchange rate
fluctuations)
The increase in operating income during the first nine months 2004 compared to
the corresponding period 2003 is mainly due to higher gross margin, partly
offset by a negative transaction impact from exchange rates.
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 6 (15)
Process Technology division
The Process Technology division consists of five customer segments: Energy &
Environment, Food Technology, Life Science, Process Industry and the aftermarket
segment Parts & Service.
<Table>
<Caption>
July 1- July 1- Jan 1- Jan 1- Jan 1- Jan 1-
Sept 30 Sept 30 Sept 30 Sept 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- -------------------------------------------------------------------------------------------------------
Orders received 1,728.3 1,433.0 5,257.6 4,312.0 5,990.6 6,488.1
Order backlog * 3,087.7 2,701.1 2,398.0 2,752.6
Net sales 1,710.9 1,433.1 4,702.3 4,017.7 5,993.6 6,377.1
Operating income 174.3 131.5 351.5 260.4 351.5 537.5
- -------------------------------------------------------------------------------------------------------
</Table>
* At the end of the period.
Orders received and net sales (all comments are after adjustment for exchange
rate fluctuations)
Orders received increased by 26.8 percent and net sales increased by 22.0
percent during the first nine months 2004 compared to the corresponding period
last year. Excluding the acquisition of bioKinetics, the corresponding figures
are 23.7 percent and 16.1 percent.
All segments in the Process Technology division have reported a substantial
increase in orders received compared to the first nine months 2003. The increase
affects almost all the applications the division is working within. The growth
has been largest within the "Process Industry" and "Energy & Environment"
segments. Parts & Service shows a continued positive development.
Operating income (all comments are after adjustment for exchange rate
fluctuations)
The increase in operating income during the first nine months 2004 compared to
the corresponding period 2003 is foremost due to higher gross margin, partly
offset by a negative transaction impact from exchange rates.
Operations division and Other
Operations are responsible for procurement, production and logistics. Other is
referring to corporate overhead and non-core businesses.
<Table>
<Caption>
July 1- July 1- Jan 1- Jan 1- Jan 1- Jan 1-
Sept 30 Sept 30 Sept 30 Sept 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- -------------------------------------------------------------------------------------------------------
Orders received 0.8 29.4 46.0 67.7 84.8 94.1
Order backlog * 34.8 29.4 24.2 23.0
Net sales 21.6 12.0 31.2 54.2 73.9 88.2
Operating income -124.8 -83.2 -257.8 -197.9 -224.4 -383.3
- -------------------------------------------------------------------------------------------------------
</Table>
* At the end of the period.
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 7 (15)
Reporting by geographical markets
The Group's secondary segments are geographical markets. All comments are after
considering exchange rate variations.
Orders received
Orders received increased in all regions during the first nine months 2004
compared to the corresponding period last year. The increase was largest in
Asia, North America and Western Europe.
Order received
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------
Consolidated July 1- July 1- Jan 1 - Jan 1 - Jan 1 - Jan 1 -
Sept 30 Sept 30 Sept 30 Sept 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- ---------------------------------------------------------------------------------------------------------
Customers in
Sweden 189.1 224.0 659.7 667.3 887.3 842.2
Other EU 1,321.0 1,236.5 4,422.2 3,819.2 5,143.3 5,374.3
Other Europe 302.6 269.9 941.1 883.3 1,234.5 1,167.8
USA 496.4 457.5 1,623.1 1,535.6 2,095.3 2,478.6
Other North America 95.3 85.9 275.5 227.5 326.7 331.2
Latin America 173.3 178.5 444.8 424.4 560.8 667.6
Africa 38.7 60.9 113.0 115.9 177.7 132.7
Asia 1,178.5 885.3 3,271.9 2,532.1 3,463.2 3,342.6
Oceania 71.2 64.4 218.1 189.4 256.5 337.8
--------------------------------------------------------------------------------
Total 3,866.1 3,462.9 11,969.4 10,394.7 14,145.3 14,674.8
- ---------------------------------------------------------------------------------------------------------
</Table>
Net sales
The invoicing increased in all regions except Africa during the first nine
months 2004 compared to the corresponding period last year. The most substantial
increases are found in Central and Eastern Europe, North America and Asia.
Net sales
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------
Consolidated July 1- July 1- Jan 1 - Jan 1 - Jan 1 - Jan 1 -
Sept 30 Sept 30 Sept 30 Sept 30 Dec 31 Dec 31
SEK millions 2004 2003 2004 2003 2003 2002
- ---------------------------------------------------------------------------------------------------------
Customers in
Sweden 183.8 209.3 615.4 623.8 893.2 835.1
Other EU 1,453.3 1,285.1 4,113.2 3,752.1 5,186.4 5,343.4
Other Europe 296.3 277.6 871.2 743.6 1,118.7 1,116.2
USA 553.5 475.0 1,651.5 1,458.3 2,159.0 2,638.7
Other North America 86.3 61.8 219.8 222.6 315.0 423.5
Latin America 139.4 143.1 393.5 399.3 553.6 626.7
Africa 43.2 42.8 117.6 108.5 182.7 69.6
Asia 1,012.2 876.5 2,614.6 2,336.8 3,242.6 3,287.9
Oceania 69.5 55.1 222.9 178.0 258.1 253.8
-------------------------------------------------------------------------------
Total 3,837.5 3,426.3 10,819.7 9,823.0 13,909.3 14,594.9
- ---------------------------------------------------------------------------------------------------------
</Table>
The values for the "Other EU" and "Other Europe" regions have been adjusted for
all periods in order to reflect the extension of the European Union on May 1,
2004 with 10 new membership countries: Cyprus, Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia.
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 8 (15)
Consolidated financial result and net income
The financial net has amounted to SEK -136.4 (-218.7) million, excluding
realised and unrealised exchange rate losses and gains. The main elements of
costs were interest on debt to the banking syndicate of SEK -31.3 (-102.0)
million, interest on the bond loan of SEK -96.7 (-107.8) million and a net of
dividends and other interest income and interest costs of SEK -8.4 (-8.9)
million. The decrease in interests to the banking syndicate between 2004 and
2003 is due to the large amortisation during 2004 and the cancellation of the
previous interest rate swaps that were requested by the first banking syndicate.
The net of realised and unrealised exchange rate differences amounts to SEK 3.2
(-41.0) million.
The result after financial items increased to SEK 766.8 (540.4) million.
Income taxes were SEK -290.3 (-143.6) million. The difference between the first
nine months of 2004 and 2003 is primarily due to utilisation of loss carry
forwards during 2003.
The parent company's result after financial items was SEK 514.3 (5.5) million,
out of which net interests were SEK 14.4 (5.7) million, dividends SEK 500.0 (-)
million and other administration costs the remaining SEK -0.1 (-0.2) million.
Asbestos-related lawsuits in the United States
Alfa Laval's subsidiary in the US, Alfa Laval Inc, was as of September 30, 2004
named as co-defendant in a total of 158 asbestos-related lawsuits with a total
of approximately 21,500 plaintiffs. The lawsuits filed in Mississippi account
for approximately 99 percent of all plaintiffs.
Alfa Laval strongly believes the claims against the company are without merit
and intends to vigorously contest each lawsuit.
After thorough investigations Alfa Laval continues to believe that potential
claims in connection with asbestos related lawsuits against Alfa Laval Inc will
be covered by insurance policies. Furthermore, primary insurance policies issued
in favour of Alfa Laval Inc. provide for coverage of its defence costs.
During the third quarter 2004 Alfa Laval Inc has been named as co-defendant in
an additional 29 lawsuits with a total of approximately 352 plaintiffs. During
the third quarter 14 lawsuits involving approximately 30 plaintiffs have been
resolved. This gives a grand total of 102 lawsuits that have been resolved. Alfa
Laval has furthermore been dismissed from the proceedings in respect of 13
plaintiffs in ongoing multiple plaintiffs lawsuits.
Based on current information and Alfa Laval's understanding of these lawsuits,
Alfa Laval continues to believe that these lawsuits will not have a material
adverse effect on the company's financial condition or results of operation.
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 9 (15)
Cash flow
Cash flow from operating and investing activities was SEK 1,286.4 (830.0)
million during the first nine months, out of which divestments generated cash of
SEK 346.9 (31.0) million.
Working capital increased by SEK 252.8 (368.3) million during the first nine
months.
Investments in fixed assets amounted to SEK 216.5 (122.9) million during the
first nine months. Out of this, acquired product concessions were SEK 36.6
million. Depreciations, excluding allocated step up values, amounted to SEK
190.9 (217.6) million during the period.
Cash and bank
The Group's cash and bank amounted to SEK 531.8 (740.8) million. The item cash
and bank in the balance sheet and in the cash flow statement is mainly relating
to bank deposits.
Borrowings and net debt
<Table>
<Caption>
Debt table
- ---------------------------------------------------------------------------------------------------------
Consolidated
September 30 September 30 December 31 December 31
SEK millions 2004 2003 2003 2002
- ---------------------------------------------------------------------------------------------------------
Credit institutions 1,719.9 2,711.6 2,530.7 3,360.2
Bond loan 1,052.8 1,049.2 1,064.8 1,127.6
Capitalised financial leases 8.6 18.6 13.6 24.7
Interest-bearing pension liabilities 5.2 6.1 5.2 6.1
---------------------------------------------------------------
Total debt 2,786.5 3,785.5 3,614.3 4,518.7
Cash, bank and current deposits 740.0 1,136.8 1,213.2 1,020.2
---------------------------------------------------------------
Net debt 2,046.5 2,648.7 2,401.1 3,498.5
- ---------------------------------------------------------------------------------------------------------
</Table>
Cash, bank and current deposits include bank and other deposits in the publicly
listed subsidiary Alfa Laval (India) Ltd of SEK 161.7 (137.4) million. The
company is not a wholly owned subsidiary of the Alfa Laval Special Finance
Group. It is owned to 64.1 percent.
Since April 15, 2004 Alfa Laval has a new senior credit facility with a banking
syndicate. The new multi currency revolving credit facility is USD 325 million
and EUR 150 million, corresponding to SEK 3,748.1 million. At September 30,
2004, SEK 1,452.1 million of the facility are utilised. During the third quarter
SEK 623.9 million were amortised. The new facility provides increased
flexibility, improved terms and extended security of funding. The maturity of
this facility is five years.
During the first nine months Alfa Laval has re-purchased bonds at the prevailing
market rate for a face value of SEK 11.4 (50.6) million. The difference between
the
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 10 (15)
higher market value and the face value was SEK 1.8 (9.7) million, which has
been reported as an interest cost. The bond loan accrues interest at 12.125
percent, which is considerably more than the Group's current cost for other
external financing.
Ownership and legal structure
Alfa Laval Special Finance AB is the parent company of the Alfa Laval Special
Finance Group. Alfa Laval Special Finance AB's parent company Alfa Laval AB
(publ) is listed on the Stockholm Stock Exchange. Alfa Laval AB (publ) had
10,360 (6,079) shareholders on September 30, 2004. The two largest owners are
Tetra Laval and Industri Kapital, where 17.7 (17.7) percent are owned by Tetra
Laval B.V., the Netherlands and 8.5 (26.9) percent are owned by the partnerships
that are controlled by Industri Kapital 2000 Ltd, United Kingdom.
Acquisitions and disposals
Alfa Laval made public in December 2003 that the company had decided to initiate
new negotiations with the former owner of bioKinetics Inc. This decision was
based on the fact that Alfa Laval suspected irregularities in the accounting of
certain customer projects in the acquired US company. The parties were
originally unable to resolve the matter, leading Alfa Laval to file a lawsuit
against the former owner Kinetics Group Inc and certain individuals. On July 2,
2004 Alfa Laval announced that a settlement agreement had been reached between
the parties. The terms of the agreement are confidential.
On December 5, 2003 an asset purchase agreement was signed between the
subsidiary Tri-Lad Inc in Canada and local management of the company whereby all
non-financial assets were sold to local management. The closing date was January
30, 2004. Tri-Lad Inc is selling equipment to the oil & gas industry and was a
non-core activity within Alfa Laval. It has been up for sale since several
years. The Tri-Lad property was sold effective on May 12, 2004. The divestment
of the Tri-Lad operations has generated a loss of SEK -15.0 million.
Accounting principles
The same accounting principles and accounting estimates have been applied in the
third quarter interim report 2004 as for the annual report for 2003, except that
comparison distortion items now are reported included in each line in the income
statement and specified in a note.
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 11 (15)
CONSOLIDATED CASH-FLOW STATEMENTS
<Table>
<Caption>
Jan 1 - Jan 1 - Jan 1 - Jan 1 -
Sept 30 Sept 30 Dec 31 Dec 31
Amounts in SEK millions 2004 2003 2003 2002
- ------------------------------------------------------------------------------------------------------------------
Cash flow from operating activities
Operating income 900.0 800.1 1,143.6 1,223.8
Adjustment for depreciation 556.4 587.2 787.2 838.0
Adjustment for other non-cash items -17.0 24.8 22.1 35.0
---------------------------------------------------------
1,439.4 1,412.1 1,952.9 2,096.8
Taxes paid -203.1 -185.6 -268.6 -396.2
Cash flow from operations before
changes in working capital 1,236.3 1,226.5 1,684.3 1,700.6
Changes in working capital:
(Increase)/decrease of current receivables -189.3 32.8 -25.7 340.0
(Increase)/decrease of inventories -543.7 -351.7 -17.2 140.4
Increase/(decrease) of liabilities 480.2 -49.4 -152.9 -134.2
---------------------------------------------------------
-252.8 -368.3 -195.8 346.2
---------------------------------------------------------
Cash flow from operating activities 983.5 858.2 1,488.5 2,046.8
=========================================================
Cash flow from investing activities
Investments in fixed assets -216.5 -122.9 -258.5 -276.7
Divestment of fixed assets 336.9 31.0 40.1 120.7
Additional purchase price -9.5 - - -367.5
Acquisition of businesses - -50.9 -289.5 -135.7
Reduction of purchase price 61.2 - - 81.6
Divestment of businesses 10.0 - - -
Provisions 120.8 114.6 50.5 29.8
---------------------------------------------------------
Cash flow from investing activities 302.9 -28.2 -457.4 -547.8
=========================================================
Cash flow from financing activities
Financial net, paid -123.1 -156.2 -237.1 -590.1
New issue of shares - - - 819.0
Paid group contribution -613.4 -53.4 -53.4 -
(Increase)/decrease of other financial assets 506.0 -3.7 -256.9 -84.2
Capitalised financing costs, acquisition loans -6.9 - - -39.7
Increase/(decrease) of liabilities to credit institutions -1,081.0 -419.1 -454.8 -1,548.2
---------------------------------------------------------
Cash flow from financing activities -1,318.4 -632.4 -1,002.2 -1,443.2
=========================================================
Net increase (decrease) in cash and bank -32.0 197.6 28.9 55.7
Cash and bank at the beginning of the year 554.6 605.9 605.9 666.4
Translation difference in cash and bank 9.2 -62.7 -80.2 -116.2
Cash and bank at the end of the period 531.8 740.8 554.6 605.9
---------------------------------------------------------
Free cash flow per share (SEK)* 157.05 101.33 125.88 286.66
Average number of shares** 8,191,000 8,191,000 8,191,000 5,229,137
</Table>
* Free cash flow is the sum of cash flows from operating and investing
activities.
** The average number of shares has been changed through new issue of shares.
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 12 (15)
CONSOLIDATED INCOME STATEMENT
<Table>
<Caption>
July 1- July 1- Jan 1 - Jan 1 - Jan 1 - Jan 1 -
Sept 30 Sept 30 Sept 30 Sept 30 Dec 31 Dec 31
Amounts in SEK millions 2004 2003 2004 2003 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
Net sales 3,837.5 3,426.3 10,819.7 9,823.0 13,909.3 14,594.9
Cost of goods sold -2,561.6 -2,183.1 -7,091.9 -6,200.6 -8,976.3 -9,262.2
----------------------------------------------------------------------------------
Gross profit 1,275.9 1,243.2 3,727.8 3,622.4 4,933.0 5,332.7
- -----------------------------------------------------------------------------------------------------------------------------
Sales costs -534.1 -526.8 -1,647.1 -1,625.8 -2,245.8 -2,115.1
Administration costs -253.7 -194.6 -678.9 -643.6 -865.8 -1,026.8
Research and development costs -89.9 -79.5 -288.0 -267.5 -368.1 -355.2
Other operating income * 84.8 35.9 212.2 171.0 248.0 282.7
Other operating costs * -81.5 -123.1 -282.5 -315.2 -366.4 -706.8
Amortisation of goodwill -47.8 -48.4 -143.5 -141.2 -191.3 -187.7
----------------------------------------------------------------------------------
Operating income 353.7 306.7 900.0 800.1 1,143.6 1,223.8
- -----------------------------------------------------------------------------------------------------------------------------
Dividends 0.9 0.0 2.3 2.4 6.9 7.8
Interest income 7.0 145.2 101.7 259.0 267.5 322.7
Interest expense * -64.2 -262.1 -237.2 -521.1 -601.3 -1,094.2
----------------------------------------------------------------------------------
Result after financial items 297.4 189.8 766.8 540.4 816.7 460.1
- -----------------------------------------------------------------------------------------------------------------------------
Minority share in subsidiaries' income -9.8 -12.1 -32.1 -30.9 -41.6 -33.7
Taxes -106.5 -43.1 -290.3 -143.6 -134.5 -218.2
----------------------------------------------------------------------------------
Net income for the year 181.1 134.6 444.4 365.9 640.6 208.2
- -----------------------------------------------------------------------------------------------------------------------------
Earnings per share (SEK) 22.11 16.43 54.25 44.67 78.21 39.82
Average number of shares ** 8,191,000 8,191,000 8,191,000 8,191,000 8,191,000 5,229,137
</Table>
* The line has been affected by comparison distortion items, see separate
specification below.
** The average number of shares has been changed through new issue of shares.
Comparison distortion items
<Table>
<Caption>
July 1- July 1- Jan 1 - Jan 1 - Jan 1 - Jan 1 -
Sept 30 Sept 30 Sept 30 Sept 30 Dec 31 Dec 31
Amounts in SEK millions 2004 2003 2004 2003 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------
Operational
Other operating income 35.4 35.9 161.3 167.4 242.4 268.7
Comparison distortion income 49.4 - 50.9 3.6 5.6 14.0
--------------------------------------------------------------------------------------
Total other operating income 84.8 35.9 212.2 171.0 248.0 282.7
Other operating costs -79.6 -123.1 -265.6 -315.2 -366.4 -663.6
Comparison distortion costs -1.9 - -16.9 - - -43.2
--------------------------------------------------------------------------------------
Total other operating costs -81.5 -123.1 -282.5 -315.2 -366.4 -706.8
Financial
Interest expense -64.2 -262.1 -237.2 -521.1 -601.3 -803.5
Comparison distortion costs - - - - - -290.7
--------------------------------------------------------------------------------------
Total interest expense -64.2 -262.1 -237.2 -521.1 -601.3 -1,094.2
</Table>
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 13 (15)
In order to illustrate the quarterly development, the income statement analysis
is shown also for the last ten quarters:
Income statement analysis
<Table>
<Caption>
2004 2003 2002
SEK millions Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2
- -------------------------------------------------------------------------------------------------------------------------------
Net sales 3,837.5 3,798.3 3,183.9 4,086.3 3,426.3 3,402.0 2,994.7 4,175.1 3,503.7 3,654.2
Adjusted gross profit 1,348.7 1,357.9 1,243.2 1,385.0 1,318.9 1,334.5 1,197.4 1,539.1 1,394.7 1,426.4
- - in % of net sales 35.1 35.8 39.0 33.9 38.5 39.2 40.0 36.9 39.8 39.0
Expenses * -863.1 -875.3 -789.0 -843.5 -817.4 -848.3 -801.4 -920.5 -902.6 -896.7
- - in % of net sales 22.5 23.0 24.8 20.6 23.9 24.9 26.8 22.1 25.8 24.6
Adjusted EBITDA 485.6 482.6 454.2 541.5 501.5 486.2 396.0 618.6 492.1 529.7
- - in % of net sales 12.7 12.7 14.3 13.3 14.6 14.3 13.2 14.8 14.0 14.5
Depreciation -58.8 -63.6 -68.5 -75.5 -70.7 -72.2 -74.7 -81.8 -78.6 -83.1
Adjusted EBITA 426.8 419.0 385.7 466.0 430.8 414.0 321.3 536.8 413.5 446.6
- - in % of net sales 11.1 11.0 12.1 11.4 12.6 12.2 10.7 12.8 11.8 12.2
Amortisation of goodwill ** -120.6 -121.1 -123.8 -124.5 -124.1 -121.8 -123.7 -125.9 -128.7 -125.7
Comparison distortion items 47.5 0.0 -13.5 2.0 0.0 0.0 3.6 -0.7 15.9 0.5
----------------------------------------------------------------------------------------------
EBIT 353.7 297.9 248.4 343.5 306.7 292.2 201.2 410.2 300.7 321.4
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
* Excluding comparison distortion items
** Including amortisation of step-up values
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 14 (15)
CONSOLIDATED BALANCE SHEET
<Table>
<Caption>
Sept 30 Sept 30 Dec 31 Dec 31
Amounts in SEK millions 2004 2003 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Non-current assets:
Intangible assets 3,934.4 4,213.1 4,200.0 4,703.3
Property, plant and equipment 2,484.9 2,754.5 2,756.5 3,082.7
Financial assets 735.7 621.4 666.2 751.9
Current assets
Inventories 2,777.7 2,561.8 2,217.8 2,279.0
Accounts receivable 2,811.6 2,517.8 2,463.3 2,504.0
Other receivables 973.3 984.1 1,167.6 1,085.5
Other current deposits 208.2 396.0 658.6 414.3
Cash and bank 531.8 740.8 554.6 605.9
TOTAL ASSETS 14,457.6 14,789.5 14,684.6 15,426.6
- ---------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity 4,841.2 4,782.4 4,402.5 4,413.0
Minority interest 130.6 116.9 104.2 108.2
Provisions for:
Pensions and similar commitments 781.4 735.7 754.8 720.6
Deferred taxes 766.2 925.1 817.0 990.3
Other 962.2 960.1 891.2 989.3
--------------------------------------------------------
2,509.8 2,620.9 2,463.0 2,700.2
Non-current liabilities:
Liabilities to credit institutions 1,486.5 2,562.9 2,427.0 3,105.8
Bond loan 1,052.8 1,049.2 1,064.8 1,127.6
--------------------------------------------------------
2,539.3 3,612.1 3,491.8 4,233.4
Current liabilities:
Liabilities to credit institutions 233.4 148.7 103.7 254.4
Accounts payable 1,267.8 1,019.0 1,199.4 1,173.2
Advances from customers 628.2 713.8 512.1 571.3
Other liabilities 2,307.3 1,775.7 2,407.9 1,972.9
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 14,457.6 14,789.5 14,684.6 15,426.6
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
<Page>
Alfa Laval Special Finance AB Interim report July 1 - September 30, 2004
Page 15 (15)
CHANGES IN CONSOLIDATED EQUITY
Amounts in SEK millions
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------
Jan 1 - Jan 1 - Jan 1 - Jan 1 -
Sept 30 Sept 30 Dec 31 Dec 31
2004 2003 2003 2002
- -----------------------------------------------------------------------------------------------------------------
At the beginning of the period 4,402.5 4,413.0 4,413.0 3,628.9
New issue of shares - - - 819.0
Group contribution - - -613.4 -53.4
Translation difference -5.7 3.5 -37.7 -189.7
Net income for the period 444.4 365.9 640.6 208.2
-------------------------------------------------------------------
At the end of the period 4,841.2 4,782.4 4,402.5 4,413.0
- -----------------------------------------------------------------------------------------------------------------
</Table>
The share capital of SEK 819,100,000 is divided into 8,191,000 shares at par
value SEK 100.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this Current Report to be signed on their behalf by
the undersigned, thereunto duly authorized.
Alfa Laval Special Finance AB
Date: October 21, 2004 By: /s/ Thomas Thuresson
--------------------
Thomas Thuresson
Chief Financial Officer