saab annual report 2011

ANNUAL REPORT 2011

ANTICIPATE TOMORROW75 YEARS OF INNOVATION FOR A SAFER SOCIETY

CONTENTS

Saab in brief

Saab 2011 1

Events by quarter 2011 2–3

Saab 75 years 4–5

Chairman’s statement 6–7

CEO comment 8–9

Market and driving forces 10–11

Saab’s core competence 14–15

Strategic goals 16–17

– Profitable growth 18–21

– Performance 22–23

– Portfolio 24–27

– People 28–29

Market segments 32–33

Markets by region 34–35

Saab’s responsibilities –

Sustainability 36–37


Business ethics 38


Employees 39–41

Saab’s responsibilities – Society 42–43


Environment 44–47

Financial review 2011 48–49

Business areas 50–61

Risks and risk management 62–65

Other information 66–68

Financial statements 69–81

Notes 82–130

Dividend motivation 131

Proposed disposition of earnings 132

Audit report 133

Corporate governance report 134–144

Shareholder information 145–151

Financial information

2012 and contact details 152

Glossary 153

Innovative technology and cost

efficiency for 75 years

Saab has been supplying innovative,

cost-effective and competitive products

and systems to customers around the

world for 75 years. The key to success is

to focus on partnerships, alliances and

information sharing.

Sensis – Bridgehead to a global

market

The acquisition of Sensis of the U.S. is

fully in line with Saab’s strategic priorities

to create profitable growth, increase its

geographical presence and continuously

adapt to portfolio.

2011 – An important year for Gripen

Gripen’s success in 2011 demonstrates

the system’s world-leading

capabilities to meet the tough demands

of the international market in terms of

function, quality and cost.

Local presence around the world

A local presence is vital to success.

In 2011, we therefore established a

stronger presence in a number of

countries, e.g., through new research

and development centres in India, the

UK and Brazil.

Pages 20–21

Pages 12–13

Pages 4–5

Pages 30–31

While every care has been taken in the transla-

tion of this annual report, readers are reminded

that the original annual report, signed by the

Board of Directors, is in Swedish.

SAAB IN BRIEF

OUR COMPETENCE MAKES SOCIETY SSaab offers world-leading solutions, products and services for military de-

fence and civil security. We develop, adapt and improve new technology to

meet our customers’ changing needs. We are represented in around 30

countries, while our solutions, products and services are sold to more than

100 countries. Our most important marke

Australia and North America. We have aro

sales amount to around SEK 23 billion, of

to research and development.

Our operations are conducted in six business areas that work together to utilise the Group’s

competencies as effectively as possible.

Aeronautics Offers a product portfolio

comprising the Gripen

fighter and Unmanned

Aerial Systems (UAS).

Aeronautics also manu-

factures components for

Saab’s own aircraft and

for passenger aircraft manufactured by others.

Examples of products: Gripen and Skeldar.

Dynamics Offers a product portfolio

with ground combat

weapons, missile sys-

tems, torpedoes and sig-

nature management sys-

tems for armed forces.

The business area also

offers military and civil niche products from spinoffs

such as rremotely operated vehicles for the offshore

industry and mapping solutions for the defence mar-

ket. Examples of products: Carl-Gustaf, RBS 70 and

Rapid 3D Mapping.

Electronic Defence Systems Offers a product portfo-

lio comprising airborne,

land-based and naval

systems in radar, signals

intelligence and self-

protection. The busi-

ness area also supplies

civil and military customers with avionics to increase

flight mission efficiency and flight safety. Examples of

products: Giraffe AMB, Erieye and Arthur.

Security and Defence Solutions Offers a product portfolio

comprising C4ISR sys-

tems, airborne early war-

ning systems, training

and simulation, air traffic

management, maritime

safety, security and

monitoring systems, and solutions for safe, robust

communication. Examples of products: 9LV (combat

management system), remotely operated towers

(RT) and tactical systems for communication

integration.

Support and Services Offers mainly support

solutions, technical

maintenance and logis-

tics, as well as products,

solutions and services for

military and civil missions

in locations with limited

infrastructure.

Combitech Combitech is an inde-

pendent, wholly owned

subsidiary that offers

technical and operational

consulting services with

an emphasis on techncal

systems. Combitech combines technology with

environmental and safety thinking.

For more information see pages 50–61.

BUSINESS AREAS

SALES DISTRIBUTION 2011

BUSINESS AREAS

25%

17%

18%

22%

14%

4%

GEOGRAPHICAL MARKETS

37%

19%8%

22%

8%5%

1%

Sweden

EU excl. Sweden

Rest of Europe

North and South America

Asia

Africa

Australia

Aeronautics

Dynamics

Electronics Defence Systems

Security and Defence Solutions

Support and Services

Combitech

MARKET SEGMENT

45%

31%

9%

6%6%

3%

Air

Land

Naval

Civil security

Commercial aeronautics

Other

SAFERets are Europe, South Africa, Asia,

ound 13,000 employees. Annual

f which about 22 per cent is related

The defence market is expected to decline in the West in the coming years as a result of the

sovereign debt crisis and changing defence priorities. At the same time, the global market for civil

security and commercial aeronautics is expected to grow.

Sweden and rest of Nordic regionThe Nordic region accounts for about one per cent of

global defence spending, a figure that is expected to

rise slightly in the years ahead. Sweden is the single

largest market for Saab, and it is where the majority of

our research and development is conducted.

Rest of Europe After the U.S., Europe is the largest defence market in

the world, representing about 23 per cent of global

spending. Economic uncertainty and the sovereign

debt crisis have led to delays in many defence pro-

jects, due to which the market is expected to shrink in

the coming years. France, Germany and the UK are

expected to account for the largest relative cutbacks.

The civil security market is anticipating growth. A

large share of our sales is to the rest of Europe, and in

2011 it strengthened our position in the UK through

our new office in London.

North AmericaThe U.S. is the world’s largest defence market, ac-

counting for about 43 per cent of global spending.

The market is expected to shrink due to the sovereign

debt crisis and changing defence priorities. The U.S.

civil security market is also the largest in the world

and is expected to continue to grow. We strengthe-

ned our U.S. position in 2011 through the acquisition

of Sensis.

Central and South AmericaThe South American defence market is relatively mo-

dest in size. Brazil, one of the strongest economies in

the region, represents the largest market. We have

been established in the region for many years. In

2011, we strengthened our presence by opening a

new research centre in Brazil.

Asia, Middle East and AustraliaThe region has maintained its strong economic

growth. Military spending is expected to continue to

increase in the years ahead. The civil security market

is relatively immature and strong growth is expected,

driven in part by increasing infrastructure needs. A

growing share of our sales is in the region, and in

2011 we strengthened our presence in India.

Africa The African continent has experienced positive eco-

nomic growth in recent years. Several countries face

political turbulence and tough economic situations,

however. Spending on defence and civil security is

expected to increase in coming years. Since the ac-

quisition of Grintek in 2005, Saab has a strong posi-

tion in South Africa.


MARKET SEGMENTS

GEOGRAPHICAL MARKETS

Saab’s market segments differ in terms of drivers and needs. Our offerings are partly based on the same

basic technologies. Thanks to our expertise in system integration, we can offer our customers entire

systems comprised of various products and solutions that cover the needs of every market segment.

Air Driven by alliances

and political deci-

sions. Purchasing

decisions are made at

the highest national

level, where custo-

mers demand fighter

aircraft that offer high-

performance, flexibi-

lity, economic efficiency and upgradability.

Land Complex conflicts, in-

cluding in urban envi-

ronments, are driving

demand for new ma-

teriel systems and

technology. The gro-

wing number of multi-

national missions and

alliances between national forces and different types

of forces are placing high demands on system inte-

gration, interoperability and command and control

capabilities.

NavalThe trend toward

broader industrial alli-

ances is making inte-

gration and lifecycle

commitments more

important. Since over

90 per cent of global

trade is transported

by sea, the need to protect these trade flows is gro-

wing. Technological advances are also driving deve-

lopment, including ships with smaller crews and more

sensors, which are used, e.g., to monitor and record

traffic along coasts and in harbours.

Civil security Investments in civil se-

curity are made to

protect citizens, criti-

cal facilities and trans-

ports of goods and

people. The market is

driven by the growing

awareness of

society’s vulnerability, tighter regulations and a reali-

sation that disruptions to society’s flows are costly.

This places demands on sustainability, flow efficiency

and interoperability.

Commercial aeronautics The market fluctua-

tes in pace with the

economy and is cha-

racterised by long

development cycles.

High fuel prices and

new environmental

requirements are

creating greater de-

mand for fuel-efficient aircraft models. The market

has few dominant players, which are now being chal-

lenged by companies from China and elsewhere.


SAAB ANNUAL REPORT 2011 1

SAAB 2011

SAAB 2011

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OUTLOOK FOR 2012:

Key financial ratios (MSEK) 2011 2010

Sales 23,498 24,434

EBITDA 4,088 2,187

EBITDA margin, % 17.4 9.0

Operating income (EBIT) 2,941 975

Operating margin (EBIT margin), % 12.5 4.0

Income after financial items 2,783 776

Net income 2,217 454

Operating cash flow 2,477 4,349

Earnings per share, SEK (after dilution) 20.38 3.97

Operating cash flow per share, SEK 22.69 39.84

Dividend per share, SEK 4.501) 3.50

Return on equity, % 18.1 4.1

Equity/assets ratio, % 41.1 39.1

Order bookings 18,907 26,278

Order backlog at year-end 37,172 41,459

Total research and development (R&D)

expenditures 5,116 5,008

Internally financed R&D 1,355 1,203

No. of employees at year-end 13,068 12,536

Share of women, % 22.0 22.0

Academic degree, % 54.1 51.4

LONG-TERM FINANCIAL GOALS AND RESULTS

SALES GROWTH

Long-term goal: Our organic sales growth

will average five per cent over a business

cycle.

In 2011, organic growth was -4 per cent (-1).

201120102009200820070

5,000

10,000

15,000

20,000

25,000MSEK

Trend line

OPERATING MARGIN

Long-term goal: Our margin goal is formulated

as an average over a business cycle. The operat-

ing margin after depreciation/amortisation (EBIT)

will be at least 10 per cent.

In 2011, the operating margin after depreciation/

amortisation (EBIT) was 12.5 per cent (4.0).

201120102009200820070

3

6

9

12

15%

Goal

EQUITY/ASSETS RATIO

Long-term goal: Our goal is an equity/

assets ratio exceeding 30 per cent.

At year-end 2011, the equity/assets ratio

was 41.1 per cent (39.1).

2201120102009200820070

10

20

30

40

50%

Goal

2 SAAB ANNUAL REPORT 2011

EVENTS BY QUARTER 2011

EVENTS IN 2011

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JAN-MARCH APRIL-JUNE


EVENTS BY QUARTER 2011

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JULY-SEP OCT-DEC


SAAB 75 YEARS

This year marks the 75th anniversary of Saab’s founding

in 1937 through a resolution by the Swedish Parliament.

When it created Saab, the Parliament was of the opinion that Sweden

should have its own capability to design fighter aircraft, since defence

materiel were difficult to obtain from other countries at the time.

Saab’s creation was a milestone for Sweden’s non-aligned status and

for the Swedish defence industry.

An important factor for Saab has been its ability to cooperate with the

Swedish armed forces and to constantly deliver cost-efficient, com-

petitive products and services. Doing more with less has been Saab’s

motto for years. It has shaped Saab and the way we work.

The Gripen fighter aircraft system is an example of this: efficient

internal processes, close cooperations with partners and a limited

number of carefully selected suppliers. Together with the Swedish

armed forces and the FMV, we have succeeded in improving per-

INNOVATIVE TECHNOLOGY AND COST EFFICIENCY – 75 YEARS OF SAAB

Market development

The concept of security policy has been broadened and today in-

cludes dimensions other than defence. Military attacks are certainly

still relevant from a long-term perspective, and localised military

incidents and operations in the near term cannot be ruled out

either. International crises and conflicts will also continue to call for

both civil and military responses. But society’s basic functions are

becoming more complex, which is accelerating questions of vulner-

ability. Saab has therefore continuously broadened its operations to

include civil applications to address this expanded threat scenario,

which today also includes impacts on our environment.

MARKET DEVELOPMENT

HISTORIC MILESTONES FOR SAAB

1937 1990 2000Saab is founded Saab Automobile – independent

company

Saab acquires Celsius

1941 1979 1990 1992 1993First B17 delivered First order – RBS 15 First laser simulator BT 46 ANZAC combat management

system for Australia’s frigates

First Gripen delivered

First order from U.S. from BOL

1646 1894 1948 1998Bofors is founded Alfred Nobel acquires Bofors First order for

Carl Gustaf

StriC in operation

MILITARY OFFENSES INTERNATIONAL ACTIONS


SAAB 75 YEARS

formance at the same time that operating expenses are significantly

lower than similar systems.

Today this capability extends beyond Gripen to include our

entire portfolio of products and solutions for a range of situations

from military attacks and multinational missions to civil security

and environmental and climate threats. Our systems can help coun-

tries to better meet security threats today and in the future, while

promoting peace, democracy and development.

The key to success is an approach that focuses on partnership, col-

laboration and information sharing. This is because it is not about

the number of technologies and systems; it is about having the right

technology and systems for each customer’s specific needs – the

right capabilities at the right price delivered in time.

This is our history and our future.

2005 2006 2011Saab acquires Grintek Saab acquires Ericsson

Microwave Systems (EMW)

Saab acquires Sensis

Corporation

2002 2004 2005 2006 2008 2011First contract – NLAW Installation of RAKEL

communication system

Contract for NEURON Saab 2000™ AEW&C First flight for Gripen Demo RBS 70 NG – launch

1950- 1970- 1980- 1990-Development of radar for

Gripen

Development of Giraffe AMB Development of Arthur Sea Giraffe AMB is

launched

THREATS AND RISKS IN SOCIETY CLIMATE AND ENVIRONMENTAL THREATS


CHAIRMAN’S STATEMENT

A COMPLEX WORLD WITH CHALLENGES AND OPPORTUNITIES

The sovereign debt crisis, which has been a problem for the West,

especially Europe, for some time, further intensified in 2011. The

global economy recovered after the financial crisis in 2008-2009,

but reversed course in 2011 driven by the growing crisis in the euro

zone. Fiscal constraints have contributed for several years to shrink-

ing defence budgets, a trend which was exacerbated last year.

At the same time, global security conditions have become more

complex, causing major transformations, especially in North Africa

and the Middle East, which are not only important to the world’s

energy supplies but also to global trade. This has also affected Swe-

den, in part because it decided to participate in the NATO opera-

tion in Libya with aerial surveillance and related support resources.

The mission was carried out with five Gripen aircraft.

2011 was a breakthrough year for the Gripen system by the fact

that the Swiss Armed Forces announced its selection of Gripen in a

major international procurement. The main reason mentioned was

the one generally cited as Saab’s biggest competitive advantage: its

solutions provide better value for the money. As part of the offer,

Sweden is also able to offer extensive industrial collaborations with

Swiss companies, so-called offsets, which will create value for both

Swiss and Swedish businesses.

Innovative capabilities are crucial to our competitiveness

Sweden has historically had an innovative business sector, where

Saab is one of a number of key players. Saab has long been one of

the country’s most engineering focused and innovation focused

companies, where around 20 per cent of sales is reinvested in

research and development. This has not only led to major export

successes and new jobs in our operations but also created a number

of new operating areas and spinoffs, where technologies that origi-

nated in defence solutions have found broad civil application, e.g.,

in road tolls and web-based mapping solutions. In this way, Saab

has served as an incubator for Swedish high-tech innovation. It is

important that we remain one.

Staying innovative in a changing financial, geopolitical and

market landscape is a challenge for both Sweden and Saab. It is in

no small measure a question of access to capital for the necessary

investments in R&D and development work. Faced with shrinking

defence budgets, we must increasingly finance this work ourselves.

This and the large customer projects we are working on are two

big reasons why Saab has built up a strong balance sheet and cash

reserves. Continued success also requires that we can build on the

many international alliances and relationships we have established,

especially in 2011, when Saab’s internationalisation was advanced

through acquisitions and

expansion in accordance

with our strategic goals. This

includes the acquisition of

the U.S. company Sensis,

which strengthens our exist-

ing product portfolio and

improves our market pres-

ence globally and in the US.

Saab is an open and trans-

parent company that actively

takes part in establishing

global guidelines and rules

on business ethics. Our code

of conduct is an important

part of how we work and was

developed based on the OECD’s guidelines for multinationals. We

also abide by the UN’s Global Compact and its principles on human

rights, labour conditions, the environment and anti-corruption.

We have to maintain our financial strength

Our long-term financial goals remain firm, and our strong financial

position is an important asset in the current market climate. Saab

will continue to focus on strengthening profitability and generating

strong operating cash flow, which will be needed in the future to in-

vest in research and development. This is critical if we are going to

maintain a high technological level, further improve our competi-

tive advantages and create long-term value for our shareholders.

I am convinced that Saab has major opportunities going

forward. Saab’s strength is being able to deliver high-quality solu-

tions that are cost-efficient to buy, operate and maintain, making

them competitive in a world where fiscal and economic conditions

remain uncertain.

Stockholm, February 2012

Marcus Wallenberg

Chairman of the Board


CHAIRMAN’S STATEMENT

“Sweden has historically had

an innovative business sector

where Saab is one of a number

of key players. Saab has long

been one of the country’s most

engineering focused and

innovation focused companies,

where around 20 per cent of

sales is reinvested in research

and development.”


CEO COMMENT

WITH A STRONG BALANCE SHEET WE CAN IMPLEMENT OUR STRATEGY

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Profitable organic growth

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On site around the world

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Active portfolio management

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CEO COMMENT

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Cost efficiency is one of our biggest competitive advantages

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Talent management cannot become a problem

In 2012 we celebrate Saab’s 75th anniversary

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MARKET AND DRIVING FORCES

A CHANGING MARKET IS DRIVING SAAB’S BUSINESS

Competition for resources and living standards is a strong

driver of social development and is clearly impacting de-

fence and security companies like Saab. Essentially, it is a

question of which products and services we will offer the

market and how we do it.

According to the UN’s World Population Clock, the global popula-

tion passed 7 billion on 31 October 2011. In recent years, Africa,

Asia and Latin America have seen the largest population gains and

economic growth, in contrast to the U.S. and Europe, where the

population growth and economic growth has been lower. Economic

growth is important to social development, and economic stability

and social stability are closely interlinked.

Competition for raw materials, resources and living standards is a

strong driver of social development. As society develops, competi-

tion increases for resources such as capital and people, which are

critical to drive innovation and growth.

The competitive picture has become more complex of late. The

old world order, where the North and West had the upper hand

over the South and East, no longer applies. While Western Europe

and North America are struggling with tough challenges and slow

economic growth, Africa, Latin America and Asia also face chal-

lenges, but are experiencing higher growth. When this competitive

dynamic changes, conflict patterns change as well.

In addition, new economic centres are being created around the

world such as China, India and Brazil, which are growing in promi-

nence through a combination of population density, education and

vigorous growth, and are leading the way to a multipolar world.

The primary drivers in Saab’s markets are

threat scenarios and security needs. This

applies to the defence sector and civil so-

ciety as well as the grey zone in between.

Understanding the development of, and

overlap between, the two main dimen-

sions of security policy is critical to also

understanding the opportunities, breadth

and potential in Saab’s market.

One dimension of Saab’s markets focuses

on traditional security policy, the purpose

of which is to maintain national sover-

eignty by defending borders. Another

dimension stresses the vulnerability of civil

society, where supply chains and infra-

structure must be protected to safeguard

society’s essential functions.

The first dimension is dominated by national

governments and military organisations, while

the second is dominated by cities, compa-

nies, organisations and individuals. Urban

security, efficiencies and sustainability are

essential to a well-functioning society.

The three areas of training, command and

control, and maintenance are “links” as well

as the lowest common denominator be-

tween these two security dimensions. For

Saab, these areas originate in a traditional

border-protecting military context, but are

just as relevant and possible to implement

in an urban-centred, flow-protecting

environment.


MARKET AND DRIVING FORCES

New security and functionality needs

Society today contains global flows of capital, goods and people

(flow society), which are strongly interdependent. As a result, major

crises can quickly spread through the system. This is exemplified

by the sovereign debt crisis, which is now threatening the financial

system and global growth.

The trend toward a global flow economy has increased security

needs in the civil sector, creating greater demand for systems to

monitor and protect critical flows and hubs such as airports, ports,

railways, highways, and information and energy systems. As ICT,

information and communication technology, has become more im-

portant to society’s infrastructure, our vulnerability has increased.

ICT is also an important driver behind the integration of military

and commercial technology, where there is a growing overlap, espe-

cially in surveillance and control.

In times of limited resources, the focus is not only on security

but functionality and efficiency. Customers in both military and

civil markets increasingly want broad-based, integrated solutions

that include more services: education, training, support and main-

tenance. Solutions are evaluated based on not only performance

but also in terms of cost of ownership and operation. The trend is

shifting toward full operational and functional commitments cover-

ing the entire lifecycle. Outsourcing of activities that had previously

been performed internally is becoming more common, including in

the military field.

Reduced defence budgets and shift toward emerging countries

The deficits and sovereign debts in many major Western economies

require comprehensive austerity programs, which are triggering

defence cuts. The U.S. and Canada accounted for the largest share

of global defence spending in 2010, approximately 43 per cent,

according to the Stockholm International Peace Research Institute

(SIPRI). The U.S. is expected to reduce its spending in the coming

years. The biggest increases in defence spending are in China and

other countries in Asia, and the trend going forward is expected

to favour emerging markets over traditional markets. Purchasing

habits have also changed. Demand is increasing for proven systems

that offer “more bang for the buck” and work in combination with

other systems.

New cooperation and alliances with a regional focus

International cooperation is important to ensure cross-border

flows and keep conflict zones under control. The long-term trend

is still toward alliances for peacekeeping and economic develop-

ment purposes. Right now, however, it is toward regional alliances

and bilateral agreements. Moreover, large defence orders almost

always include extensive offsets through industrial partnerships.

Large development projects are increasingly part of public-private

partnerships.

New conditions for R&D

International cooperation and system partnerships require open

systems that can be coordinated and integrated operationally. This

is why a growing share of development work is being done collabo-

ratively. As a result, the defence industry can expect less financing

through national defence budgets, alongside the fact that shrinking

government budgets no longer allow for research and development

to the same extent as before. To a growing extent, defence authori-

ties around the world want access to the best the market has to offer

regardless of country of origin, and they want it delivered on short

notice. A larger share of research and development (R&D) therefore

has to be financed by the industry itself. On the other hand, gov-

ernments around the world are devoting more research resources

to civil security, energy, the environment and sustainable urban

development. Access to energy is a critical factor in the develop-

ment of living standards and energy security and hence is central to

both military and civil strategies. Developing new sources of energy

is now a high priority in both old and new economies. The aim is

to become less dependent on undesirable and politically sensitive

sources, capitalise on the economic benefits of new technology and

reduce global environmental risks. Development and security go

hand in hand in this area as well.

Local presence is decisive

Despite the trend toward international alliances, the need for a

strong local presence is critical to success in both the military and

civil markets. Customers want integrated solutions from compa-

nies that understand local conditions and can adapt their solutions

accordingly. This makes it important to be established locally, build

local competence and understand local conditions if you hope to be

successful. It significantly increases your chances of being selected

as a supplier or subcontractor and to have a portion of your devel-

opment financed through government appropriations.


GRIPEN


A YEAR FOCUSED ON GRIPEN

At the start of 2011, the first six Gripen were delivered from Sweden to

the Royal Thai Air Force, as planned. Thailand has ordered a further

six Gripen C/D aircraft, which are in production.

Last spring, Gripen was involved in a conflict situation for the

first time when the Swedish Air Force joined the NATO-led opera-

tion in Libya.

“We received confirmation that both the aircraft and the unit

performed well. We provided what was asked of us without any

damage or losses. For me, this is an affirmation that practice makes

perfect – with realistic training, we can assist in such actions,” said

Lt Col Anders Segerby, who was Chief of Operations for the unit in

Libya, FL01.

In April, the Indian Ministry of Defence announced that Gripen

would no longer be included in the Indian Multi-Role Combat

Aircraft (MMRCA) procurement programme. India remains one of

Saab’s most important markets and we see great business potential

within the aviation, defence and security industries.

In November, the Swiss government announced that it had cho-

sen Gripen as a potential future combat aircraft – a clear acknowl-

edgement that Gripen is a world-class and highly cost-effective

combat aircraft system. Besides the Gripen system being offered,

the programme also includes a long term industrial cooperation

between Switzerland and Sweden.

Gripen’s successes in 2011 are indicators of the Gripen system’s

world-leading ability to meet the international market’s demands –

in terms of function, quality and cost.

Gripen is operated by the air forces in Sweden, South Africa,

Thailand, the Czech Republic and Hungary. The UK’s Empire Test

Pilots’ School (ETPS) uses Gripen for training test pilots from

across the world. Gripen’s development is supported by the Swedish

government and Armed Forces, which has stated that Gripen will

form the backbone of the Swedish Air Force until at least 2040.

Countries that have been offered Gripen are: Brazil, Bulgaria, Den-

mark, the Netherlands, India, Croatia, Switzerland and Romania.

Throughout Saab’s 75-year history, operations have grown from military

aviation into a portfolio of products and solutions for defence and civil

security. These systems can help countries develop their capacity to

meet current and future security threats.


GRIPEN – today and in the futureGripen is the world’s first new generation multi-

role fighter that can perform a complete range

of different roles. It is suitable for reconnais-

sance and monitoring (air policing) missions as

well as air-to-air and air-to-ground operations.

Gripen was designed with ease of handling in

mind – both for the pilot and ground crew.

The Gripen systemThe Gripen system was designed for continu-

ous development. New sensors and weapons

are easy to integrate, thus making Gripen

flexible and cost-effective to develop further as

new technologies become available.

Cost-effective system

Gripen is designed for minimal cost in terms of

procurement, logistics support and mainte-

nance. The cost of ownership was catered for

in the aircraft design from the very beginning,

since this was one of the driving requirements

set by the Swedish customer.

Operating costs are low due to:

-

nance and fuel usage thanks to the efficient

single engine.

average time to repair is short.

based – so they do not require as many

expensive hardware modifications.

Air combat

Gripen is one of the most agile fighters around.

Its highly developed aerodynamic construction

and triplex digital flight control system, com-

bined with its world-beating new-generation

weapons system, gives it enormous advan-

tages in air combat.

Digital cockpit

Gripen has a state-of-the-art, fully integrated

digital cockpit with clear, manageable displays

and Hands-On-Throttle and Stick (HOTAS)

controls. This, along with the on-board inte-

grated data link capability, gives the Gripen

pilot total Situational Awareness and, with its

advanced weaponry, the pilot has a decisive

edge in combat situations.

Gripen Next GenerationGripen NG is the next generation of Gripen, an

enhanced version of the well-established multi-

role fighter. It is the next and natural step in the

successful development of Gripen, which will

secure the system’s life span and competitive-

ness beyond 2040. Gripen NG is equipped

with a more powerful engine, increased range,

new AESA (Active Electronically Scanned

Array) radar and a new avionic system, giving

the user new and improved capabilities in the

battle arena.

Gripen C/D Facts:

Length: 14,1 meters

Wingspan: 8,4 meters

Thrust: >18,000 lbs

Weapons Stations: 8

Turnaround-time, i.e. the time it takes for

an aircraft to land, fill up fuel, change cargo and

take off again:

Less than 10 minutes with weapons for

Air-To-Air Combat, less than 20 minutes with

weapons for Air-To-Ground combat.

Gripen E/F Facts:

Length: 14,9 meters

Wingspan: 8,6 meters

Thrust: >22,000 lbs

Weapons Stations: 10

Turnaround-time: Less than 10 minutes with

weapons for Air-To-Air Combat, less than

20 minutes with weapons for Air-To-Ground

combat.


SAAB’S CORE COMPETENCE

SYSTEMS EXPERTISE IS OUR CORE BUSINESS

We address the global market and meet traditional defence needs as well as the needs of the growing market for civil

security. Our core offering consists of systems know-how in products and systems to safeguard national borders as

well as the functional and security needs of the global flow society.

OUR VIEW OF THE MARKET

Our customers increasingly want integrated solutions that

meet local requirements. These solutions are evaluated based

on performance as well as the cost to own and operate. De-

mand is increasing for proven systems that offer “more bang

for the buck” and can be combined with other systems.

OUR CORE COMPETENCE

Our core competence is systems engineer-

ing, i.e., understanding and being able to

integrate complex systems: our own and

others’. At the same time we have developed

world-leading technologies in a number of

important areas and today work with open

systems as far as possible.

OUR MARKET POSITION

Our strongest position and good growth

opportunities are in fighter aircraft, com-

mand and control systems, radar, reconnais-

sance and surveillance systems, including

Airborne Early Warning (AEW) systems,

tactical weapon and missile systems, and

Command, Control, Computing Intel-

ligence, Surveillance and Reconnaissance

(C4ISR) systems.

We also have a strong niche position in

commercial aviation and in selected regions

in civil security, support and services, train-

ing and underwater systems, as well as in

niche segments such as signals intelligence

and countermeasure systems. Geographi-

cally we have a strong position in Sweden

and good positions in South Africa and

Australia.

Read more on pages 10–11


SAAB’S CORE COMPETENCE

OUR VISION

It is a human right to feel safe.

OUR MISSION

To make people safe by push-ing intellectual and technologi-cal boundaries.

OUR BUSINESS CONCEPT

Saab constantly develops, adopts and improves new

technology to meet changing customer needs. Saab

serves the global market of governments, authorities

and corporations with products, services and solu-

tions for military defence, commercial aviation and

civil security.

OUR VALUES

Expertise – We combine a strong history of

knowledge with constant learning.

Trust – We are global citizens, honest and reliable

and we keep our promises.

Drive – We have a passion for innovation, we are

open to change and we are committed to being fast

and flexible.

OUR STRATEGIC HOUSE

Since 2010, our strategy has focused on four priority areas. Our aim

is to create long-term value by accomplishing these strategic priori-

ties. We will also maintain a solid balance sheet, focus on capital

efficiency and generate strong cash flow.

Our long-term financial goals since 2011 relate to organic sales

growth, the operating margin after depreciation/amortisation

(EBIT) and the equity/assets ratio; see also page 48.

Profitable growthWe continuously evaluate our

positioning and identify growth

opportunities. We focus on areas

with a strong market position and

on strengthening in areas with good

growth opportunities.

PortfolioWe adapt our portfolio to areas

with strong competitive advantages

and growth opportunities. We also

target areas with a strong market

position or leading technology.

PerformanceWe work with efficiencies and

continuous improvements.

PeopleWe want to be an employer of

choice in the global market. Our

employees are the backbone of our

offering and our growth.

Read more on pages 16–29

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STRATEGIC GOALS

DELIVERING ON STRATEGIC GOALS

Outcome/goal attainment

Sales decreased in 2011 compared to 2010 as a

result of lower activity levels in major projects and the

challenging business climate in South Africa.

Outcome/goal attainment

Profitability increased in 2011 compared to 2010.

This included capital gains MSEK 1,169 (14),

compared to structural costs of MSEK 616 in 2010.

Underlying profitability increased in 2011, with

successful project execution as one of the most

important drivers.

Priorities 2012

In 2012, we will continue to focus on a

number of key markets, including the

US, Sweden, India and the UK. Our

priority is to increase local competence

and establish a stronger local presence

in selected markets.

Long-term financial goals and outlook for

2012, see page 1.

Priorities 2012

In 2012, we will continue to focus on

improving tied-up capital and generat-

ing strong cash flow. It is important to

us to have a strong balance sheet and

sound profitability to facilitate growth-

enhancing investments.

Long-term financial goals and outlook for

2012, see page 1.

1. PROFITABLE GROWTH

Activities during the year

During the year, we focused on expanding operations

in priority markets, including through focused acquisi-

tions. Among other things, we expanded in the UK

through a new office and a design centre for the de-

velopment of Sea Gripen. We also strengthened our

presence in the US, through the acquisition of Sensis

Corporation. In addition, we established a research

centre in Brazil and a product and technological

development centre in India, where we also signed a

number of strategic agreements with partners.

2. PERFORMANCE


We have continued to focus on standardising opera-

tions and our functional processes to achieve func-

tional synergies. Our improved processes for project

implementation and risk management have enabled

us to identify savings and improve our forecasting

abilities. Our cost base is now more transparent,

which has given us greater flexibility when cost

adjustments must be made.

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0

5,000

10,000

15,000

20,000

25,000MSEK

2009 2010 20110

4

8

12

16

20%

2009 2010 2011

Sales EBIT

Administrative

costs

0

300

600

900

1,200

1,500MSEK

2009 2010 20110

6

12

18

24

30%

2009 2010 2011

Gross margin

Saab’s four strategic priorities are profitable growth, performance, a focused portfolio and people. In 2011, we took a

number of important steps toward meeting them.


STRATEGIC GOALS

Transactions

First half-year 2011:

Investment in Scandinavian Air Ambulance

Acquisition of E-COM of the Czech Republic

Divestment of interest in Grintek Ewation

Divestment of interest in Denel Saab Aerostruc-

tures (Pty) Ltd

Additional consideration was received from the

sale of Saab Space in 2008

Divestment of interest in Image Systems AB

Exercise of option to sell Aker Holding AS

Investment in ISD Technologies Int AB

Second half-year 2011:

Acquisition of Sensis Corporation in the US

Divestment of shares in the 3D mapping company

C3 Technologies AB

Priorities 2012

We will continue to invest in product

development and renewal as well as

prioritise and strengthen our current

competitive position in a number of

selected markets and a number of

technological specialties. In several

markets, we are cooperating with

selected partners to build a local pres-

ence and gain better access to the

market.

Priorities 2012

We will continue to develop Saab

Academy.

We will improve long-term talent

management.

We will develop HR support globally

and locally.

3. PORTFOLIO


We completed several transactions during the year

in order to focus operations. This included streamlin-

ing the corporate portfolio, acquiring companies in

growth areas and divesting non-core operations. The

divestments included the shares in the 3D mapping

company C3 Technologies AB and the Norwegian

company Aker Holding AS, where we exercised an

option. In the US, Sensis Corporation was acquired,

a transaction that strengthens our offering in air traffic

management as well as radar and sensors. In the

Czech Republic, we acquired E-COM, a company

active in training and simulation.

In total, more than 10 transactions were completed.

4. PEOPLE


During the year, we started building Saab Academy

to ensure we have the competence needed to grow

now and in the future.

We are continuously evaluating our employees. Dur-

ing the year, we implemented a uniform performance

management process.

Results 2011

HR goals Results 2011

Employer of choice – internally

(index) 67

Employer of choice – externally

(ranking by Universum) 12th place

Communicative leadership (index) 68

Employee reviews, % 84

Development plans, % 72

Percentage of female managers, % 21


STRATEGY > PROFITABLE GROWTH

1. PROFITABLE GROWTH

GROWTH THROUGH MARKET FOCUS Our business targets markets with strong demand where

our technologies and solutions can meet security needs.

During the year, we continued to deliver on our strategic

goal to focus on key existing markets and strengthen our

presence in selected markets.

Saab has a strong position in Sweden. While we expect this to con-

tinue, the large share of future growth will come from outside the

country. Becoming a more international business – in both military

and civil security, through investments in selected markets and a

deeper market presence – is also one of our principal strategies.

Our sales outside Sweden have gradually increased in recent years.

Today, Sweden and the rest of Europe currently account for slightly

over 56 per cent of sales.

Profitable growth is one of our financial goals. Our organic sales

growth will amount to five per cent over a business cycle. In 2011,

our sales decreased slightly compared to 2010 as a result of lower

activity levels in major projects and the challenging business cli-

mate in Africa. Despite the decrease, we took a series of steps in line

with our strategic goals to create a stronger platform for growth.

Priorities 2011: Measures to increase our global presence

To create profitable growth, we are gradually building our global

presence in priority markets by giving employees in Sweden the

opportunity to work abroad and by recruiting local competence.

In 2011, we signed important agreements in markets where we are

expanding our local presence, e.g., with the Thai Royal Navy, and in

key markets such as the U.S. and Asia.

We acquired Sensis Corporation in the US, broadening our

foundation for growth in the North American market and globally.

Sensis has a strong local presence in the U.S. in radar and sensors

and a world-leading position in the market for air traffic manage-

ment systems; see also page 20.

During the year we also acquired the Czech company E-COM,

which specialises in the development and production of virtual

simulators. We have also established research and development

centres in the strategically important markets of India, Brazil and

the UK; see also pages 30–31.

Priorities 2012–2016: Clearer market focus

Through acquisitions to support our financial goals in defence and

civil security, we will continue to build a strong presence in key

markets. A focused Gripen strategy is also critical.

Our customers can be found in around 100 countries, at the

same time that the majority of order bookings come from around

30 countries where for the most part we also have our own opera-

tions. We will concentrate our efforts primarily on these countries.

Decisions where we operate around the world are based on

extensive market analyses of political, regulatory and competitive

conditions and growth potential. We also look at how our product

portfolio fits the local market’s needs.

A stronger local presence is necessary to meet our goals. This

includes everything from marketing to joint ventures, partner-

ships, industrial cooperations and technology transfers. Our local

presence can also be strengthened through acquisitions, with the

acquisition of Sensis Corporation in the U.S. in 2011 being a prime

example.

Naturally we continue to do business in other countries where

the conditions are right.

We will also be intensifying efforts to find applications for our

know-how and technologies in new areas such as green technology.

At year-end 2011, we had 13,068 employees, about 79 per cent

of whom are in Sweden, five per cent in the U.S. and 11 per cent in

South Africa and Australia.

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SA

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FOCUS ON SELECTED MARKETS

OUR EXPANDING OPERATIONS IN THAILAND

One of our criteria to establish in a new geo-

graphical market is that there is a demand for our

products, services and solutions. We want there

to be in a growing market or a market where we

can gain a strong position. There have to be op-

portunities to build partnerships with authorities

and businesses. In addition, we have to have ac-

cess to engineers and other skilled workers. Another

important factor is that the business environment, in

both the state and private sectors, is trans-

parent and complies with internationally

accepted principles.

Our operations in Thailand are a successful example

where we have found excellent opportunities for our

civil and military products and services.

Thailand has ordered twelve Gripen in two batches,

two Saab 340 Erieye AEW (Airborne Early Warning),

one Saab 340B and an air command and control

system – a complete air defence concept. Moreover,

we received an order in 2011 for the upgrade of

combat management and fire control systems.

A cornerstone of our Thai venture was becoming part-owner of the

Thai company Aviasatcom, which develops and supplies products to

the Thai defence forces. This consolidates our presence in the country

and gives us good opportunities to support customers locally.

Our presence and the deals we have finalised also open up other

business opportunities in Thailand and the region.

SALES TREND BY MARKET SEGMENT SALES TREND BY MARKET REGION

0

3,000

6,000

9,000

12,000

Swedenand

rest ofNordic region

Rest ofEurope

NorthAmerica

Central andSouth

America

Asia,Middle

East andAustralia

Africa

MSEK

0

3,000

6,000

9,000

12,000

Air Land Naval Civil Security

Comm.Aeronautics

Other

MSEK

2010

2011

2010

2011


In 2011, Saab acquired the U.S. company Sensis Corporation

(Sensis), a leading provider of air traffic management solutions

and surveillance technology. The acquisition is fully in line with

our strategic priorities to create profitable growth, increase our

geographical presence and continually adapted our portfolio.

Sensis has a strong position in the U.S. in radar and sensors

and is a world leader in air traffic management, an important

complement to Saab’s existing offering. For example, Sensis has

a strong position with major airports, while Saab is a leader in

Remote Towers for small airports. With this combination, the

Group creates a stronger product portfolio – and new growth

opportunities in a growing global market.

The acquisition of Sensis also gives us a growth platform in

the important North American market, where a local presence

is critical to success. We have also identified operational syner-

gies in both the medium and long term, which we are currently

working to capitalise on.

Sensis has developed and distributed air traffic management

and air defence systems since 1985. It maintains a global base

of more than 200 installations among over 60 customers in 35

countries on six continents. Operations rest on two divisions:

Air Traffic Management, which accounts for about 75 per cent

of sales and has installations at more than 85 airports, and De-

fence & Security Systems, which works with defence organisa-

tions around the world.

Stronger position in important market

Through the Sensis acquisition, we strengthen our offering in

advanced air traffic management and surveillance. There are

several factors driving demand in this market:

Demand for air traffic management and infrastructure is

driven by growth between and within regions.

Global air traffic is growing, increasing congestion. By 2030,

around 50 per cent of growth is expected to come from

travel to, from and within Asia.

Higher fuel prices and increased security demands.

A desire among customers to meet future security, capability

and environmental needs.

Access to new technology.

The Air Traffic Management (ATM) market is cyclical,

programme-driven, dominated by increased automation and

characterised by limited growth in Europe and North America.

Emerging regions, on the other hand, will account for a large

share of market growth, since growing traffic volumes are creat-

ing demand for new systems. At the same time, it remains a fact

that existing systems will not be able to satisfy future needs. A

large number of players are now planning to modernise their

systems and implement new technology.

SENSIS – BRIDGEHEAD TO A GLOBAL MARKET

Saab Sensis’ products and

systems are installed with

over 60 customers in 35

countries on six continents.



Strategy for civil security

Investments in products and solutions for civil security are in-

creasing around the world. We have good positions in Sweden,

Central Europe, South Africa and Australia, e.g., through the

new security system SAFE (Situation Awareness For Enhanced

Security), which covers every security need for the protection

of critical infrastructure, prisons and emergency services . For

more information on SAFE, see page 27.

We are well-positioned in the area and our offering is based on

expertise in military technology, with an emphasis on situational

control as well as efficient, safe and secure trade flows.

Our civil security strategy is also based on our role as a system

supplier and integrator with a focus on airports and aviation,

ports and shipping, as well as on having a competitive portfolio

of solutions to measure-analyse-act.

Air Traffic

Management National Security

Maritime Safety

& Surveillance

Security & Safety

Management



STRATEGY > PERFORMANCE

2. PERFORMANCE

IMPROVED COMPETITIVENESS THROUGH COST EFFICIENCY

We will continue at a rapid pace to improve efficiencies in

the ways we work throughout the Group. The goal is to

become even more competitive.

An efficient business means creating the right conditions to be the

most competitive partner possible for our customers and to pave

the way for growth. In our daily work this means continuously

developing and refining our processes and work methods.

We are working in a structured manner to increase harmonisa-

tion and standardisation within the Group. We also continuously

re-evaluate and prioritise our activities to ensure the highest pos-

sible return on our efforts. The work is measured, followed up and

communicated internally. To succeed, we have to promote a culture

that puts the entire Group’s best first.

Priorities 2011: Organisation and implementation

In 2011, we strengthened cash flow by further improving our

processes for managing capital employed, finalising divestments

and maintaining our programme to sell account receivables. An

efficient organisation is especially important to project imple-

mentation, which we focused on in 2011 and which will remain

a priority.

Due to the long lead times between order bookings and the

receipt of revenue, it is critical that we can do more for less,

which is already one of our strengths. We have also continued to

improve R&D efficiency through a uniform lifecycle process for

our products. This work requires that our organisation and man-

agement model support product development.

Since the cost-cutting programme was completed in 2010,

we have continued to work with improvements in day-to-day

operations. An important element are our centres of excellence

in research and development, which we began opening in 2010.

They will support our collective actions while increasing internal

efficiency.

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FIVE PRIORITIES

Priorities in our efficiency improvement efforts:

Standardise and harmonise operations to achieve functional

synergies.

Focus on contract quality, project implementation and risk

management to improve project results and forecasting abilities.

Increase the flexibility in our cost base to quickly adapt to

variations in volume.

Focus on cash flow and tied-up capital to facilitate investments

for growth and acquisitions, R&D and marketing.

Develop uniform processes for product management and

development to optimise R&D efficiency.

PRIORITIES 2011

Strengthen cash flow through divestments

Successful project implementation

R&D efficiency

Continuous improvements


STRATEGY > PERFORMANCE

OUR PRIORITY 2012–2016: CONTINUOUS IMPROVEMENTS

To achieve our goal of an operating margin

after depreciation/amortisation of at least

ten per cent, we have to work in a structured

manner with continuous efficiency improve-

ments. Maintaining a stable cash flow and

high capital efficiency make us more com-

petitive and facilitate investments that drive

growth. Payment plans in tenders/contracts,

resource-efficient project execution and

reductions in working capital, for example

in account receivables and inventories are

important aspects.

SUCCESSFUL CENTRES OF EXCELLENCE

To increase operating efficienc, not least by eliminating redundancies,

we established centres of excellence within various areas of the Group

in 2010. The goal is to make important knowledge more widely avail-

able and in that way maintain our desired level of competence in certain

areas while improving it in others. The resources that are freed up will

be used for investments in our future. After a short time, the benefits of

the centres have become increasingly evident.

“We can already safely say that the centres which are furthest along

in their development, such as the Optics Design Centre, have lowered

their fixed and variable costs and are seeing greater cooperation be-

tween business areas,” said Göran Johansson, who is leading the effort

to create Saab’s centres of excellence. “This means that we are erasing

the dividing lines within Saab and creating synergies.”

In addition to the Optics Design Centre, Saab established three other

centres of excellence in 2010. As planned, seven new centres were

added in 2011. All of them are in different stages of development.

“Before establishing each centre, we analyse detailed calculations and

arguments,” Göran Johansson continued. “In some cases, we have

found commercial applications, where customers have shown interest

in utilising the competence.”

The work is now continuing. In 2012, around four more centres will be

established, and those already in operation will be re-evaluated accord-

ing to various criterias.

2011

Power

Aerodynamics

Technical

Publications

Ballistics

ILS

Antenna EM Field

Test Equipment

Rugged Computers

Centres of excellence that Saab has established

2010

Optics Design Centre

Common Component Sourcing Centre

Geo Data Centre (digital maps) in a portal, a

central geodata library

Power Electronics Design Centre

ADMINISTRATIVE EXPENSES

MARKETING EXPENSES

CASH FLOW FROM OPERATING ACTIVITIES

0

350

700

1,050

1,400

2009 2010 2011

MSEK

0

500

1,000

1,500

2,000

2009 2010 2011

MSEK

0

1,250

2,500

3,750

5,000

2009 2010 2011

MSEK


STRATEGY > PORTFOLIO

3. PORTFOLIO

DEVELOPMENT OF OUR CORE COMPETENCE

Maintaining a product portfolio that meets our customers’

current needs and develops based on their future needs

is critical if we are to reach our overarching goals in the

short and long term. The ability to continuously supply

sought-after defence and security solutions is also one of

our biggest strengths.

Our strategic priority of a “focused portfolio” refers to how we

develop our offering in defence and security. Our focus is on

developing products and services in areas where we have a leading

position or the potential to secure one. Our product portfolio and

geographical presence create growth potential in a number of areas,

from complex systems to niche products. The Gripen system and

ERIEYE radar system, and their further development, are two of

our best examples of strategic offerings.

Examples of investments in leading niche products that we sell individually

or as part of more complex systems include the weapon systems Carl-

Gustaf, AT4 and NLAW, the RBS 70 ground-based air defence system, the

unmanned helicopter Skeldar, the Arthur and Giraffe AMB radar systems,

and our unmanned underwater vehicles. Niche products also include

combat training, where we have a leading position.

One niche area that was strengthened during the year was Air

Traffic Management (ATM), partly through the launch of the

Remote Tower concept and partly through the acquisition of Sensis,

a leader in the market segment. In terms of development, we are

well-positioned through our participation in the Single European

Sky ATM Research Program (SESAR).

We are also seeing increased demand for solutions based on

open systems as well as systems that can be integrated with those of

different suppliers. We have positioned ourselves as a supplier that

can meet these needs.

PRIORITIES 2011:

Acquisitions and streamlining

Through the acquisition of US-based Sensis in 2011 we have

complemented our portfolio in Air Traffic Management (ATM),

radar and sensors. The acquisition of the Czech company E-

COM further strengthens our offering in training and education.

Moreover, we have maintained the focus on our core areas

by divesting our shares in the 3D mapping company C3

Technologies AB.

Research and development

Our research and development has been focused on the further de-

velopment of products and services that support our core portfolio.

Work on the Group-wide product management process established

in 2010 has continued. We are now seeing major benefits from

having every business area work and follow up their results in a

uniform manner.

This will increase efficiencies in development work, create

synergies between projects, reduce costs and shorten development

times. As part of this work, we are increasingly using model-based

development for complex software and software systems.

Every research and product development investment is preceded

by a careful analysis where customer benefits, future market poten-

tial and profitability are the decisive criteria.

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We develop and supply products and services in both the short

term (about 12 months) and the longer term. Short-term projects

include the area of civil security, where Saab is developing security

management systems for prisons and airports.

A typical example of a long-term research project is the Europe-

an research collaboration Clean Sky, which is designed to promote

greener air transports. Saab’s role in the project is to develop a new,

energy-efficient smart wing, which will be launched on the market

in 2020-2025. This type of long-term project accounts for about ten

per cent of Saab’s self-financed research and development budget.

OUR FOCUS 2012: STRENGTHENED CORE PORTFOLIO

Acquisitions and collaborations

To strengthen our core portfolio while maintaining our desired

ratio between development costs and sales, we continue to take

strategic measures. This includes everything from divestments

to international partnerships and acquisitions.


During the period, we are planning to increase the rate of

investment in many of our product segments. Investments in

the development of the Gripen system are expected to remain

extensive depending on whether we receive addition orders for

Gripen. The large part of these investments will be customer-

financed. In other product segments, we expect future product

development to be self-financed to varying degrees.

We will continue to improve our product management

process by introducing a uniform product portfolio process in

2012. The purpose of the process is to be able to analyse gaps in

the portfolio and prioritise potential investments.

Reduced balance sheet risk and stable foundation for

future profitability

As of 1 January 2009, we changed the application of the ac-

counting principles for development costs. As a result of this

more conservative view, development costs are capitalised at a

later stage in all projects and all capitalised development costs

are amortised over a maximum of 10 years. Consequently, capi-

talised development costs have decreased by 46 per cent, from

MSEK 3,628 at year-end 2008 to MSEK 1,950. This means we

have reduced our exposure to unexpected write-downs.

20112010200920080

6

12

18

24%

20112010200920080

625

1,250

1,875

2,500MSEK

R&D AS SHARE OF SALES SELF-FINANCED R&D AND DEPRECIATION, AMORTISATION AND WRITE-DOWNS

Self-financed research & development

Depreciation, amortisation and write-downs of capitalised development costs

20112010200920080

1,000

2,000

3,000

4,000MSEK

CAPITALISED DEVELOPMENT COSTS 2008–2011



SAAB VENTURES

Saab is a research and development focused company. Some of our

development projects result in product ideas that fall outside our

core areas. These projects have been consolidated in a corporate

portfolio, where Saab Ventures’ role is to initially drive and develop

the businesses together with other co-investors before finding a

natural home for each company.

Saab Venture’s other purpose is to find and invest in small, rap-

idly growing companies that could eventually complement Saab’s

core portfolio.

In 2011, new investments were made in C-leanship and ISD

Technologies AB. In November, Svenska Tracab AB filed for bank-

ruptcy. Saab Ventures’ holding in the company was 6.49 per cent.

Since 2001, Saab Ventures has divested eleven companies. Dur-

ing the year, the shares in C3 Technologies AB, which specialises

in 3D-mapping and in Image Systems AB, which specialises in

technology based on image processing, were sold.

Core portfolio

Company Specialisation

Ownership

interest, %

C-leanship Aps Hull Cleaning Vehicles 27

Cold Cut Systems AB Cutting Fire Extinguisher 29

ISD Technologies AB Virtual Training & Simulation 33

Opax AS Intelligent Video Surveillance 100

Protaurius AB Mobile Ballistic Protection 6

Spin-offs

Company Specialisation

Ownership

interest, %

Minesto AB Tidal Energy Solution 14

Lemon Planet AB Software 17

Wrap International AB Spectrum Management 23

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AIR LAND NAVAL CIVIL SECURITY COMMERCIAL AERONAUTICS

SOLUTIONS iNTEGRATED SOLUTIONS, INCLUDING C4ISR1, TRAINING & SIMULATION

PRODUCTS AND SYSTEMS

SERVICES TECHNICAL CONSULTANCY AND SUPPORT AND SERVICE

1) Command, Control, Computing, Communication, Intelligence, Surveillance and Reconnaissance

2) ATM – Air Traffic Management

Aeronautical

sub-systems

Civil security and traffic man-

agement systems (incl. ATM2)Training and

simulation systemsMissile systems

Underwater

products

Camouflage

solutions

Radar and

electronic warfare

Support weaponsC4ISR1 systemsGripen and unmanned

systems

Saab’s offering



SAFE – THE NEXT GENERATION OF SECURITY SYSTEMS IS HERE

Situation Awareness for Enhanced Security (SAFE) is totally new type of

security system for enhanced situation awareness among multiple users.

SAFE can handle any type of incident, store data and statistics, and even

make its own decisions. For customers this translates into significantly less

administration and more time to focus on their core business. The system

is also easy-to-use, scalable and robustly designed to optimise security and

business flows.

SAFE is based on a powerful command and control system and an

advanced integration platform. The system covers every security need to

protect critical infrastructure, prisons and emergency services. Today it is

installed at a number of Sweden’s largest power plants, correction facilities

and Arlanda Airport, as well as used by first responders. It is also a clear

example of how Saab’s experience, development and existing IT solutions

are integrated in a new software program that now offers an attractive solu-

tion in civil security.


STRATEGY > PEOPLE

4. PEOPLE

COMPETITIVE STRENGTH IS CREATED BY EMPLOYEES To remain on the forefront of technological developments,

we must have employees who take responsibility for mak-

ing the company a market leader.

Saab is a global company with strong ties to Sweden. We are active

in a highly competitive market where our customers’ needs are

constantly changing. An emphasis on business thinking is crucial

to our success and to reach our goals. We need to be attentive and

develop close cooperations with our customers in order to under-

stand their needs and develop attractive solutions in terms of both

technology and cost efficiency.

Technologies are developing at a rapid and our business con-

ditions are constantly changing. This means that we, like other

companies, face the challenge of maintaining and recruiting the right

competence. We want to be the natural choice in the global market,

and our employees are the backbone of our offering and our growth.

Our philosophy as an employer is to create a stimulating, enriching

climate and to develop and support our managers in their role as

leaders.

One of our goals is a more even gender distribution. At the

management level we want 30 per cent of managers to be female by

2015. We are engaged in a structured effort to reach this goal, which

begins with the recruitment of new talents. We are convinced that a

more even gender distribution will make us more successful in our

business thinking and in our ability to deliver attractive solutions

for customers. This applies to both our civil and military offerings.

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150 MANAGERS DISCUSS THE FUTURE

In a changing world, high demands are placed on understanding the drivers and challenges that

affect and will affect Saab’s business. The future was therefore the overarching theme when 150

Saab managers gathered last autumn.

The areas discussed included overarching targets, the importance of an increased market focus

and our priorities in the years to come. It was stressed that we have an attractive product portfo-

lio and a strong position to be successful in the global market.


STRATEGY > PEOPLE

SAAB ACADEMY – DEVELOPING COMPETENCEIn the highly competitive global market where we are active, educated em-

ployees with the right competence are an important success factor. At the

same time, our employee demographics are changing. A large group born

in the 1940s is retiring and a new generation is taking their place. This will

change the demands we face as a company and employer. In several areas

we face major recruitment needs. Finding the right talents and building on

those already in the company is one of the keys to our continued growth.

We are making an ambitious effort to remain the natural choice for tomor-

row’s talents. Competition for the top talents is great, however. Two

concrete measures now being taken to ensure that Saab has the right

competence to meet the future and achieve its business goals are the

newly formed Saab Academy and a trainee programme. Saab Academy is

an international venture which will be adapted to the needs of each country

where Saab is active. Skills training will be provided on multiple fronts,

including by improving and broadening the internal programmes already in

place, developing cooperations with schools, institutes of technology and

universities, and, not least, working even harder with individual programmes

to further develop certain key positions.

FEMALE ENGINEER OF THE YEAR – ANNA PERNESTÅLA self-described nerd won the Saab-sponsored

award for Sweden’s female engineer of the year

in 2011. A project manager at Scania and former

Uppsala student, Anna Pernestål impressed the jury

with her dedication to engineering sciences and her

inspirational drive.

Today slightly over 20 per cent of Saab’s employees

in Sweden are female. This percentage will rise. With

the award, Saab is trying to stimulate interest in en-

gineering and to encourage women to choose it as a

career path. When she received the award in October,

Anna felt it was a strong acknowledgement that she

is headed in the right direction.

CLOSE COOPERATION WITH SCHOOLS AND UNIVERSITIES We collaborate with around 50 schools,

universities and institutes of technology. The

aim is to keep children and young people

interested in education and technology,

drive research projects and show what we

can offer as an employer. Learn more on

page 43.

GUIDING VALUES Expertise, trust and ambition. Our code of

conduct describes how we work internally

and externally. Learn more on page 38.


LOCAL PRESENCE AROUND THE WORLDIn 2011, we established new research and development centres in several locations

worldwide: India, the UK and Brazil. They are important to future product develop-

ment and a stronger presence in strategically important markets.

Research and development in Brazil

In São Bernardo do Campo, Brazil, we were the

driving force behind the Swedish-Brazilian Centre

for Research and Innovation (CISB). The aim is

to create innovations that will find commercial

application in Brazil and internationally. Modelled

on the Lindholmen Science Park in Göteborg,

CISB brings together representatives from the

public sector, academia, and industry. The goal

is that the centre will be self-financed and its

research will focus on defence & security, energy

& the environment, transportation & logistics and

sustainable urban development. To date, the

centre has attracted over 40 partners that are

helping to select research projects. In November

2011, we signed an agreement to offer around

100 Brazilian scholarship winners the opportunity

to study at Swedish universities.

Major investment in the US

In 2010 we opened an office in Washing-

ton, DC to strengthen our local presence

on a continent that accounts for half of

the global market for defence and civil

security.

All our business areas will eventually be

represented here as part of a cohesive

team. Starting with our current product

portfolio, growth will be achieved organi-

cally through industrial partnerships as well

as through acquisitions.

As part of these efforts, Saab acquired

Sensis Corporation in 2011. Read more

on page 20.


Development centre opened in India

In cooperation with Mahindra Satyam, we

opened the Saab India Technology Centre

(SITC) in Hyderabad during the year. SITC will

be part of our global offering, while supporting

operational excellence within the Group and

facilitating an expansion in the Indian market. Its

work will focus on aeronautics, defence systems

and urban development, including civil security.

The most important development areas are

software, electrotechnology and mechanical

engineering. The establishment of SITC is also a

strategic measure to develop synergies between

Mahindra Satyam’s unique expertise in enterprise

solutions, technical services, aerospace systems

and integration and our expertise in aeronau-

tics, network-centric warfare and specialised

IT systems. In late 2011, Saab placed its first

development order with the new centre.

Success for WISE in Australia

With WISE (Widely Integrated Systems Environ-

ment), our innovative software suite, users can

quickly and easily integrate command and control

systems from different domains and countries,

thereby improving situational awareness and

increasing efficiency.

Unlike conventional system integration, WISE

communicates with linked systems through their

own communication standards and protocols,

eliminating the need to modify the integrated

systems.

The software has been demonstrated for, among

others, the Australian Department of Defence. We

showed how advanced technology can produce

major improvements in important defence areas.

Our successful demonstration met the customer’s

stringent technical requirements and strict budget

and time parameters.

The UN: A future market

The United Nations (UN) has quickly become

an important and growing market for Saab. The

journey that culminated in the UN becoming a

market began in earnest in 2009. An initial order

was received in May 2010. The same year a

more extensive contract was signed to supply

maintenance and technical services for the

UN’s missions in East Africa. Three of Saab’s six

business areas are participating and initially have

focused on logistics and training for peacekeep-

ing missions – in particular, solutions for energy,

water and waste management.

One of the biggest reasons why Saab’s business

relationship with the UN has grown is our local

presence. Saab already has an office in Nairobi,

Kenya and is now looking at opportunities to

increase its presence Entebbe, Uganda as well.

At the same time, the UN’s operations in New

York are monitored from Saab’s North American

office.

Sweden

Saab is the first company in the world to supply

an airport with a Remote Tower for air traffic

management, which reduces costs and allows

several different airports to be managed from

a single centre. The first installations at the

airports in Sundsvall and Örnsköldsvik represent

a paradigm shift. The system is expected to be

placed in operation in 2012, when air traffic at

both will be is managed from a Remote Tower in

Sundsvall.

The UK: A priority market

In London, Saab has established both a new

head office for its UK operations and the Saab

Design Centre, where around ten engineers from

Sweden and the UK will initially work on the de-

velopment of an aircraft carrier-based version of

Gripen, Sea Gripen. This is a new area for Saab,

where the aim is to utilise British experience.

South Africa

Saab has a multi-faceted commit-

ment to South Africa. At the same

time that we supply the country with

cutting-edge defence and security

technologies, we are investing heavily

in local industry to drive growth. With

over 1,000 employees on site, we can

combine a local presence with our

international organisation to promote

prosperity and improve the nation’s

defence. Together with the South Afri-

can Army and Bakenberg Traditional

Council, Saab has donated MZAR 2 to

finance the iLab classroom for schools

in Limpopo province to give students

access to computer training.


MARKET SEGMENTS

A changing security marketWe operate in five different market segments, where needs differ but the solutions are partly based

on the same technologies.

AIR LAND

DRIVERS Annual sales in the market segment for unman-

ned aerial vehicles are expected to grow from

around SEK 270 billion to over SEK 340 billion in

the next ten years. The UAV market is estimated at

SEK 25–27 billion per year.

Growth is driven by nations that want new fighter

aircraft with better performance, more flexibility

and better overall economic efficiency.

Alliances and political factors affect the market.

Global economic turbulence has delayed a num-

ber of procurements.

Demands to reduce defence spending are making

performance and life cycle costs more important.

Military aircraft are increasingly used in multina-

tional operations on extended flights over long

distances.

Aeronautics systems require open architecture

and must be upgradable.

New types of military operations and technology

are driving demand for training and education,

often as part of multi-year turnkey commitments.

Land combat is a broad segment and one of the

fastest growing areas of the military market in recent

years. The total market is estimated at SEK 550–580

billion.

Complex conflicts, often in urban environments,

require new strategies, materiel systems and

technology.

Reduced operational needs are expected to result

in lower market growth in the next five years.

The increase in multinational missions requires

cooperation between different countries’ forces

and different types of forces.

Higher demands are being placed on system

integration, interoperability, and command and

control capabilities.

As security threats grow, the need for training

does as well.

OUR POSITION We offer fighter systems, air C4I solutions, unman-

ned aerial vehicles, countermeasures and electro-

nic warfare, avionics solutions, weapon systems,

sensors, training solutions and aftermarket services.

Gripen is a competitive single-engine fighter currently

in service in five countries. During the year, Swit-

zerland decided to continue negotiations on Gripen

as its future fighter aircraft. Our sales amounted to

MSEK 10,611 (10,393).

We have leading positions in many segments of

this market and offer, among other things, tactical

weapon systems and highly sophisticated surveil-

lance and command and control systems (C4I) as

well as solutions for troop protection. Our offering

includes sensors, signature management and

countermeasures, reconnaissance and air defence

systems, and training solutions. Our sales amounted

to MSEK 7,201 (7,611).

0

3,000

6,000

9,000

12,000

2009 2010 2011

MSEK

45%

0

3,000

6,000

9,000

12,000

2009 2010 2011

MSEK

31%

SALES SHARE OF TOTAL SALES

SHARE OF TOTAL SALES

SALES


MARKET SEGMENTS

NAVAL CIVIL SECURITY COMMERCIAL AERONAUTICS

The total naval market is estimated at SEK 300–370

billion per year.

The naval market is stable with growing demand

for expeditionary and coastal capabilities.

More than 90 per cent of global trade is trans-

ported by sea, which has made the protection of

trade flows increasingly important.

For navies and coast guards, the trend is toward

broader-based industrial commitments with grea-

ter demand for integration and lifecycle solutions.

International alliances make the ability to act far

from home more important.

There is growing interest in long-endurance ships

with smaller crews, where sensors and combat

management are the highest priority.

Public-private partnerships are becoming more

common.

An extensive naval build-up is under way in the

Middle East and Southeast Asia (mainly China).

The civil security market currently generates slightly

over SEK 400 billion a year and is anticipating annual

growth of 10–11 per cent, divided equally between

protection for borders, ports, energy systems and

airports.

Growth is driven by new laws and the realisation

of how costly disruptions to society’s various flows

can be.

Investments in national security to protect people,

critical facilities and large flows are increasing

around the world.

The continued growth and increased complexity

of large cities is placing tougher demands on

sustainability, flow efficiency and interoperability.

The total market is growing by an estimated five

per cent per year. For new commercial aircraft, the

market is estimated at SEK 600 billion annually.

Growth fluctuates greatly with the economy, with

commercial carriers currently in a recovery phase.

The market is exposed to the U.S. dollar and

exchange rates.

The industry is capital-intensive with long develop-

ment cycles and has consolidated into oligopolis-

tic structures.

New players, especially from China, are challen-

ging Boeing of the U.S. and Europe’s Airbus in the

market for large aircraft.

High fuel prices and new environmental require-

ments are strengthening demand for fuel-efficient

aircraft models.

Subcontractors continue to face price pressure.

Delivery volumes are increasing significantly as

new aircraft such as the B787 and A350 are

introduced on the market.

New aircraft models contain larger modules than

before, with systems content integrated into the

structure.

We have a strong position in radar and early

warning, command, control and communication

systems (C4ISR), tactical weapons and underwa-

ter systems. Our sales amounted to MSEK 2,065

(2,278).

Our civil security offering is focused on monitoring

and situational control as well as ensuring efficient

flows, with an emphasis on airports and air travel,

ports and shipping, and emergency response

planning. Our position, while challenging, is good

in Sweden, Central Europe, the US, South Africa

and Australia. Our sales amounted to MSEK 1,479

(1,427).

We are a supplier to the world’s leading aircraft

manufacturers, including Boeing and Airbus, mainly

of durable, lightweight aerostructures, avionics,

operating systems, structural and system integration

services, and support solutions. We have a track

record of having built more than 4,000 aircraft. Our

sales amounted to MSEK 1,309 (1,348).

0

750

1,500

2,250

3,000

2009 2010 2011

MSEK

9%

0

750

1,500

2,250

3,000

2009 2010 2011

MSEK

6%

0

750

1,500

2,250

3,000

2009 2010 2011

MSEK

6%




SALES SALES SALES


MARKETS BY REGION

SAAB – A SWEDISH GLOBAL SECURITY GROUP

Saab is a global group with operations on every continent. In recent years, we have sharpened

our market focus with an aim to strengthen our local presence while increasing sales and market

shares. In 2011, approximately 63 per cent of sales and 56 per cent of order bookings were

generated outside Sweden.

AMERICAS

Saab’s position Through the acquisition of Sensis, Saab

strengthened its position in the important North American

market. The order intake in the market increased in 2011 and

included orders for the Carl-Gustaf man-portable weapon

system and the Giraffe AMB multi-mission radar system.

MARKET TRENDS

North and South America accounted for nearly half of

global defence spending in 2010, or about SEK 791 bil-

lion. Defence spending is expected to decrease in North

America in the coming years, at the same time that invest-

ments in civil security continue to rise rapidly. Brazil, one of

the stronger economies in South America, accounted for

the large share of its defence spending.

0

750

1,500

2,250

3,000

2010 2011 2010 2011

MSEK

Sales Order bookings

AFRICA

Saab’s position Since the acquisition of Grintek Defence in

2005, Saab has maintained a strong position in South Africa.

The order intake and sales decreased in 2011 compared to

2010 due to challenging market conditions in South Africa.

MARKET TRENDS

In recent years, the African continent has experienced

economic growth, although several countries are facing

political turbulence. In 2010, defence spending in the

region accounted for about 2 per cent of the global total.

Spending on defence and civil security is expected to

increase in the coming years.

0

750

1,500

2,250

3,000

2010 2011 2010 2011

MSEK



MARKETS BY REGION

REST OF EUROPE

Saab’s position Important markets include the UK, France,

Germany and Finland. In 2011, Saab strengthened its position

in the UK by opening a new office and design centre. The order

intake increased in 2011 compared to 2010 and included live

training capabilities to the British Army.

SWEDEN

Saab’s position Since Saab was founded, Sweden has

been its largest market and the majority of its research and

development is conducted there. The order intake and

sales both decreased slightly in 2011 compared to 2010.

MARKET TRENDS

Defence budgets are being reassessed in Europe in light of

the current economic situation. Defence spending is expec-

ted to decline not only in Greece, Italy and Spain but also the

UK, Germany and France, which accounted for about ten per

cent of the global total in 2010. In total, Europe accounted for

about 23 per cent of global defence spending in 2010. Defence

appropriations are expected decline in the coming years.

Investments in civil security are expected to continue to rise at the

same rate as previous years, i.e., by about ten per cent per year.

MARKET TRENDS

Sweden accounted for less than a half per cent of global

defence spending in 2010. Together, the Nordic countries’

defence spending represented about one per cent of the

global total in 2010. This figure is expected to rise slightly

in the coming years.

0

1,500

3,000

4,500

6,000

2010 2011 2010 2011

MSEK


0

2,500

5,000

7,500

10,000

2010 2011 2010 2011

MSEK


ASIA, MIDDLE EAST AND AUSTRALIA

Saab’s position India and Thailand are two important markets for

us in Asia, where our investments have given us a strong position.

We have also been working for many years in Australia, where

we today have a strong local presence in command and control

systems and are growing in traffic management systems and

civil security. Parts of the region represent markets that are not

available to Saab for political reasons. The order intake decreased

in 2011 compared to 2010 and sales rose due to a higher level

of order activity. Orders included an upgrade of combat manage-

ment and fire control systems from Thailand, the weapon locating

system Arthur from Korea och ammunition to the Carl-Gustaf

man-portable weapon system.

MARKET TRENDS

Defence budgets are expected to increase throughout the region

in future years. In 2010, defence spending here accounted

for about 26 per cent of the global total, with the Middle East

accounting for about seven per cent. After China, Japan has

the highest spending in the region, according to the Stockholm

International Peace Research Institute (SIPRI).

Investments in civil security are expected to continue to grow in

the region.

0

2,500

5,000

7,500

10,000

2010 2011 2010 2011

MSEK



SAAB’S RESPONSIBILITIES > SUSTAINABILITY

Through its operations, Saab plays an important part in

society’s development. Our defence and security solu-

tions contribute to a safer society. The actions we take

are based on a set of values and ambitious goals to be a

responsible business partner and employer..

Saab has played an important role in Sweden since the company

was founded in 1937. The acquisition of Celsius added a unique

industrial heritage dating back to the Bofors iron mill in 1646. In

pace with globalisation and growing international trade, Saab’s

operations have become more international. Today the Group is

active in around 30 countries and has around 13,000 employees.

Our overarching goal is to contribute positively to society. We do

so by providing systems and solutions that make society safer and

more secure.

From a societal perspective, Saab is an innovation powerhouse

for advanced Swedish technology. This produces positive effects

in a number of areas and helps to keep Sweden on the map as a

knowledge leader.

High expectations

Predicting the needs and expectations of our various stakeholders

is critical to the long-term success of our operations. Saab’s primary

stakeholders are its customers, business partners, employees, share-

holders and the society in which we operate.

Our customers and business partners expect us to offer cost-

efficient solutions designed for their specific needs. They want a

business relationship that develops over time, based on mutual

trust. And they want there to be no question that we will comply

with international regulations and treaties and maintain high ethi-

cal standards.

Our employees expect Saab to be an employer that utilises their

skills and offers opportunities for professional development.

Our shareholders expect a consistently high return and trans-

parency in our communication with the capital market.

The society in which we operate expects us to responsibly man-

age our business. This includes caring for the environment and

contributing positively to our communities locally and globally.

SUSTAINABILITY AT SAAB

DRIVE

We have a passion for innovation,

we are open to change and

we are committed to being

fast and flexible

EXPERTISE We combine a strong history

of knowledge with

constant learning.

TRUST

We are global citizens,

honest and reliable and we

keep our promises.

OUR VALUES


SAAB’S RESPONSIBILITIES > SUSTAINABILITY

MANAGEMENT OF SUSTAINABILITY WORK

Overall responsibility for sustainability work rests with Saab’s Board of

Directors, which, through the CEO and other members of Group Manage-

ment, ensures that sustainable development is incorporated into day-to-

day operations. Group Management has assigned individuals responsibility

for each of the four areas mentioned below.

Clear lines of responsibility for priority issues

BOARD OF DIRECTORS

MANAGEMENT

Aeronautics DynamicsElectronic Defence Systems



Combitech

ENVIRONMENT

Responsibility for Saab’s strategic development and oversight of

environmental work rests with Group Quality & Environment. Operat-

ing issues are handled by the business areas, whose managers

ultimately bear responsibility for compliance with environmental

requirements. The goals that are set at the Group level are broken

down by business area, work group, etc. The Group Environ mental

Council coordinates and follows up environmental work within Saab.

EMPLOYEES

Saab’s Senior Vice President and Head of Group Human Resources

has overarching responsibility for HR work within the Group. Co-

ordination and development of the Group’s HR work is handled by

the HR units within each business area under the leadership of the

HR staff.

BUSINESS ETHICS

The General Counsel has overarching responsibility for our code

of conduct and for raising business ethics issues in the organisa-

tion. In the course of day-to-day operations, every employee has

an individual and shared responsibility to comply with the code of

conduct. If any confusion arises, it is the duty of the employee to

bring it to the attention of his or her immediate supervisor. Saab has

also established a whistleblower function as well as an ethics and

compliance unit within the legal department, which is responsible

for the Group’s rules and ethical standards.

SOCIETY

Our efforts are guided by our overall vision, business concept and

values. Certain specific measures are governed by our sponsorship

policy, which requires that sponsorship activities generally focus on

education and technology.


SAAB’S RESPONSIBILITIES > BUSINESS ETHICS

A CODE OF CONDUCT WITH CLEARLY DEFINED RULES

We have a code of conduct with guidelines that define

how we are expected to act with each other as col-

leagues, in contacts with our customers and in our com-

munities. We have a zero tolerance policy with regard to

violations of any kind.

Goal

Saab will be a trustworthy and reliable partner that promotes an

open and transparent market.

We are committed to acting ethically in everything we do on the

basis of current laws, our values and code of conduct, and indus-

try codes of conduct. We have developed our code based on the

OECD’s guidelines for multinationals and the UN Global Compact.

In 2011, we introduced an updated version of our code of conduct.

Industry cooperation to fight corruption

Through the Aerospace and Defence Industry Association (ASD),

the European defence industry has drafted Common Industry

Standards to fight corruption. Saab participated actively in this

work and has implemented the requirements and procedures in its

own operations. The basic rules then served as the starting point for

a more extensive cooperation between European and U.S. defence

contractors as part of the International Forum on Business Ethical

Conduct (IFBEC), which in 2011 arrived at its final form. IFBEC’s

mission is to develop and in various ways promote ethical standards

within the global aerospace and defence sector. Saab is a member of

IFBEC and participates in its Task Force. Through this international

collaboration, the industry has clearly expressed its commitment to

fighting every form of corruption through the use of best practices

and uniform rules.

Business ethics at every level

In a global society, companies fill an important function by creating

sustainable growth and doing business ethically. Trust and transpar-

ency are critical to future success. During the year, Saab updated and

enhanced its code of conduct. All employees have been provided in-

formation on the new code and are expected to familiarise themselves

with its contents and follow its guidelines.

Focus on business ethics throughout the sales organisation

In autumn 2011, around 150 people received training on our new code

of conduct and Saab’s zero tolerance of bribes. In addition, they were

all taught that responsible officials are required to conduct a corruption

risk assessment in connection with every business deal.

Saab will continue this exten-

sive training within the mar-

keting and sales organisation

in 2012. All 500 employees

will attend the programme.

Everyone who completes it

signs a document as proof

that they have received train-

ing in Saab’s business ethics.

Marketing consultants and other cooperations

The use of marketing consultants and other advisers is normal in a

complex market. At Saab all such cooperations are analysed and

evaluated centrally. Specific rules of procedure must be followed, and

every decision must be preceded by a thorough analysis.


SAAB’S RESPONSIBILITIES > EMPLOYEES

COMMITMENT AND COMPETENCE IN FOCUS

As a knowledge company, Saab is dependent on attract-

ing the right talents today and in the future. We therefore

strive to offer the right development opportunities for

current employees and to be the first choice of future

generations of Saab employees.

Goal

Our overall goal is to be an employer of choice for current and

future employees.

Priorities 2011

Performance Management

During the year, we introduced a Group-wide process for goal-set-

ting, development, monitoring and incentives. The aim is to ensure

that all employees have explicit goals, plans and follow-ups.

Harmonised HR processes

We continued during the year to focus on creating uniform HR

routines with the aim of increasing quality and cost efficiencies. For

example, we have implemented a process to support HR and man-

agers throughout the employment cycle: attract, recruit, introduce,

develop and terminate. In terms of introductions, we have also

launched a Group-level introductory programme that will be used

for all new hires.

We have also implemented payroll efficiencies and signed a

Group-wide occupational health agreement in Sweden. As a result,

we have reduced 26 service providers to one, a cost reduction of

about 25 per cent. The agreement also represents an opportunity to

work more strategically with healthcare issues.



Culture and behaviours

Knowing and understanding our future direction is important to

creating commitment and confidence in the future. In autumn

2011, Saab’s business plan for 2012-2016 was therefore presented to

the Group, and through the business areas to every employee.

During the autumn, the Group’s employees received the up-

dated code of conduct, which establishes a number of important

principles, including that trust is the cornerstone of our business.

Descriptions are provided of the rules that apply to the business as

a whole, how we are expected to act in our workplaces, the impor-

tance of business ethics to building trust and how to communicate

internally and externally.

Competence and leadership

We have continued to try to create the right opportunities for cur-

rent employees to develop. By maximising the commitment and

competence of every employee, Saab will be better able to meet its

overarching goals.

During the autumn, 150 managers met to discuss the future. The

topics included professionalism at every level of operations and Saab’s

foundation: its employees. By 2020, 50 per cent of the Swedish popula-

tion will be born after 1978, which means that Saab’s demographics

will change as well. The managers received valuable insight on the new

generation of employees and discussed the future demands on Saab’s

leadership and corporate culture. An important part of this work to at-

tract new talents is our cooperations with institutes of technology and

universities. Learn more on page 43.

During the year, around 300 managers, project leaders and young

talents sharpened their leadership abilities while building skills and

know-how through our management development programmes.

The basic programme has been modified and will be launched

in 2012. The new management development concept will focus

on personal development, business knowledge and international

business culture and will be open to all Saab managers around

the world. We also offer international management development

programmes, including the Advanced Corporate Management

Network (ACMN), which has brought together participants from

Sweden, South Africa, England and Australia. The purpose of the

programme is to learn more about Saab’s entire operations in order

to develop as a leader in an increasingly international environment.

After the recruiting process for Saab’s new training programme

was completed during the year, 15 trainees were hired to begin in

the first quarter of 2012. During the year, competence mapping

assessments were done in selected functions in order to harmonise

development activities.

During the year, a decision was made to launch a global Saab

Academy to give further attention to talent management and de-

velopment in all of Saab’s operations. Saab Academy will be started

in 2012.

Priorities 2012

Continue to develop Saab Academy

Improve talent management

Develop HR support globally and locally



PERSONNEL DATA

2011 2010 2009

Total number of employees 13,068 12,536 13,159

of whom in – Sweden 10,321 10,396 10,916

– South Africa 1,064 1,086 1,146

– USA 652 191 262

– Australia 324 348 378

– UK 147 117 118

– Czech Republic 143 21 -

– Denmark 68 72 79

– Finland 74 74 72

– Norway 55 50 47

Percentage of women, total 22% 22% 22%

Number of consultants 1,368 1,109 1,150

– of which external 1,044 826 906

RESULTS 2011

HR-related goals Results 2011 Results 2010 Goal 2015

Employer of choice – internally

(Index) 67 69 75

Employer of choice – exter-

nally (Ranking by Universum) 12th place 10th place

5th place

or better

Communicative leadership

(Index) 68 67 73

Employee reviews, % 84 83 100

Development plans, % 72 71 100

Share of female managers, % 21 19 30

78%

22%

Men

Women

GENDER DISTRIBUTION

2011200920072005200320010

25

50

75

100%

Employees in Sweden

Employees outside

Sweden

PERCENTAGE OF EMPLOYEES OUTSIDE SWEDEN

Engineering and manufacturing

Natural sciences, mathematics and

computer science

Social sciences, law, business and

administration

Other majors

EDUCATIONAL BACKGROUND

73%7%

10%

10%

COMMENTWe had a high response rate in our annual employee survey, which we see

as a sign of strong commitment. The survey was conducted during the first

quarter, a time of significant changes and cost cuts. Although employees

gave Saab a slightly lower overall rating compared to the previous year,

they continued to respond positively in terms of the opportunities available

and that Saab offers a good work-life balance.

In last year’s Corporate Barometer, Saab fell from tenth to twelfth place

compared to the previous year, but retained its position as an employer of

choice among Swedish engineering students. In just a few years, the crite-

ria students use to rank employers have changed appreciably. Now most

feel that it is extremely important that an employer can offer a balance

between work and life, an area that Saab’s current employees rate highly.

The survey also shows that corporate culture is becoming more impor-

tant. Engineering students want a creative, dynamic and welcoming work

environment, leaders who support their development and contacts with

international customers and colleagues.

The share of wage-setting female managers increased to 21 per cent. We

remain focused on achieving our goal of 30 per cent by 2015.


SAAB’S RESPONSIBILITIES > SOCIETY

As one of Sweden’s most research-intensive compa-

nies, we have contributed to technological development

domestically and around the world. Today this remains

an important component in industrial development in a

global market.

Saab is a company that contributes to society on several dimen-

sions beyond its basic business concept. For example, it creates job

opportunities itself as well as through its subcontractors, in Sweden

and our other home markets. Having access to the right skills is

critical to our long-term development and success, which is why we

have invested for years in collaborations and programmes to give

children and young people the opportunity of a good education in

Sweden and South Africa.

In Sweden, we have established alliances with several leading uni-

versities and institutes of technology. Our focus in South Africa is

on assisting children and young people to receive an education and

provide them with access to the right learning materials.

Goal

We create economic value where we operate. Our research and

development helps to build competence and provides economic

benefits in our own and others’ businesses.

Priorities 2011

New innovation centre in Brazil

May 18 marked the opening of the Swedish-Brazilian research and

innovation centre created on Saab’s initiative. The main focus is

on transportation and logistics, defence and security, and urban

PARTNERSHIPS FOR SUSTAINABLE DEVELOPMENT

FROM WET TO DRY

Saab has maintained a local presence in Thailand for

several years. In connection with the flooding there in fall

2011, Saab received a request from the Thai Embassy for

emergency assistance.

After analysing the situation, Saab’s organisations in Thai-

land and Sweden donated two water treatment facilities,

300 tents and 100 electric generators for the Thai people.

Since Saab has the capacity, experience and local presence

in Thailand, it was able to respond quickly.

Saab’s many years of experience with infrastructure services

and system solutions for defence, disaster and rescue mis-

sions is a vital asset for those in need. Efforts are coordi-

nated as part of Project Relief.

About Project Relief

Project Relief is an initiative created by Saab to meet

emergency needs and reduce human suffering caused

by disasters. By utilising our technical expertise and long ex-

perience, we can make a difference. To build on this social

responsibility work and at the same time be in position to

respond quickly and effectively to future disasters, Saab has

decided to create a permanent capability. The initiative is

still in development. A previous project in Pakistan 2010

provided water treatment plant facilities for 15,000-20,000

people. Saab also donated money to Haiti after the earth-

quake in 2010.


SAAB’S RESPONSIBILITIES > SOCIETY

COLLABORATIONS

Saab collaborates with around 50 schools, institutes of technology and uni-

versities. The aim is to promote education and technology among children

and young people, drive research projects and demonstrate that Saab is

an attractive, stimulating employer.

Collaborations to promote education and technology

Examples include:

Saab Technical High School, which was established in 2009 to strength-

en interest in engineering and the natural sciences among children and

young people in Arboga and the surrounding area.

Cooperation with Arabyskolan in Växjö, where Saab is involved in the

engineering and science curriculum.

The Royal Swedish Academy of Sciences’ science and technology

programme for preschool and primary school students.

Venture Cup

Kunskapsskolan

Female Engineer of the Year

Swedish Championship in Technology and “Technology Days” events

Åke Svensson’s research grant at Linköping University

Long-term sponsorship agreement with the electrotechnology depart-

ment at Chalmers.

Cooperation with First Lego League and Upptech to promote technol-

ogy among young people.

A number of educational projects in South Africa, where we supply the

materials and other equipment, participate in lectures and take our own

teaching initiatives.

iLab Classroom, where we sponsor mobile computer labs that can easily

be transported to schools where children today lack access to comput-

ers and IT.

Saab is engaged in a wide array of technological collaborations with Swed-

ish and foreign universities, research institutes and companies, contributing

to a number of research programmes and centres of excellence. In 2011,

this included eight EU projects, four ETAP projects and 24 NFFP projects.

Examples include:

Together with Linné University and Chalmers University of Technology, a

doctoral project is under way on dynamic forecasting models. The aim

is to measure aircraft vibrations and compare them with how aircraft

perform in reality.

Saab is represented on the Governing Board of Clean Sky, one of the

EU’s largest research projects ever. Learn more on page 46.

Saab is a partner in Neuron, Europe’s largest multinational military

demonstrator project.

Saab is a partner in MidCAS, the European Defence Agency’s (EDA)

largest research project ever.

Saab is the lead partner in FAS4Europe, the first joint study of the future

of European military aerospace.

Saab is one of the founding companies behind Compraser. Created in

2011, Compraser is a Swedish research centre for fiber composites,

where member companies are cooperatively trying to find better, more

efficient ways to produce, test and validate their products, mainly carbon

fiber composites.

Several adjunct professors are dividing their time between Saab and

their universities as a way to develop knowledge collaboratively.

development, specifically with regard to energy and the environ-

ment. The centre will bring together stakeholders from the public,

academia and industry and give them the opportunity, using

technology, to tackle important challenges in society. Learn more

on page 30.

Structured assistance

Natural and man-made disasters have increased in number in the

last 20 years. The demand for humanitarian aid in the aftermath of

such catastrophes is high, especially in terms of shelters, potable

water, medical assistance and food. To meet this need, Saab has es-

tablished Project Relief, through which it supplies technical exper-

tise and experience to save lives in affected areas. With its resources,

Saab can help to meet basic human needs and reduce suffering in

the wake of disasters. As an example, we might donate material and

provide organisational assistance with water treatment, cartography

and technical support.


SAAB’S RESPONSIBILITIES > ENVIRONMENT

We are working actively to reduce our impact on the en-

vironment and climate change. An important part of our

work is to collaborate with the industry to create sustain-

able solutions for the future.

Objective

Our overall objective is to reduce the impact of our operations and

products on people’s health, the environment and the climate. The

most important environmental aspects for us are climate change,

our products’ environmental impact, hazardous chemicals and

environmental risks; learn more on page 65. Our climate objective

is to reduce relative CO2 emissions by 20 per cent during the period

2007-2020. Emissions are measured against our turnover in MSEK.

In the area of chemicals, we work actively with needs analyses,

knowledge and communication internally within Saab and with

our suppliers. All the business areas drafted strategy documents in

2011, where the use of hazardous substances in their products was

identified. These strategies will serve as the basis for prioritising

measures to replace hazardous chemicals. The work is monitored

on a regular basis by the Group Environmental Council.

Priorities and results 2011

Climate change

During the period 2007-2010 relative CO2 emissions were reduced

from 2.6 to 2.5 tons per MSEK. Vehicles, aircraft, business travel

and goods transports account for 60 per cent of emissions, while

40 per cent is attributable to electricity and heating for our facili-

ties, machinery and processes.

An extensive energy conservation project was launched in 2011

to cut energy consumption at Saab AB’s properties in half by 2015.

The measures include smaller facilities, more efficient operations,

technological investments and increased awareness among em-

ployees about consumption from computers, lighting and projec-

tors. In 2012, one of Saab’s large cooling centres will be replaced by

district cooling to reduce CO2 emissions by 3,000–4,000 tons per

year while at the same time eliminating another smaller, energy-

draining system.

For the fifth consecutive year, Saab was ranked in the international

Carbon Disclosure Project’s (CDP) Carbon Disclosure Leadership

Index. In its Nordic report, CDP ranks companies that excel at climate

reporting. The focus is on greenhouse gas emissions, goals and results,

measures to limit emissions, and the risks and opportunities compa-

nies see due to climate change. For more information on CDP and

Saab’s complete CDP report, see www.cdproject.net.

Hazardous substances

Certain hazardous chemicals are still necessary to meet security

and technical performance requirements in the aerospace and

defence industry. During the last ten years Saab has reduced its use

of hazardous substances such as volatile organic solvents (VOC),

trichloroethylene, brominated flame retardants, lead and cadmium.

It has received an exemption from the Swedish National Chemi-

cals Inspectorate to use trichloroethylene at the Swedish facilities

in Tannefors and Järfälla. Beginning in 2010, four older facilities

that used trichloroethylene to degrease metals have been replaced

by two modern, enclosed plants, which offer many environmental

benefits, including a reduction in trichloroethylene from over ten

tons to about one ton per year. Trichloroethylene emissions to

water have ceased and hazardous wastes have been reduced. In the

process, energy and water consumption have decreased as well.

Although its products are not governed by the EU’s RoHS

directive (Restriction of the use of certain Hazardous Substances in

electrical and electronic equipment), Saab is actively seeking to re-

duce consumption of these substances as stipulated in the directive.

Moreover, we are working to adapt to the requirements of the EU’s

chemicals law, REACH (Registration, Evaluation and Authorisation

of Chemicals). In 2011, Saab acquired and tested an IS/IT tool to

structure information on the chemicals contained in its products.

The tool will also be used to verify that the products meet current

chemical requirements. Implementation will begin in 2012. We

have long been using an effective Group-wide IS/IT system to man-

age chemical products in its operations.

Demands on suppliers

We have many suppliers around the world. Because a large share of

the components and subsystems used in its products are pur-

chased from other companies, they too have a great impact on our

environmental work. We therefore require that our suppliers act

responsibly and follow our requirements as well as those of the

EU and our customers. Setting environmental requirements for

suppliers and monitoring compliance is a continuous process. In

2011 this work was given higher priority, especially since we are

currently introducing uniform processes and routines within Saab.

External environmental cooperations

We are one of the main suppliers to Clean Sky, a Joint Technology

Initiative financed equally by the EU and the industry. The purpose

of Clean Sky is to bring the European aviation industry together to

meet the 2020 environmental goals set by the Advisory Council for

Aeronautic Research in Europe (ACARE). This includes reducing

REDUCING OUR ENVIRONMENTAL IMPACT



CO2 emissions per passenger km flown in European airspace by

50 per cent, nitrogen oxide by 80 per cent and noise levels around

airports by half. The project is now halfway complete and the

results are beginning to be released. In addition, we are helping

to develop a future wing that will utilise innovative technology in

terms of design and construction to reduce wind resistance, thereby

cutting fuel consumption by up to eight per cent. Initial production

testing was conducted in 2011. An aircraft with a full-scale wing is

scheduled for testing in 2014–2015.

0

10,000

20,000

30,000

40,000

50,000

60,000

201918171615141312111009080706050.0

0.6

1.2

1.8

2.4

3.0

3.6

Total emissions (tonnes CO2)

The relative target for GHG emissions is a 20% decrease

between 2007 and 2020

Relative emissions (tonnes CO2/MSEK sales)

tonnes C

O2

tonnes C

O2/M

SE

K s

ale

s

CO2 EMISSIONS BY SOURCE WITHIN SAAB IN 2010*, %

CO2 EMISSIONS WITHIN THE SAAB GROUP

* Figures for 2011 were not available at the time this annual report was produced.

Group-owned boilers and accidents, 5 %

Group-owned vehicles and aircraft, 25 %

Purchased electricity, 25 %

Purchased district heating, 12 %

Purchased business travel 27 %

Purchased freight, 5 %

Leased properties, 1 %

ELECTRICITY CONSUMPTION IN SAAB’S OPERATIONS

0

40

80

120

160

200

20112010200920082007

GWh Electricity

Heating

Saab works actively to more

efficiently use electricity and

heating energy. The reduction

in electricity consumption is

due to the coordination of

operations and energy savings

measures. The increase in

heating energy consumption is

due to the cold winter in 2010.

EMISSIONS OF VOLATILE ORGANIC SOLVENTS (VOCs), TONNES

The reduction in VOC emis-

sions from 2010 to 2011 is

due to variations in production

volume. Aeronautics and Saab

Barracuda AB account for the

largest share of emissions.2007 2008 2009 2010 2011

60

50

40

30

20

10

0

CONSUMPTION OF CHLORINATED VOLATILE ORGANIC SOLVENTS (VOCs), TONNES

Chlorinated VOCs consist

of trichloroethylene, which is

used within Aeronautics and

Electronic Defence Systems.

The reduction in consumption

is due to the new degreasing

facility Aeronautics used

throughout the year.

15

12

9

6

3

02007 2008 2009 2010 2011



SUSTAINABLE SOLUTIONS TO REDUCE ENVIRONMENTAL IMPACTS

Environmental and climate challenges are global, and all

our customer-countries face the daunting task of having

to address them as a major priority.

In February 2011, the EU reaffirmed its goal to reduce greenhouse

gas emissions by 80–95 per cent by 2050 to avoid a temperature

increase of two degrees Celsius. Taking into account the measures

developing countries will have to take, this represents a global re-

duction in emissions of 50 per cent by 2050. Moreover, 50 per cent

of the world’s population currently lives in urban environments. In

20 years, this is expected to grow to 60 per cent. Cities devour en-

ergy and resources and produce large volumes of waste. For escalat-

ing urbanisation to be sustainable, new solutions and ideas will be

needed. Every industry is looking for ways to effectively transition

to a more sustainable society. As a result, energy-efficient solutions

are in growing demand, regardless of the energy source.

Information and communication technology (ICT) is thought to

have excellent potential to reduce CO2 emissions if used optimally.

In our business development we have already seen how our know-

how and solutions based on existing technology can help custom-

ers. This has facilitated a leap into the greentech market. Our

Greentech Business Concept is to create and introduce sustainable

solutions for various situations where people impact of the environ-

ment. This includes cities, energy supplies, transports and traffic on

land, at sea and in the air.

Transports, energy, water, waste management and huge amounts of

information flow in various directions. Several of the players responsi-

ble for this in society are customers of Saab. Our systems can optimise

these flows and represent an important step toward a sustainable

society. Examples include:

Intelligent transport solutions for air, land and sea

Solutions that improve logistical and maintenance efficiency

Communication and decision-making systems

Surveillance systems for land and sea

Data processing and visualisation for better decision guidance

Waste and energy

Current examples include: :

Measuring cities – Safe & Efficient Cities is a collaborative project

by the Linköping municipal and technical authorities, Saab and

Linköping University launched in 2008. Together we have demon-

strated a sensor that measures drinking water in real time. Saab’s

contribution to the project is the control system that transmits

the alarm from the sensors. The security system is currently being

tested in Linköping and is expected to be available in the interna-

tional market within a year.

Support for wind and solar power – Saab offers complete main-

tenance and monitoring systems for wind farms, which means

that operators can rely on us as their sole supplier of maintenance

systems. The same offering is available for solar energy, where Saab

supplies weather monitoring systems that control the wind park’s

functions. Customers include ABB and Cleanergy.

Telematic Fleet Maintenance – Used at airports, for example, to

monitor fuel consumption, emissions and costs per vehicle by col-

lecting data from sensors in the vehicles. The system also handles

data transfers between the backoffice and vehicles.

SESAR – (Single European Sky Air Traffic Management Research),

an EU collaboration focused on developing future air traffic man-

agement systems with less impact on the environment.

Clean Sky – Saab’s technology is contributing to lighter, more

energy-efficient aircraft with lower wind resistance, thereby

reducing energy consumption. New technology will gradually be

incorporated into future generations of commercial cargo aircraft

beginning in 2016.

BioFuel – Saab participated in 2011 in a joint study with FMV and

the Swedish military on the use of biofuels in the Gripen system.

C-lean Ship – All ships collect algae and other unwanted mate-

rial on their hulls, which makes them slower and increases fuel

consumption. The bigger the ship, the more consumption increases.

Most shipping companies wash the hulls once every three years,

which will sideline a vessel for up to 48 hours. Saab has developed

a robotic cleaning device, based on the remotely operated vehicles

(ROV) from Dynamics, which can do the job in 6–8 hours. Maersk,

for one, has seen savings of about MSEK 400 per year.

Minesto - develops a new concept for a powergeneration through

tidal water and ocean streams. It is a spin-off from Saab’s expertise

within aerodynamics. The powerplant, called Deep Green, has a

unique ability to function in a cost-efficient manner at low speeds

where no other known technology functions. In 2010 Time Maga-

zine named Deep Green as one of the best inventions of the year.



IN THE FUTURE THE PLANTAGON GREENHOUSE WILL SUPPLY THE CITY WITH FRESH VEGETABLES

The World Expo in Shanghai in 2010 introduced one of the most spectacu-

lar greentech projects ever conceived. Plantagon is an enormous spherical

greenhouse that could potentially supply cities with fresh produce.

The company Plantagon develops futuristic greenhouses with innovative

functions. Thanks to its collaboration with Saab, an enormous glass ball

with a spiral-shaped growing area may eventually be constructed just out-

side Linköping. The hope is that the greenhouse will supply a large section

of the city’s population with fresh fruit and vegetables in an environmentally

sustainable way that eliminates practically all shipping. Combitech is the

sole supplier of Plantagon’s control systems.


ADMINISTRATION REPORT > FINANCIAL INFORMATION

FINANCIAL REVIEW 2011

Saab AB (publ.), corporate identity number 556036-0793, with its

registered address in Linköping, Sweden. The address of the com-

pany’s head office is Gustavslundsvägen 42, Stockholm, with the

mailing address Box 12062, SE-102 22 Stockholm, Sweden, and the

telephone number +46 8 463 00 00.

Saab has been listed on NASDAQ OMX Stockholm since 1998

and on the Large Cap list since October 2006. The principal owner

is Investor AB, with 30 per cent of the shares, corresponding to

40.8 per cent of the votes. The total number of shares in the com-

pany is 109,150,344, distributed between 1,907,123 Series A shares

with ten votes each and 107,243,221 Series B shares with one vote

each. At year-end, a total of 3,818,386 Series B shares had been

repurchased to guarantee the Group’s various share matching plans.

The repurchased shares are held as treasury shares.

In accordance with the Swedish Annual Accounts Act, Saab has

prepared a corporate governance report separate from the annual

report. It can be found in this document on pages 134-143. The cor-

porate governance report contains the Board of Directors’ report on

internal control of financial reporting, which includes information

for both the Parent Company and the Group. See pages 139-140 in

this document.

Operations

As one of the world’s leading high technology companies, Saab

offers products, solutions and services for military defence and civil

security. In 2011, we had customers in over 100 countries, while

research and development are principally carried out in Sweden.

We are primarily active in Europe, South Africa, Australia and the

US. Saab is organised in six business areas: Aeronautics, Dynam-

ics, Electronic Defence Systems, Security and Defence Solutions,

Support and Services, and Combitech. Combitech, which provides

consulting services, is an independent, wholly owned subsidiary of

Saab and is reported as a business segment.

In addition to the business areas, Corporate comprises Group

staff and departments and secondary operations. It also includes

the leasing fleet of Saab 340 and Saab 2000 aircraft.

Long-term financial objectives

The long-term financial goals as of 2011 consist of goals for organic

sales growth, operating margin after depreciation and amortisation

(EBIT) and the equity/assets ratio.

LONG-TERM FINANCIAL GOAL PERFORMANCE IN 2011

Growth

Goal: Our organic sales growth will average 5 per cent per year over

a business cycle.

Result 2011: In 2011, organic sales growth was -4 per cent (-1).

Sales decreased compared to 2010 as a result of lower activity

levels in major projects and the challenging business climate in

South Africa.

Operating margin

Goal: We have a margin goal formulated as an average over a busi-

ness cycle. The operating margin after depreciation/amortisation

will be at least 10 per cent.

Result 2011: The operating margin after depreciation/amortisation

(EBIT) in 2011 was 12.5 per cent (4.0).

Operating income in 2011 included capital gains of MSEK 1,169.

It also included structural costs for Saab Sensis totalling MSEK 27

and costs related to the acquisition process of Sensis of MSEK 25.

In 2010, operating income was impacted negatively by structural

costs and other non-recurring items of MSEK 616 and capital gains

of MSEK 14.

Equity/assets ratio

Goal: Our goal is an equity/assets ratio exceeding 30 per cent.

Result 2011: At year-end 2011, the equity/assets ratio was 41.1

per cent (39.1).

The equity/assets ratio increased as a result of stronger income

in 2011.

DIVIDEND AND DIVIDEND POLICY

Proposal for 2011 dividend and dividend policy

Saab’s long-term dividend objective is to distribute 20–40 per cent

of net income over a business cycle to shareholders.

For 2011, the Board of Directors proposes a dividend of

SEK 4.50 per share (3.50). This would represent 21 per cent of net

income in 2011 (85).

OUTLOOK 2012

In 2012, we estimate that sales will increase slightly compared to 2011.

We expect the operating margin in 2012, excluding material

net capital gains, to be in line with the operating margin in 2011,

excluding material net capital gains, of 7.5 per cent.


ADMINISTRATION REPORT > FINANCIAL INFORMATION

IMPORTANT EVENTS IN 2011

Saab announced it has signed a 5-year Multi-Currency revolving credit

facility of SEK 4 billion to refinance the existing credit facility maturing in

March 2012. The terms of the credit facility reflect Saab’s strong financial

position and contain no financial covenants. The credit margin is 0.65

per cent with a commitment fee of 35 per cent of the margin. The facil-

ity is self-arranged and the agreement was signed with a total of eight

banks with an MSEK 500 commitment each.

Saab AB held its Annual General Meeting 2011 on Thursday, 7 April

2011 in Stockholm. Håkan Buskhe and Michael O’Callaghan were elect-

ed to the Saab Board of Directors and Johan Forssell, Sten Jakobsson,

Per-Arne Sandström, Cecilia Stegö Chilò, Åke Svensson, Lena Treschow

Torell, Marcus Wallenberg and Joakim Westh were re-elected as Board

Members. Erik Belfrage and George Rose declined re-election. Marcus

Wallenberg was re-elected as Chairman of the Board of Saab AB.

Saab announced it had received information from the Indian Ministry

of Defence that Gripen has not been shortlisted for the Indian Medium

Multi-Role Combat Aircraft (MMRCA) programme.

Saab launched an investigation after details emerged in the Swedish me-

dia about a contract with a South African consultant about which Saab

had no prior knowledge. After having completed a review of the contract

and the financial transactions of the company Sanip Pty Ltd during the

period in question, it was revealed that approximately MZAR 24 had

been paid from BAE Systems to Sanip. These payments were trans-

ferred to the South African consultant shortly thereafter. The investigation

and assembled materials were submitted to the attorney Tomas Nilsson,

who thereafter commented on the investigation and handed it over to the

Swedish National Anti-Corruption Unit.

Saab announced that the Board has decided to utilise its authorisation to

repurchase the company’s own series B shares to hedge the company’s

share matching plans and performance share plans. Acquisitions will be

made on NASDAQ OMX Stockholm at a price within the registered share

price interval on each occasion. Acquisitions can be made as of 20 July

2011 until next year’s Annual General Meeting. However, no acquisi-

tions will be made during the 30-day period prior to the public release of

quarterly results, including the date of release.

On 16 June 2011, it was announced that Board Member Michael

O’Callaghan would immediately resign from his position as a result of

BAE Systems’ sale of its shareholding in Saab AB.

Saab formed its own Academy to focus more on employee training and

competence development. The Academy is headed by Mikael Grodzin-

sky, who left his position as Head of Group Human Resources within the

Group Management during autumn 2011.

Saab announced that Carina Brorman had been appointed as new Sen-

ior Vice President and Head of Group Communications. She assumed

her new post on 1 October 2011.

Saab announced that Anne Gynnerstedt, Senior Vice President and

Head of Group Legal Affairs, would leave her position in autumn 2011.

Saab announced the shareholder representatives who, together with the

Chairman of the Board, constitute the Nomination Committee for the An-

nual General Meeting 2012: Marcus Wallenberg, Chairman of the Board

of Saab AB; Petra Hedengran, Investor AB; Peter Wallenberg Jr, Knut

and Alice Wallenberg Foundation; Thomas Eriksson, Swedbank Robur

Funds; and Thomas Ehlin, Nordea Investment Funds. The Nomination

Committee represents approximately 52 percent of the voting rights of

Saab AB based on the ownership structure as of 31 August 2011. The

Annual General Meeting of Saab AB will be held on Thursday, 19 April,

2012.

Switzerland announced that it had made a type-selection of Gripen for

negotiations as a future multirole fighter aircraft for the Swiss Air Force.

Saab announced that Lena Eliasson had been appointed as new Senior

Vice President and Head of Group Human Resources and that Annika

Bäremo had been appointed new Senior Vice President, General Coun-

sel and Head of Group Legal Affairs at Saab. Both are members of the

Group Management.

Saab announced that Lars Granlöf, Senior Vice President and Chief

Financial Officer, would leave his position at the end of February 2012.

He thereafter is available to the company during a transition period.


ADMINISTRATION REPORT > SAAB’S BUSINESS AREAS

AERONAUTICS

Aeronautics offers a product portfolio that includes the

Gripen fighter and Unmanned Aerial Systems (UAS).

Aeronautics also manufactures aircraft components for

Saab’s own aircraft as well as passenger aircraft pro-

duced by others. Products include Gripen, Skeldar

and Neuron.

SALES, INCOME AND ORDERS

Orders received

Orders received in 2011 included several orders from FMV related

to the Gripen system. For example, orders were received for de-

velopment of the existing material system 39 (edition 19) and for

maintenance and development studies of the Gripen system.

Orders received in 2011 were substantially lower than in 2010

mainly as 2010 included a large order from FMV for six Gripen

aircraft intended for the Royal Thai Air Force of SEK 1.6 billion and

an order for a Tactical Unmanned Aerial Vehicle system (TUAV) of

MSEK 407.

Orders received where the order sum exceeded MSEK 100 rep-

resented 84 per cent (89) of total order bookings.

Sales

Sales in 2011 decreased mainly as a result of the lower activity of

deliveries of Gripen to South Africa. All 26 aircraft ordered by

South Africa have been delivered.

Markets outside Sweden accounted for 43 per cent (44) of sales.

Income and margin

In 2011, the ownership interest in Denel Saab Aerostruc-

tures (Pty) Ltd. was divested and generated a capital gain before tax

of MSEK 58.

Structural costs of MSEK 98 in 2010 related to lay-offs as a con-

sequence of the reorganisation of Aeronautics announced in 2009.

Operating cash flow

Operating cash flow improved during the year due to improved

working capital.

Several projects entered into their final stages of completion

in 2010 and 2011. These projects have been successfully delivered

to the customer because Saab has managed to execute them at a

lower cost level than originally planned. A final price adjustment of

MSEK 680 was therefore made in the fourth quarter 2011.

KEY FIGURES

MSEK 2011 2010

Sales 6,351 6,741

Operating income 332 191

Adjusted operating margin, % 5.2 2.8



Operating cash flow 223 30

EBITDA 579 438


SALES, MSEK OPERATING INCOME AND MARGIN

SHARE OF SALES 2011, %

25%

2011201020090

2,000

4,000

6,000

8,000

0

70

140

210

280

350

2011201020090

2

4

6

8

10

Operating income, MSEK Operating margin, %



HIGHLIGHTS 2011

Neuron is a European collaboration project to develop a UCAV

demonstrator, Unmanned Combat Aerial Vehicle. The aim is to

develop expertise in advanced aeronautics. Saab is responsible

for, among other things, low signature (stealth) technology,

flight testing, aerodynamics, and the design and production of

the main fuselage. The delivery to Dassault of France was made

in January.

In April, Sweden’s Parliament decided to deploy fighter aircraft

in Libya. The mission included between five and eight Gripen

fighters, surveillance and support resources, personnel for infor-

mation operations and an aircraft for air refuelling.

In September, the first Boeing 787 was delivered to the airline

ANA. Saab is supplying the doors and installation kits for the

aircraft.

On November 30, the Swiss government announced its type-se-

lection of Gripen and that it would begin negotiations on Gripen

as a possible future multirole fighter aircraft for Switzerland.

STRATEGIC PRIORITIES

Continue to strengthen the Gripen programme in Sweden

and through export contracts, including through an increased

market presence.

Profitably grow the successful civil aerostructures operations

through new and existing business.

Increase sales and marketing activities in Unmanned Aerial

Systems and build on a strong international position through

cooperations in both research and technology and new develop-

ment programmes.

Operational improvements through lean manufacturing and

efficiency goals in product development and production.

PRODUCTS AND SOLUTIONS

The Gripen fighter, which offers continuous upgrades, high cost

efficiencies and a level of performance that meets the high demands

of armed forces.

The unmanned helicopter Skeldar, which offers a modular design and

several optional features.

Airborne missile systems.

Subcontractor for commercial aircraft producers.

The development of the unmanned helicopter Skeldar is an

example of Saab’s niche innovations.



DYNAMICS

Dynamics offers a product portfolio with ground combat

weapons, missile systems, torpedoes, unmanned under-

water vehicles and signature management systems for

armed forces as well as military and civil niche products

from spin-offs such as unmanned underwater vehicles for

the offshore industry and 3D mapping solutions for the

defence market. Products include Carl-Gustaf, RBS 70

and Rapid 3D Mapping.


Orders received

Orders received in 2011 included several larger orders for ammuni-

tion to the Carl-Gustaf man-portable weapon system and contracts

for further deliveries of components for the system. An order for

the system was also received from the US Army. A large order for

the AT4 man-portable weapon system was also received.



Sales

Sales decreased as a result of a lower order intake during 2010 and

consequently lower activity levels in the first half of 2011 compared

to 2010.


Income and margin

The operating margin in 2010 was impacted negatively by struc-

tural costs of MSEK 278, which were partly reversed in 2011.

Operating cash flow

Operating cash flow in 2011 was lower compared to 2010 due to

timing differences of milestone deliveries in large projects.

KEY FIGURES

MSEK 2011 2010

Sales 4,335 4,741





Operating cash flow 588 1,044

EBITDA 652 516


17%

2011201020090

2,000

1,000

3,000

4,000

5,000

0

100

200

300

400

500

2011201020094

6

8

10

12

14






HIGHLIGHTS 2011

Contract with the US Army and US Special Operations Com-

mand for the Carl-Gustaf man-portable weapon system valued

at a total of MSEK 209. This is the first time that the US Army is

buying the Swedish recoilless rifle system.

Saab sold its interest in the 3D mapping company C3 Technolo-

gies AB. Saab will continue to offer 3D mapping applications for

the military, government and geographical information systems

(GIS) markets through the new unit R3DM (Rapid 3D Map-

ping) within Dynamics.

A significant order valued at MSEK 1,155 was received for

ammunition for the Carl-Gustaf man-portable weapon system,

with an option that could lead to additional orders of up to

about MSEK 500. The order, comprising the production of anti-

armour ammunition, is expected to create around 40 new jobs at

Saab’s production unit in Karlskoga, Sweden.

The launch of the RBS 70 NG missile system, which, among

other things, is equipped with a new sighting system and offers

several new functions and capabilities, including lighter weight,

night sight, automatic target tracking to assist the gunner during

engagement, and built-in video recording of the gunner’s view.


To support the international expansion and future business,

local operations and partnerships with selected companies will

be established internationally, including by utilising Saab’s own

sales resources in selected markets such as India and North

America.

Continued focus on operational development and introduction of

lean manufacturing processes to increase efficiency and profes-

sionalism throughout the organisation.

Self-financed development is being increased, as in the case of

RBS 70 NG. Investments to improve existing products and an

increased focus on lighter missiles.


The installed base in more than 60 countries around the world includes

support weapons, camouflage, 3D mapping, missiles, torpedoes and

unmanned underwater vehicles.

Ground combat weapons such as NLAW, AT4, Carl-Gustaf and Bill 2.

Land-based air defence systems, e.g., RBS 70, Bamse and ASRAD-R.

Missile programs such as Meteor, Taurus and IRIS-T.

RBS 70 NG, the next genera-

tion of air defence system,

was launched in September.

The system has market-

leading technology, unique

flexibility and the ability to

combat aircraft, missiles,

unmanned aerial systems

and tanks.



ELECTRONIC DEFENCE SYSTEMS

Electronic Defence Systems offers a product portfolio

comprising airborne, land-based and naval systems in

radar, signals intelligence and self-protection. The busi-

ness area also supplies civil and military customers with

avionics that increase flight mission efficiency and flight

safety. Products include Giraffe AMB, Erieye, Arthur, BOL

and IDAS.


Orders received

Orders received in 2011 included an airborne electronic warfare

self-protection system (named IDAS, Integrated Defensive Aids

Suite) and an order from LIG Nex1, the prime contractor in South

Korea, for the weapon locating system Arthur. An order was also

received for the Giraffe AMB multi-mission radar system and

related services from the US Department of State.



Sales

Sales in 2011 increased mainly as a result of a higher activity level

in a significant airborne early warning project during the year. The

project was finalised at the end of the year.


Income and margin

Profitability increased in 2011 as a result of the divestment of the own-

ership interest of 42.4 per cent in the South African system engineer-

ing company Grintek Ewation to Cassidian, a division of EADS. The

transaction generated a capital gain before tax of MSEK 122.

During the second half of 2011, operating income was negatively

affected by structural costs related to the acquisition of Sensis.

In 2010, the operating margin was positively affected by a claim re-

lated to a finalised project where Saab reduced its estimated risk share.

Operating cash flow

In the fourth quarter the operating cash flow was negatively im-

pacted by delays in a few projects.

Operating cash flow was positively impacted by MSEK 179 as a

result of the divestment of the ownership interest in Grintek Ewation.

The acquisition of Sensis had a negative impact on operating

cash flow of about MSEK 230.

Electronic Defence Systems was a supplier to several projects

in Aeronautics that entered into their final stages of completion in

2010 and 2011. These projects have been successfully delivered to

the customer and Saab has managed to execute them at a lower cost

level than originally planned. A final price adjustment of MSEK 170

was therefore made in the fourth quarter 2011.

KEY FIGURES

MSEK 2011 2010

Sales 4,561 4,354






EBITDA 785 589


18%

2011201020090

2,000

1,000

3,000

4,000

5,000

0

60

120

180

240

300

2011201020090

2

4

6

8

10






HIGHLIGHTS 2011

Order for Saab’s multi-mission radar Giraffe AMB and related

services from the U.S. Department of State. The order value is

about MSEK 155.

Order for the Arthur weapon locating radar from LIG Nex1, the

prime contractor for the Defence Acquisition Program Admin-

istration in South Korea. The order is worth MSEK 450.

Order for the IDAS airborne self-defence system valued at about

MSEK 250. The system improves security for aircraft, helicopters

and crews in threat environments.

Divestment of the South African system engineering company

Grintek Ewation to Cassidian.

Order together with Saab Sensis for the multi-role naval surveil-

lance radar Sea Giraffe AMB as part of the U.S. Navy’s Littoral

Combat Ship Program.

As part of ongoing efficiency improvements, changes have been

made in electronics manufacturing, e.g., circuit board produc-

tion has been outsourced to three subcontractors


Focus on strengthening Saab’s presence in selected markets,

increasing sales to existing customers and developing operations

in key markets that offer opportunities for repeat business.

Through acquisitions, partnerships and collaborations, the

electronic defence operations and product portfolio are being

further enhanced. Products are kept attractive through spiral

development, where we continuously upgrade the capabilities.

Continue to develop a more efficient organisation, including

through lean manufacturing, and increase cost awareness in

project implementation.


The operations meet customer demand for solutions for surveillance

and for detection, localization and protection against the various types

of threats. The product portfolio includes airborne, land-based and naval

systems in radar, signals intelligence and self-protection. The operations

also comprise avionics that increase flight mission efficiency and flight

safety.

The sensor systems ERIEYE, Carabas, Arthur and Giraffe AMB.

Electronic warfare systems, including IDAS, Camps, BOL and LEDS.

Avionics, including surveillance, display and digital recording systems.

Saab Sensis’ expertise in various types of radar upgrades.

The weapon locating system

Arthur is one of Saab’s leading

niche products and has been

exported to the Czech Republic,

Denmark, Greece, Norway,

Spain, Sweden and the UK,

among others.



SECURITY AND DEFENCE SOLUTIONS

Security and Defence Solutions offers a product portfolio

comprising defence reconnaissance systems, airborne early

warning systems, training and simulation, air traffic manage-

ment, maritime security, security and monitoring systems,

and solutions for safe, robust communications. Products

include 9LV combat management and fire control systems,

the Remote Tower air traffic management system and the

Tacticall communication integration system.


Orders received

Orders received in 2011 included orders from the UK Ministry of

Defence to enhance its existing provision of live training capabili-

ties to the British Army in the UK and abroad. An order was also

received from the Swedish Prison and Probation Service (Krimi-

nalvården) for the communication solution Tacticall. The contract

consists of ten operator positions for use in prisons around Sweden.

Two orders were also received from the Royal Thai Navy to upgrade

combat management and fire control systems on two frigates of the

Naresuan class. Orders were received from FMV for hardware for

the Hydra sonar system 135/137 and for modifications to the com-

bat management system used by the Swedish Armed Forces’ Gävle-

and Visby-class corvettes. In addition a framework agreement was

secured with the US Army Program Executive Office of Simula-

tion, Training and Instrumentation (PEO STRI). The framework

agreement covers radio communication systems (LT 2-IRS) for live

training.

Orders received where the order sum exceeded MSEK 100

represented 40 per cent (40) of total order bookings.

Sales

Sales declined as a result of a challenging market situation in South

Africa.


Income and margin

During the second half of 2011, operating income was negatively

affected by structural costs related to the acquisition of Sensis.

During 2010, profitability was negatively impacted by costs of

MSEK 290 related to a terminated contract and a write-down of

capitalised development of MSEK 20.

Operating cash flow

The acquisition of Sensis had a negative impact on operating cash

flow of about MSEK 730.

KEY FIGURES

MSEK 2011 2010

Sales 5,704 6,210





Operating cash flow 584 1,066

EBITDA 502 265


22%

2011201020090

2,800

1,400

4,200

5,600

7,000

0

80

160

240

320

400

2011201020090

2

4

6

8

10






HIGHLIGHTS 2011

Extended maintenance agreement valued at MSEK 150 signed

with the British Army. The order covers the maintenance and

support of delivered training systems used by the British Army

and implementation of the OSAG 2.0 laser code.

Acquisition of the Czech company E-COM, with operations in

training and simulation, and the US company Sensis a leading

supplier of solutions for air traffic management and surveillance

technology. The acquisition os Sensis strengthens Saab’s presence

in the US market and expands the product portfolio in air traffic

management, radar and sensors. The company is Saab’s Centre

of Excellence in air traffic management.

Saab and Airservices Australia signed a contract to commence a

trial of remotely operated air traffic control tower technology.

Two orders from the Royal Thai Navy for the upgrade of com-

mand combat and control systems on two frigates of the Nar-

esuan class. The total order value is MSEK 454 and comprises

the upgrade of the frigates with the latest generation of combat

management and fire control systems.

Order from the (FMV) to upgrade a naval sonar system worth

MSEK 400.


Focus on growing internationally and in civil security. An

expanded market presence is the key to global expansion and

can be implemented in several ways, e.g., through increased

marketing and local presence, as well as through collaborations

and partnerships.

The strategic growth areas are aviation, airport, port and coastal

surveillance, and cyber security. Priority areas include security,

efficiency, green flights, surveillance, automated air traffic con-

trol, safe harbours, cyber warfare and reliable communications.

The product portfolio is a cornerstone to growth. We integrate

military and civil technology to build a safer society.


Operations are concentrated on C4ISR (computerised command,

control, communications and intelligence) systems, WISR solutions and

security solutions, as well as training and simulation.

Remote air traffic control uses cameras and sensors installed around air-

ports. All the information they record is linked in real time to the air traffic

control centre and projected onto a 360-degree view. This cost-effective

solution allows several airports to be monitored from a single location.

Airborne surveillance systems, e.g., AEW&C (Airborne Early Warning &

Control).

Saab supplies the armed

forces in North America and

the UK, among others, with

realistic combat training solu-

tions. With Saab’s systems,

soldiers can see where each

individual is and how they

are acting, allowing them to

practice tactics and improve

their personal capabilities.



SUPPORT AND SERVICES

Support and Services primarily offers support solutions,

technical maintenance and logistics, and products, solu-

tions and services for military and civil missions in loca-

tions with limited infrastructure.


Orders received

Orders received in 2011 included an order related to the eight-year

agreement signed with Scandinavian Air Ambulance Holding AB

in December 2010 which came into force during the first quarter.

A major order was also received from FMV for the support and

maintenance of Helicopter 15 (Agusta 109 LUHS), operated by the

Swedish Armed Forces. The Norwegian Defence Logistics Organi-

sation placed an order for an upgrade of the steering control con-

soles on the ULA class submarine, which will ensure that new high

technology components are used in the steering control consoles

for autopilot functionality and integration.



Sales

Sales were in line with 2010, despite lower orders received, due to a

strong inflow of smaller orders in 2011.


Income and margin

Profitability improved in 2011 as a result of improved project ex-

ecution and finalisation of a major airborne early warning project.

Operating cash flow

Operating cash flow in 2011 was lower compared to 2010 due to

timing differences of milestone payments.

KEY FIGURES

MSEK 2011 2010

Sales 3,428 3,403






EBITDA 444 366


14%

2011201020090

1,600

800

2,400

3,200

4,000

0

100

200

300

400

500

2011201020090

3

6

9

12

15






HIGHLIGHTS 2011

Significant growth in small and medium-sized orders.

Teaming agreement signed with Sikorsky on services and train-

ing for the Swedish Black Hawk Programme.

Eight-year agreement with Scandinavian Air Ambulance to

assume responsibility for technical and maintenance personnel

and operations of helicopters and aircraft.

Five-year agreement with the South African Navy on mainte-

nance of logistical solutions for various platforms.

Three employees from Support and Services spent two weeks in

Thailand, where they assisted flood victims.


Continued focus on the successful helicopter operations and on

growing through Saab’s current installed base of products and

solutions.

Strengthening the marketing and sales organisation in grow-

ing markets such as the Sub-Sahara, North America and India,

including by establishing harmonised support operations in

several different countries.

Implement a streamlined organisational structure that consoli-

dates capabilities and growth areas, while strengthening oppor-

tunities to win new business.


Integrated service solutions for operations in the air, on land and at sea,

as well as civil security.

Offer a package solution for equipment maintenance and service,

technical training, spare parts, logistical solutions and field support, and

round-the-clock service centres.

Flexible, scalable, adaptable and upgradable solutions.

Operations are global and comprise Saab as well as other OEM systems

and equipment.

Support and service of a large part of the Saab 340 and Saab 2000

operating globally today with 469 aircraft by 71 operators in 38 countries.

Total of around 1,400 flights a day.

Helicopter maintenance has

become an increasingly important

part of Saab’s operations and

several central support agree-

ments were signed in 2011

with military and commercial

customers. Saab is responsible

for maintenance and support of

the Swedish Armed Forces’ latest

helicopter systems – Helicopter

15 and Helicopter 16 – and

has also signed an eight-year

agreement with the commer-

cial company Scandinavian Air

Ambulance, which is responsible

for Sweden’s ambulance flights.

Through our operations, we

contribute to international peace-

keeping and rescue missions and

provide support in connection

with major disasters.



COMBITECH

Combitech, an independent subsidiary of the Saab

Group, is one of Sweden’s largest technology consulting

firms. By combining technology with cutting-edge exper-

tise in the environment and security, we create solutions

for our clients’ specific needs.


Orders received

Orders received increased in 2011 compared to 2010 as a result of

higher demand in several areas and several major orders received.

Important framework agreements were also signed during the year.

Sales

Sales increased as a result of a good order intake and about 100 new

employees have been hired as a consequence of this. The highest

growth rate was in the industry and defence segments. Sales with

clients other than Saab accounted for 62 per cent (65).

Income and margin

The improved profitability is a result of increased sales volume, a

high utilisation rate and higher efficiency.

Operating cash flow

Operating cash flow improved due to a higher sales volume.

KEY FIGURES

MSEK 2011 2010

Sales 1,000 915



Order bookings 1,118 964

Order backlog at year-end 344 226


EBITDA 94 83


4%

2011201020090

400

200

600

800

1,000

0

20

40

60

80

100

2011201020090

3

6

9

12

15






HIGHLIGHTS 2011

Several important framework agreements were signed during

the year.

Combitech has announced plans to establish a development

centre in Trollhättan with the capability to take on turnkey com-

mitments.

In a highly competitive recruiting market, Combitech managed

well in recruiting engineers in particular. In total, 100 employees

were added in 2011.

The operations of Combitech’s Norwegian subsidiary.

Sörman Information was acquired in early 2012. The acquisition

is part of Combitech’s strategy to expand its range of services

and grow in the Nordic consulting market.


Continued focus on the development of a Nordic technology

consulting company.

Further additions to the range of services.

Continued focus on growth among existing clients and in prior-

ity market segments.

INDUSTRIES AND SERVICES

Combitech is active in the defence, aeronautics, telecom and other

industries as well as the public sector. In 2011, sales grew fastest among

defence and other industrial clients.

Combitech offers services in systems development, systems integration,

information security, systems security, communications, mechanics and

logistics. Demand in mechanics and systems development was espe-

cially favourable in 2011.

The Combitech Learning Lab (CLL) is a major attraction for new

employees. CLL includes a number of courses and methods that

have been developed as part of a 15-year collaboration with the

Royal Institute of Technology.


ADMINISTRATION REPORT > RISKS AND RISK MANAGEMENT

RISKS AND RISK MANAGEMENT

2010

Analysis of business risks and risk

processes

Review of financial controls

2011

Design and implementation of a

harmonised rsk management pro-

cess throughout the company

2012

Training, follow-up and completed

introduction of the harmonised rsk

management process

RISK MANAGEMENT PRIORITIES 2010-2012

POLITICAL RISKS

RISKPart of Saab’s sales is classified as

strategic products which are regu-

lated by various laws.

Access to vital components and systems

may be subject to export restrictions and

regulations of various kinds.

Customers’ inability to fulfil

current contracts

SIGNIFICANCE Amendments to national laws and

ordinances, including international

agreements, could affect Saab’s

sales.

Amendments to national laws and

ordinances, including international

agreements, could affect access to vital

components in various systems and

subsystems.

The risk consists of customers’ in-

ability to fulfil current contracts due to

economic, political or other circum-

stances such as natural disasters, an

economic crisis, a shift in power or an

embargo.

MANAGEMENT Saab manages political risks through various types of export guarantees, insurance solutions and other instruments. It is

impossible, however, to avoid losing business opportunities or incurring damage if political risks are realised.

Saab’s business generally entails significant investments,

long periods of time and product development or refine-

ment. In addition to customer and supplier relations,

international operations involve joint ventures and other

collaborations as well as the establishment of operations

abroad.

All businesses entail risk. A risk can be specific to the company

or related to a certain industry or market. Certain risks can be

fully managed by the company, while others are out of its control.

Saab’s operations primarily involve the development, production

and supply of technologically advanced hardware and software to

customers around the world. The international part of the business

is growing.

Operations entail significant risk-taking in various respects. The

key risk areas are political, financial and operational risks. Pages

62–63 provide information on the political and financial risks. See

pages 64–65 for more information on the operating risks.

MANAGING RISKS

Significant risks that are identified are managed continuously at all lev-

els of the organisation and in strategic planning. Various policies and

instruments govern the management of significant risks. In addition,

Saab has an independent audit unit that serves as a dedicated resource

to independently audit the effectiveness of internal control processes.

Risks are also managed by procuring insurance. Saab has a Group-wide

programme where insurance is obtained on the market or through the

Group’s own insurer, Lansen Försäkrings AB.

Risk analysis and activities 2011

In 2011, we worked on introducing a uniform risk evaluation pro-

cess within the Group in line with international risk management

standards. The process is designed based on an analysis in 2010 of

various aspects of the risk processes used by the business areas and

divisions. The work also included a review of the risk management

process for long-term customer projects.

In 2011, we also began introducing an improved process for

reporting financial controls within Saab. For more information, see

the corporate governance report, pages 139–140.



FINANCIAL RISKS

RISK

Foreign currency risk

Interest rate risk

Refinancing risk

Credit and counterparty risks

Commodity risk Pension obligations

MANAGEMENT

Management of financial risks is governed by the

Group Treasury Policy established by the Board of

Directors.

Learn more about financial risks in Note 41. See below.

FINANCIAL RISKS

In its operations, Saab is exposed to various financial risks. Man-

agement of financial risks is governed by the Group Treasury Policy

established by the Board of Directors. Moreover, detailed directives

and processes are in place for operating management of each area.

Overarching responsibility for managing financial risks lies with

Group Treasury.

Pension obligations

The Group’s pension obligations are substantial, as indicated in

Note 37. In the calculation of pension obligations, future pension

obligations are discounted to present value. The size of the liability

is dependent on the choice of discount rate: a low interest rate pro-

duces a high liability, and vice versa. To manage the pension liabil-

ity, the Saab Pension Fund was established in 2006 and capitalised

with the corresponding PRI liability. The Group’s obligations are

calculated on an actuarial basis each year, after which a comparison

is drawn with the fund’s assets. Deficits according to such calcula-

tions may require Saab to contribute additional funds. The Saab

Pension Fund’s objective is a real annual return of at least 4 per cent

on invested capital. The fund invests in interest-bearing securities,

equities and hedge funds.

The accounting principle IAS 19 Employee Benefits was

amended in June 2011, due to which the Group will stop applying

the “corridor approach” and instead recognise all actuarial gains

and losses in other comprehensive income when they arise. Past

service costs will be recognised immediately. Interest expenses and

the expected return on plan assets will be replaced by net interest

calculated with the help of the discount rate, based on the net

surplus or net deficit in the defined benefit plan. The Group intends

to apply the amended standard for financial years beginning on or

after 1 January 2013. If the new standard had been applied in the

annual accounts for 2011, retained earnings would have decreased

by MSEK 2,000 and the pension obligation increased by

MSEK 2,700. The year’s actuarial loss amounted to MSEK 1,344,

which would have affected other comprehensive income negatively.

Application of the standard changes the recognition of yield tax and

special payroll tax. The effect of this change has not yet been

evaluated.

The standard has not been adopted yet by the EU.

OPERATING RISKS

A number of significant areas have been identified with respect to

operating risks, which are important in assessing the Group’s results

and financial position.

Develop and introduce new systems and products

The Group invests heavily in the research and development of its

own products and systems as well as acquisitions of technology. Its

biggest systems are the export version of Gripen, missile systems

and electronic warfare systems. One example of acquired technol-

ogy is the world-leading radar technology obtained through the ac-

quisition of Ericsson Microwave Systems AB in 2006. Investments

in new systems and products are made after a strategic and financial

analysis and assessment of future business opportunities.

Management of development and introduction of new systems

and products

Various measures were launched in 2011 to further improve ef-

ficiencies in development processes, including the continued estab-

lishment of centres of excellence within Saab for different aspects of

development work. This means that we consolidate all development

within the same area in one location.

Certain development costs are capitalised in accordance with

established accounting principles. Amortisation of capitalised develop-

ment costs is scheduled over the estimated production volume or

an estimated period of use, though not more than five to ten years.

If the estimated period of use is shorter than five years, the costs are

amortised over the shorter period. Future business opportunities are

periodically reassessed, which can lead to impairment losses. Capital-

ised development costs are shown in Note 16.



OPERATING RISKS

RISKDevelop and introduce

new system and products

Managing long-term

customer projects

Environmental risks

and liabilities

Liquidation of leasing

operations

SIGNIFI-CANCE

The risk is that Saab does

not reach the levels of

business required for its

products to be profitable.

The risk is that Saab will

be unsuccessful in meeting

customer requirements, as a

result of which the commit-

ment is not fulfilled.

In its operations, Saab

handles a wide variety of

chemical products that

are classified as harmful to

humans and the environ-

ment. The most important

environmental risks involve

hazardous chemicals,

building and plant fires,

and soil contamination.

Saab offers lease financing

in connection with aircraft

sales on the market. The

risk in the portfolio is that

Saab is unable to lease out

the aircraft. The impact on

Saab’s profitability could be

negative if the aircraft are not

being used.

RESPONSI-BILITY The Group takes an ac-

tive approach to product

management. A high degree

of modularisation in project

management allows Saab to

reuse product solutions in its

offerings.

Before a contract is entered

into with a customer to

supply a product, solution or

service, a thorough analysis

is always done of the condi-

tions and risks associated

with the delivery using a pro-

ject management process

established by Saab.

Saab has introduced strict

routines for assessment,

supervision and control

of various environmental

risks.

Part of the leasing fleet is fi-

nanced through US leverage

leases, rents from which are

insured through the Export

Credits Guarantee Board

(EKN) in Sweden. Part of the

portfolio is financed internally

and recognised as assets

in the statement of financial

position. Saab’s direct risk-

taking in the leasing fleet

has been managed primarily

through various types of

insurance.

2011

Various measures were

launched in 2011 to further

improve efficiencies in devel-

opment processes, including

the continued establishment

of centres of excellence for

various aspects of develop-

ment work. Learn more on

page 23.

A review was made of the

project management pro-

cess in 2010 and a modified

process for managing long-

term customer projects was

introduced in 2011.

Only a few minor soil

remediation projects

were necessary in 2011,

the total cost of which

amounted to less than

MSEK 0.5.

Saab’s leasing portfolio

consisted on 31 December

2011 of 82 turboprop Saab

340 and Saab 2000 aircraft.

Of the portfolio, 42 aircraft

are financed through US

leverage leases. Reserves

in the statement of financial

position related to the leas-

ing portfolio and provisions

for commitments for regional

aircraft are considered suf-

ficient to cover the remaining

risks.

2012

We will continue to improve

our product managament

process by introducing a

uniform product portfolio

pocess.

Follow-up and ensure

implementation of the risk

management process.

In 2012, Sensis and

E-COM will be integrated

in Saab’s environmental

risk work.

The leasing fleet is expected

to be liquidated by 2015.

Until then, Saab will carry

out these operations in ac-

cordance with the terms and

conditions of its insurance.



Long-term customer projects

Management of long-term customer projects involves risks. Saab’s

operations entail complex development projects on the leading

edge of technology where the competitive situation is complex.

Success depends on the ability to offer cost-effective high technol-

ogy solutions, though also in some cases on participation in the

customer-country’s economy through various forms of industrial

co-operation. The risk in managing long-term customer projects is

that Saab will be unsuccessful in meeting customer requirements,

as a result of which the commitment is not fulfilled.

Management of long-term customer projects

A majority of all long-term customer projects contains significant

development work, which is associated with risks. Before a contract

is entered into with a customer to supply a product, solution or ser-

vice, a thorough analysis is always done of the conditions and risks

associated with the delivery using an established process within

Saab for customer contracts.

Periodic reviews are subsequently made of the project during its

implementation stage using the same process. An important aspect

is to identify and assess risks, then take the measures needed to

mitigate them with the help of a risk assessment method.

The Group applies the percentage-of-completion method to rec-

ognise revenue from long-term customer projects. An estimation of

total costs is critical to revenue recognition and provisions for loss

contracts as well as valuating inventories. The outcome of technical

and commercial risks may affect income.

A review was made of the project management process in 2010,

and we are now working continuously to improve this process and

ensure its implementation.

Environmental risks and liabilities

The most important environmental risks are improper manage-

ment of hazardous chemicals, fires in buildings and plants, and soil

contamination. For more information on environmental risks and

liabilities, see Note 48.

Management of environmental risks and liabilities

The operations in Linköping and Karlskoga are subject to Europe’s

Seveso law, which is designed to reduce risks in connection with the

large-scale use of chemicals. Against this backdrop, we have intro-

duced strict routines for risk assessment, supervision and control of

chemicals for the entire Saab Group. Strict routines are also applied

to purchases of chemical products. Health and environmental

information on chemical products is available in the Group’s chemi-

cal data system.

Saab works actively to assess and minimise fire risks in its opera-

tions. Since a fire in a production facility can cause extensive

environmental damage to the local area, effective fire prevention is

an important part of the efforts to reduce environmental risks.

We analyse our operations and properties around the world to as-

sess Saab’s risk exposure resulting from soil contamination.

When a contaminated area is identified, liability is determined

and an overall risk assessment is made. Information on contami-

nated areas is documented as it is received. An insurance solution

to manage soil contamination cases has been in place since 2009.

Overall risk assessments are made to determine how operations

are affected by climate change. These risks are reported within the

framework of reporting for the Carbon Disclosure Project (CDP).

Divestment of the leasing portfolio

Saab decided in 1997 to discontinue the manufacture of turboprop

aircraft.

As with other manufacturers, Saab had a business model that

included lease financing in connection with aircraft sales on the

market. The risk in the portfolio is that Saab is unable to lease out

the aircraft. The impact on Saab’s profitability could be negative if

the aircraft are not being used.

Management of risks in connection with leasing operations

Saab’s direct risk-taking in the leasing fleet has been managed

primarily through various types of insurance. The leasing fleet is

expected to be divested by 2015. Until then, Saab will manage the

operations in accordance with the terms of its insurance.

Saab’s leasing portfolio at 31 December 2011 consisted of 82

turboprop Saab 340 and Saab 2000 aircraft. Of the portfolio, 42

are financed through US leverage leases. Rents from these leases

are insured through The Swedish Export Credits Guarantee Board

(EKN). 40 aircraft are financed internally and recognised as assets

in the statement of financial position.

Reserves in the statement of financial position related to the

leasing portfolio and provisions for commitments associated with

regional aircraft are considered sufficient to cover remaining risks.


ADMINISTRATION REPORT > OTHER INFORMATION

CORPORATE

Corporate reported operating income of MSEK 916 (-206). 2011

included a capital gain of MSEK 13 from the sale of Image Sys-

tems AB to Digital Vision AB and an additional consideration of

MSEK 60 for the divestment of Saab Space. It also included a capital

gain of MSEK 916 from the divestment of the shares in the 3D

mapping technology company, C3 Technologies AB. C3 Technolo-

gies was created by Saab Ventures in 2008 and the technology is

based on Saab’s, in particular the business area Saab Dynamic’s,

more than 40 years of experience in image processing for target

seekers and expertise in navigation systems.

Operating income also included costs of MSEK 25 related to the

acquisition process of Sensis.

In addition, Saab Aircraft Leasing completed several sales in-

volving Saab aircraft and booked reversals of risk provisions related

to these transactions, which impacted earnings positively.

GUIDELINES FOR REMUNERATION AND OTHER TERMS OF

EMPLOYMENT FOR SENIOR EXECUTIVES 2011

According to the Swedish Companies Act, the Board of Directors shall

to each Annual General Meeting propose guidelines for determin-

ing salaries and other remuneration for the President and CEO and

other senior executives in the Company. The Annual General Meeting

2011 adopted the Board of Directors’ proposed guidelines for such

remuneration. This group comprises the President and Chief Executive

Officer and other members of the Group Management, as defined on

the Company’s website (www.saabgroup.com). In some special cases,

these guidelines may also comprise Board Members of Saab AB, as

described below.

Saab shall offer market terms, enabling the Company to recruit

and retain senior executives. To the greatest extent possible,

remuneration structures shall be characterized by predictability

with respect to both the cost for the Company and the benefit

for the employee. They shall be based on factors such as position,

competence, experience and performance. Benchmarking shall be

practiced regularly relative to comparable industries and markets.

The Board shall be entitled to divert from the guidelines, if there

are reasonable grounds to do so in an individual case.

The Board’s proposal is based mainly on agreements in effect be-

tween Saab AB and individual executives. No board fees are paid to

members of the Group Management for participation on the boards

of the business areas or Saab subsidiaries.

The Remuneration Committee is responsible for developing

and reviewing remuneration and other employment terms for the

Group Management.

These guidelines apply from the Annual General Meeting 2011. In

terms of fixed salary, the guidelines shall apply from 1 January 2011.

Fixed remuneration

Cash remuneration shall consist of fixed salary. The fixed salary

shall be reviewed annually as per 1 January for all members of the

Group Management. The fixed salary shall be at market terms and

based on factors such as position, competence, experience and

performance.

Variable remuneration

It is important that senior executives have a long-term view and a

long-term commitment in the Company’s operations and profits.

Therefore long-term incentive is especially well suited to Saab and

its shareholders.

The President and CEO and senior executives are entitled to

participate in the long-term incentive programs resolved by the

Annual General Meeting.

In extraordinary cases, agreements of a one-time nature for

variable cash remuneration may be made provided that such agree-

ments are made solely on an individual base for recruitment or

retention purposes, or as compensation for extraordinary efforts

beyond the individual’s ordinary assignment. Such remuneration

shall never exceed the amount of the fixed annual salary and shall

not be paid more than once a year per individual. Resolutions on

such cash remuneration shall be made by the Board based on a

proposal from the Remuneration Committee.

Variable cash remuneration shall not be paid in other cases.

Other benefits

All members of the Group Management are entitled to a company

car according to Saab’s regulations.

Pension

For pension agreements entered into after 1 January 2005, the

pension age is 62. In addition to the ITP agreement, the pension

is part of a defined contribution plan where provisions are made

annually. For the President and CEO, the provision is equivalent to

35 per cent of his fixed salary, and for other executives the percent-

age is based on a set of regulations in the so-called Saab plan. The

percentage is dependent on the number of years remaining until

the age of retirement upon joining the plan.

OTHER INFORMATION



Other terms

All executives in the Group Management, including the President,

may terminate their employment with six months’ notice. If the

employment is terminated by Saab, the notice period is six months,

and after the notice period, severance equal to one year’s salary is

paid. An additional year’s salary is payable if no new employment

has been obtained in the first 18 months from the time the notice of

termination was served.

With respect to employment agreements made after 1 Janu-

ary 2005, and in cases where Saab terminates the employment, a

maximum severance pay of 18 months is payable in addition to the

six-month notice period. In both cases, any income from termina-

tion pay and severance pay will be deducted against income from

other employment during the corresponding time.

Remuneration to Board Members

Board Members, elected by the Shareholders’ Meeting, may in spe-

cial cases receive a fee for services performed within their respec-

tive areas of expertise, separately from their Board duties and for a

limited period time. Compensation for these services shall be paid

at market terms.

Incentive programs proposed to the Annual General Meeting 2011

The Board of Directors proposed that the Annual General Meeting

should resolve on the implementation of a Share Matching Plan

2011 and a Performance Share Plan 2011. The Annual General

Meeting resolved in accordance with the Board’s proposal.

THE BOARD OF DIRECTORS’ PROPOSAL FOR GUIDELINES

FOR REMUNERATION OF SENIOR EXECUTIVES TO APPLY AS

OF THE NEXT ANNUAL GENERAL MEETING

Background and reasons

The Remuneration Committee has evaluated the application of the

guidelines for remuneration for senior executives of Saab that were

resolved at the Annual General Meeting in 2011 and the current

remuneration structures and remuneration levels in the Company.

The Remuneration Committee is of the opinion that the guidelines

that were resolved in 2011 achieve their purposes to facilitate the

recruitment and retention of senior executives.

The Remuneration Committee has recommended the Board of

Directors to propose to the Annual General Meeting to adopt prin-

ciples of remuneration whose terms and conditions in essence are

the same as those that were resolved at the Annual General Meeting

in 2011. However, in consideration of a general review of senior ex-

ecutive employment agreements, certain clarifications are proposed

to be made in the guidelines pertaining to customary executive

benefits and to the “Saab Plan” that regulates pension terms.

Proposal for guidelines

In light of the above background and reasons, the Board of Direc-

tors therefore proposes that the guidelines for remuneration of

senior executives are changed.

In respect of fixed and variable remuneration, miscellaneous terms

and consultant fees to members of the Board of Directors the

guidelines are unchanged from 2011 except for minor linguistic

adjustments.

The new guidelines are proposed to have the following word-

ing regarding incentive programs proposed to the Annual General

Meeting 2012, other benefits and pension.

The guidelines are proposed to apply from the Annual General

Meeting 2012.

Incentive programs proposed to the Annual General Meeting 2012

The Board of Directors proposes that the Annual General Meeting

resolves on the implementation of a Share Matching Plan 2012 and

a Performance Share Plan 2012.

The terms and estimated costs for the Share Matching Plan 2012

and the Performance Share Plan 2012 are presented in the Board’s

complete proposal to the Annual General Meeting.

Other benefits

All members of the Group Management may be entitled to other

benefits in accordance with local practice. The benefits shall

contribute to facilitating the executive’s discharge of his or her du-

ties. These benefits shall not constitute a material part of the total

compensation and shall be equivalent to what is considered reason-

able in relation to market practice. Other benefits may for example

be a company car, travels, overnight accommodation and medical

insurance.

Pension

For pension agreements entered into after 1 January 2005, the pen-

sion age is 62. In addition to the ITP agreement, the pension is part

of a defined premium based contribution plan where provisions are

made annually. For the President and CEO, the provision is equivalent

to maximum 35 per cent of the fixed salary. For other senior execu-

tives the percentage is based on a set of regulations in the so-called

Saab plan. According to this plan, the percentage is dependent on the

number of years remaining until the age of retirement upon joining the

plan. The aggregate insurance balance should cover a targeted pension

from 65 years of age of approximately 32.5 percent of salary levels be-

tween 20 and 30 basic income amounts and approximately 50 percent

of segments above 30 basic income amounts.

All senior executives may also be entitled to strengthened dis-

ability pension and survivors’ pension.



Information in the Annual Report note 37

Note 37 of the Annual Report includes a description of existing

remunerations for senior executives, including fixed and variable

compensation, long-term incentive programs and other benefits.

Deviation from the guidelines for remuneration for senior executives

resolved at the Annual General Meeting 2011

The Board of Directors resolved to deviate from the guidelines

during 2011.

The President and CEO has during 2011 received a benefit in

the form of flight travels. The reason for this was that at the time of

employment and for a period of time thereafter, the President and

CEO had his residence in another place than the place of work. In

addition, other customary benefits have been provided to mem-

bers of the Group Management in order to facilitate the persons’

discharge of his or her duties.

SHARE REPURCHASE

Share repurchase

In April 2007, Saab’s Annual General Meeting resolved to offer employ-

ees the opportunity to participate in a voluntary share matching plan

where they can purchase Series B shares in Saab during a 12-month

period. Purchases are made through deductions of between 1 and 5

per cent of the employee’s monthly salary. If the employee retains the

purchased shares for three years after the investment date and is still

employed by the Saab Group, the employee will be allotted a corre-

sponding number of Series B shares. The plan was introduced in au-

tumn 2007 in Sweden and Norway. In 2008 it was expanded to include

employees in Denmark, Germany, the UK, the U.S., Switzerland and

Australia, and in 2009 it was expanded again to cover employees in

South Africa. In April 2008, Saab’s Annual General Meeting resolved

to introduce a performance-based plan for senior executives and key

employees entitling them to 2–5 matching shares depending on the

category the employee belongs to. In addition to the requirement that

the employee remain employed by Saab after three years, there is a re-

quirement that earnings per share grow in the range of 5 to 15 per cent.

The Annual General Meetings in 2009, 2010 and 2011 resolved

to renew the share matching plan and performance share plan.

The 2011 share matching plan comprises all employees, including

senior executives and key persons. The performance share plan for

2011, which is directed to senior executives and key persons entitles

participants to 1–4 matching shares, depending on the category the

employee belongs to.

In 2007, Saab repurchased 1 million shares, in 2008 and 2009 it

repurchased 1,340,000 shares per year, and in 2010 it repurchased

838,131 shares to hedge the plans.

The Annual General Meeting on 7 April 2011 renewed the

Board of Directors’ mandate to repurchase up to 10 per cent of the

Company’s shares, of which 1,340,000 shares to hedge the share

matching plan and performance share plan.

The purpose of the authorisation was to provide the Board with

greater scope in working with the company’s capital structure and

enable acquisitions when considered appropriate, as well as to

secure the Group’s share matching plan. The mandate applied until

the next Annual General Meeting. Repurchases may be effected

over the stock exchange or through offerings to shareholders. It was

also proposed that the Board’s mandate include the possibility to

transfer repurchased shares as allowed by law. Repurchased shares

can also be transferred in connection with the company’s share

matching plan and performance share plan.

During the second quarter 2011, Saab announced that the Board

had decided to utilise its authorisation for repurchases and that

the repurchases could be made on NASDAQ OMX Stockholm at a

price within the registered share price interval on each occasion.

No shares were repurchased in 2011.

NUMBER OF REPURCHASED SHARES

The number of repurchased B shares held in treasury on 31

December 2011 was 3,818,386, which was 614,229 shares fewer

than at year-end 2010.

The Saab Pension Fund did not hold any shares in Saab on 31

December 2011.

DIVIDEND

The Board of Directors proposes that shareholders receive a divi-

dend of SEK 4.50 per share (3.50), or a total of MSEK 474 (367).

The proposed record day for the dividend is 24 April 2012, and the

dividend is expected to be paid on 27 April 2012.

IMPORTANT EVENTS AFTER THE BALANCE SHEET

EVENTS AFTER THE BALANCE SHEET DATE

Saab announced that Combitech had acquired Sörman Information.

The acquisition is part of Combitech’s strategy to expand its range of

services and grow in the Nordic consultancy market. Following the ac-

quisition of Sörman, Combitech has an annual turnover of approximately

SEK 1.1 billion and 1,100 employees.

Saab Sensis was selected by the US Federal Aviation Administration

(FAA) for the Airport Surface Surveillance Capability (ASSC) program.

FAA incrementally funded MSEK 34 (MUSD 5) of the MSEK 370

(MUSD 55) five-year contract. In addition, options for deliveries beyond

the five-year period were valued at MSEK 442 (MUSD 65), for a total

contract value of MSEK 825 (MUSD 119).

Saab received a framework order worth MSEK 98 from FMV concerning

technical system support for materiel operated by the Swedish Armed

Forces during 2012.

Saab received a multi-year contract for the next generation of laser-

based training systems for the US Army’s armoured combat vehicles.

The order value was MSEK 116 (MUSD 17.2). The indefinite delivery/

indefinite quantity (ID/IQ) contract consists of this order and options that

can be exercised over a time period of five years with a potential value of

MSEK 600 (MUSD 90).

No other significant events have occurred after the closing date that

affect the Group’s results or financial position.


FINANCIAL INFORMATION > FINANCIAL STATEMENTS AND NOTES

1 Accounting principles 82

2 Assumptions in the application of the accounting

principles 90

3 Revenue distribution 90

4 Segment reporting 91

5 Other operating income 93

6 Other operating expenses 93

7 Government grants 93

8 Business combinations and divestments 93

9 Employees and staff costs 95

10 Auditors’ fees and compensation 96

11 Operating expenses 96

12 Depreciation/amortisation and impairments 96

13 Financial income and expenses 97

14 Appropriations 97

15 Taxes 97

16 Intangible fixed assets 100

17 Tangible fixed assets 102

18 Lease assets and lease agreements 103

19 Biological assets 105

20 Investment properties 105

21 Shares in associated companies consolidated

according to the equity method 106

22 Shares in joint ventures consolidated according to

the proportional method 107

23 Parent Company’s shares in associated

companies and joint ventures 107

24 Receivables from Group companies, associated

companies and joint ventures 108

25 Financial investments 108

26 Other long-term securities holdings 108

27 Long-term receivables and other receivables 108

28 Inventories 109

29 Accounts receivable 109

30 Prepaid expenses and accrued income 109

31 Liquid assets 110

32 Assets held for sale 110

33 Shareholders’ equity 110

34 Earnings per share 111

35 Interest-bearing liabilities 111

36 Liabilities to credit institutions 111

37 Employee benefits 111

38 Provisions 116

39 Other liabilities 117

40 Accrued expenses and deferred income 118

41 Financial risk management and

financial instruments 118

42 Assets pledged and contingent liabilities 125

43 Transactions with related parties 126

44 Group companies 126

45 Untaxed reserves 127

46 Statement of cash flows,

supplemental information 127

47 Information on Parent Company 129

48 Environmental report 129

49 Exchange rates

used in financial statements 130

50 Definitions of key ratios 130

Income Statement, Consolidated 70

Statement of Comprehensive Income,

Consolidated 71

Statement of Financial position, Consolidated 72

Statement of Changes in Equity, Consolidated 74

Statement of Cash Flows, Consolidated 75

Income Statement, Parent Company 77

Comprehensive Income, Parent Company 77

Balance Sheet, Parent Company 78

Statement of Changes in Equity, Parent Company 80

Statement of Cash Flows, Parent Company 8 1

FINANCIAL STATEMENTS AND NOTES

NOTES TO THE FINANCIAL STATEMENTS

1 January – 31 December

MSEK Note 2011 2010

Sales 3, 4 23,498 24,434

Cost of goods sold -16,791 -18,843

Gross income 6,707 5,591

Other operating income 5 1,351 222

Marketing expenses -1,879 -1,727

Administrative expenses -1,217 -1,235

Research and development costs -1,928 -1,820

Other operating expenses 6 -77 -70

Share in income of associated companies 21 -16 14

Operating income 10, 11 ,12 2,941 975

Share in income of associated companies 21 4 26

Financial income 162 116

Financial expenses -324 -341

Net financial items 13 -158 -199

Income before taxes 2,783 776

Taxes 15 -566 -322

Net income for the year 2,217 454

Attributable to:

Parent Company’s shareholders 2,225 433

Non-controlling interest -8 21

Earnings per share before dilution (SEK) 34 21.19 4.12

Earnings per share after dilution (SEK) 34 20.38 3.97

CONSOLIDATED INCOME STATEMENT

ORDERS

Order bookings for 2011 decreased by 28 per cent compared to

2010 to MSEK 18,907 (26,278).

The order intake was lower compared to the previous year, partly

as a result of major orders in 2010 which included a large order

from FMV (Swedish Defence Material Administration) for six Gripen

aircraft intended for the Royal Thai Air Force of approximately

SEK 2.2 billion and an order for an airborne surveillance system of

approximately SEK 4.5 billion. 2011 did not include any orders of

similar significant size. In addition, we saw further delays in cus-

tomers’ investment decision making processes during the second

half of 2011 as a result of subdued global economic conditions.

The order backlog at the end of the year amounted to

MSEK 37,172 (41,459).

During 2011, index and price changes had a positive effect on

order bookings of MSEK 308 (377).

In all, 85 per cent (86) of order bookings were attributable to

defence-related operations and 56 per cent (66) of order book-

ings are from customers outside Sweden.

Orders received where the order sum was larger than MSEK 100

represented 48 per cent (58) of total order bookings.

Order backlog duration :

2012: SEK 17.7 billion




After 2015: SEK 3.6 billion

SALES

Sales decreased slightly compared to 2010 as a result of lower

activity levels in major projects and the challenging business

climate in South Africa.

Exchange rates had a 1 per cent negative impact on sales due

to depreciation of the ZAR and USD to SEK.

Saab Sensis contributed to sales with MSEK 265.

In 2010, sales decreased with approximately MSEK 100 as an

effect of lower revenue recognition related to a terminated

contract in Security and Defence Solutions.

Sales in markets outside Sweden amounted to MSEK 14,819

(15,211), or 63 per cent (62) of total sales.

Of sales, 84 per cent (83) was related to the defence market.

SALES BY REGION

MSEK

Jan-Dec

2011

Jan-Dec

2010

Sweden 8,679 9,223

EU excluding Sweden 4,514 4,737

Rest of Europe 320 368

Americas 1,899 2,199

Asia 5,176 3,937

Africa 1,789 2,833

Australia, etc. 1,121 1,137

Total 23,498 24,434

SALES BY MARKET SEGMENTS

MSEK

Jan-Dec

2011

Jan-Dec

2010

Air 10,611 10,393

Land 7,201 7,611

Naval 2,065 2,278

Civil Security 1,479 1,427

Commercial Aeronautics 1,309 1,348

Other 833 1,377

Total 23,498 24,434

FINANCIAL INFORMATION > FINANCIAL STATEMENTS


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

The order backlog primarily includes :

and Boeing

INCOME, MARGIN AND PROFITABILITY

In 2011, the gross margin was positively impacted by several sales transac-

tions by Saab Aircraft Leasing and reversals of risk provisions related to

these transactions.

Operating income in 2011 included capital gains of MSEK 1,169. It also in-

cluded structural costs for Saab Sensis totalling MSEK 27 and costs related

to the acquisition process of Sensis of MSEK 25.

Saab Sensis reported a loss before structural costs of MSEK -34 in 2011.

In 2010, operating income was impacted by structural costs and other non-

recurring items of MSEK 616 and capital gains of MSEK 14.

Total depreciation and amortisation amounted to MSEK 1,261 (1,358).

Depreciation and write-down of tangible fixed assets amounted to

MSEK 352 (382), while depreciation of the leasing fleet amounted to

MSEK 114 (146).

Total expenditure for research and development amounted to MSEK 5,116

(5,008). The expenditures in research and development that are internally

funded amounted to MSEK 1,355 (1,203), of which a total of MSEK 15 (47)

has been capitalised.

Amortization and write-down of intangible fixed assets amounted to

MSEK 795 (830), of which amortization and write-down of capitalised devel-

opment costs amounted to MSEK 588 (664). In 2010, it included a write-

down of capitalised development costs of MSEK 20.

The share of income in associated companies, MSEK -16 (14), primarily

relates to net income in Hawker Pacific Airservices Ltd.

FINANCIAL NET

MSEK Jan–Dec 2011 Jan–Dec 2010

Project interest from unutilised

advance payment

-30 -17

Net interest items 33 -40

Currency losses/gains -32 57

Financial net related to pensions -60 -168

Other net financial items -69 -31

Total -158 -199

Project interest on unutilised advance payment refers to orders that are

financed to a significant extent with advance payment from customers.

The effect on interest of advance financing is recognised in gross income

and reduces financial net.

The currency losses/gains reported above related to the tender portfolio

where the hedged part was valued at market value. Other net financial

items consisted of income from shares in associated companies and other

exchange rate effects. Other exchange rate effects included an accounting

loss related to a pre-maturity closing of an interest rate swap.

Current and deferred taxes during the year amounted to MSEK -566 (-322),

or an effective tax rate of 20 per cent (41). Tax-exempt income in 2011 led to

a lower tax rate in the year.

The pre-tax return on capital employed was 22.2 per cent (7.9) and the

after-tax return on equity was 18.1 per cent (4.1), both measured over a

rolling 12-month period.


MSEK 2011 2010

Net income for the year 2,217 454

Other comprehensive income:

Translation differences -60 16

Net gain/loss on cash flow hedges

Change in value 22 658

Reversed through profit and/or loss -278 108

Tax attributable to net gain/loss on cash flow hedges 69 -201

Share of other comprehensive income in associated companies -26 2

Other comprehensive income -273 583

Net comprehensive income for the year 1,944 1,037

of which Parent Company’s shareholders’ interest 1,995 1,006

of which non-controlling interest -51 31



as of 31 December

MSEK Note 2011 2010

Assets

Intangible fixed assets 16 6,699 6,413

Tangible fixed assets 17 3,272 3,052

Lease assets 18 771 1,154

Biological assets 19 305 299

Investment properties 20 224 236

Shares in associated companies 21 288 251

Financial investments 25 197 203

Long-term receivables 27 1,046 856

Deferred tax assets 15 86 -

Total fixed assets 12,888 12,464

Inventories 28 4,334 4,100

Derivatives 41 520 1,105

Tax assets 23 46

Accounts receivable 29 3,153 3,052

Other receivables 27 3,579 3,630

Prepaid expenses and accrued income 30 829 680

Short-term investments 25 4,555 1,544

Liquid assets 31 1,918 2,544

Total current assets 18,911 16,701

Assets held for sale 32 - 113

TOTAL ASSETS 31,799 29,278

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

STATEMENT OF FINANCIAL POSITION

Since the beginning of 2011, the net cash position has in-

creased by MSEK 2,042 to MSEK 5,333 at the end of 2011.

Major reasons for the improvement in the net cash position are

an increased profitability, an increased level of customer ad-

vances and milestone payments.

Intangible assets increased as a result of the acquisition of

Sensis.

As of 1 January 2009, Saab changed its view on the applica-

tion of the accounting principles for development costs. As a

result of this more conservative view, development costs are

capitalised at a later stage in all projects and all capitalised de-

velopment costs are amortised over maximum ten years.

Inventories are recognised after deducting utilised advances.

Other receivables decreased as a result of the divestment of

the shares in Aker Holding AS.

Short-term interest-bearing liabilities decreased by MSEK 69

from the beginning of the year.

Provisions for pensions amounted to MSEK 12 (5). During

2011, the Saab Pension Fund was capitalised with a total of

MSEK 102 (108). The fund was set up in 2006 with the overall

objective to secure the Group’s defined-benefit pension plans

and at the same time hedge the interest rate volatility of the

pension liability and reduce the overall cost of pensions.

For more information on the reporting of Saab’s pension obli-

gations, see Note 37.



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as of 31 December

MSEK Note 2011 2010

Equity 33

Capital stock 1,746 1,746

Other capital contributions 543 543

Other reserves 457 687

Retained earnings 10,204 8,298

Equity attributable to Parent Company’s

shareholders 12,950 11,274

Non-controlling interest 119 170

Total equity 13,069 11,444

Liabilities

Long-term interest-bearing liabilities 35 1,218 1,117

Other liabilities 39 439 294

Provisions for pensions 37 12 5

Other provisions 38 1,728 2,207

Deferred tax liabilities 15 1,012 803

Total long-term liabilities 4,409 4,426

Short-term interest-bearing liabilities 35 520 589

Advance payments from customers 1,022 643

Accounts payable 1,785 1,799

Derivatives 41 628 750

Tax liabilities 244 265


Accrued expenses and deferred income 40 8,629 7,751

Provisions 38 746 792

Total current liabilities 14,321 13,408

Liabilities attributable to assets held for sale 32 - -

Total liabilities 18,730 17,834

TOTAL EQUITY AND LIABILITIES 31,799 29,278

For information on the Group’s assets pledged and contingent liabilities,

see Note 42.



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

MSEK

Capital

stock

Other capital

contributions

Net result

of cash

flow

hedges

Translation

reserve

Revaluation

reserve

Retained

earnings

Total equity

attributable

to Parent

Company’s

shareholders

Non-

controlling

interest

Total

equity

Opening balance, 1 January 2010 1,746 543 84 -21 51 8,139 10,542 140 10,682

Net comprehensive income for

the year - - 564 9 - 433 1,006 31 1,037

Transactions with shareholders:

Repurchase of shares - - - - - -80 -80 - -80

Share matching plan - - - - - 43 43 - 43

Dividend - - - - - -237 -237 - -237

Acquisition and sale of non-controlling

interest - - - - - - - -1 -1

Closing balance, 31 December 2010 1,746 543 648 -12 51 8,298 11,274 170 11,444

Opening balance, 1 January 2011 1,746 543 648 -12 51 8,298 11,274 170 11,444

Net comprehensive income for

the year - - -191 -39 - 2,225 1,995 -51 1,944


Share matching plan - - - - - 47 47 - 47

Dividend - - - - - -367 -367 - -367

Acquisition and sale of non-controlling

interest - - - - - 1 1 - 1

Closing balance, 31 December 2011 1,746 543 457 -51 51 10,204 12,950 119 13,069

For a definition of other reserves, see Note 33.

Other reserves




MSEK Note 2011 2010

Operating activities


Transferred to pension fund -132 -147

Adjustments for items not affecting cash flow 46 141 2,317

Income tax paid -450 -196

Cash flow from operating activities before changes

in working capital 2,342 2,750

Cash flow from changes in working capital

Increase(–)/Decrease(+) in inventories -243 586

Increase(–)/Decrease(+) in current receivables -96 855

Increase(+)/Decrease(–) in advance payments from

customers 409

194

Increase(+)/Decrease(–) in other current liabilities 610 399

Increase(+)/Decrease(–) in provisions -630 -297

Cash flow from operating activities 2,392 4,487

Investing activities

Investments in intangible fixed assets -26 -70

Capitalised development costs -15 -47

Investments in tangible fixed assets -325 -262

Investments in lease assets -1 -2

Sale of tangible fixed assets 23 11

Sale of lease assets 301 65

Investments in and sale of short-term investments -2,967 -993

Sale of and investments in other financial assets 306 -6

Investments in operations and associated compa-

nies, net effect on liquidity 8, 46 -1,135 -

Sale of subsidiaries and associated companies, net

effect on liquidity 8, 46 1,264 161

Cash flow from investing activities -2,575 -1,143

Financing activities

Repayment of loans -50 -1,950

Repurchase of shares - -80

Dividend paid to Parent Company’s shareholders -367 -237

Cash flow from financing activities -417 -2,267

CASH FLOW FOR THE YEAR 46 -600 1,077

Liquid assets at beginning of year 2,544 1,463

Exchange rate difference in liquid assets -26 4

Liquid assets at year-end 46 1,918 2,544

For Saab’s operating cash flow, see Note 46 and page 76.

CONSOLIDATED STATEMENT OF CASH FLOWS

CAPITAL EXPENDITURES

Gross capital expenditures in property, plant and equipment,

excluding lease assets, amounted to MSEK 325 (262).

Investments in intangible assets amounted to MSEK 41 (117)

of which MSEK 15 (47) are related to capitalised product

development and MSEK 26 (70) to other intangible assets.

CASH FLOW

Operating cash flow amounted to MSEK 2,477 (4,349) in

2011. The lower level compared to 2010 was mainly caused

by certain projects in Aeronautics which entered into their final

stages in 2010 and 2011. These projects were successfully

delivered to the customer, and Saab managed to execute

them at a lower cost than originally planned. Therefore a final

price adjustment was made in the fourth quarter 2011 of about

MSEK 850. This had a negative impact on the operating cash

flow of both Aeronautics and Electronic Defence Systems.

Operating cash flow was distributed between cash flow from

core operating activities of MSEK 2,123 (4,043), acquisitions

and divestments of operations and associated companies of

MSEK 129 (161) and the leasing aircraft business of

MSEK 225 (145). See table on page 76.

Saab has an established programme to sell accounts receiv-

able to strengthen its financial position and increase financial

flexibility. The accounts receivable sold are in most cases re-

lated to customers with high credit worthiness, and one hun-

dred per cent of the value of the receivables is sold at favour-

able funding levels. As per 31 December 2011, receivables of

MSEK 872 were sold, compared to MSEK 1,409 at 31 De-

cember 2010. Hence it had a negative impact of MSEK 537 on

cash flow for the year.

For more detailed information on operating cash flow, refer to

Note 46.



Specification of operating cash flow 2011

MSEK

Saab excl acquisi-

tions /divest-

ments and SAL

Acquisitions and

divestments

Saab Aircraft

Leasing

Total

Group

2011

Total

Group

2010

Cash flow from operating activities before changes in

working capital 2,178 - 164 2,342 2,750

CASH FLOW FROM CHANGES IN WORKING CAPITAL

Inventories -245 - 2 -243 586

Current receivables -98 - 2 -96 855

Advance payments from customers 409 - - 409 194

Other current liabilities 762 - -152 610 399

Provisions -538 - -92 -630 -297

Change in working capital 290 - -240 50 1,737

Cash flow from operating activities 2,468 - -76 2,392 4,487

INVESTING ACTIVITIES

Investments in intangible fixed assets -41 - - -41 -117

Investments in tangible fixed assets -325 - - -325 -262

Investments in lease assets -1 - - -1 -2

Sale of tangible fixed assets 23 - - 23 11

Sale of lease assets - - 301 301 65

Investments in and sale of financial assets -1 - - -1 6

Investments in operations and associated companies,

net effect on liquidity - -1,135 - -1,135 -

Sale of subsidiaries and associated companies,

net effect on liquidity - 1,264 - 1,264 161

Cash flow from investing activities excluding change

in short-term investments and other interest-bearing

financial assets -345 129 301 85 -138

OPERATING CASH FLOW1) 2,123 129 225 2,477 4,349

1) For a reconciliation of operating cash flow to cash flow for the year, see Note 46.




MSEK Note 2011 20101)

Sales 3, 4 15,415 14,745

Cost of goods sold -11,785 -11,650

Gross income 3,630 3,095

Marketing expenses -1,220 -1,114

Administrative expenses -664 -727

Research and development costs -1,143 -1,024

Other operating income 5 219 82

Other operating expenses 6 -3 -16


Result from financial items: 13

Result from shares in Group companies 1,410 1,171

Result from shares in associated companies/joint ventures 59 32

Result from other securities and receivables held as fixed assets 81 107

Other interest income and similar items 182 114

Interest expenses and similar items -207 -173

Income after financial items 2,344 1,547

Appropriations 14 -293 -83

Income before taxes 2,051 1,464

Taxes 15 -462 -423

Net income for the year 1,589 1,041

1) The income statement for the parent company has been restated for the year 2010 due to a correction of classification and valuation of intangible and financial fixed assets.

The income statement for the year 2010 has also been restated due to changes in accounting principles regarding group contributions paid to subsidiaries


MSEK Note 2011 2010


Other comprehensive income - -

Net comprehensive income for the year 1,589 1,041

PARENT COMPANY INCOME STATEMENT

PARENT COMPANY COMPREHENSIVE INCOME

SALES AND INCOME

The Parent Company includes units within the business areas Aeronautics,

Electronic Defence Systems, Security and Defence Solutions, and Support

and Services. Group staffs and Group support are included as well. The

Parent Company’s sales in 2011 amounted to MSEK 15,415 (14,745). Op-

erating income was MSEK 819 (296). Operating income included expenses

of approximately MSEK 330 regarding increased pension obligations ac-

cording to the FPG/PRI system due to changed mortality assumptions;

see also Note 37.

Operating income in 2010 included expenses of MSEK 290 mainly related

to a terminated contract in Security and Defence Solutions and structural

costs of MSEK 98 in Aeronautics related to lay-offs announced in January

2010 as well as the reorganisation announced in 2009.

Net financial income and expenses amounted to MSEK 1,525 (1,251).

After appropriations of MSEK -293 (-83) and taxes of MSEK -462 (-423),

net income for the year amounted to MSEK 1,589 (1,041).



as of 31 December

MSEK Note 2011 20101)

ASSETS

Fixed assets

Intangible fixed assets 16 1,938 2,273

Tangible fixed assets 17 2,137 2,205

Financial fixed assets

Shares in Group companies 44 6,407 5,770

Receivables from Group companies 24 911 557

Shares in associated companies and joint ventures 23 552 491

Receivables from associated companies and joint ventures 24 17 32

Other long-term securities holdings 26 24 1,457

Other long-term receivables 27 34 10

Deferred tax assets 15 233 417

Total financial fixed assets 8,178 8,734

Total fixed assets 12,253 13,212

Current assets

Inventories, etc. 28 3,152 2,782

Current receivables

Accounts receivable 29 1,424 1,338

Receivables from Group companies 2,280 2,107

Receivables from associated companies and joint ventures 6 26

Tax assets - -

Other receivables 27 2,045 1,991

Prepaid expenses and accrued income 30 640 512

Total current receivables 6,395 5,974

Short-term investments 4,511 1,544

Cash and bank balances 1,237 1,935

Total current assets 15,295 12,235

TOTAL ASSETS 27,548 25,447

1) The balance sheet for the parent company has been restated for the year 2010 due to a correction of classification and valuation of intangible

and financial fixed assets

PARENT COMPANY BALANCE SHEET

LIQUIDITY, FINANCE, CAPITAL EXPENDITURE

AND NUMBER OF EMPLOYEES

The Parent Company’s net liquidity amounted to MSEK 516 at 31 Decem-

ber 2011 compared to a net debt of MSEK 2,395 at 31 December 2010.

The change in net liquidity is related to strong operating cash flow and the

divestment of shares in Aker Holding AS that impacted the net cash position

positively by approximately MSEK 1,500 as well as the divestment of the

shares in C3 Technologies AB that impacted the net cash position positively

by MSEK 149. Gross capital expenditures in property, plant and equipment

amounted to MSEK 168 (150). Investments in intangible assets amounted

to MSEK 22 (68).

At the end of 2011, the Parent Company had 7,873 employees, compared

to 7,915 at the beginning of the year.



as of 31 December

MSEK Note 2011 20101)

EQUITY AND LIABILITIES

Equity 33

Restricted equity

Capital stock 1,746 1,746

Revaluation reserve 713 718

Statutory reserve 543 543

Unrestricted equity

Retained earnings 2,399 1,673


Total equity 6,990 5,721

Untaxed reserves 45 795 502

Provisions

Provisions for pensions and similar commitments 37 469 192

Other provisions 38 1,034 1,465

Total provisions 1,503 1,657

Liabilities

Liabilities to credit institutions 36 1,100 2,223

Liabilities to Group companies 7,697 7,084

Advance payments from customers 471 98

Accounts payable 1,247 1,034

Liabilities to associated companies and joint ventures 51 69

Tax liabilities 101 83


Accrued expenses and deferred income 40 7,106 6,305

Total liabilities 18,260 17,567

TOTAL EQUITY AND LIABILITIES 27,548 25,447

1) The balance sheet for the parent company has been restated for the year 2010 due to a correction of classification and valuation of intangible

and financial fixed assets.

Assets pledged 42 10 110

Contingent liabilities 42 5,829 5,918

PARENT COMPANY BALANCE SHEET



STATEMENT OF CHANGES IN EQUITYFOR THE PARENT COMPANY

Restricted equity Unrestricted equity

MSEK Capital stock

Revaluation

reserve

Statutory

reserve

Retained

earnings

Net compre-

hensive

income Total equity

Opening balance, 1 January 2010 1,746 724 543 3,103 - 6,116

Restatement due to a correction of classification and

valuation of intangible and financial fixed assets1) - - - -1,162 - -1,162

Adjusted opening balance, 1 January 2010 1,746 724 543 1,941 - 4,954

Items reported directly in equity:

Change in revaluation reserve - -6 - 6 - -

Net comprehensive income for the year - - - - 1,041 1,041


Dividend to shareholders - - - -237 - -237

Repurchase of shares - - - -80 - -80

Share matching plan - - - 43 - 43

Closing balance, 31 December 2010 1,746 718 543 1,673 1,041 5,721

Opening balance, 1 January 2011 1,746 718 543 2,714 - 5,721

Items reported directly in equity:

Change in revaluation reserve - -5 - 5 - -

Net comprehensive income for the year - - - - 1,589 1,589


Dividend to shareholders - - - -367 - -367

Share matching plan - - - 47 - 47

Closing balance, 31 December 2011 1,746 713 543 2,399 1,589 6,990

1) Other balance sheet items that have been restated through the correction of the opening balance for 2010 are intangible fixed assets, by MSEK 2,473, from

MSEK 96 to MSEK 2,569, and shares in Group companies, by MSEK -3 635, from MSEK 9,520 to MSEK 5,885. See also Note 16 and Note 44.



PARENT COMPANY STATEMENT OF CASH FLOWS


MSEK Note 2011 2010


Income after financial items 2,344 1,547

Adjustments for items not affecting cash flow 46 -642 -296

Income tax paid -328 -

Cash flow from operating activities before changes in working capital 1,374 1,251

Cash flow from changes in working capital

Increase(–)/Decrease(+) in inventories -329 441

Increase(–)/Decrease(+) in current receivables -296 1,149

Increase(+)/Decrease(–) in advance payments from customers 373 -93

Increase(+)/Decrease(–) in other current liabilities 1,045 553

Increase(+)/Decrease(–) in provisions -559 -324



Shareholders’ contributions paid -718 -25




Investments in and sale of short-term investments -2,967 -993

Sale of and investments in financial assets 1,176 223

Investments in operations -41 -

Investments in subsidiaries -215 -2

Sale of subsidiaries 2 -

Cash flow from investing activities -2,936 -1,014

Financing activities

Change in receivables/liabilities, Group companies 128 857



Dividend paid to shareholders -367 -237

Group contributions and dividends received 1,297 1,223

Group contributions paid -32 -164

Cash flow from financing activities 630 -816

CASH FLOW FOR THE YEAR -698 1,147

Liquid assets at beginning of year 1,935 788

Liquid assets at year-end 46 1,237 1,935



NOTE 1

ACCOUNTING PRINCIPLES

Operations

Saab ab is a Swedish limited company with its registered address in

Linköping. The company’s shares are listed on the nasdaq omx Stockholm’s

large cap list. The operations of Saab ab with its subsidiaries, joint ventures

and associated companies (jointly referred to as Saab or the Group) are

divided into six business areas: Aeronautics, Dynamics, Electronic Defence

Systems, Security and Defence Solutions, Support and Services, and

Co mbitech. The operations in each business area are described in Note 4.

Saab has a strong position in Sweden and the large part of its sales are

generated in Europe, in addition to which Saab has a local presence in South

Africa, Australia, the U.S. and other selected countries.

On 10 February 2012, the Board of Directors and the President approved

this annual report and consolidated accounts for publication, and they will be

presented to the Annual General Meeting on 19 April 2012 for adoption.

Conformity to standards and laws

The consolidated accounts have been prepared in accordance with the Interna-

tional Financial Reporting Standards (ifrs) issued by the International Account-

ing Standards Board (iasb) and the interpretations of the International Financial

Reporting Interpretations Committee (ifric) as approved by the eu. The consol-

idated accounts have also been prepared in accordance with the Swedish Finan-

cial Reporting Board’s recommendation rfr 1 Supplementary Accounting Rules

for Groups, which contains certain additional disclosure requirements for Swed-

ish consolidated accounts prepared in accordance with ifrs.

The annual report for Saab ab has been prepared according to the Annual

Accounts Act, the Swedish Financial Reporting Board’s recommendation rfr 2

Reporting by Legal Entities and the pronouncements of the Swedish Finan-

cial Reporting Board. Differences between the accounting principles applied

by Saab ab and the Group are the result of limitations on opportunities to

apply ifrs by the Parent Company owing to the Annual Accounts Act, the

Act on Safeguarding Pension Commitments and in certain cases current tax

rules. Significant differences are described below under “Significant differ-

ences between the Group’s and the Parent Company’s accounting principles.”

Assumptions in the preparation of the financial reports

The Parent Company’s functional currency is Swedish kronor (sek), which is

also the reporting currency for the Parent Company and for the Group. The

financial reports are presented in sek. All amounts, unless indicated other-

wise, are rounded off to the nearest million.

Assets and liabilities are carried at historical cost, with the exception of

certain financial assets and liabilities, investment properties and biological

assets, which are carried at fair value or amortised cost. Derivatives are car-

ried at fair value.

Non-current assets and disposal groups held for sale are carried at the

lower of their carrying amount and fair value less selling expenses at the time

they were classified as held for sale.

The preparation of the financial reports in accordance with ifrs requires

the Board of Directors and Management to make estimates and assumptions

that affect the application of the accounting principles and the carrying

amounts of assets, liabilities, revenue and expenses. Estimates and assump-

tions are based on historical experience and knowledge of the industry that

Saab operates in, and under current circumstances seem reasonable. The

result of these estimates and assumptions is then used to determine the carry-

ing amounts of assets and liabilities that otherwise are not clearly indicated

by other sources. Actual outcomes may deviate from these estimates and

assumptions.

Estimates and assumptions are reviewed regularly, and the effect of

changed estimates is recognised in profit or loss.

Estimates made by the Board of Directors and Management in applying

the accounting principles in compliance with ifrs that may have a significant

impact on the financial reports as well as estimates that may necessitate

significant adjustments in financial reports in subsequent years are described

in more detail in Note 2.

The accounting principles described below for the Group have been

applied consistently for all periods presented in the Group’s financial reports,

unless otherwise indicated below.

Application of new and revised accounting rules

The International Accounting Standards Board (iasb) and the International

Financial Reporting Interpretations Committee (ifric) have issued and the eu

has adopted the following new and revised standards, which apply as of the

financial year 2011:

Amendment to ias 32 Financial Instruments: Classification of Rights

Issues

ifric 19 Extinguishing Financial Liabilities with Equity Instruments

Amendment to ifrs 1 First-time Adoption of ifrs

Revised ias 24 Related Party Disclosures

Amendment to ifric 14 “ias 19 – The Limit on a Defined Benefit

Asset, Minimum Funding Requirements and their Interaction”

iasb annual improvements projects 2010

ifrs 1 First-time Adoption of ifrs

ifrs 3 Business Combinations

ifrs 7 Financial instruments: Disclosures

ias 1 Presentation of Financial Statements

ias 27 Consolidated and Separate Financial Statements

ias 34 Interim Financial Reporting

ifric 13 Customer Loyalty Programmes

These new and amended standards and interpretations have not had any

effect on the Group’s financial reports for 2011.

New and amended standards and interpretations that have not yet

entered into force

The International Accounting Standards Board (iasb) has issued the follow-

ing new and amended standards that have not yet entered into force and the

International Financial Reporting Interpretations Committee (ifric) has

published the following new and amended interpretations that have not yet

entered into force and have not yet been adopted by the eu:

Standards

Will apply to financial

years beginning:

Amendments to ias 19 Employee Benefits 1 January 2013

Amendment to ifrs 7 Disclosures: Transfers

of Financial assets 1 July 2011

ifrs 9 Financial Instruments 1 January 2015

ifrs 10 Consolidated Financial Statements 1 January 2013

ifrs 11 Joint arrangements 1 January 2013

ifrs 12 Disclosures of interests in other entities 1 January 2013

ifrs 13 Fair value measurement 1 January 2013

ifrs 1 First-time Adoption of ifrs 1 July 2011

ias 1 Presentation of Financial Statements 1 July 2012

ias 12 Income Taxes 1 January 2012

ias 27 Separate Financial Statements 1 January 2013

ias 28 Investments in Associates and

Joint Ventures 1 January 2013

The effect on Saab of the application of ifrs 9 and ifrs 11 has not yet been

determined.

Effects of amendments to IAS 19 Employee Benefits

Saab applies the current standard’s option to apply the so-called corridor

approach. This means that the effects of changes in so-called actuarial

assumptions about pension liabilities and assets under management are not

recognised directly but rather over the remaining period of employment (see

also Note 1 and Note 37). The updated standard eliminates this option. This

means that changes in actuary of assumptions, e.g., discount rates, are recog-

nised directly in other comprehensive income. The updated standard also

requires the company to use the same interest rate to discount pension liabili-

ties as in the calculation of the projected return on assets under management.

FINANCIAL INFORMATION > NOTES


The updated standard will be applied retroactively as of the first quarter of

2013. For Saab, this means an immediate increase in its net pension liability

(classified as a financial liability) and a corresponding decrease in retained

earnings after taking into account the tax effects. If the standard had been

applied as of 31 December 2011, the net pension obligation would have been

about msek 2,700 higher and retained earnings about msek 2,000 lower. The

effect on operating and net results for 2011 would not have changed signifi-

cantly. The updated standard also contains rules on the reporting of the spe-

cial employer’s contribution and tax on returns from pension funds. There

remains uncertainty with regard to the Swedish portion of the net pension

debt about the reporting of the special employer’s contribution and tax on

returns from pension funds. The effect on the reporting of this has not been

factored into the above amounts.

Other standards and interpretations are not expected to have a material

effect on the consolidated financial statements.

Operating segments

Segment information is presented based on management’s view, and operat-

ing segments are identified based on internal reporting to the company’s

chief operating decision maker. Saab has identified the Chief Executive

Officer as its chief operating decision maker, while the internal reports used

by the ceo to oversee operations and make decisions on allocating resources

serve as the basis of the information presented. The segments are monitored

at the operating income level. The accounting principles for reportable seg-

ments conform to the principles applied by the Group as a whole.

The Group had six reportable segments in 2011:

Complementing the six segments is Corporate, which comprises Group staffs

and departments as well as other non-core operations.

Sales of goods and services between segments are made on market terms.

A detailed description of the segments, together with the factors used to

identify segments, can be found in note 4 and on pages 50–61.

Classification of assets and liabilities

Current assets and current liabilities generally consist of amounts that can be

recovered or paid within twelve months of the closing day. Other assets and

liabilities are recognised as fixed assets or long-term liabilities.

Consolidation principles

Group companies

Group companies are companies in which Saab ab has a decisive influence

through a direct or indirect shareholding amounting to more than 50 per

cent of the votes, other than in exceptional circumstances where it can be

clearly demonstrated that such ownership does not constitute a decisive

influence. Decisive influence also exists when the parent owns not more than

half of the voting power of an entity but otherwise has a decisive influence

over more than half the voting rights or the power to govern the company’s

financial and operating policies under a statute or agreement. When deter-

mining whether a decisive influence exists, potential voting shares that can be

exercised or converted without delay are taken into account.

Subsidiaries and acquired operations (business combinations) are recog-

nised according to the purchase accounting method. This means that a busi-

ness combination is treated as a transaction whereby the Group indirectly

acquires the business’s assets and takes over its liabilities and contingent liabil-

ities. The Group’s cost is determined through an acquisition analysis with

regard to the acquisition of operating entities. Cost is comprised of the sum of

the fair value of what of is paid in cash on the acquisition date through the

assumption of liabilities or shares issued. Contingent consideration is

included in cost and recognised at its fair value on the acquisition date. The

subsequent effects of revaluations of contingent consideration are recognised

in profit or loss. Acquired identifiable assets and assumed liabilities are ini-

tially recognised at their acquisition-date fair value. The exceptions to this

principle are acquired tax assets/liabilities, employee benefits, share-based

payment and assets held for sale, which are valued in accordance with the

principles described in the sections below for each item. Exceptions are also

made for indemnification assets and repurchased rights. Indemnification

assets are valued according to the same principle as the indemnified item.

Repurchased rights are valued based on the remaining contractual period

regardless of whether other market players might consider opportunities for

contract extensions in connection with valuations. Recognised goodwill con-

sists of the difference between, on the one hand, the cost of Group company’s

interests, the value of non-controlling interests in the acquired company and

the fair value of the previously owned interest and, on the other, the carrying

amount of the acquired assets and assumed liabilities in the acquisition analy-

sis. Goodwill is recognised according to the section on intangible fixed assets.

Non-controlling interests are recognised on the acquisition date either at fair

value or their proportionate share of the carrying amount of the acquired

company’s identified assets and liabilities. Acquisitions of non-controlling

interests are recognised as transactions affecting the owners’ equity.

The financial reports of Group companies are included in the consoli-

dated accounts from the point in time when a decisive influence arises

(acquisition date) until this influence ceases. When decisive influence over

the Group company ceases but the Group retains an interest in the company,

the remaining shares are initially recognised at fair value. The gain or loss that

arises is recognised in profit or loss.

Associated companies

Associated companies are companies over which the Group has a significant

(but not decisive) influence over operating and financial controls, usually

through a shareholding of between 20 and 50 per cent of the votes. From the

point in time when the significant influence arises, the shares in the associ-

ated company are recognised according to the equity method in the consoli-

dated accounts. The equity method is applied until the point in time when the

significant influence ceases. The equity method means that the carrying

amount of the shares in the associated company corresponds to the Group’s

share of the company’s equity based on an application of the Group’s account-

ing principles as well as Group goodwill and any remaining Group surplus or

deficit values. “Share in income of associated companies” in the income state-

ment comprises the Group’s share of the net income after tax and the non-

controlling interest in associated companies adjusted for any depreciation,

impairment loss or dissolution of acquired surplus and deficit values deter-

mined in the same way as for operating acquisitions. Dividends received

from the associated company reduce the carrying amount of the investment.

If the Group’s share of the accumulated deficit in an associated company

exceeds the carrying amount of the shares in the Group, the value of the shares

is reduced to nil. Losses are also offset against long-term uncollateralised finan-

cial balances that in their economic significance represent part of the owner-

company’s net investment in the associated company. Subsequent losses are not

recognised as a liability in the consolidated accounts as long as the Group has

not issued any guarantees to cover losses arising in the associated company.

When decisive inflluence over the associated company ceases but the Group

retains an interest in the company, the remaining shares are initially recog-

nised at fair value. The gain or loss that arises is recognised in profit or loss.

Joint ventures

Companies in which the Group, through a cooperative agreement with one

of more parties, shares a decisive influence over operating and financial con-

trols are recognised in the consolidated accounts according to the propor-

tional method. For joint ventures, this means that the Group’s share of the

companies’ revenue and expenses and their assets and liabilities is recognised

in the consolidated income statement and statement of financial position

based on application of the Group’s accounting principles. This is done by

combining Saab’s share of revenue and expenses and assets and liabilities in

the joint venture with the corresponding items in the consolidated accounts.

When a joint venture is terminated but the Group retains an interest in the

company, the remaining shares are initially recognised at fair value. The gain

or loss that arises is recognised in profit or loss.



Eliminated transactions

Intra-Group receivables and liabilities, revenue or expenses, and gains or

losses that arise from transactions between Group companies are eliminated

in their entirety in the preparation of the consolidated accounts.

Gains that arise from transactions with associated companies and joint

ventures are eliminated to an extent corresponding to the Group’s ownership

interest in the company. Losses are eliminated in the same way as gains, but

only to the extent there that is no impairment loss.

Foreign currency

Functional currencies are the currencies in each primary economic environ-

ment where units of the Group conduct their operations.

Transactions and assets and liabilities in foreign currency

Transactions in foreign currency are recognised in the functional currency at

the exchange rate on the transaction day. Monetary assets and liabilities are

translated to the functional currency on the closing day at the exchange rate

then in effect. Exchange rate differences that arise through these translations

are recognised in profit and loss. Non-monetary assets and liabilities recog-

nised at fair value are translated to the functional currency at the rate in effect

at the time of valuation at fair value. Changes in exchange rates are then rec-

ognised in the same way as other changes in value of the asset or liability.

Translation of financial reports of foreign operations to sek

Assets and liabilities in operations with a functional currency other than sek

are translated to sek at the closing day exchange rate. Revenue and expenses

in foreign operations are translated to sek at the average rate. Translation dif-

ferences that arise through currency translations are recognised directly in

other comprehensive income. The amount is recognised separately as a trans-

lation reserve in equity.

Revenue

Revenue is measured at the fair value of what is received or will be received

after deducting sales tax, returns, discounts or other similar deductions.

Sales of goods

Revenue from the sale of goods is recognised in profit or loss when the signifi-

cant risks and benefits associated with ownership have transferred to the buyer,

when it is considered likely that payment will be received and the revenue and

related expenses can be calculated reliably.

Service assignments

Revenue from service assignments is recognised when the services are ren-

dered. Revenue from services rendered as part of fixed-price contracts is rec-

ognised in accordance with the principles that apply to long-term customer

contracts; see below. Revenue is recognised only if it is likely that the eco-

nomic benefits will accrue to the Group.

Long-term customer contracts

A large part of the Group’s operations comprises long-term customer con-

tracts. Long-term customer contracts relate to the development and manu-

facture of complex systems that stretch over several reporting periods. When

such contracts concern development and hardware that can be reliably calcu-

lated, revenue and expenditures attributable to the assignment are recognised

in the consolidated income statement in relation to the assignment’s stage of

completion, i.e., according to the percentage of completion method.

The stage of completion is based on a determination of the relationship

between expenditures incurred for services rendered as of the closing day

and estimated total expenditures. Of the estimated total revenue for an

assignment, the portion corresponding to the stage of completion is recog-

nised in each period. The stage of completion can also be determined in cer-

tain cases based on milestones or deliveries. With regard to orders that are

financed to a significant extent with advance payment from customers, the

effect on interest of advance financing is recognised in gross income. The

interest amount that affected gross income is indicated in Note 13.

An anticipated loss is recognised in profit or loss as soon as it is identified.

Recognised subcontracting revenue for which the customer has not yet

been invoiced is recognised as a receivable from that customer. All projects in

progress from customers for whom invoiced amounts exceed project

expenses and reported profits are recognised as liabilities to those customers.

Operating expenses

The income statement is classified according to function as follows:

Cost of goods sold comprises costs for material handling and manufac-

turing costs, including salary and material costs, purchased services,

premises, and the depreciation/amortisation and impairment of intan-

gible and tangible fixed assets. Customer-financed research and devel-

opment is recognised in cost of goods sold.

Administrative expenses relate to expenses for the Board of Directors,

Group Management and staff functions.

Marketing expenses comprise expenses for the in-house marketing and

sales organisation as well as external marketing and selling expenses.

Research and development costs are recognised separately and com-

prise the cost of self-financed new and continued product development

as well as amortisation of capitalised development costs; see below.

Other operating revenue and expenses relate to secondary activities, ex-

change rate differences on items of an operating nature, changes in the

value of derivatives of an operating nature and capital gains/losses on

the sale of tangible fixed assets. Also included at the Group level are cap-

ital gains/losses on the sale of subsidiaries and associated companies.

Government grants

Government grants are recognised in the statement of financial position as

prepaid or accrued income when there is reasonable certainty that the grant

will be received and that the Group will meet the conditions associated with

the grant. Grants are systematically recognised in the income statement in

the same way and over the same periods as the expenses for which the grants

are intended to compensate. Government grants related to assets are recog-

nised in the statement of financial position as a reduction in the asset’s carry-

ing amount.

Financial revenue and expenses

Financial revenue and expenses consist of interest income on bank balances,

receivables and marketable securities, interest expenses on loans, dividends,

exchange rate differences, unrealised and realised gains on financial invest-

ments, amortisation of actuarial gains and losses on pensions, and derivatives

used in financial operations.

Intangible fixed assets

Goodwill

Goodwill is distributed among cash-generating units and tested annually for

impairment in the fourth quarter. Goodwill arising through the acquisition of

associated companies is included in the carrying amount of the shares in the

associated company.

In acquisitions where the cost is less than, on the one hand, the net of the

cost of the Group company’s shares, the value of non-controlling interests in

the acquired company and the fair value of the previously owned interest and,

on the other, the carrying amount of the acquired assets and assumed liabilities

in the acquisition analysis, the difference is recognised directly through profit

or loss.


Expenditures for research undertaken in an effort to gain new scientific or

technological knowledge are expensed when incurred.

Expenditures for development, where the research results or other knowl-

edge is applied to new or improved products or processes, are recognised as

an asset in the statement of financial position from the time when the prod-

uct or process in the future is expected to be technically and commercially

usable, the company has sufficient resources to complete development and

subsequently use or sell the intangible asset, and the product or process is

likely to generate future economic benefits. The carrying amount includes

expenditures for material, direct expenditures for salaries and, if applicable,

other expenditures that are considered directly attributable to the asset.

Other expenditures for development are recognised in profit for loss as an

expense when they arise. Development expenditures are recognised in the

statement of financial position at cost less accumulated amortisation and any



impairment losses. Customer-financed research and development is recog-

nised in cost of goods sold rather than capitalised.

Other intangible fixed assets

Other acquired intangible fixed assets, which include acquired assets such as

trademarks and customer relations, are recognised at cost less accumulated

amortisation and any impairment losses.

Amortisation

Amortisation is recognised in profit or loss over the intangible fixed assets’

estimated periods of use, provided such periods can be determined. Intangi-

ble fixed assets, excluding goodwill and other intangible fixed assets with

indeterminate periods of use, are amortised from the day they are available

for use. Estimated periods of use and amortisation methods are as follows:

Patents, trademarks, customer relations and other technical rights:

5-10 years on a straight line basis

Capitalised development costs: Self-financed capitalised development

costs are amortised based on estimated production volume, but over a

maximum period of 5 years. Production volume is set using future

sales projections according to a business plan based on identified

business opportunities. Acquired development costs are amortised on

a straight line basis over a maximum of 10 years.

Goodwill: In the Parent Company, goodwill is amortised over a maxi-

mum 20 years. Goodwill is not amortised in the Group.

Periods of use are tested annually and unfinished development work is tested

for impairment at least once a year regardless of any indications of dimin-

ished value.

Tangible fixed assets

Tangible fixed assets are recognised as an asset in the statement of financial

position if it is likely that the future economic benefits will accrue to the

Group and the cost of the asset can be reliably estimated.

Tangible fixed assets are recognised at cost after deducting accumulated

depreciation and any impairment. Cost includes the purchase price and costs

directly attributable to putting the asset into place and condition to be uti-

lised in accordance with the purpose of the purchase. Examples of directly

attributable expenditures included in cost are delivery and handling, installa-

tion, title and consulting services.

The cost of fixed assets produced by Saab includes expenditures for mate-

rial, expenditures for employee benefits and, where applicable, other produc-

tion costs considered directly attributable to the fixed asset.

The cost of tangible fixed assets includes estimated costs for disassembly

and removal of the assets as well as restoration of the location or area where

these assets are found.

The carrying amount of a tangible fixed asset is excluded from the state-

ment of financial position when the asset is sold or disposed of or when no

future economic benefits are expected from its use. The gain or loss that arises

on the sale or disposal is comprised of the difference between the sales price

and the asset’s carrying amount less direct selling expenses. Such gains and

losses are recognised as other operating income/expenses.

Incremental expenditures

Incremental expenditures are added to cost only if it is likely that the future

economic benefits tied to the incremental expenditures will accrue to the

Group and the expenditures can be reliably estimated. All other incremental

expenditures are recognised as costs in the period they arise.

The determining factor whether an incremental expenditure is added to

cost is whether it relates to the replacement of identifiable components, or

parts thereof. If so, the cost is capitalised. Even in cases where a new com-

ponent is created, the expenditure is added to cost. Any undepreciated car-

rying amount of replaced components, or parts of components, is disposed

of and expensed in connection with the replacement. Repairs are expensed

as incurred.

Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construc-

tion or production of an asset and takes a substantial period of time to pre-

pare for its intended use or sale is capitalised as part of the asset’s cost when

it is likely that they will lead to future economic benefits for the Group and

the expenditures can be measured reliably. Other borrowing costs are

expensed in the period in which they arise.

Depreciation

Depreciation is booked on a straight-line basis based on the asset’s cost less

estimated residual value at the end of the period of use, over the asset’s esti-

mated period of use. Land is not depreciated. Component depreciation is

applied, which means that fixed assets consisting of various components or

where significant parts have different periods of use are depreciated as sepa-

rate assets based on their periods of use.

Estimated periods of use:

Operating properties: 20–90 years

Property, plant and equipment: 5–10 years

Equipment, tools, installations and computers: 3–10 years

Aircraft: 20–25 years

Each asset’s residual value and period of use are estimated annually. Periods

of use are unchanged compared with the previous year.

Lease assets

Lease assets mainly refer to 40 aircraft owned by legal entities within Saab

Aircraft Leasing and leased out via operating leases. Saab Aircraft Leasing’s

fleet consists of 82 Saab 340 and Saab 2000, of which 42 aircraft are leased in

through operating leases and leased out through operating leases.

Leasing is classified in the consolidated accounts as either finance or

operating leasing. Finance leasing exists when the economic risks and bene-

fits tied to ownership are essentially transferred to the lessee; otherwise it is

operating leasing.

For anticipated or established deficits according to current leases with

respect to aircraft financing in Saab Aircraft Leasing, provisions are allocated

at an amount corresponding to the obligation. See also Note 18.

Saab as lessor

At year-end 2011, Saab only had operating leases. Leasing revenue is recog-

nised on a straight-line basis over the leasing period. Direct expenditures that

arise by entering into an operating lease are expensed on a straight-line basis

over the leasing period.

Saab as lessee

At year-end 2011, Saab only had operating leases. Leasing fees for operating

leases are expensed on a straight-line basis over the leasing period.

Biological assets

Biological assets in the form of forests are carried at fair value after deducting

estimated selling expenses. Fair value is based on the valuation of an inde-

pendent appraiser.

Investment properties

Investment properties are properties held to earn rental income, for capital

appreciation or a combination of both. Investment properties are carried in

the statement of financial position at fair value. Fair value has been deter-

mined by calculating net rental income, which then serves as the basis of a

valuation of fair value.

Assets held for sale

When an asset is classified as held for sale, it means that its carrying amount

will be recovered primarily through a sale rather than through use. In order

to classify a fixed asset as an asset held for sale, the asset must be available for

immediate sale and it has to be highly likely that a sale will take place.

Immediately before classification as held for sale, the recognised value of

the assets is determined according to the Group’s accounting principles.



Upon initial classification as held for sale, assets are recognised at the lower of

their carrying amount and fair value less selling expenses.

Assets are not depreciated/amortised after they are classified as held for sale.

Impairment

The carrying amount of fixed assets, with the exception of assets stated at fair

value, is tested on each closing day for any indication of impairment. If an

indication exists, the asset’s recoverable amount is calculated. A description of

impairment principles for available-for-sale financial assets is provided below.

For goodwill and other intangible fixed assets with an indeterminate

period of use and intangible fixed assets not yet ready for use, recoverable val-

ues are calculated annually in the fourth quarter.

The recoverable amount of an asset is the higher of its fair value less sell-

ing expenses and value in use. Value in use is measured by discounting future

cash flows using a discounting factor that takes into account the risk-free rate

of interest plus supplemental interest corresponding to the risk associated

with the specific asset.

If essentially independent cash flows cannot be isolated for individual

assets, the assets are grouped at the lowest levels where essentially independ-

ent cash flows can be identified (cash-generating units). An impairment loss

is recognised when the carrying amount of an asset or cash-generating unit

exceeds its recoverable value. Impairment losses are charged against the

income statement.

Impairment losses attributable to a cash-generating unit (pool of units)

are mainly allocated to goodwill, after which they are divided proportionately

among other assets in the unit (pool of units).

Impairment of goodwill is not reversed. Impairment losses from other

assets are reversed if a change has occurred in the assumptions that served as

the basis for determining recoverable value. Impairment is reversed only to

the extent the carrying amount of the assets following the reversal does not

exceed the carrying amount that the asset would have had if the impairment

had not been recognised, taking into account the depreciation or amortisa-

tion that would have been recognised.

Financial assets and liabilities and other financial instruments

Financial instruments recognised in the statement of financial position

include, on the asset side, liquid assets, accounts receivable, shares, loans

receivable, bonds receivable, derivatives and part of accrued income and

other receivables. Liabilities include trade accounts payable, loans payable,

derivatives and certain accrued expenses and other liabilities. Financial assets

are recognised as of their settlement date.

Financial instruments are initially recognised at cost, corresponding to

the instrument’s fair value plus transaction expenses for all financial instru-

ments with the exception of those in the category financial assets at fair value

through profit or loss. The instruments are subsequently recognised at fair

value or amortised cost, depending on how they have been classified as fol-

lows. The fair value of listed financial assets and liabilities is determined using

market prices. Saab also applies various valuation methods to determine the

fair value of financial assets and liabilities traded on an inactive market or

unlisted holdings. These valuation methods are based on the valuation of

similar instruments, discounted cash flows or accepted valuation models

such as Black-Scholes. Amortised cost is determined based on the effective

interest rate calculated on the acquisition date.

A financial asset or financial liability is recognised in the statement of

financial position when the company becomes party to the instrument’s con-

tractual terms. Accounts receivable are recognised in the statement of finan-

cial position when an invoice has been sent. Liabilities are recognised when

the counterparty has performed and there is a contractual obligation to pay,

even if an invoice has not yet been received. Accounts payable are recognised

when an invoice is received.

A financial asset is removed from the statement of financial position

when the rights in the agreement are realised, expire or the company loses

control over them. The same applies to part of a financial asset. A financial

liability is removed from the statement of financial position when the obliga-

tion in the agreement has been discharged or otherwise extinguished. The

same applies to part of a financial liability.

On each reporting date, Saab evaluates whether there are objective indica-

tions that a financial asset or pool of financial assets is in need of impairment.

Financial assets and liabilities are offset and recognised as a net amount in the

statement of financial position when the there is a legal right to a set-off and

when the intent is to settle the items with a net amount or to realise the asset

and settle the liability at the same time.

Financial assets and liabilities are classified in one of the following categories:

Financial assets and liabilities at fair value through profit or loss:

Assets and liabilities in this category are carried at fair value with

changes in value recognised in profit or loss. This category consists of

two subgroups: financial assets and liabilities held for trading and

other financial assets and liabilities that the company initially chose to

recognise at fair value through profit or loss. A financial asset is classi-

fied as held for trading if it is acquired for the purpose of selling in the

near term. Derivatives are always recognised at fair value through

profit or loss, unless hedge accounting is applied.

Held-to-maturity investments:

Financial assets in this category relate to non-derivative assets with pre-

determined or determinable payments and scheduled maturities that

the company intends and has the ability to hold to maturity. They are val-

ued at amortised cost.

Loans receivable and accounts receivable:

Loans receivable and accounts receivable are non-derivative financial

assets with fixed payments which are not listed on an active market.

Receivables arise when the company provides money, goods or ser-

vices directly to the debtor without the intent to trade its claim. The

category also includes acquired receivables. Assets in this category are

recognised after acquisition at amortised cost.

Accounts receivable are recognised at the amount expected to be re-

ceived based on an individual valuation. Accounts receivable have a

short maturity, due to which they are recognised at their nominal

amount without discounting. Impairment losses on accounts receiva-

ble are recognised in operating expenses. Saab has an accounts receiv-

able sales programme with an independent party. When a receivable

is sold, the entire credit risk is transferred to the counterparty, because

of which the proceeds received are recognised as liquid assets.

Other receivables are receivables that arise when the company pro-

vides money without the intent to trade its claim.

Other financial liabilities:

Liabilities classified as other financial liabilities are initially recog-

nised at the amount received after deducting transaction expenses.

After acquisition, the loans are carried at amortised cost, according to

the effective rate method.

Trade accounts payable are classified in the category other financial li-

abilities. Trade accounts payable have a short expected maturity and

are carried without discounting at their nominal amount.

Calculation of recoverable value

The recoverable value of financial assets in the categories held-to-maturity

investments, loans receivable and accounts receivable measured at amortised

cost is calculated using the present value of future cash flows discounted by

the effective interest rate in effect when the asset was initially recognised.

Assets with a maturity of less than one year are not discounted.

Impairment of held-to-maturity investments and loans receivable and

accounts receivable recognised at amortised cost is reversed if a subsequent

increase in recoverable value can objectively be attributed to an event occur-

ring after the impairment.

Liquid assets

Liquid assets consist of cash and cash equivalents, immediately accessible

balances with banks and similar institutions, and short-term liquid invest-

ments with a maturity from acquisition date of less than three months, which

are exposed to no more than an insignificant risk of fluctuation in value.



Financial investments

Financial investments comprise either financial fixed assets or short-term

investments, depending on the intent of the holding. If the maturity or the

anticipated holding period is longer than one year, they are considered finan-

cial fixed assets, and if it is shorter than one year they are short-term invest-

ments.

With recognition at fair value through profit or loss, changes in value are

stated in financial revenue and expenses.

Valuation principles

The fair value of listed financial assets is determined using market prices.

Furthermore, Saab applies various valuation methods to determine the fair

value of financial assets that are traded on an inactive market or unlisted

holdings. These methods are based on the valuation of similar instruments,

discounted cash flows or customary valuation methods such as Black-

Scholes. See Note 41.

Derivatives and hedge accounting

Derivatives include forward exchange contracts, options and swaps utilised

to cover risks associated with changes in exchange rates and exposure to

interest rate risks. Derivatives are recognised on their acquisition date at cost

and subsequently at fair value.

Derivatives with positive values are recognised as assets and derivatives

with negative values are recognised as liabilities under the heading deriva-

tives in the statement of financial position. Gains and losses on a derivative

arising due to a change in fair value are recognised in profit or loss if the

derivative is classified among financial assets and liabilities at fair value

through profit or loss.

In hedge accounting, derivatives are classified as fair value hedges or cash

flow hedges. The recognition of these hedging transactions is described below.

Cash flow hedges

Certain forward exchange contracts and currency swaps (hedge instruments)

entered into to hedge future receipts and disbursements against currency

risks are accounted for according to the rules for cash flow hedging. Deriva-

tives that protect future receipts and disbursements are recognised in the

statement of financial position at fair value. Changes in value are recognised

in other comprehensive income and separately recognised in the hedge

reserve in equity until the hedged cash flow meets the operating profit or loss,

at which point the cumulative changes in value of the hedging instrument are

transferred to profit or loss to meet and match the effects on earnings of the

hedged transaction.

Interest rate exposure from future variable-rate liabilities is hedged with

interest rate swaps. In its reporting, Saab applies cash flow hedging, which

means that the change in value of the interest rate swap is recognised in other

comprehensive income and separately recognised in the hedge reserve in

equity. The change in value is recognised in financial revenue and expenses

when transferred to profit or loss.

When the hedged future cash flow refers to a transaction that will be capi-

talised in the statement of financial position, the net gain or loss on cash flow

hedges in equity is dissolved when the hedged item is recognised in the state-

ment of financial position. If the hedged item is a non-financial asset or a non-

financial liability, the reversal from the net gain or loss on cash flow hedges in

equity is included in the original cost of the asset or liability. If the hedged item

is a financial asset or financial liability, the net gain or loss on cash flow hedges

in equity is gradually reversed through profit or loss at the same rate that the

hedged item affects earnings.

When a hedging instrument expires, is sold or is exercised, or the com-

pany revokes the designation as a hedging relationship before the hedged

transaction occurs and the projected transaction is still expected to occur, the

recognised cumulative gain or loss remains in the net gain or loss on cash

flow hedges in equity and is recognised in the same way as above when the

transaction occurs.

If the hedged transaction is no longer expected to occur, the hedging

instrument’s cumulative gains and losses are immediately recognised in profit

or loss in accordance with principles described above for derivatives.

Fair value hedges

Certain forward exchange contracts and currency swaps (hedge instruments)

entered into to hedge future receipts and disbursements for currency and

interest rate risk are accounted for according to the rules for fair value hedg-

ing. These hedges are recognised at fair value in the statement of financial

position with regard both to the derivative itself and the future receipt or dis-

bursement (hedge item) for the risk being hedged. The change in fair value of

the derivative is recognised in the profit and loss together with the change in

value of the hedged item.

Hedge of currency exposure in assets and liabilities

Currency exposure from an asset or liability is hedged with forward exchange

contracts. No hedge accounting is applied, due to which both the hedged

item and hedging instrument are recognised with respect to currency risk at

fair value with changes in value through profit or loss. Changes in the value of

operations-related receivables and liabilities are recognised in operating

income, while changes in the value of financial receivables and liabilities are

recognised in financial revenue and expenses.

Inventories

Inventories are valued at the lower of cost and net realisable value. Net realis-

able value is the estimated selling price in continuing operations after deduct-

ing estimated expenses for completion and expenses incurred in selling.

Cost is calculated by applying the first-in first-out method (fifo) and

includes expenses to acquire inventory assets and bring them to their present

location and condition. For finished and semifinished goods, cost consists of

direct manufacturing expenses and a reasonable share of indirect manufac-

turing expenses as well as expenses to customise products for individual cus-

tomers. Calculations take into account normal capacity utilisation.

Dividends

The dividend proposed by the Board of Directors reduces earnings available

for distribution and is recognised as a liability when the Annual General

Meeting has approved the dividend.

Employee benefits

The Group has two types of pension plans: defined-contribution and defined-

benefit pension plans.

Defined-contribution plans

In defined-contribution plans, pensions are based on the premiums paid.

Obligations with regard to defined-contribution plans are expensed in the

income statement.

Defined-benefit plans

In defined-benefit plans, pensions are based on a percentage of the recipient’s

salary. Saab has around ten different types of defined-benefit plans. The pre-

dominant plan is the itp plan, which accounts for approximately 80 per cent

of the total obligation. The second largest plan refers to the state-funded

retirement pension and vested pensions in Affärsverket ffv when it was

incorporated on 1 January 1991.

The Group’s net obligation for defined-benefit plans is calculated sepa-

rately for each plan by estimating the future compensation that employees

have earned through employment in present and previous periods. This com-

pensation is discounted to present value. Saab has secured main part of the

obligation through provisions to a pension fund, and the fair value of the

fund’s assets is offset against the provision for the pension obligation at pre-

sent value in the statement of financial position. The discount rate to calculate

the commitment at present value has been determined based on the interest

rate on the closing day for a first-class mortgage bond with a maturity corre-

sponding to the pension obligation. The calculation is made by a qualified

actuary using the projected unit credit method.

When the compensation terms in a plan improve, the portion of the

increased compensation attributable to the employees’ services in previous

periods is expensed through the income statement on a straight-line basis

over the average period until the compensation is fully vested. If the compen-

sation is fully vested, an expense is recognised directly through profit or loss.



The obligation is estimated on the closing day, and if the calculated amount

deviates from the estimated commitment an actuarial gain or loss arises. All

actuarial gains and losses as of 1 January 2004, the date of transition to ifrs,

are recognised in equity and other items in the statement of financial posi-

tion. For actuarial gains and losses that arise from the calculation of the

Group’s obligation for different plans after 1 January 2004, the so-called corri-

dor method is applied. This means that the portion of the cumulative actuar-

ial gains and losses exceeding 10 per cent of the higher of the commitments’

present value and the fair value of assets under management is recognised

over the expected average remaining period of employment of the employees

covered by the plan. Actuarial gains and losses otherwise are not taken into

account.

If pension obligations are lower than assets under management and actu-

arial losses, this amount is recognised as an asset.

When there is a difference in how the pension cost is determined for a

legal entity and the Group, a liability or receivable for the special employer’s

contribution arises based on this difference.

Severance

A provision is recognised in connection with termination of personnel only if

the company is obligated to terminate an employment before the customary

time, e.g., when compensation is paid in connection with a voluntary termi-

nation offer. In cases where the company terminates personnel, a detailed

plan is drafted containing at the minimum the workplaces, positions and

approximate number of individuals affected as well as compensation for each

personnel category or position and a schedule for the plan’s implementation.

Share-based payment

Share-based payment refers solely to remuneration to employees, including

senior executives. Share-based payment settled with the company’s shares or

other equity instruments is comprised of the difference between the fair value

at the time these plans were issued and the consideration received. This

remuneration is recognised as staff costs during the vesting period. To the

extent the vesting conditions in the plan are tied to market factors (such as

the price of the company’s shares), they are taken into consideration in deter-

mining the fair value of the plan. Other conditions (such as earnings per

share) affect staff costs during the vesting period by changing the number of

shares or share-related instruments that are expected to be paid.

Share matching plan for employees

Saab has a Global Share Matching Plan where all employees are entitled to

participate. The payroll expenses for matching shares in the plan are recog-

nised during the vesting period based on the fair value of the shares. The

employees pay a price for the share that corresponds to the share price on the

investment date. Three years after the investment date, employees are allotted

as many shares as they purchased three years earlier provided that they are

still employees of the Saab Group and that the shares have not been sold. In

certain countries, social security expenses are paid on the value of the

employee’s benefit when matching takes place. During the vesting period,

provisions are allocated for these estimated social security expenses. Share

repurchases to fulfil the commitments of Saab’s share matching plans are rec-

ognised in equity.

In addition, a plan was introduced for senior executives entitling them to

2–5 matching shares depending on the category the employee belongs to. In

addition to the requirement that the employee remain employed by Saab after

three years, there is also a requirement that earnings per share grow in the

range of 5 to 15 per cent. See also, Note 37.

Provisions

A provision is recognised in the statement of financial position when the

Group has a legal or informal obligation owing to an event that has occurred

and it is likely that an outflow of economic resources will be required to settle

the obligation and a reliable estimate of the amount can be made. Where it is

important when in time payment will be made, provisions are estimated by

discounting projected cash flow at a pre-tax interest rate that reflects current

market estimates of the time value of money and, where appropriate, the risks

associated with the liability.

Regional aircraft

A provision for an aircraft lease is recognised when future lease receipts are

less than unavoidable lease disbursements.

Restructuring

A provision for restructuring is recognised when a detailed, formal restruc-

turing plan has been established and the restructuring has either begun or

been publicly announced. No provision is made for future operating losses.

Loss contracts

A provision for a loss contract is recognised when anticipated benefits are

lessthan the unavoidable costs to fulfil the obligations as set out in the con-

tract.

Guarantees

A provision for guarantees is normally recognised when the underlying

products or services are sold if a reliable calculation of the provision can be

made. The provision is based on historical data on guarantees for the prod-

ucts or similar products and an overall appraisal of possible outcomes in rela-

tion to the likelihood associated with these outcomes.

Soil remediation

In accordance with the Group’s publicly announced environmental policy

and applicable legal requirements, periodic estimates are made of Saab’s obli-

gations to restore contaminated soil. Anticipated future payments are dis-

counted to present value and recognised as an operating expense and a provi-

sion.

Contingent liabilities

A contingent liability exists if there is a possible commitment stemming from

events whose occurrence is dependent on one or more uncertain future

events and there is a commitment that is not recognised as a liability or provi-

sion because it is unlikely that an outflow of resources will be required or the

size of the obligation cannot be estimated with sufficient reliability. Informa-

tion is provided as long as the likelihood of an outflow of resources is not

extremely small.

Taxes

Income taxes consist of current tax and deferred tax. Income taxes are recog-

nised in profit or loss unless the underlying transaction is recognised in other

comprehensive income, whereby the related tax effect is also recognised in

other comprehensive income.

Current tax is the tax paid or received for the current year, applying the

tax rates that have been set or essentially set as of the closing day to taxable

income and adjusting for current tax attributable to previous periods.

Deferred tax is calculated according to the balance sheet method based on

temporary differences that constitute the difference between the carrying

amount of assets and liabilities and their value for tax purposes. Deductible

temporary differences are not taken into account in the initial reporting of

assets and liabilities in a transaction other than a business combination and

which, at the time of the transaction, do not affect either the recognised or tax-

able result. Moreover, temporary differences are not taken into account if they

are attributable to shares in subsidiaries and associated companies that are not

expected to be reversed within the foreseeable future. The valuation of

deferred tax is based on how the carrying amounts of assets or liabilities are

expected to be realised or settled. Deferred tax is calculated by applying the tax

rates and tax rules that have been set or essentially are set as of the closing day.

Deferred tax assets from deductible temporary differences and tax loss

carry forwards are only recognised to the extent it is likely that they will be

utilised. The value of deferred tax assets is reduced when it is no longer con-

sidered likely that they can be utilised. Deferred tax assets are set off against

deferred tax liabilities when the receivable and liability refer to the same tax

authority.



Significant differences between the Group’s and the Parent Company’s

accounting principles

The Parent Company follows the same accounting principles as the Group

with the following exceptions.

Business combinations

Transaction costs are included in the cost of business combinations.

Associated companies and joint ventures

Shares in associated companies and joint ventures are recognised by the Par-

ent Company according to the acquisition value method. Revenue includes

dividends received.

Intangible fixed assets

All development costs are recognised in profit or loss.

Tangible fixed assets

Tangible fixed assets are recognised after revaluation, if necessary. All leases

are recognised according to the rules for operating leasing.

Borrowing costs

The Parent Company recognises borrowing costs as an expense in the period

in which they arise.

Investment properties

Investment properties are recognised according to acquisition cost method.

Financial assets and liabilities and other financial instruments

The Parent Company carries financial fixed assets at cost less impairment and

financial current assets according to the lowest value principle. If the reason

for impairment has ceased, it is reversed.

The Parent Company does not apply the rules for setting off financial

assets and liabilities.

Derivatives and hedge accounting

Derivatives that are not used for hedging are carried by the Parent Company

according to the lowest value principle. For derivatives used for hedging, rec-

ognition is determined by the hedged item. This means that the derivative is

treated as an off balance sheet item as long as the hedged item is recognised at

cost or is not included on the balance sheet. Receivables and liabilities in for-

eign currency hedged with forward contracts are valued at the forward rate.

Employee benefits

The Parent Company complies with the provisions of the Law on Safeguarding

of Pension Commitments and the regulations of the Swedish Financial

Supervisory Authority, since this is a condition for tax deductibility.

Untaxed reserves

The amounts allocated to untaxed reserves constitute taxable temporary dif-

ferences. Due to the connection between reporting and taxation, the deferred

tax liability is recognised in the Parent Company as part of untaxed reserves.

Group contributions and shareholders’ contributions

Shareholders’ contributions are recognised directly in the equity of the recipi-

ent and capitalised in the shares and participating interests of the contributor,

to the extent impairment is not required.

Group contributions received and paid are recognised through profit or

loss in financial income and expenses.



NOTE 2

ASSUMPTIONS IN THE APPLICATION OF THE ACCOUNTING PRINCIPLES

The Board of Directors and Group Management together have identified the

following areas where estimates and assumptions in the application of the

accounting principles may have a siginificant impact on the accounting of the

Group’s results of operations and financial position and may result in signifi-

cant adjustments in subsequent financial reports. Developments in these

areas are monitored continuously by Group Management and the Board of

Directors’ audit committee.

UNCERTAINTIES IN ESTIMATES AND ASSUMPTIONS


A majority of all long-term customer contracts contain significant develop-

ment aspects, which are associated with risks. Before a contract is signed

with a customer on delivery of a product, solution or service, a thorough

analysis is always made of the prerequisites and risks of the delivery through

a project management process established within Saab. In the execution

stage, continuous reviews are then made of the work in the project accord-

ing to the same process. An important aspect is to identify risks and assess

them and the measures that are taken to mitigate the risks with the help of a

risk assessment method.

The Group applies the percentage of completion method to recognise

revenue from long-term customer contracts. An estimation of total costs is

critical in revenue recognition and provisions for loss contracts as well as

inventory valuations, and the outcome of technical and commercial risks

may affect income.

Recovery of value of development costs

The Group has invested significant amounts in research and development. The

reported amounts in the statement of financial position are primarily due to

development projects relating to exports of Gripen, electronic warfare sys-

tems, missile systems, Air Traffic Management (atm), radar and sensors. Cap-

italised development costs amount to msek 1,950 (2,428). The recognition of

development expenditures as an asset on the statement of financial position

requires an assumption that the product is expected to be technically and

comercially usable in the future and that future economic benefits are likely.

Capitalised development costs are amortised over the estimated production

volume or period of use, up to a maximum of 5 years, with the exception of

acquired development costs, where the maximum period of use is 10 years.

Projected production volumes and periods of use may later be reassessed,

which could necessitate impairment.

Impairment testing of goodwill

In the calculation of cash-generating units to determine whether there has

been an impairment of goodwill, assumptions have been made with regard

to the calculation of value in use, which is based on discounted cash flow

projections. A significant deviation in the conditions will affect the value of

goodwill. The carrying amount for goodwill amounts to msek 4,223 (3,470).

Pensions

Saab has two types of pension plans: defined-benefit and defined-contribu-

tion. In defined-benefit plans, post-employment compensation is based on a

percentage of the recipient’s salary. The present value of defined-benefit obli-

gations amounts to msek 6,541 (5,233). The value of the pension obligation is

determined through a number of actuarial assumptions, because of which

the obligation can significantly increase or decrease if the actuarial assump-

tions change. Due to the revisions to the reporting standard ias 19, which

enter into force in 2013, the so-called corridor approach will disappear. This

means changes in actuarial gains and losses directly affect the pension obliga-

tion and hence the Group’s financial position.

NOTE 3

REVENUE DISTRIBUTION

Revenue by significant source

Group Parent Company

MSEK 2011 2010 2011 2010

Sale of goods 3,999 4,359 1,669 1,670

Long-term customer

contracts 13,811 13,826 9,653 8,836

Service assignments 5,684 6,246 4,090 4,237

Royalties 4 3 3 2

Total 23,498 24,434 15,415 14,745

Sale of goods

The sale of goods includes sales of goods manufactured by Saab and goods

purchased for resale, e.g., spare parts and other equipment which is sold

separately.


Long-term customer contracts relate to the development and manufacture of

complex systems that stretch across several accounting periods.

For long-term customer contracts on development and hardware that

can be calculated reliably, revenue and expenditures attributable to the

assignment are recognised as income and expenses in the consolidated

income statement in relation to the assignment’s stage of completion, i.e.

according to the percentage of completion method.

Service assignments

Service assignments refer to the performance of a service on behalf of a cus-

tomer during a contractual period, e.g. consulting and support services.

Royalties

Royalties include revenue from outside parties for the use of Saab’s assets

such as patents, trademarks and software.



NOTE 4

SEGMENT REPORTING

Saab is one of the world’s leading high technology companies, operating

principally in the areas of defence, aeronautics and civil security. Operations

primarily comprise well-defined areas in defence electronics and missile sys-

tems as well as military and civil aeronautics. Saab is also active in technical

services and maintenance. Saab has a strong position in Sweden and the

large part of sales is generated in Europe. In addition, Saab has a local

presence in South Africa, Australia, the u.s. and other selected countries. As a

result of a reorganisation as of 1 January 2010, Saab is divided into five busi-

ness areas, which also represent operating segments, Aeronautics, Dynamics,

Electronic Defence Systems, Security and Defence Solutions, and Support

and Services. As of 2011 Combitech is also reported as a business area and an

operating segment. The comparative year is restated accordingly. The busi-

ness areas are described below. Complementing them is Corporate, which

comprises Group staffs and departments as well as other non-core opera-

tions.

Aeronautics

Aeronautics engages in advanced development of military and civil aviation

technology. The product portfolio includes the Gripen fighter and

Unmanned Aerial Systems (uas). Aeronautics also manufactures aircraft

components for Saab’s own aircraft as well as passenger aircraft produced by

others.

Dynamics

Dynamics offers a highly competitive product range comprising ground

combat weapons, missile systems, torpedoes, unmanned underwater vehicles

and signature management systems for armed forces as well as spin-off niche

products for the civil and the defence market, such as unmanned underwater

vehicles for the off-shore industry and 3D-mapping for the defence market.

Electronic Defence Systems

The operations are based on Saab’s close interaction with customers requiring ef-

ficient solutions for surveillance and for threat detection, location and protec-

tion. This has created a unique competence in the area of radar and electronic

warfare, and a product portfolio covering airborne, land-based and naval radar,

electronic support measures and self-protection systems. For increased flight

mission efficiency and flight safety we supply mission avionics and safety critical

avionics computers for both civil and military customers.


The operations comprise products and solutions in the areas of military com-

mand and control, airborne early warning, training and simulation, air traffic

management, maritime security, security and surveillance, and secure, robust

communication.


Support and Services offer reliable, cost-effective service and support for all

of Saab’s markets. This primarily includes integrated support solutions, tech-

nical maintenance and logistics, and products, solutions and services for mil-

itary and civil missions in locations with limited infrastructure.

Combitech

Combitech, an independent subsidiary of the Saab Group, is one of Sweden’s

largest technology consulting firms. They create solutions for our customers’

specific needs through a combination of high technology and expertise on

the environment and security.

Significant items not affecting cash flow

No significant items not affecting cash flow arose during the year.

Restructuring expenses not affecting cash flow amounted to msek 477 in

2010 and are divided by operating segment as follows: Aeronautics msek 31 ,

Dynamics msek 240, Electronic Defence Systems msek 55, Security and

Defence Solutions msek 36, Support and Services msek 50, and Corporate

msek 65.

Information on major customers

Saab has one customer, the Swedish Defence Materiel Administration (fmv),

which accounts for 10 per cent or more of the Group’s revenue. fmv is a cus-

tomer of every business area, generating total revenue of msek 6,555 (6,404)

in 2011.

Information on geographical areas

External sales are distributed to the market where the customer is domiciled,

while fixed assets are distributed to the market where the asset is geographi-

cally located.



Group Aeronautics Dynamics

Electronic

Defence

Systems

Security and

Defence

Solutions

Support and

Services Combitech Corporate Eliminations Group

MSEK 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

External revenue 6,168 6,482 4,219 4,648 3,928 3,366 5,507 6,086 3,143 3,084 618 595 -85 173 - - 23,498 24,434

Internal revenue 183 259 116 93 633 988 197 124 285 319 382 320 1 -3 -1,797 -2,100 - -

Total revenue 6,351 6,741 4,335 4,741 4,561 4,354 5,704 6,210 3,428 3,403 1,000 915 -84 170 -1,797 -2,100 23,498 24,434

Operating income be-

fore share in income

of associated compa-

nies 332 191 482 300 297 90 394 137 426 351 92 81 934 -189 - - 2,957 961

Share in income of as-

sociated companies - - 2 22 - 9 - - - - - - -18 -17 - - -16 14

Operating income 332 191 484 322 297 99 394 137 426 351 92 81 916 -206 - - 2,941 975

Share in income of as-

sociated companies - - 6 3 - - - - - - - - -2 23 - - 4 26

Financial income 52 18 16 7 15 - 34 28 3 3 1 1 234 199 -193 -140 162 116

Financial expenses -88 -111 -20 -43 -36 -40 -80 -72 -29 -31 -2 -5 -262 -179 193 140 -324 -341

Income before taxes 296 98 486 289 276 59 348 93 400 323 91 77 886 -163 - - 2,783 776

Taxes -96 -67 -135 -72 92 72 -54 -107 -26 -3 -25 -20 -322 -125 - - -566 -322

Net income for the

year 200 31 351 217 368 131 294 -14 374 320 66 57 564 -288 - - 2,217 454

Assets 6,104 7,303 4,104 4,117 8,698 7,970 6,503 5,131 2,403 2,250 567 522 19,170 15,183 -15,750 -13,198 31,799 29,278

Of which shares in as-

sociated companies - - 55 53 11 124 - - - - - - 222 74 - - 288 251

Liabilities 5,945 7,214 2,535 2,575 4,400 3,852 4,088 4,064 1,638 1,541 274 258 8,659 5,907 -8,809 -7,577 18,730 17,834

Operating cash flow 223 30 588 1,044 413 594 584 1,066 420 894 87 65 162 656 - - 2,477 4,349

Capital employed 2,103 2,118 2,359 2,496 5,037 4,584 3,309 2,282 1,243 1,248 381 355 7,328 5,693 -6,941 -5,621 14,819 13,155

Investments 35 63 102 53 92 70 27 33 2 15 3 2 106 145 - - 367 381

Depreciation and am-

ortisation 247 247 168 156 488 490 108 108 18 15 2 2 209 277 - - 1,240 1,295

Impairments - - - 38 - - - 20 - - - - 21 5 - - 21 63

Geographical areas

Group Sweden Rest of EU Rest of Europe North America Latin America

MSEK 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

External revenue 1) 8,679 9,223 4,514 4,737 320 368 1,803 2,083 96 116

as % of revenue 37 38 19 19 1 2 8 9 - -

Fixed assets 9,530 10,066 115 139 29 34 2,377 1,088 5 5

Group Asia Africa Australia, etc. Total

MSEK 2011 2010 2011 2010 2011 2010 2011 2010

External revenue 1) 5,176 3,937 1,789 2,833 1,121 1,137 23,498 24,434

as % of revenue 22 15 8 12 5 5 100 100

Fixed assets 19 17 550 825 263 290 12,888 12,464

1) External sales are distributed according to the market where the customer is domiciled.

NOTE 4, CONT.



Revenue by operating segment

Parent Company

MSEK 2011 2010

Aeronautics 6,178 6,401

Electronic Defense Systems 3,631 2,534

Security and Defence Solutions 2,538 2,846

Support and Services 3,068 2,964

Total 15,415 14,745

Revenue by geographical market

Parent Company

MSEK 2011 2010

Sweden 7,380 7,623

Rest of EU 1,857 1,997

Rest of Europe 51 54

North America 916 832

Latin America 33 51

Asia 3,793 2,490

Africa 851 1,380

Australia, etc. 534 318

Total 15,415 14,745

NOTE 5

OTHER OPERATING INCOME


MSEK 2011 2010 2011 2010

Gain on sale of Group

companies 976 13 - -

Gain on sale of associated

companies 193 24 - -

Exchange rate gains

on operating receivables/

liabilities and change in

value of derivatives 52 27 16 11

Gain from other operating

activities 47 29 - 2

Trading result 32 35 32 35

Government grants 23 26 21 26

Change in fair value of

biological assets 6 43 - -

Gain on sale of intangible

and tangible fixed assets 4 - 148 -

Other 18 25 2 8

Total 1,351 222 219 82

Trading result refers to the result in Saab Treasury from trading in currency

and money market instruments according to the risk mandate approved by

the Board of Directors; see note 41.

Other operating activities consist of results from subsidiaries that fall out-

side core operations and net rental income from property rentals.

Gain on sale of Group companies primarily refers to C3 Technologies ab.

NOTE 6

OTHER OPERATING EXPENSES


MSEK 2011 2010 2011 2010

Loss from other operating

activities -33 -33 - -8

Revaluation of investment

properties -12 - - -

Change in value of deriva-

tives -3 - - -

Loss on sale of tangible

fixed assets -3 -7 -3 -7

Loss on sale of Group

companies - -22 - -

Other -26 -8 - -1

Subtotal -77 -70 -3 -16

Change in fair value of deriv-

atives 6 50 - -

Change in value of

contracted flows -6 -50 - -

Subtotal - - - -

Total -77 -70 -3 -16

Other operating activities consist of results from subsidiaries that fall outside

core operations.

NOTE 7

GOVERNMENT GRANTS

Saab receives government grants, mainly various grants from eu related

research and development projects. For 2011, msek 78 (112) has been received.

msek 85 (91) has been recognised through profit or loss by reducing research

and development expenditures and as other operating income. In the state-

ment of financial position at year-end, msek 44 is recognised as prepaid

income.

Saab and the Ministry of Enterprise, Energy and Communications have

reached an agreement with the National Debt Office to co-finance Saab’s par-

ticipation in the Airbus A380 project. The co-financing is in the form of a

royalty loan maximised at msek 350. Repayment will take the form of a roy-

alty on each delivery to Airbus. Through 2011, the National Debt Office has

paid out a net of msek 263 (263), which reduces inventory in the financial

statements.

No contingent liabilities or contingent assets are reported.

NOTE 8

BUSINESS COMBINATIONS AND DIVESTMENTS

On 29 June 2011, Saab announced a definitive agreement to acquire us. com-

pany Sensis Corporation. Sensis is a leading provider of air traffic manage-

ment (atm) solutions and surveillance technologies. The acquisition was

completed on 12 August for approximately musd 150, about msek 962 (effect

on liquid assets). In addition, the parties agreed on a maximum potential

earn out payment of musd 40. Saab has estimated the earn out payment at

musd 36.

The acquisition of Sensis strengthens Saab’s existing offer within radar,

sensors, atm, and defence solutions and establishes a stronger market pres-

ence globally as well as in the u.s. The acquisition provides a growth platform

from which Saab can build on the combined installed base and skills in sys-

tems engineering, design and integration. Sensis’ customers and partners will

benefit from Saab’s product portfolio and global support operations.

NOTE 4, CONT.



Preliminary purchase price analysis for Sensis:Purchase consideration

MUSD MSEK

Purchase price paid 12 August 170 1,089

Contingent consideration 36 231

Total consideration 206 1,320

Effect on liquid assets

MUSD MSEK

Purchase price paid 170 1,089

Less; liquid assets in the acquired company -20 -127

Effect on liquid assets 150 962

The fair value of the identifiable assets and liabilities of Sensis as at the date

of the acquisition were:

Acquired assets and liabilities

MUSD MSEK

Intangible fixed assets:

Developed technologies 17 110

Customer relationships 18 115

Trademarks 2 13

Other intangible fixed assets 1 6

Tangible fixed assets 42 270

Inventories 7 45

Other current assets 51 324

Liquid assets 20 127

Total assets 158 1,010

Interest-bearing lease obligation 16 102

Provisions 5 32

Current liabilities 40 256

Deferred tax liabilities 6 38

Total liabilities 67 428

Total identifiable net assets at fair value 91 582

Goodwill 115 738

Purchase consideration 206 1,320

The goodwill of msek 738 comprises the value of expected synergies through

the consolidation of the operations of the Saab Group and Sensis arising from

the acquisition. None of the acquired goodwill is expected to be deductible

for income tax purposes.

The fair value of intangible fixed assets amounted to msek 244.

Terms for calculation of earn out merger consideration:

The seller and the buyer have agreed on a two-year earn out period between 1

July 2011 and 30 June 2013. The contingent consideration of musd 40 is split

into two parts: one if determined EBIT targets are achieved and one depend-

ing of the order intake for new technologies.

Of the purchase price, musd 20 is deposited in an escrow account to cover

warranties and representations.

From the date of the acquisition Sensis has contributed msek 265 to sales

and msek -66 to income before taxes. If Sensis had been consolidated as of

1 January 2011, sales would have increased by approximately msek 560 and

income before taxes would have decreased by approximately msek 140.

The transaction costs of msek 25 have been expensed and are included in

administrative expenses. In the statement of cash flow, they are included in

cash flow from operating activities.

Other acquisitions

On 14 December 2010, Saab announced the signing of an eight-year agree-

ment with Scandinavian Air Ambulance Holding ab. In addition, Saab

acquired inventories and equipment. The purchase price amounted to

msek 41 and was paid on 1 March 2011.

Saab also acquired assets from the Czech company e-com, with its main

operations in the development and production of virtual simulators. The pur-

chase price amounted to msek 17 and was paid on 1 May 2011.

These acquisitions have only had a minor impact on the consolidated

income and financial position.

The fair value of the identifiable assets and liabilities as at the date of the

acquisition were:

Purchase consideration in summary

MSEKScandinavian Air

AmbulanceE-COM

Intangible fixed assets 24 1

Tangible fixed assets 3 13

Inventories 14 4

Other current assets - 1

Total assets 41 19

Provisions - 2

Total liabilities - 2

Total identifiable net assets at fair

value 41 17

Goodwill - -

Purchase consideration 41 17

Divestments

On 14 March, Saab signed an agreement to divest its ownership share of 42.4

per cent in South African system engineering company Grintek Ewation to

Cassidian, a division of eads. The transaction generated a capital gain before

tax of msek 122 and positive cash flow of msek 179.

In the second quarter, Saab divested its 20 per cent share in the South

African company Denel Saab Aerostructures (Pty) Ltd. The transaction gen-

erated a capital gain of msek 58 and positive cash flow of msek 61.

On 8 April, Saab announced it had received additional consideration of

msek 60 for the divestment of Saab Space.

On 19 April, Saab announced it had divested its 36 per cent share in the

image processing company Image Systems ab to Digital Vision ab. Image

Systems ab had been a part of Saab Venture’s portfolio since 2008. The price

received was approximately msek 17, which impacted cash flow positively.

The transation generated a capital gain of msek 13.

On 16 May, Saab announced it intended to utilise its option to divest its

shares in Aker Holding as, which were acquired in 2007. The divestment gen-

erated cash of msek 400 to Saab and had a positive impact on the operating

cash flow and net liquidity by msek 130. The transaction had no impact on

results.

On 14 July, Saab announced it had agreed to divest its shares, correspond-

ing to 57.8 per cent on a fully diluted base, in the 3D mapping company

C3 Technologies ab. The consideration amounted to msek 1,007 and gener-

ated a capital gain of msek 916.

Overview of capital gains 2011

MSEK Jan–Dec

C3 Technologies 916

Grintek Ewation 122

Saab Space 60

Denel Saab Aerostructures 58

Image Systems 13

Total 1,169

No other significant acquisitions or divestments were made during 2011.

NOTE 8, CONT.



NOTE 9

EMPLOYEES AND STAFF COSTS

Average number of employees

2011

of whom

men 2010

of whom

men

Parent Company

Sweden 7,566 80% 7,656 80%

United Arab Emirates 15 93% 14 93%

South Africa 12 92% 6 100%

Thailand 6 83% 1 100%

Brazil 6 83% 1 100%

USA 4 100% 5 100%

India 4 50% 3 67%

Canada 3 100% 2 100%

Saudi Arabia 3 100% 1 100%

France 3 100% 1 100%

Czech Republic 2 100% 1 100%

Belgium 1 100% 2 50%

Chile 1 100% 1 100%

South Korea 1 100% 1 100%

Poland 1 100% 1 100%

Australia 1 100% 1 100%

Germany 1 100% - -

UK 1 100% - -

Parent Company, total 7,631 80% 7,697 80%

Group companies

Sweden 2,435 79% 2,498 78%

South Africa 1,081 71% 1,115 71%

USA 698 74% 233 55%

Australia 320 80% 354 78%

Czech Republic 137 76% 14 64%

UK 135 80% 115 79%

Finland 73 75% 74 76%

Denmark 71 86% 76 86%

Norway 51 86% 50 88%

Switzerland 48 100% 49 100%

India 37 78% 6 83%

Kenya 33 100% 31 100%

Germany 22 91% 33 91%

Canada 12 92% 11 91%

Nigeria 4 75% 24 71%

South Korea 4 75% 4 75%

Netherlands 4 100% 4 100%

Hungary 2 50% 2 50%

Chile 2 50% 2 50%

Slovenia 2 100% 2 100%

United Arab Emirates 1 - 1 -

Japan 1 100% 1 100%

Singapore 1 - 1 -

Greece 1 100% 1 100%

France - - 3 100%

Group companies, total 5,175 76% 4,704 76%

Joint ventures

Sweden 8 88% 25 88%

Joint ventures, total 8 88% 25 88%

Group total 12,814 79% 12,426 79%

The average number of employees has been calculated as the average of the

number of full-time equivalents. The term full-time equivalents excludes

long-term absentees and consultants. Part-time employees and probationers

are however included in the calculation.

Gender distribution of corporate management

Share of women, per cent 2011 2010

Parent Company

Board of Directors 22 20

Other senior executives 29 23

Salaries, other remuneration and social security expenses

2011 2010

MSEK

Salaries and

other remu-

neration

Social

security

expenses

Salaries and

other remu-

neration

Social

security

expenses

Parent Company 3,960 2,043 3,861 1,689

of which pension costs - 1,066 1) - 5091)

Group companies 2,443 225 2,355 885

of which pension costs3) - -174 - 503

Joint ventures 5 2 11 4

of which pension costs - 1 - 2

Group, total 6,408 2,270 6,227 2,578

of which pension costs - 8932) - 1,0142)

1) Of the Parent Company’s pension costs, MSEK 8 (6) refers to the Board and President, including deputies and

Executive Vice Presidents. The company’s outstanding pension obligations for these individuals amount to

MSEK 45 (47), of which MSEK 45 (47) refers to former Board members and Presidents, including deputies and

Executive Vice Presidents.

2) Of the Group’s pension costs, MSEK 18 (15) refers to the Group’s boards and Presidents, including Group com-

panies. The Group’s outstanding pension obligations for these individuals amount to MSEK 48 (49), of which

MSEK 45 (47) refers to former board members and Presidents.

3) Adjustment according to different accounting principles regarding defined-benefit plans between Parent Com-

pany and Group. See also note 1.

Salaries and other remuneration distributed between Board members,

President and Vice Presidents and other employees

2011 2010

MSEK

Board,

President

and Vice

Presidents

Other

employees

Board,

President

and Vice

Presidents

Other

employees

Parent Company 20 3,940 27 3,834

of which variable remuneration - 2

Group companies 68 2,375 58 2,297

of which variable remuneration 6 6

Joint ventures - 5 1 10

Group total 88 6,320 86 6,141

of which variable remuneration 6 8

Of the salaries and remuneration paid to other employees in the Group,

msek 43 (38) refers to senior executives other than Board members and the

President.

For information on post-employment compensation and share-related

compensation, see Note 37.



NOTE 10

AUDITORS’ FEES AND COMPENSATION


MSEK 2011 2010 2011 2010

PwC

Audit assignments 15 1 7 -

Audit work in excess of the

audit assignment 5 - 5 -

Tax advice 1 - - -

Other services 1 - 1 -

Ernst & Young

Audit assignments - 10 - 4


audit assignment - 1 - 1

Tax advice - 2 - 1

Other services - 2 - 1

Deloitte

Audit assignments - 3 - -


audit assignment - 1 - 1

Tax advice - - - -

Other services - 1 - 1

Other

Audit assignments 1 1 - -

Total 23 22 13 9

Audit assignments refer to expenses for the statutory audit, i.e. the work that

was necessary to issue the audit report as well as advice in connection with

the audit assignment.

Audit work in excess of the audit assignment relates to expenses for opin-

ions and other assignments associated to a fairly high degree with audits and

which are normally performed by the external auditor, including consulta-

tions on advisory and reporting requirements, internal control and the

review of interim reports.

Other services relate to expenses that are not classified as audit assign-

ments, audit work in excess of the audit assignment and tax advice.

The Annual General Meeting on 7 April 2011 elected the registered

accounting firm PricewaterhouseCoopers ab as the new auditor for a period

of four years. Håkan Malmström has been appointed auditor in charge.

NOTE 11

OPERATING EXPENSES

Group

MSEK 2011 2010

Raw materials, materials and consumables 5,135 6,390

Subsystems and equipment 1,567 2,305

Purchased services 2,717 2,691

Change in inventory of finished goods and work

in progress, excluding write down 267 -21

Personnel costs 8,678 8,805

Depreciation and amortisation 1,126 1,149

Impairments -73 193

Other expenses 2,398 2,113

Total 21,815 23,625

Operating expenses refer to cost of goods sold, marketing expenses, adminis-

trative expenses and research and development costs. Depreciation and am-

ortisation in the leasing operations (Saab Aircraft Leasing) are not included

in depreciation and amortisation above.

NOTE 12

DEPRECIATION/AMORTISATION AND IMPAIRMENTS

Group

MSEK 2011 2010

Depreciation/amortisation


Other intangible fixed assets -186 -161

Operating properties -80 -83

Property, plant and equipment -172 -145

Equipment, tools and installations -99 -114

Leasing aircraft -114 -146

Other lease assets -1 -2

Total -1,240 -1,295

Impairments

Goodwill -21 -5

Capitalised development costs - -20

Operating properties - -33

Property, plant and equipment - -2

Equipment, tools and installations - -3

Total -21 -63

In 2011, goodwill impairment of msek 21 was recognised for companies in the

venture portfolio. In 2010, impairments of msek 38 were recognised on build-

ings, machinery and equipment in connection with the restructuring of the

underwater operations in Dynamics. Impairments of capitalised develop-

ment costs of msek 20 were recognised for projects in Security and Defence

Solutions, while goodwill impairments amounted to msek 5 for companies in

the venture portfolio.

Parent Company

MSEK 2011 2010

Depreciation/amortisation


Goodwill -39 -39

Other intangible fixed assets -146 -125

Buildings -58 -60

Property, plant and equipment -108 -110

Equipment, tools and installations -50 -48

Total -601 -582



NOTE 13

FINANCIAL INCOME AND EXPENSES

Group

MSEK 2011 2010

Interest income on loans receivable 186 61

Financial income from revaluation of financial assets and

liabilities measured at fair value through profit or loss - 65

Dividends 5 6

Other financial income 1 1

Less project interest applied to gross income -30 -17

Financial income 162 116

Interest expenses on loans and financial liabilities -140 -104

Financial expenses from revaluation and disposal of

financial assets and liabilities measured at fair value

through profit or loss -110 -52

Financial expenses related to pensions -60 -169

Other financial expenses -14 -16

Financial expenses -324 -341

Share in income of associated companies 4 26

Net financial income and expenses -158 -199

Parent Company

Result from shares in

Group companies

Result from shares in

associated compa-

nies/joint ventures

MSEK 2011 2010 2011 2010

Dividends 543 419 2 5

Group contributions

received 1,087 1,039 - -

Group contributions paid -144 -28 - -

Capital gain on sale of

shares 68 1 43 20

Impairments -128 -283 - -

Other -16 23 14 7

Total 1,410 1,171 59 32

Parent Company

Result from other

securities and

receivables held as

fixed assets

Other interest income

and similar profit/loss

items

MSEK 2011 2010 2011 2010

Interest income,

Group companies - - 66 114

Other interest income - - 146 16

Capital gain on sale of

shares 112 - - -

Impairment -4 -23 - -

Dividends 26 27 - -

Translation differences 43 113 - -

Net change in value from

revaluation of financial

assets/liabilities -77 15 - -

Less project interest

applied to gross income - - -30 -16

Other -19 -25 - -

Total 81 107 182 114

Parent Company

Interest expenses and

similar profit/loss items

MSEK 2011 2010

Interest expenses, Group companies -120 -53

Other interest expenses -87 -120

Total -207 -173

NOTE 14

APPROPRIATIONS

Parent Company

MSEK 2011 2010

Buildings and land 17 19

Property, plant and equipment as well as tools

and installations 40 -102

Total difference between tax depreciation and deprecia-

tion according to plan 57 -83

Tax allocation reserve -350 -

Total -293 -83

NOTE 15

TAXES

Tax recognised through profit or loss

Group

MSEK 2011 2010

Current tax expense (-)/tax income (+)

Taxes for the year -442 -350

Adjustment for taxes related to previous years 18 2

Total -424 -348

Deferred tax expense (-)/tax income (+)

Deferred tax related to temporary differences -186 312

Deferred tax related to value of tax loss

carry forwards capitalised during the year 48 9

Deferred tax expense due to utilisation of previously

capitalised tax value in tax loss carry forwards -2 -276

Deferred tax related to previous years -2 -19

Total -142 26

Total recognised tax in Group -566 -322

The Group’s table, “Change in deferred tax in temporary differences and tax

loss carry forwards”, on page 99 specifies how deferred tax affects income.

The net change in the tax loss carry forwards for the year excluding acquisi-

tion/divestment of operations amounts to msek 46, which is the sum of the

deferred tax on the capitalised tax value of tax loss carry forwards, msek 48,

and the deferred tax expense resulting from the utilisation of the previously

capitalised value of tax loss carry forwards, msek -2.

The remaining amount in the table’s column, “Recognised in profit or

loss”, amounts to msek -188, which is the sum of deferred tax related to tem-

porary differences and deferred tax related to previous years. In total, the

Group’s deferred tax amounts to msek -142 (26) and current tax expense for

the year to msek -424 (-348) which generate a total reported tax of msek -566

(-322) in the consolidated income statement.



Parent Company

MSEK 2011 2010

Current tax expense (-)/tax income (+)

Taxes for the year -278 -168 1)

Adjustment for taxes related to previous years - 17

Total -278 -151

Deferred tax expense (-)/tax income (+)

Deferred tax related to temporary differences -184 8

Deferred tax expense due to utilisation of previously

capitalised tax value in tax loss carry forwards - -274

Deferred tax related to previous years - -6

Total -184 -272

Total recognised tax expense in Parent Company -462 -423

1) The current tax expense for 2010 has been restated due to a change in the application of tax in Group contributions.

Reconciliation of effective tax

Group

MSEK 2011 (%) 2011 2010 (%) 2010

Income before taxes 2,783 - 776

Tax according to current tax

rate for Parent Company -26.3 -732 -26.3 -204

Effect of other tax rates for

foreign Group companies 0.6 15 -2.7 -21

Non-deductible expenses -4.9 -135 -8.4 -65

Tax-exempt income 10.1 280 5.8 45

Revaluation of deferred tax

assets from the leasing

portfolio - - -5.0 -39

Tax on additional, uncapital-

ised tax loss carry forwards -0.4 -12 -2.3 -18

Tax related to previous years 0.6 18 -2.1 -16

Other - - -0.5 -4

Reported effective tax rate -20.3 -566 -41.5 -322

Operations divested during the year have generated tax-exempt capital gains

totaling msek 952 (13). In connection with dividends from Group companies

in certain non-European countries, taxation may exceed normal company

tax. The dividend paid to shareholders has no tax consequences.

Parent Company

MSEK 2011 (%) 2011 2010 (%) 2010

Income before taxes - 2,051 - 1,464

Tax according to current tax

rate for Parent Company -26.3 -539 -26.3 -385

Tax related to previous years - - 0.8 11

Non-deductible expenses -6.8 -140 -12.2 -178

Tax-exempt income 10.6 217 8.8 129

Reported effective tax rate -22.5 -462 -28.9 -423

Income before taxes for the Parent Company, Saab ab, has been restated for

2010 due to a change in accounting principles for Group contributions to

subsidiaries. Income before taxes has also been restated for 2010 due to a cor-

rection in the classification and valuation of intangible and financial assets.

As a result, the tax on non-deductible expenses has increased and the

reported effective tax rate is -28.9%, compared with -23.6% previously.

Deferred tax assets and liabilities

Group

Deferred

tax assets

Deferred

tax

liabilities Net

MSEK 31-12-2011 31-12-2011

Intangible fixed assets 1 -646 -645

Tangible fixed assets 20 -504 -484

Lease assets 5 -105 -100

Biological assets - -52 -52

Long-term receivables - -38 -38

Inventories 243 -2 241

Accounts receivable 6 - 6

Prepaid expenses and accrued income 30 -3 27

Long-term liabilities 91 -2 89

Provisions for pensions 167 -458 -291

Other provisions 617 -14 603

Tax allocation reserves - -94 -94

Contingency reserve attributable to Lansen

Försäkrings AB - -357 -357

Accrued expenses and deferred income 169 - 169

Other 55 -197 -142

Tax loss carry forwards 142 - 142

Tax assets/liabilities 1,546 -2,472 -926

Set-off -1,460 1,460 -

Tax assets /liabilities, net 86 -1,012 -926

Group

Deferred

tax assets

Deferred

tax

liabilities Net

MSEK 31-12-2010 31-12-2010

Intangible fixed assets 11 -745 -734

Tangible fixed assets 23 -465 -442

Lease assets 19 -189 -170

Biological assets - -51 -51

Long-term receivables 22 -52 -30

Inventories 193 -16 177


Prepaid expenses and accrued income 15 -2 13

Long-term liabilities 82 -22 60

Provisions for pensions 152 -279 -127

Other provisions 800 -19 781

Tax allocation reserves - -2 -2

Contingency reserve attributable to Lansen

Försäkrings AB - -357 -357

Accrued expenses and deferred income 229 -12 217

Other 67 -243 -176

Tax loss carry forwards 33 - 33

Tax assets/liabilities 1,651 -2,454 -803

Set-off -1,651 1,651 -

Tax assets /liabilities, net - -803 -803

In the company’s view, the tax value of future taxable surpluses will exceed

reported deferred tax assets. In the u.s. there are approximately msek 200 in

tax loss carry forwards, of which approximately msek 120 is expected to be

offset against future taxable earnings. The tax loss carry forwards attributable

to the u.s. operations can be utilised through 2029, but partly expire as of 2021.

NOTE 15, CONT.



Parent Company

Deferred

tax assets

Deferred

tax

liabilities Net

MSEK 31-12-2011 31-12-2011

Tangible fixed assets - -240 -240

Inventories 87 - 87


Prepaid expenses and accrued income 3 - 3

Provisions for pensions 107 - 107

Other provisions 238 - 238


Tax assets/liabilities 473 -240 233

Set-off -240 240 -

Tax assets/liabilities, net 233 - 233

Parent Company

Deferred

tax assets

Deferred

tax

liabilities Net

MSEK 31-12-2010 31-12-2010

Tangible fixed assets - -242 -242

Inventories 77 - 77


Long-term receivables 22 - 22

Prepaid expenses and accrued income 13 - 13

Provisions for pensions 92 - 92

Other provisions 383 - 383


Tax assets/liabilities 659 -242 417

Set-off -242 242 -

Tax assets/liabilities, net 417 - 417

The change in deferred tax assets and liabilities in the Parent Company,

Saab ab, has been recognised in profit or loss.

Estimated utilisation dates of recognised deferred tax assets

MSEK Group Parent Company

Deferred tax assets expected to be

recovered within one year 62 13

Deferred tax assets expected to be

recovered after one year 1,484 460

Estimated utilisation dates of recognised deferred tax liabilities


Deferred tax liabilities due for payment within

one year 39 6

Deferred tax liabilities due for payment after

one year 2,433 234

Change in deferred tax in temporary differences and tax loss

carry forwards

Group

MSEK

Opening

balance

1 Jan.

2011

Recog-

nised in

profit or

loss

Recog-

nised in

the com-

prehen-

sive

income

Acquisi-

tion/di-

vestment

of opera-

tions

Transla-

tion dif-

ference

Closing

balance

31 Dec

2011

Intangible fixed as-

sets -734 195 - -98 -8 -645

Tangible fixed assets -442 -2 - -37 -3 -484

Lease assets -170 78 - - -8 -100

Biological assets -51 -1 - - - -52

Long-term receiva-

bles -30 -8 - - - -38

Inventories 177 64 - - - 241

Accounts receivable 5 15 - -13 -1 6

Prepaid expenses

and accrued income 13 14 - - - 27

Long-term liabilities 60 - - 27 2 89

Provisions for

pensions -127 -164 - - - -291

Other provisions 781 -186 - 7 1 603

Tax allocation re-

serves -2 -92 - - - -94

Contingency reserve

attributable to

Lansen

Försäkrings AB -357 - - - - -357

Accrued expenses

and deferred income 217 -60 - 12 - 169

Other -176 -41 69 6 - -142

Tax loss carry for-

wards 33 46 - 58 5 142

Total -803 -142 69 -38 -12 -926

The Group’s total deferred tax expense in the 2011 income statement

amounted to msek -142. The Group’s total deferred tax income in the state-

ment of comprehensive income amounted to msek 69. The closing balance

on 31 December 2011, msek -926, consisted of deferred tax assets of msek 86

and tax liabilities of msek -1,012, see table on page 98.

The tax items in the column Acquisition/divestment of operations pri-

marily relates to the acquisition of Sensis Corporation.

NOTE 15, CONT.



Group

MSEK

Opening

balance

1 Jan.

2010

Recog-

nised in

profit or

loss

Recog-

nised in

the com-

prehen-

sive

income

Acquisi-

tion/di-

vestment

of opera-

tions

Transla-

tion dif-

ference

Closing

balance

31 Dec

2010

Intangible fixed as-

sets -929 195 - - - -734

Tangible fixed assets -417 -25 - - - -442

Lease assets -240 70 - - - -170

Biological assets -39 -12 - - - -51

Long-term

receivables -10 -20 - - - -30

Inventories 123 54 - - - 177

Accounts receivable 9 -4 - - - 5

Prepaid expenses

and accrued income 1 12 - - - 13

Long-term liabilities 83 -23 - - - 60

Provisions for

pensions -199 72 - - - -127

Other provisions 757 24 - - - 781

Tax allocation re-

serves -7 5 - - - -2

Contingency reserve

attributable to

Lansen

Försäkrings AB -357 - - - - -357

Accrued expenses

and deferred income 267 -50 - - - 217

Other 11 21 -201 - -7 -176

Tax loss carry for-

wards 326 -293 - - - 33

Total -621 26 -201 - -7 -803

The Group’s total deferred tax income in the 2010 income statement

amounted to msek 26. The Group’s total deferred tax expense in the state-

ment of comprehensive income amounted to msek -201. The closing balance

on 31 December 2010, msek -803, consisted of deferred tax assets of msek 0

and tax liabilities of msek -803; see table on page 98.

Tax items recognised directly against other comprehensive income

Group

MSEK 2011 2010

Cash flow hedges 69 -201

Total 69 -201

NOTE 16

INTANGIBLE FIXED ASSETS


MSEK 31-12-2011 31-12-2010 31-12-2011 31-12-2010

Goodwill 4,223 3,470 571 610

Capitalised development

costs 1,950 2,428 1,056 1,256

Other intangible assets 526 515 311 407

Total 6,699 6,413 1,938 2,273

Goodwill


MSEK 2011 2010 2011 2010

Acquisition value

Opening balance,

1 January 4,146 4,128 784 784

Acquired through business

acquisitions 738 19 - -

Reclassification - 8 - -

Translation differences 36 -9 - -

Closing balance,

31 December 4,920 4,146 784 784

Amortisation and impairments

Opening balance,

1 January -676 -671 -174 -135

Amortisation for the year - - -39 -39

Impairments for the year -21 -5 - -

Closing balance,

31 December -697 -676 -213 -174

Carrying amount,

31 December 4,223 3,470 571 610

Acquired through business acquisitions 2011 relates to Sensis. Goodwill

impairments of msek 21 (5) in 2011 related to companies in the venture port-

folio.

Capitalised development costs


MSEK 2011 2010 2011 2010

Acquisition value

Opening balance,

1 January 5,457 5,406 2,000 2,000


acquisitions 110 - - -

Internally developed assets 15 47 - -

Disposals and

reclassifications - -3 - -

Translation differences -31 7 - -

Closing balance,

31 December 5,551 5,457 2,000 2,000


Opening balance, 1 January -3,029 -2,368 -744 -544

Amortisation for the year -588 -644 -200 -200

Impairments for the year - -20 - -

Disposals and reclassifications - 3 - -

Translation differences 16 - - -

Closing balance, 31 December -3,601 -3,029 -944 -744

Carrying amount,

31 December 1,950 2,428 1,056 1,256

Acquired through business acquisitions 2011 relates to Sensis. Capitalised

development costs of msek 20 in 2010 related to a project in Security and

Defense Solutions.

NOTE 15, CONT.



NOTE 16, CONT.

Other intangible assets


MSEK 2011 2010 2011 2010

Acquisition value

Opening balance, 1 January 1,551 1,500 1,376 1,310


acquisitions 160 1 24 -

Investments 26 70 22 68

Disposals and reclassifications 3 -9 4 -2


Closing balance, 31 December 1,749 1,551 1,426 1,376


Opening balance, 1 January -1,036 -887 -969 -846

Amortisation for the year -186 -161 -146 -125

Disposals and reclassifications - 9 - 2


Closing balance, 31 December -1,223 -1,036 -1,115 -969

Carrying amount,

31 December 526 515 311 407

Acquired through business acquisitions 2011 largely relates to Sensis and

comprises customer relations and trademarks.

Amortisation is included in the following lines in income statement


MSEK 2011 2010 2011 2010

Cost of goods sold 185 161 185 164

Marketing expenses 1 - - -

Research and

development costs 588 644 200 200

Impairments are included in the following lines in income statement


MSEK 2011 2010 2011 2010

Other operating expenses 21 5 . -

Research and

development costs - 20 . -

Development costs

The significant items in total capitalisation are development costs for radar

and sensors, electronic warfare systems, air traffic management (atm), the

export version of Gripen and the anti-ship missile rbs15 mk3.

Development costs are capitalised only in the consolidated accounts. In

legal units, all costs for development work are expensed. Capitalised develop-

ment costs in the Parent Company relate to acquired development costs.

Other intangible fixed assets

Significant items in the carrying amount are attributable to the acquisitions

of Ericsson Microwave Systems and Sensis and relate to expenses incurred

for customer relations, trademarks and values in the order backlog. Of the

carrying amount, msek 526, msek 413 is attributable to acquired values and

msek 113 to licenses for operating systems etc.

Impairment tests for goodwill

In connection with business combinations, goodwill is allocated to the cash-

generating units that are expected to obtain future economic benefits in the

form, for example, of synergies from the acquisition. Saab’s business areas

have been identified as separate cash-generating units. The following cash-

generating units have significant recognised goodwill values in relation to the

Group’s total recognised goodwill value. Goodwill in every cash-generating

unit has been tested for impairment.

Goodwill in the Parent Company relates to acquired goodwill from Saab

Microwave Systems.

MSEK 31-12-2011 31-12-2010

Dynamics 572 571

Electronic Defence Systems 2,253 1,988

Security and Defence Solutions 999 491

Support and Services 240 240

Combitech 159 159

Other units, aggregated - 21

Total goodwill 4,223 3,470

Impairment testing for cash-generating units is based on the calculation of

value in use. This value is based on discounted cash flow forecasts according

to the units’ business plans.

VARIABLES USED TO CALCULATE VALUE IN USE

Volume/growth

Growth in the cash-generating units’ business plans is based on Saab’s expec-

tations with regard to development in each market area and previous experi-

ence. The first five years are based on the five-year business plan formulated

by Group Management and approved by the Board. For cash flows after five

years, the annual growth rate has been assumed to be 0 (0) per cent.

Operating margin

The operating margin is comprised of the units’ operating income after

depreciation and amortisation. The units’ operating margin is calculated

against the backdrop of historical results and Saab’s expectations with regard

to the future development of markets where the units are active. The busi-

ness areas Dynamics, Electronic Defence Systems and Security and Defence

Solutions have a substantial order backlog of projects that stretches over a

number of years. The risks and opportunities affecting the operating margin

are managed through continuous cost forecasts for all significant projects.

Capitalised development costs

In the five-year business plans, consideration is given to additional invest-

ments in development considered necessary for certain units to reach the

growth targets in their respective markets.

Discount rate

Discount rates are based on the weighted average cost of capital (wacc). The

wacc rate that is used is based on a risk-free rate of interest in five years

adjusted for operational and market risks. The discount rate is in line with the

external requirements placed on Saab and similar companies in the market.

All units have sales of defence materiel, unique systems, products and sup-

port solutions in the international market as their primary activity, and their

business risk in this respect is considered equivalent. However, units with a

significant share of the business plan’s invoicing in the order backlog have

been discounted at an interest rate that is slightly lower units with a short

order backlog.

The following discount rates have been used (pre-tax):

Pretax discount rate (WACC)

Per cent 2011 2010

Dynamics 11 11

Electronic Defence Systems 11 11

Security and Defence Solutions 11 11

Support and Services 13 13

Combitech 13 13

Sensitivity analysis

Group Management believes that reasonable possible changes in the above

variables would not have such a large impact that any individually would

reduce the recoverable amount to less than the carrying amount.



NOTE 17

TANGIBLE FIXED ASSETS


MSEK 31-12-2011 31-12-2010 31-12-2011 31-12-2010

Operating properties/

buildings and land1) 2,050 2,033 1,410 1,464

Property, plant and

equipment 799 636 460 531

Equipment, tools and

installations 292 315 149 158

Construction in progress 131 68 118 52

Total 3,272 3,052 2,137 2,205

1) In the Group, the reported amount refers to operating properties. In the Parent Company, the reported

amount refers to buildings and land.

Operating properties/buildings and land 1)


MSEK 2011 2010 2011 2010

Acquisition value

Opening balance,

1 January 4,822 4,824 1,881 1,853




Other reclassifications -34 -46 4 -

Divestments -27 - -27 -


Closing balance,

31 December 4,899 4,822 1,872 1,881

Depreciation and

impairments

Opening balance,

1 January -2,789 -2,719 -1,314 -1,254

Depreciation for the year -80 -83 -58 -60



acquisitions -32 - - -

Reclassifications 42 46 - -

Divestments 13 - 13 -

Translation differences -3 - - -

Closing balance,

31 December -2,849 -2,789 -1,359 -1,314

Revaluations

Opening balance, 1 January - - 897 897

Closing balance,

31 December - - 897 897

Carrying amount,

31 December 2,050 2,033 1,410 1,464

1) In the Group, the reported amount refers to operating properties. In the Parent Company, the reported amount

refers to buildings and land.

Acquired through business acquisitions largely relates to Sensis. In 2010

impairments of msek 33 related to buildings were recognised in the Group

as a consequense of the reorganisation of the underwater operations in

Dynamics.

Operating properties include a property leased by u.s. company Saab Sensis,

which was acquired during the year. The finance lease extends through 2025.

The carrying amount is msek 111. The property is depreciated on a straight-

line basis over its period of use through 2025.

Total future minimum lease fees amount to msek 139, of which msek 9 is

due within one year, msek 39 after one year but within five years, and msek 91

after five years. The present value of future minimum lease fees is msek 111.

Property, plant and equipment


MSEK 2011 2010 2011 2010

Acquisition value

Opening balance,

1 January 2,504 2,465 1,909 1,897


acquisitions 400 - 3 -


Other reclassifications -7 35 2 23

Divestments -61 -78 -56 -72

Translation differences 8 5 - -

Closing balance,

31 December 2,962 2,504 1,893 1,909

Depreciation and

impairments

Opening balance,

1 January -1,868 -1,772 -1,378 -1,318





Other reclassifications 15 -13 - -13

Divestments 58 66 53 63


Closing balance,

31 December -2,163 -1,868 1,433 -1,378

Carrying amount,

31 December 799 636 460 531

Acquired through business acquisitions largely relates to Sensis. Equipment

impairments of msek 2 were recognised in 2010 in connection with the

restructuring of the underwater operations in Dynamics.



Equipment, tools and installations


MSEK 2011 2010 2011 2010

Acquisition value

Opening balance, 1 January 2,134 2,092 1,290 1,271



Acquisitions from compa-

nies within the Group - - - 8


Reclassifications 4 -11 4 -11

Sales -132 -72 -63 -24

Translation differences -20 - - -

Closing balance,

31 December 2,081 2,134 1,271 1,290

Depreciation and impairments

Opening balance, 1 January -1,819 -1,784 -1,132 -1,115





Acquisitions from compa-

nies within the Group - - - -7

Reclassifications - 14 -1 14

Sales 116 68 61 24

Translation differences 18 - - -

Closing balance,

31 December -1,789 -1,819 -1,122 -1,132

Carrying amount,

31 December 292 315 149 158

Acquired through business acquisitions largely relates to Sensis. Equipment

impairments amounted to msek 3 in 2010 in connection with the restructur-

ing of the underwater operations in Dynamics.

Construction in progress


MSEK 2011 2010 2011 2010

Acquisition value

Opening balance,

1 January 68 68 52 49


Reclassifications -23 -25 -13 -12

Carrying amount,

31 December 131 68 118 52

Collateral

On 31 December 2011 property with a carrying amount of msek 0 (0) was

pledged as collateral for bank loans.

NOTE 18

LEASE ASSETS AND LEASE AGREEMENTS

As the former manufacturer of the regional aircraft Saab 340 and Saab 2000,

Saab has a great interest in ensuring that these aircraft maintain high capacity

utilisation. Over 500 aircraft have been delivered and 82 are included in Saab’s

leasing fleet, of which 40 aircraft are owned by Saab. Leasing operations are

carried out in the global market. Operating lease terms conform to customary

terms in the international aircraft leasing market, which may entail the right to

early termination, purchases and extensions, as well as security, geographical

and tax-related limitations on the allocation of the aircraft in question. No air-

craft are held via finance leases, nor is Saab the lessor in any finance leases. The

operations are carried out in usd.

Owned aircraft are depreciated on a straight-line basis over 20–25 years.

The leasing fleet is expected to be divested around 2015.

Leasing aircraft obtained for leasing purposes

MSEK 2011 2010

Acquisition value

Opening balance, 1 January 3,792 4,224

Sales -1,514 -158

Reclassifications - -145

Translation differences 58 -129

Closing balance, 31 December 2,336 3,792

Depreciation

Opening balance, 1 January -2,238 -2,337

Sales 991 93

Reclassifications - 89

Depreciation for the year -114 -146

Translation differences -12 63

Closing balance, 31 December -1,373 -2,238

Impairments

Opening balance, 1 January -404 -427

Sales and revaluations 208 22

Translation differences 1 1

Closing balance, 31 December -195 -404

Total 768 1,150

Other lease assets

Opening balance, 1 January 4 4

Acquisitions 1 2

Depreciation for the year -1 -2

Translation differences -1 -

Closing balance, 31 December 3 4

Carrying amount, 31 December 771 1,154

NOTE 17, CONT.



Leasing fees for aircraft obtained/leased via operating leases

MSEK

Payments

to lessors

Payments

from

air lines1)

Payments

from

air lines2)

Outcome

2010 264 59 199

2011 238 66 126

Contracted

2012 254 76 12

2013 249 68 5

2014 100 25 4

2015 - - 3

2016 - - -

2017 and forward - - -

Total contracted 603 169 24

1) Receipts from airlines for aircraft held via operating leases and leased out via operating leases.

2) Receipts from airlines for owned aircraft leased out via operating leases.

The leasing fleet is periodically valuated in terms of the present value of the

future payments it is expected to generate. The inflow is represented by pro-

jected receipts from customers and the Export Credits Guarantee Board

(ekn) in Sweden. Disbursements consist of fees to the lessee and for technical,

legal and administrative activities directly related to management of the fleet.

Insurance protection limits Saab’s risk. However, the internal distribution

between expected receipts from customers and those from ekn will be

affected in each instance by current projections.

Income from leasing operations (Saab Aircraft Leasing) is recognised net

through profit and loss on the line cost of goods sold after offsetting the loss

risk reserve. Saab Aircraft Leasing’s income statement and balance sheet are

largely usd-related, since its agreements on the sale and lease of aircraft are in

usd, which is its functional currency. The exchange rates used for translation

of the financial statements are indicated in Note 49.

Income statement Saab Aircraft Leasing

MSEK 2011 2010

Leasing revenue 276 328

Interest income 55 40

Other revenue 378 216

Total revenue 709 584

Leasing expenses -216 -239

Interest expenses -19 -31

Depreciation -114 -146

Other expenses -455 -227

Total expenses -804 -643

Utilisation of loss risk reserve 145 84


Financial position Saab Aircraft Leasing

MSEK 31-12-2011 31-12-2010

Assets

Lease assets 768 1,150

Receivables from Group companies 1,501 1,575

External receivables 326 297

Inventories 15 16

Liquid assets 15 11

Total assets 2,625 3,049

Equity and liabilities

Equity 1,168 1,414

Provisions 811 851

Other liabilities 646 784

Total equity and liabilities 2,625 3,049

Leasing fees for other assets obtained via operating leases1)

Other leasing fees refer to premises, computers and cars.

Group

MSEK

Premises

and

buildings

Machinery

and equip-

ment

Outcome

2010 239 83

2011 281 104

Contracted

2012 253 93

2013 214 69

2014 178 26

2015 169 2

2016 160 2

2017 and forward 790 1

Total contracted 1,764 193

Parent Company

MSEK

Premises

and

buildings

Machinery

and equip-

ment

Outcome

2010 172 62

2011 195 78

Contracted

2012 172 72

2013 164 57

2014 146 21

2015 137 1

2016 136 -

2017 and forward 786 -

Total contracted 1,541 151

1) The Group has a finance lease on a building; see Note 17.

NOTE 18, CONT.



NOTE 19

BIOLOGICAL ASSETS

Group

MSEK 2011 2010

Living forest

Carrying amount, 1 January 299 256

Change in fair value 15 53

Less fair value logging -9 -10

Carrying amount, 31 December 305 299

Of which fixed assets 305 299

On 31 December 2011, biological assets consisted of approximately

403,000 m³ of spruce, 637,000 m³ of pine and 69,000 m³ of hardwood. Forest

growth is estimated at 35,000–40,000 m³ timber per year. During the year,

approximately 23,200 m³ of timber was felled, which had a fair value in the

Group, after deducting selling expenses, of msek 9 on the felling date.

The valuation of forests has been done with the help of independent

appraisers. The forestry property has been valued according to the market

comparison method. In the valuation according to the market comparison

method, the environmental impact on the firing range has not been taken

into account. An adjustment for the environmental impact has been made by

reducing fair value by an amount corresponding to the market value of the

size of the firing range (4,457 hectares) less the value of the timber.

NOTE 20

INVESTMENT PROPERTIES

Information on fair value of investment properties in the Group

In the Group, investment properties are reported according to the fair value

method.

Group

MSEK 2011 2010


Reclassification from/to asset held for sale - 211

Revaluation -12 -


Investment properties are recognised in the statement of financial position

at fair value, while changes in the value of these properties are recognised in

the income statement; see also Note 1.

Investment properties comprise a number of rental properties leased to

outside tenants. Leases on offices and production space are normally signed

for an initial period of 2–6 years. Prior to expiration, renegotiations are held

with the tenant on the rent level and other terms of the agreement, provided

the lease has not been terminated.

Fair values have been determined by analysing rental income and

expenses for each property, thereby producing a net rental income figure. Net

rental income has then served as the basis of a valuation of fair value with a

yield of 8 per cent. The yield requirements corresponds to the risk in net

rental income. Fair value is not based on the valuation of an independent

appraiser.

The 2010 reclassification refers to a real estate company that was previ-

ously recognised as an asset held for sale.

Group

MSEK 2011 2010

Effect on net income/net rental income

Rental income 26 26

Direct costs for investment properties that generated

rental income during the year -10 -12

Effect on net income /net rental income 16 14

Information on fair value of investment properties in Parent Company

In the Parent Company, investment properties are recognised as buildings

according to the acquisition cost method. Investment properties in the Parent

Company are leased out to other companies in the Group and are therefore

classified as operating properties in the Group.

Parent Company

MSEK 2011 2010

Accumulated fair value

Opening fair value, 1 January 159 159

Revaluation 6 -

Closing fair value, 31 December 165 159

Parent Company

MSEK 2011 2010

Effect on net income/net rental income

Rental income 27 24

Direct costs for investment properties that generated

rental income during the year -9 -11

Effect on net income /net rental income 18 13

Information on carrying amount of investment properties in Parent Company

Parent Company

MSEK 2011 2010

Accumulated acquisition value



Accumulated depreciation according to plan


Depreciation according to plan for the year -4 -4


Accumulated revaluations






NOTE 21

SHARES IN ASSOCIATED COMPANIES CONSOLIDATED ACCORDING TO THE

EQUITY METHOD

Group

MSEK 2011 2010


Acquisition of associated companies 104 -

Sale of associated companies -4 -25

Share in associated companies’ income 1) -12 40

Hedge reserve - 2

Reclassifications to assets held for sale - -113

Other reclassifications - -4

Translation differences and internal gains -1 1

Dividends -50 -6


1) Share in associated companies’ net income and non-controlling interests.

Results from Wah Nobel (Pvt) Ltd. are recognised as financial income and

expenses through profit or loss. Other associated companies are held for

operating purposes, i.e., they are related to operations of the business units or

in the venture portfolio and are therefore recognised in operating income.

During the first half of 2011, Saab sold all its shares in the associated com-

pany Grintek Ewation (Pty) Ltd. (42.4 per cent) to Cassidian, a division of

eads. These shares were classified as assets held for sale in 2010. It also sold

all the shares in the associated company Image Systems ab (36 per cent) to

Digital Vision ab and all its shares in the associated company Denel Saab

Aerostructures (Pty) Ltd (20 per cent).

Acquisitions of shares in associated companies mainly refer to 36.6 per

cent in Avia Satcom Co., Ltd. In addition, Saab invested msek 11, representing

more than 30 per cent of total shares, in the Swedish systems development

company isd Technologies Int ab.

Shares in associated companies as of 31 December 2011 include goodwill

of msek 61 (8).

The Group’s share of sales, income, assets, liabilities and the carrying amount

of shares in associated companies is as follows.

2011

MSEK Country Sales

Share in

associated

companies’

income


Hawker Pacific Airservices Ltd Hong Kong 540 -17

Wah Nobel (Pvt) Ltd Pakistan 16 4

Taurus Systems GmbH Germany 50 2

S.N. Technologies SA Switzerland 15 -

Industrikompetens i Östergötland AB Sweden 46 -

Omnigo (Pty) Ltd South Africa 26 1

Kontorsbolaget i Karlskoga AB Sweden 21 1

Sörman Intressenter AB Sweden 40 3

FFV Services Private Limited India - -

Avia Satcom Co.Ltd Thailand 21 -

Other associated companies in the

venture portfolio 11 -6

Total 786 -12

2010

MSEK Country Sales

Share in

associated

companies’

income


Hawker Pacific Airservices Ltd Hong Kong 638 -16

Wah Nobel (Pvt) Ltd Pakistan 17 3

Taurus Systems GmbH Germany 163 12

S.N. Technologies SA Switzerland 19 8

Industrikompetens i Östergötland AB Sweden 44 1

Omnigo (Pty) Ltd South Africa 21 -2

Kontorsbolaget i Karlskoga AB Sweden 15 2

Sörman Intressenter AB Sweden 36 -

Grintek Ewation (Pty) Ltd South Africa 247 9

Denel Saab Aerostructures (Pty) Ltd 1) South Africa 49 -

Other associated companies in the

venture portfolio 25 -

Reversal provision related to Eurenco SA - 23

Total 1,274 40

1) Our share of the company’s result amounted to MSEK -61.

31-12-2011

MSEK Assets Liabilities

Booked

value,

shares in

associated

companies

Ownership

interest, %


Hawker Pacific Airservices Ltd 291 181 110 32.3

Wah Nobel (Pvt) Ltd 31 7 24 27.2

Taurus Systems GmbH 58 55 3 33.0

S.N. Technologies SA 21 10 11 50.0

Industrikompetens i

Östergötland AB 18 7 11 33.0

Omnigo (Pty) Ltd 16 8 8 40.0

Kontorsbolaget i Karlskoga

AB 126 121 5 50.0

Sörman Intressenter AB 18 14 4 25.3

FFV Services Private Limited 25 12 13 49.0

Avia Satcom Co.Ltd 106 28 78 36.6

Other associated companies

in the venture portfolio 26 5 21 -

Total 736 448 288 -



31-12-2010

MSEK Assets Liabilities

Booked

value,

shares in

associated

companies

Ownership

interest, %


Hawker Pacific Airservices Ltd 310 152 158 33.0

Wah Nobel (Pvt) Ltd 28 6 22 27.2

Taurus Systems GmbH 91 76 15 33.0

S.N. Technologies SA 20 9 11 50.0

Industrikompetens i

Östergötland AB 21 11 10 33.0

Omnigo (Pty) Ltd 15 6 9 40.0

Kontorsbolaget i Karlskoga

AB 124 119 5 50.0

Sörman Intressenter AB 16 14 2 25.3

Denel Saab Aerostructures

(Pty) Ltd 2) 88 172 - 20.0

Other associated companies

in the venture portfolio 24 5 19 -

Total 737 570 251 -

2) Saab is confident that the negative equity will not affect its results and liquidity.

NOTE 22

SHARES IN JOINT VENTURES CONSOLIDATED ACCORDING TO THE

PROPORTIONAL METHOD

The Group has a 50 per cent holding in the joint venture Gripen International

kb, whose principal activity is to offer, market and provide services for air-

craft, military materiel and related equipment. The Group’s remaining hold-

ings in joint ventures are of an insignificant amount.

The Group’s financial reports include the following items that constitute

the Group’s ownership interest in the joint venture’s sales, income, assets and

liabilities.

Gripen International KB

MSEK 2011 2010

Sales 42 96

Net income 70 110

MSEK 31-12-2011 31-12-2010

Fixed assets - 6

Current assets 821 793

Total assets 821 799



Net assets 434 364

NOTE 23

PARENT COMPANY’S SHARES IN ASSOCIATED COMPANIES AND JOINT VENTURES

Parent Company

MSEK 2011 2010



Acquisitions 78 7

Divestments -68 -154

Reclassifications -19 -

Share of net income for the year in limited partnerships 70 110


Accumulated impairments

Opening balance, 1 January - -98

Divestments - 98

Closing balance, 31 December - -


Specification of Parent Company’s (co-owner’s) directly owned holdings

of shares in associated companies and joint ventures.

2011

MSEK

% of votes

and capital

Carrying

amount


Hawker Pacific Airservices Ltd, Hong Kong 32.3 22

Industrikompetens i Östergötland AB,

556060-5478, Linköping 33.0 2

Sörman Intressenter AB, 556741-2233, Stockholm 25.3 3

Avia Satcom Co Ltd, Thailand 36.6 78

Joint ventures

Gripen International KB, 969679-8231, Linköping 50.0 434

Industrigruppen JAS AB, 556147-5921, Stockholm 80.0 4

Avia Tech Systems Co. Ltd., Thailand 40.0 9

Total 552

2010

MSEK

% of votes

and capital

Carrying

amount


Hawker Pacific Airservices Ltd, Hong Kong 33.0 22

Industrikompetens i Östergötland AB,

556060-5478, Linköping 33.0 2

Sörman Intressenter AB, 556741-2233, Stockholm 25.3 3

Denel Saab Aerostructures (Pty) Ltd, South Africa 20.0 64

Vingtec Saab AS, Norway 49.0 -

Image Systems AB, 556550-5400, Linköping 35.8 4

Joint ventures

Saab Natech AB, 556627-5003, Jönköping 51.0 7

Gripen International KB, 969679-8231, Linköping 50.0 365

Gripen Venture Capital AB, 556298-6629, Linköping 50.0 12

SAAB-BAE SYSTEMS Gripen AB,

556527-6721, Linköping 50.0 -

Saab Ericsson NBD Innovation AB,

556628-6406, Stockholm 60.0 -

Industrigruppen JAS AB, 556147-5921, Stockholm 80.0 3

Avia Tech Systems Co. Ltd., Thailand 40.0 9

Total 491

NOTE 21, CONT.



NOTE 24

RECEIVABLES FROM GROUP COMPANIES, ASSOCIATED COMPANIES

AND JOINT VENTURES

Parent Company

Receivables from

Group companies

Receivables from

associated companies

and joint ventures

MSEK 2011 2010 2011 2010

Accumulated acquisition

value

Opening balance,

1 January 557 760 32 116

Acquisitions 642 2 1 -

Sales -288 -205 -16 -84

Closing balance,

31 December 911 557 17 32

NOTE 25

FINANCIAL INVESTMENTS

Group

MSEK 31-12-2011 31-12-2010

Financial investments held as fixed assets

Financial assets measured at fair value through

profit or loss:

Shares and participations 54 56

Investments held to maturity:

Interest-bearing securities 143 147

Total 197 203

Short-term investments classified as current assets

Financial assets measured at fair value through

profit or loss:

Interest-bearing securities 4,555 1,544

Total 4,555 1,544

Investments in interest-bearing securities consist of government, mortgage

and corporate bonds, corporate and bank commercial paper, and mortgage

credit certificates, as well as Floating Rate Notes. The fair value of interest-

bearing securities held to maturity amounts to msek 145 (147).

NOTE 26

OTHER LONG-TERM SECURITIES HOLDINGS

Parent Company

MSEK 2011 2010



Acquisitions 1 2

Divestments -1,431 -63

Closing balance, 31 December 38 1,468



Impairments for the year -3 -18

Divestments - 41


Carrying amount, 31 December 24 1,457

Divestments in 2011 relate to the holding in Aker Holding AS.

NOTE 27

LONG-TERM RECEIVABLES AND OTHER RECEIVABLES

Group

MSEK 31-12-2011 31-12-2010

Long-term receivables held as fixed assets

Receivables from associated companies, interest-bearing 70 130

Receivables from associated companies, non interest-

bearing 2 2

Receivables from joint ventures, interest-bearing - 8

Other interest-bearing receivables 29 12

Other non interest-bearing receivables 945 704

Total 1,046 856

Other non interest-bearing receivables primarily consist of net receivables

attributable to pensions according to ias 19.

Saab does not consider there to be a significant difference between book

and fair value.

Group

MSEK 31-12-2011 31-12-2010

Other receivables held as current assets

Receivables from associated companies, non interest-

bearing 22 43

Receivables from joint ventures, non interest-bearing 37 3

Advance payments to suppliers 58 80

Other interest-bearing receivables 368 617

Other non interest-bearing receivables 451 415

Subtotal 936 1,158

Receivables from customers

Assignment revenue 3 438 4,153

Less utilised advance payments -795 -1,681

Subtotal 2 643 2,472

Total 3 579 3,630



The decrease in other interest-bearing receivables mainly relates to the

divestment of Aker Holding as.

Assignment revenue refer to assignment costs incurred plus reported

gross income less any losses attributable to the work performed. Unutilised

advance payments amount to msek 1,022 (643).

Costs attributable to assignment revenue amounted to msek 2,481 (3,150).

Reported gross income amounted to msek 957 (1,003).

Parent Company

MSEK 31-12-2011 31-12-2010

Other long-term receivables

Interest-bearing receivables 25 1

Non interest-bearing receivables 9 9

Total 34 10

Parent Company

MSEK 31-12-2011 31-12-2010

Other receivables held as current assets

Non interest-bearing receivables 286 126

Subtotal 286 126

Receivables from customers

Assignment revenue 2,194 2,741

Less utilised advance payments -435 -876

Subtotal 1,759 1,865

Total 2,045 1,991

Assignment revenue refer to assignment costs incurred plus reported gross

income less any losses attributable to the work performed. Unutilised

advance payments amount to msek 471 (98).

Costs attributable to assignment revenue amounted to msek 1,583 (2,100).

Reported gross income amounted to msek 611 (641).

Parent Company

MSEK 2011 2010

Long-term receivables



Incremental receivables 25 1

Deductible receivables -1 -35


NOTE 28

INVENTORIES

Group

MSEK 31-12-2011 31-12-2010

Raw materials and consumables 2,109 1,681

Work in progress 1,470 1,534

Finished goods and goods for resale 755 885

Total 4,334 4,100

Saab and the Swedish Ministry of Enterprise, Energy and Communications

have reached agreement with the National Debt Office to co-finance Saab’s

participation in the Airbus A380 project. The co-financing is in the form of a

royalty loan maximised at msek 350. Repayment will take the form of a roy-

alty on each delivery to Airbus. Through 2011, the National Debt Office has

paid out a net of msek 263 (263), which reduces inventory in the financial

statements.

The Group’s cost of goods sold includes inventory impairments of

msek 16 (145). The reversal of previous impairments amounts to msek 89 (0).

The value of inventories measured at fair value less selling expenses amounts

to msek 100 (59). Of inventories, msek 407 is expected to be realised more

than twelve months after the closing day.

Parent Company

MSEK 31-12-2011 31-12-2010

Raw materials and consumables 1,518 1,263

Work in progress 1,059 948

Finished goods and goods for resale 519 540

Advance payments to suppliers 56 31

Total 3,152 2,782

Cost of goods sold for the Parent Company includes inventory impairments

of msek 11 (66) after the reversal of previous impairments of msek 86 (0). The

value of inventories measured at fair value less selling expenses amounts to

msek 100 (59). Of the Parent Company’s inventories, msek 282 is expected to

be realised more than twelve months after the closing day.

NOTE 29

ACCOUNTS RECEIVABLE

Accounts receivable in the Group amount to msek 3,153 (3,052). In 2011, Saab

sold receivables as part of the sales programme arranged in 2009 to

strengthen its financial position and increase financial flexibility. Customers

in most cases are nations with high credit worthiness.

The receivables were sold in their entirety at a favourable funding level.

This reduced accounts receivable at year-end by msek 872 (1,409) and also

has a negative effect on cash flow of msek -537 (620). During the year,

accounts receivable were written down by msek 5 (12). Reversals of previous

write-downs amounted to msek 3 (15).

Accounts receivable in the Parent Company amount to msek 1,424 (1,338).

During the year, receivables were written down by msek 4 (3). Reversals of

previous write-downs amounted to msek 2 (8). See also Note 41.

NOTE 30

PREPAID EXPENSES AND ACCRUED INCOME


MSEK 31-12-2011 31-12-2010 31-12-2011 31-12-2010

Prepaid expenses 367 399 275 347

Accrued service income 143 148 73 87

Other accrued income 319 133 292 78

Total 829 680 640 512

Prepaid expenses relate to pension premiums, rents, licenses and insurance,

among other things.

NOTE 27, CONT.



NOTE 31

LIQUID ASSETS

Group

MSEK 31-12-2011 31-12-2010

Cash and bank balances 681 703

Bank deposits 1,083 1,830

Funds in escrow accounts 139 -

Deposits held on behalf of customers 15 11

Total according to statement of financial position 1,918 2,544

Total according to statement of cash flows 1,918 2,544

Bank deposits relate to short-term investments, the large part of which has a

maturity of less than one month. Funds in escrow accounts relate to cash

deposited with independent third parties until contractual terms are met.

The Group’s unutilised account overdraft facility amounted to msek 118 (131)

at year end. With regard to the Group’s other loan facilities, refer to Notes 36

and 41.

NOTE 32

ASSETS HELD FOR SALE

The Group holds no assets or liabilities for sale. Assets held for sale in 2010

amounted to msek 113 and included an associated company within Electronic

Defence Systems, Grintek Ewation. Saab’s interest in Grintek Ewation was

divested during the second quarter to Cassidian, a division of EADS; see

note 8.

NOTE 33

SHAREHOLDERS’ EQUITY

The shares in the Parent Company are divided into two series, a and b. Both

classes of shares carry equal rights, with the exception that each Series a share

is entitled to ten votes and each Series b share one vote. The shares have a

quota value of sek 16.

Outstanding shares as of

31 December 2011

Number of

shares

Per cent of

shares

Per cent of

votes

Series A 1,907,123 1.8 15.6

Series B 103,424,835 98.2 84.4

Total 105,331,958 100.0 100.0

Outstanding shares as of

31 December 2010

Number of

shares

Per cent of

shares

Per cent of

votes

Series A 1,907,123 1.8 15.6

Series B 102,810,606 98.2 84.4

Total 104,717,729 100.0 100.0

Change in number of

outstanding shares 2011 Series A Series B Total

Number of outstanding shares as of

1 January 1,907,123 102,810,606 104,717,729

Early share matching - 55,352 55,352

Share matching plan - 558,877 558,877

Number of outstanding shares as of

31 December 1,907,123 103,424,835 105,331,958

In 2011 no Series b shares were repurchased on the market to secure Saab’s

Share Matching Plan and Performance Share Plan. During the year, 614,229

shares were matched in Saab’s Share Matching Plan. A total of 3,818,386

shares are held in treasury.

The dividend to shareholders amounted to msek 367 (237), or sek 3.50

(2.25) per share.

Management of the Group’s capital

The Group’s capital under management consists of equity. The Group’s capital

management goal is to facilitate continued operating growth and to remain

prepared to capitalise on business opportunities. The long-term equity/asset

goal is at least 30 per cent.

Net result of cash flow hedges

The net result of cash flow hedges comprises the effective share of the cumu-

lative net change in fair value of a cash flow hedging instrument attributable

to hedge transactions that have not yet taken place.

Translation reserve

The translation reserve comprises exchange rate differences that arise from

the translation of financial reports from operations that have prepared their

reports in a currency other than the currency that the Group’s financial

reports are presented in. The Parent Company and the Group present their

financial reports in sek. The translation reserve at year-end amounts to

msek -51 (-12). Of the translation reserve msek -4 (2) has been reclassified to

gains/losses.

Revaluation reserve

The revaluation reserve comprises the difference between the fair value and car-

rying amount of operating properties reclassified as investment properties.

PARENT COMPANY

Restricted reserves

Restricted reserves may not be reduced through profit distributions.

Revaluation reserve

When a tangible or financial fixed asset is revaluated, the revaluation amount

is allocated to a revaluation reserve.

Legal reserve

Provisions to the legal reserve has previously amounted to at least 10 per cent

of net income for the year, until the legal reserve corresponded to 20 per cent

of the Parent Company’s capital stock. As of 2006 provisions are voluntary

and the Parent Company makes no provisions to the statutory reserve.

Unrestricted equity

Retained earnings

Consists of previous year’s unrestricted equity after profit distribution and

Group contributions paid. Retained earnings together with net income for

the year comprise unrestricted equity, i.e., the amount available for distribu-

tion to the shareholders.



NOTE 34

EARNINGS PER SHARE

2011 2010

Net income for the year attributable to Parent Company’s

shareholders (MSEK) 2,225 433

Weighted average number of common shares

outstanding :

before dilution (thousands) 104,982 105,218

after dilution (thousands) 109,150 109,150

Earnings per share, before dilution (SEK) 21.19 4.12

Earnings per share, after dilution (SEK) 20.38 3.97

The weighted average number of shares outstanding before dilution refers to

the total number of shares in issue less the average number of repurchased

treasury shares. The weighted average number of shares outstanding after

dilution refers to the total number of shares in issue.

NOTE 35

INTEREST-BEARING LIABILITIES

Group

MSEK 31-12-2011 31-12-2010

Long-term liabilities

Liabilities to credit institutions 1,103 1,103

Other interest-bearing liabilities 115 14

Total 1,218 1,117

Current liabilities

Liabilities to credit institutions 46 78

Liabilities to joint ventures 449 428

Other interest-bearing liabilities 25 83

Total 520 589

Total interest-bearing liabilities 1,738 1,706

Terms and repayment schedules

Collateral for bank loans amounts to msek 0 (0). Of the long-term liabilities,

msek 1,128 (1,110) falls due between one and five years of the closing day and

msek 90 (7) later than five years of the closing day.

Liabilities to credit institutions largely consist of Medium Term Notes

(mtn), and in the previous year of commercial paper as well. For more infor-

mation on financial risk management, refer to Note 41.

The fair value of mtns and commercial paper exceeds book value by

msek 13 (8). Saab otherwise does not consider there to be a significant differ-

ence between book and fair value.

NOTE 36

LIABILITIES TO CREDIT INSTITUTIONS

Parent Company

MSEK 31-12-2011 31-12-2010

Current liabilities

Overdraft facilities: Available credit/limit 118 1,254

Short-term portion of bank loans: Unutilised portion -118 -131

Utilised credit amount - 1,123

Short-term borrowing from credit institutions - -

Total - 1,123

Long-term liabilities

Overdraft facilities: Available credit/limit 4,000 4,000

Long-term portion of bank loans: Unutilised portion -4,000 -4,000

Utilised credit amount - -

Long-term borrowing from credit institutions 1,100 1,100

Total 1,100 1,100

Total liabilities to credit institutions 1,100 2,223

In December 2009, Saab established a mtn programme of sek 3 billion in

order to enable the issuance of long-term loans on the capital market. Under

the terms of this programme, Saab has issued bonds and Floating Rate Notes

(frn) for msek 1,100.

The Parent Company had mnok 975 in financing arranged in connection

with the acquisition of 7.5 per cent of the shares in Aker Holding as in 2007.

Saab’s investment amounted to approximately nok 1.2 billion, of which about

80 per cent was financed through the above mentioned loans.

Saab has exercised the option which gave it the right to sell its shares in

Aker Holding as. The loan was amortised and the interest rate swap was ter-

minated. The net amount in nok was hedged through forward contracts. The

sale had a positive effect on cash flow in the Parent Company of approximately

msek 1,500 and on net liquidity in the Group of approximately msek 130.

NOTE 37

EMPLOYEE BENEFITS

Saab has two types of pension plans: defined-benefit and defined-contribu-

tion. In defined-benefit plans, post-employment compensation is based on a

percentage of the recipient’s salary. Saab has around ten types of defined-ben-

efit plans. The predominant plan is the itp plan, and the second largest plan

refers to state-funded retirement pension. Saab’s defined-benefit plans are

secured in three ways: as a liability in the balance sheet, in pension funds or

funded through insurance with mainly Alecta. The Saab Pension Fund, that

secured part of the itp plan, had assets of msek 4,050 (3,969) as of 31 Decem-

ber 2011, compared to an obligation of msek 5,866 (4,675) according to ias 19,

or a solvency margin of 69 per cent (85).

The portion secured through insurance with Alecta refers to a defined-

benefit plan that comprises several employers and is reported according to a

pronouncement by the Swedish Financial Reporting Board, ufr 3. For fiscal

year 2011, the Group did not have access to the information that would make

it possible to report this plan as a defined-benefit plan. The itp pension plan,

which is secured through insurance with Alecta, is therefore reported as a

defined-contribution plan. Alecta’s surplus can be distributed to policyhold-

ers and/or insureds. At year-end 2011, Alecta’s surplus in the form of the col-

lective funding ratio amounted to 113 per cent (146). The collective funding

ratio is the market value of Alecta’s assets as a percentage of the insurance

obligations calculated according to Alecta’s actuarial assumptions, which

does not conform to ias 19.

In defined-contribution plans, pensions are based on the premiums paid

and return on assets.



NOTE 37, CONT.

Group

MSEK 31-12-2011 31-12-2010

Wholly or partially funded obligations

Present value of defined-benefit obligations 6,319 4,969

Fair value of assets under management -4,446 -4,298

Net wholly or partially funded obligations 1,873 671

Present value of unfunded defined-benefit obligations 222 264

Present value of net obligation 2,095 935

Unreported actuarial losses -2,678 -1,404

Net obligation employee benefits -583 -469

The net amount is reported in the following items in the statement of financial

position

Provisions for pensions 12 5

Long-term receivables 595 474

The net amount is divided among plans in the

following countries

Sweden -523 -413

USA -72 -61

Germany 5 5

Switzerland 7 -

Net amount in the statement of financial position -583 -469

Unreported actuarial losses amount to msek 2,678 (1,404). Actuarial losses

are calculated as the difference between pension obligations and the liability

according to the statement of financial position. If the actuarial losses are

more than 10 per cent of the pension obligation, the portion exceeding 10 per

cent is amortised over the remaining period of employment for employees

covered by defined-benefit plans. According to the above table, the actuarial

losses exceed the pension obligation for 2011 by more than 10 per cent. This

means that the difference between msek 654 and msek 2,678 will be distrib-

uted over anticipated remaining years in service.

During 2012, amortisation will be approximately msek 183.

Unreported actuarial losses

Group 31 December

MSEK 2011 2010 2009 2008 2007

Present value of defined-benefit

obligations -6,541 -5,233 -5,577 -5,004 -4,679

Fair value of assets under man-

agement 4,446 4,298 3,907 3,356 3,565

Net obligation in the statement of

financial position -583 -469 -475 -424 101

Losses -2,678 -1,404 -2,145 -2,072 -1,013

The unreported actuarial loss amounted to msek 1,344 in 2011, primarily due

to two negative factors. The return on assets under management was lower

than expected at -0.7 per cent, compared to an anticipated 6 per cent, which

produced an actuarial loss of msek 290. The actuarial loss on pension obliga-

tions amounted to msek 1,048, which was due to a 130 bp lower discount rate.

The actuarial loss was amortised by msek 70 during the year. The net loss

increased by msek 1,274.

Changes in net obligation for defined-benefit plans reported

in the statement of financial position

Group

MSEK 2011 2010

Net obligation for defined-benefit plans, 1 January -469 -475

Compensation paid -208 -189

Deposits to pension fund and other funding -132 -170

Cost reported in income statement 216 339

Settlement/Translation difference -9 3

Withdrawals from pension fund 19 23

Net obligation for defined-benefit plans, 31 December -583 -469

Change in pension obligation

Group

MSEK 2011 2010

Opening fair value, 1 January 5,233 5,577

Benefits vested during the year 156 170

Interest expense 249 226

Pension disbursements -208 -189

Settlement 56 -14

Actuarial gain/loss 1,048 -523


Closing fair value, 31 December 6,541 5,233

Change in assets under management

Group

MSEK 2011 2010

Opening fair value, 1 January 4,298 3,907

Assumed return 259 201

Withdrawals -19 -23

Settlement 60 -14

Contributions 132 170

Actuarial gain/loss -290 68


Closing fair value, 31 December 4,446 4,298

Cost reported in income statement

Group

MSEK 2011 2010

Costs for employment during current year 156 170

Interest expense for obligation 249 226

Assumed return on assets under management -259 -201

Amortised actuarial losses 70 144

Cost of defined-benefit plans in income statement 216 339

Cost of defined-contribution plans 531 490

Payroll tax 146 185

Total cost of post-employment compensation 893 1,014



The cost is reported on the following lines in the income statement:

Group

MSEK 2011 2010

Cost of goods sold 630 685

Marketing expenses 76 59

Administrative expenses 48 56

Research and development costs 79 45

Financial expenses 60 169

Total cost of post-employment compensation 893 1,014

Interest expense and amortisation of actuarial losses less the assumed return

on assets under management is classified as financial expense. Other pension

costs are divided by function in the income statement in relation to how

payroll expenses are charged to the various functions.

Return on assets under management

Group

MSEK 2011 2010

Actual return on assets under management -31 269

Assumed return on assets under management -259 -201

Actuarial result from assets under management

during the year -290 68

Assumptions for defined-benefit obligations

Group

Per cent 2011 2010 2009 2008 2007

Significant actuarial assumptions

as of closing day (expressed as

weighted averages)1)

Discount rate, 31 December 3.50 4.80 4.00 4.25 4.50

Assumed return on assets under

management, 31 December 6.00 6.00 5.00 5.00 5.00

Future salary increase 3.00 3.00 3.00 3.00 3.00

Future increase in pensions 2.00 2.00 2.00 2.00 2.00

Employee turnover 3.00 3.00 5.00 5.00 5.00

Anticipated remaining years in service 12.9 13.0 11.2 11.2 11.3

1) Refers to Sweden since essentially all defined-benefit plans are in Sweden.

The following assumptions serve as the basis of the valuation of Saab’s

pension liability:

Discount rate: The valuation is based on covered Swedish mortgage bonds

(aaa). Each assumed cash flow is discounted using an interest rate for the

corresponding maturity.

Assumed return on assets under management: Of the assets managed by the

Saab Pension Fund, 50 per cent is invested in interest-bearing bonds and 50

per cent in equities and hedge funds. The risk premium above current inter-

est rate levels, which has historical support and is used by many companies

for shares, is approximately 3-6 per cent above interest rates. For bonds, the

interest rate used is the same as the discount rate less a risk premium for

mortgage bonds. The assumed rate of return is 3 per cent (4) on the interest-

bearing bonds and 9 per cent (8) on equities and hedge funds. Saab’s pension

fund does not own any Saab shares.

Long-term salary increase assumption: Assumed to be as high as the increase

in the basic income amount. This means that Saab expects the same salary

increases as the national average.

Long-term increase in basic income: Data from Statistics Sweden on current

wage increases in the private sector provide an historical average during the

period 1974–2000 of approximately 1 per cent above inflation.

Long-term rate of inflation: Based on the Riksbank’s inflation target of 2

per cent.

Mortality: Mortality is the same assumption recommended by the Financial

Supervisory Authority (fffs 2007:31), based on Makeham formulas for men

and women.

Marriage: Marriage is the same assumption recommended by the Financial

Supervisory Authority (fffs 2001:13).

Employee turnover: The likelihood that an individual ends his/her employ-

ment is assumed to be 3 per cent per year.

Parent Company’s pension obligations

Funds allocated for pensions according to the balance sheet correspond to

the net present value of existing pension obligations less funds that are

secured by Saab’s pension fund.

Parent Company

MSEK 31-12-2011 31-12-2010

FPG/PRI pensions 309 75

Other pensions 88 44

Other provisions for pensions 72 73

Total 469 192

Of which credit guarantees via FPG/PRI 389 107


MSEK 2011 2010 2011 2010

Amount of provision

expected to be settled after

more than 12 months 12 5 333 67

Share Matching Plan

In April 2007, Saab’s Annual General Meeting resolved to offer employees the

opportunity to participate in a Global Share Matching Plan. The Board consid-

ers it important that Saab’s employees share a long-term interest in the appre-

ciation of the company’s shares. Employees who participate in the plan can

have up to 5 per cent of their gross base salary withheld to purchase shares on

the nasdaq omx Stockholm during a twelve-month period. If the employee

retains the purchased shares for three years after the investment date and is

still employed by the Saab Group, the employee will be allotted a correspond-

ing number of Series b shares.

In April 2008, Saab’s Annual General Meeting resolved to introduce a per-

formance-based plan for senior executives and key employees entitling them

to 2–5 matching shares depending on the category the employee belongs to.

In addition to the requirement that the employee remain employed by Saab

after three years, there is a requirement that earnings per share grow in the

range of 5 to 15 per cent. The Annual General Meeting 2011 amended the

terms of the Performance Share Plan 2011, compared to previous years’ pro-

grams, so that those who are eligible may also participate in Saab’s Share

Matching Plan 2011, and that the Performance Share Plan 2011 entitles partic-

ipants to 1-4 matching shares, depending on the category to which the

employee belongs.

2007 Share Matching Plan

In 2008, employees purchased 673,235 Series b shares, corresponding to the total

number of matching shares. The number of participants from the start was

5,104. Matching shares were issued on four occasions in 2011. In total, 633,479

shares have been matched by the plan, corresponding to 94 per cent of the

shares that have been purchased.


In April 2008, Saab’s Annual General Meeting resolved to offer employees a new

Share Matching Plan with similar terms as the 2007 plan. In 2009, employees

purchased 680,267 Series b shares, corresponding to the maximum number of

matching shares. The number of participants from the start was 3,194. Match-

ing shares will be issued on four occasions in 2012, beginning in January.


In April 2009, Saab’s Annual General Meeting resolved to offer a third Share

Matching Plan with similar terms as the previous years’ plans. In 2010, partici-

pants purchased 462,877 Series b shares, corresponding to the total number of

matching shares. The number of participants from the start was 2,841.


In April 2010, Saab’s Annual General Meeting resolved to offer a fourth Share

Matching Plan with similar terms as the previous years’ plans. In 2011, partici-

pants purchased 303,033 Series b shares, corresponding to the total number of

matching shares. The number of participants from the start was 2,315.

NOTE 37, CONT.



2008 Performance Share Plan

In the first Performance Share Plan, around 280 senior executives and key

employees were invited to participate. The number of participants from the

start was 193. Participants in the plan purchased 123,590 shares, corresponding to

about 275,000 matching shares. After the end of the measurement period, on

30 September 2011, it was determined that the growth requirement of 5 to 15 per

cent had not been reached, due to which no matching will be issued in 2012.


In the second Performance Share Plan, the 138 participating employees pur-

chased 62,633 shares in 2010. The maximum number of matching shares is

about 140,000.


In the third Performance Share Plan, the 115 participating employees purchased

46,972 shares in 2011. The maximum number of matching shares is about 110,000.

2011 Share Matching Plan and Performance Share Plan

In April 2011, Saab’s Annual General Meeting resolved to offer employees a

new Share Matching Plan and a new Performance Share Plan. The Share

Matching Plan for 2011 comprises all employees, including senior executives

and key persons. The Performance Share Plan for 2011, which is designed

solely for senior executives and key persons, entitles participants to 1-4

matching shares, depending on the category to which the employee belongs. The plans start in January 2012 and continue through the calender year 2012.

The maximum number of matching shares in these two plans is 1,040,000.

Share Matching Plan 2007 plan 2008 plan 2009 plan 2010 plan Total

Number of matching shares

at beginning of the year 582,381 628,913 456,056 - 1,667,350

Allotted during the year

(treasury shares) - - - 303,033 303,033

Less early matching -18,883 -22,766 -12,501 -1,202 -55,352

Ordinary matching -558,877 - - - -558,877

Forfeited matching shares -4,621 -17,351 -11,859 -2,559 -36,390


eligible at year-end - 588,796 431,696 299,272 1,319,764

Number of participants,

31 Dec. 2011 - 2,805 2,638 2,272

% of total number of

employees - 21 20 17

Average remaining maturity,

years - 0.4 1.7 2.7

Performance Share Plan 2009 plan 2010 plan Total

Number of matching shares at beginning

of the year 61,023 - 61,023

Allotted during the year (treasury shares) - 46,972 46,972

Forfeited matching shares -5,754 -322 -6,076


eligible at year-end 55,269 46,650 101,919

Number of participants, 31 Dec. 2011 123 110

Average remaining maturity, years 1.7 2.7

Recognised expense for above-mentioned plan,

including social security expenses 2011 2010

Share Matching Plan 2007 22 33



Share Matching Plan 2010 4 -

Performance Share Plan 2008 - -4

Performance Share Plan 2009 5 2

Performance Share Plan 2010 1 -

Total 77 62

The fair value of the services rendered is based on the share price of the

matching shares that are expected to be allotted. The share price is deter-

mined at the time of the participants’ investment adjusted by the dividend

that does not accrue to the employee during the vesting period.

The expense for the share plans is included in operating income and is

recognised in the balance sheet as equity and accrued expenses (social secu-

rity fees). Administrative expenses for the share matching plans amounted to

msek 5 (4) in 2011.

SENIOR EXECUTIVES’ BENEFITS

Remuneration to Board members

In accordance with the resolution of the Annual General Meeting, the fees paid

to the members of the Board amount to sek 4,075,000 (4,075,000), consisting

of sek 1,100,000 (1,100,000) to the Chairman and sek 425,000 (425,000) to

each of the other members elected by the Annual General Meeting, with the

exception of the President. The member nominated by bae Systems, Michael

O’Callaghan, an employee of bae Systems, stepped down from his position on

the Board during the year after bae Systems sold its shares in Saab. Michael

O’Callaghan has declined his fees with reference to bae Systems’ policy.

For audit committee work, committee chairman Per-Arne Sandström

also received fees of sek 150,000 (150,000) and committee members Johan

Forssell and Joakim Westh sek 100,000 (100,000) each.

For compensation committee work, committee chairman Lena Treschow

Torell also received fees of sek 135,000 (135,000) and committee members

Marcus Wallenberg sek 80,000 (80,000) and Sten Jakobsson sek 80,000 (0).

In his capacity as a consultant, Board member Åke Svensson received

sek 106,334 from Saab ab through 31 March 2011 for assisting the new Presi-

dent and ceo and the Group Management. Hence the assignment has been

completed.

Remuneration to the President

The salary paid to the President and ceo consists of a fixed portion. The previ-

ous short-term variable portion has been discontinued as of 2011 in accord-

ance with the resolution of the Annual General Meeting. The preparation pro-

cess for compensation issues regarding the President is handled by the Board’s

Remuneration Committee according to the principles laid down by the

Annual General Meeting and then voted on by the Board.

Håkan Buskhe has participated since 1 September 2010 in the Saab Global

Performance Share Plans approved by the 2009 and 2010 Annual General

Meetings.

Outstanding matching rights in the Saab Global Performance Share Plan

2009 amount as of 31 December 2011 to sek 260,329 (14,237) and in the Saab

Global Performance Share Plan 2010 to sek 275,318 at a estimated outcome.

During the period 1 January through 31 December 2011, Håkan Buskhe

received salary and other benefits totalling sek 10,341,508 (2,958,466), of

which other benefits, including performance share plans, amounted to

sek 1,678,261 (31,326).

Pension terms

The retirement age for the President is 62. The President has a defined-contri-

bution pension plan. He may decide himself on the payment term, though

within the provisions of Swedish income tax law. The pension cost for Saab

consists of pension premiums amounting to 30 per cent of fixed salary until

the President turns 50, after which the pension premium will amount to 35 per

cent of fixed salary. Pension premiums are paid as long as the President

remains an employee of the company, but not beyond the age of 62. During

his first five years of employment, the President also receives an extra pension

contribution of sek 440,000, payment of which is made annually and is con-

ditional on Håkan Buskhe remaining an employee at the time.

To this is added the cost of pension premiums according to the itp plan.

The pension commitment is vested.

For 2011, the cost of President Håkan Buskhe’s pension, including itp, was

sek 3,187,551 (1,391,089).

Severance terms

If terminated by the company, the President will receive a salary and pension

benefits for a period of six months (period of notice). Thereafter he will receive

severance pay equivalent to one year of salary, based on his current fixed sal-

ary. If the President does not obtain new employment, he will receive an addi-

tional six months of severance pay. The salary during the period of notice and

severance will be deducted from income received from other employment

NOTE 37, CONT.



during the same period. If the President resigns voluntarily, there is a six-

month period of notice with salary and pension benefits, but no severance pay.

The President’s agreement contains a non-compete clause.

Remuneration to other senior executives

The group of other senior executives included 13 individuals (13) in 2011, con-

sisting of the Executive Vice Presidents, heads of the business areas and heads

of Group staffs. Carina Brorman took over as the new Head of Group Com-

munications on 1 October. At the turn of 2011/2012, Group Management there-

fore consisted of 14 persons, including the ceo.

The salaries paid to other senior executives consist of a fixed portion. The

previous short-term variable portion has been discontinued as of 2011 in

accordance with the resolution of the Annual General Meeting. Compensa-

tion issues regarding the other senior executives are prepared by the Head of

Group Human Resources and presented to the President, who makes a deci-

sion pending the approval of the Compensation Committee and the Board.

During the period November 2007 through October 2008, other senior

executives participated in the Saab Share Matching Plan approved by the 2007

Annual General Meeting for all company employees. The Saab Share Match-

ing Plan 2007 was concluded in November 2011. Since November 2008 all eli-

gible executives have participated in the Saab Global Performance Share Plans

approved by the Annual General Meetings in 2008, 2009 and 2010. Outstand-

ing matching rights in the Saab Global Performance Share Plan 2008 amount

to sek 0 (0) as of 31 December 2011, while the Saab Global Performance Share

Plan 2009 amounts to sek 2,373,575 (587,843) and the Saab Global Perfor-

mance Share Plan 2010 amounts to sek 668,333 at a estimated outcome.

During the year, three members of Group Management received total

variable cash remuneration of sek 2,393,866 before tax for their extraordinary

performance in 2011.

In 2011, the other senior executives received salaries and other benefits

totalling sek 48,405,129 (37,880,302), of which other benefits, including per-

formance share plans, accounted for sek 4,112,686 (684,594).

Pension terms

As of 1 January 2005, a pension age of 62 years applies to new executives.

Among other senior executives, two individuals have a pension age of

60 years.

In addition to itp or its equivalent, 13 members of the group (13) are affiliated

with the Saab plan, which is defined-contribution and vested. The Saab plan

provides pensions benefits over and above itp or its equivalent on salary levels

between 20 and 30 basic amounts as well as on salary segments over 30 basic

amounts. The individuals themselves can decide on the payment term, though

within the provisions of Swedish income tax law. Moreover, an insurance pol-

icy finances the period between the ages of 60 or 62 years and 65 years.

The pension cost for Saab consists of pension premiums, which are based

on a percentage of qualifying salaries. The percentage rate is determined by

each executive’s time remaining until the pension age, 60 or 62 years, when

joining the plan. The aggregate insurance balance should cover a targeted

pension from 65 years of approximately 32.5 per cent of salary levels between

20 and 30 basic amounts and approximately 50 per cent of segments over 30

basic amounts of qualifying salaries. Premium payments continue as long as

the individuals remain in their positions or as employees of the company.

Pension obligations are vested. In 2011, pension costs for other senior

executives, including itp and its equivalent, amounted to sek 16,127,093

(14,076,215). Other senior executives are entitled, or obliged if the company

so requests, to retire on pension as of the age of 60 or 62 years.

Severance terms

If terminated by the company, the group of other senior executives will receive

a salary and pension benefits for six months (period of notice). Thereafter

they will receive severance pay equivalent to 18 months of salary, based on

their fixed salary. Severance is paid monthly with the first payment in the

month after employment has ended. Severance is not paid for the period that

falls after the contractual pension age. Employees hired before 1 January 2005

who have reached the age of 55 are entitled to another six months of severance.

The salary during the period of notice and severance will be deducted

from income received from other employment during the same period. If

they resign voluntarily, there is a six-month period of notice with salary and

pension benefits, but no severance pay.

Other benefits

All senior executives have a company car and medical insurance. Several sen-

ior executives also have benefits in the form of overnight housing and travel.

Summary of compensation and other benefits during 2011

SEK

Base salary/

Board and

Committee fee

Variable

compen sation

Performance

Share Plan Other benefits 6) Pension cost Total

Provisions 2011 for

long-term variable

compensation at

estimated outcome


Marcus Wallenberg 1,180,000 - - - - 1,180,000 -

Deputy Chairman

Sten Jakobsson 505,000 - - - - 505,000 -

Other Board members 1)

Åke Svensson 425,000 - - - - 425,000 -

Johan Forssell 525,000 - - - - 525,000 -

Per-Arne Sandström 575,000 - - - - 575,000 -

Cecilia Stegö Chilò 425,000 - - - - 425,000 -

Lena Treschow Torell 560,000 - - - - 560,000 -

Joakim Westh 525,000 - - - - 525,000 -

Michael O’Callaghan 7) - - - - - - -

President and CEO Håkan Buskhe 4) 8,663,247 - 520,042 1,158,219 2) 3,187,551 13,529,059 535,647

Other senior executives 4) 41,898,577 5) 2,393,866 3) 2,365,683 1,747,003 16,127,093 5) 64,532,222 3,041,908

Total 55,281,824 2,393,866 2,885,725 2,905,222 19,314,644 82,781,281 3,577,555

1) Excluding consultant’s fee payed to member of the Board.

2) Including benefits for air travel described in the administration report on page 68.

3) Including remuneration to two senior executives, which, according to their contracts, was paid in the form of pension premiums.

4) In addition, cash payments related to bonuses for 2010 were made in the amount of SEK 3,665,530.

5) Including estimated remuneration allocated for seniors executives who leave Group Management in 2012.

6) Including compensation for the additional costs the benefits lead to.

7) Employed by BAE Systems. Resigned on June 16 2011, as a result of BAE System’s sale of its shareholding in Saab.

Guidelines for remuneration and other benefits for senior executives are described in the financial review.

NOTE 37, CONT.



NOTE 38

PROVISIONS

Group

MSEK 31-12-2011 31-12-2010

Provisions that are long-term liabilities

Obligations related to regional aircraft 1,119 1,199

Expenditures for restructuring measures 89 290

Loss contracts 245 401

Other 275 317

Total 1,728 2,207

Provisions that are current liabilities

Obligations related to regional aircraft 12 102

Expenditures for restructuring measures 115 254


Other 459 339

Total 746 792

Parent Company

MSEK 31-12-2011 31-12-2010

Obligations related to regional aircraft 320 451

Expenditures, for restructuring measures 78 248


Other 278 276

Total 1,034 1,465

Obligations related to regional aircraft


Opening balance, 1 January 2011 1,301 451

Amount utilised during the year -190 -131

Translation differences and other 20 -

Closing balance, 31 December 2011 1,131 320

Expenditures for restructuring measures


Opening balance, 1 January 2011 544 248

Provisions allocated during the year 76 50


Reversal of unutilised amount -83 -5

Reclassification -17 -18

Closing balance, 31 December 2011 204 78

Loss contracts






Reclassification 52 40



Summary of compensation and other benefits during 2010

SEK

Base salary/

Board and

Committee fee

Variable

compen sation Other benefits Pension cost Total

Provisions 2010 for

long-term variable

compensation at

estimated outcome


Marcus Wallenberg 1,180 000 - - - 1,180,000 -

Deputy Chairman

Sten Jakobsson 425,000 - - - 425,000 -

Other Board members1)

Åke Svensson - - - - - -

Erik Belfrage 425,000 - - - 425,000 -

Johan Forssell 525,000 - - - 525,000 -

George Rose - - - - -

Per-Arne Sandström 575,000 - - - 575,000 -

Cecilia Stegö Chilò 425,000 - - - 425,000 -

Lena Treschow Torell 560,000 - - - 560,000 -

Joakim Westh 525,000 - - - 525,000 -

President and CEO Åke Svensson 5,933,537 1,123,200 15,178 1,626,631 8,698,546 -

President and CEO Håkan Buskhe 2,927,140 - 31,326 1,391,089 4,349,555 14,237

Other senior executives 34,534,548 2,661,160 684,594 14,076,215 51,956,517 1,210,056

Total 48,035,225 3,784,360 731,098 17,093,935 69,644,618 1,224,293

1) Excluding consultant’s fee paid to Board member.

NOTE 37 CONT.



Other provisions






Reclassification 8 -3

Translation differences and other -21 -


Total provisions


Opening balance, 1 January 2011 2,999 1,465


Amount utilised during the year -1,001 -758


Reclassification 43 19


Closing balance, 31 December 2011 2,474 1,034

Regional aircraft

Commitments regarding regional aircraft refer to anticipated deficits related

to lease agreements. Saab expects the leasing portfolio to be divested around

2015.

Restructuring

Structural costs primarily relate to the costs to adapt resources and change-

over costs. The expenditure is expected to fall in 2012-2015.

Project losses

Provisions for project losses on the closing day primarily relate to Helicop-

ter 14, command and control projects and certain other military projects. The

provisions are utilised in pace with the project’s completion.

Other provisions

Other provisions primarily relate to provisions for guarantees and remaining

costs in projects as well as for environmental commitments.

NOTE 39

OTHER LIABILITIES

Group

MSEK 31-12-2011 31-12-2010

Other long-term liabilities

Long-term prepaid revenue 49 82

Other 390 212

Total 439 294

Other current liabilities

Liabilities to associated companies 6 21

Value-added tax 240 358

Withholding tax 129 163

Deposits in leasing operations 31 17

Other 341 260

Total 747 819

Liabilities due for payment more than five years

after closing day 32 133

Parent Company

MSEK 31-12-2011 31-12-2010

Value-added tax 163 297

Withholding tax 73 110

Other 251 264

Total 487 671

Liabilities due for payment more than five years

after closing day 12 -

Other liabilities in the Parent Company include both interest-bearing and

non-interest-bearing liabilities. For a comparison with the Group, see also

Note 35.

Saab does not consider there to be a significant difference between book

and fair value.

NOTE 38, CONT.



NOTE 40

ACCRUED EXPENSES AND DEFERRED INCOME


MSEK 31-12-2011 31-12-2010 31-12-2011 31-12-2010

Accrued expenses

Accrued project costs 1,620 782 1,134 451

Vacation pay liability 787 807 584 607

Expected invoices 467 382 419 296

Social security expenses 444 475 321 357

Personnel liabilities 238 246 171 186

Accrued leasing costs 103 135 - -

Cost of customer commit-

ments in regional aircraft 95 108 95 108

Claims reserve 57 67 2 4

Royalties and commissions 35 28 22 16

Accrued interest 23 37 23 56

Other 223 228 50 111

Total accrued expenses 4,092 3,295 2,821 2,192

Deferred income

Liabilities to customers 4,038 3,883 3,628 3,437

Prepaid insurance

compensation 417 486 - -

Retained project interest 12 27 12 27

Capitalised changes in value

related to forward contract

rollovers - - 578 598

Other 70 60 67 51

Total deferred income 4,537 4,456 4,285 4,113

Total 8,629 7,751 7,106 6,305

Saab does not consider there to be a significant difference between book and

fair value.

NOTE 41

FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Saab’s financial assets and liabilities and contractual obligations give rise to

financial risks. These risks are managed to a large extent with various finan-

cial instruments.

Financial risk management

The Board of Directors of Saab has approved a Group Treasury Policy, which

provides an overall description of the management of financial risks and

treasury operations. The goal is to identify and actively manage financial risks

in order to reduce the negative impact on the Group’s results, competitive

strength and financial flexibility.

The financial risks are defined as follows:


Interest rate risk

Liquidity and financing risk

Commodity risk

Credit and counterparty risk

Saab uses derivatives primarily to:

convert anticipated commercial cash flows in foreign currency to sek

convert borrowings in sek, or surpluses in sek, to the currencies in

which assets are denominated (primarily relates to aircraft that Saab

owns in its leasing fleet)

convert the fixed interest periods in leases to coincide with leasing

revenue and the desired fixed interest rates for other assets and liabili-

ties

Responsibility for managing the Group’s financial risks and developing meth-

ods and principles to manage financial risks is centralised in Group Treasury.

The operating business areas have directives and processes that describe how

financial risks are managed. Furthermore, Group Management has issued

detailed directives and guidelines for Group Treasury’s operations.

Management of insurance is centralised in the Group’s insurance com-

pany, Lansen Försäkrings ab, where external transactions are handled as

well. Customer finance, guaranty and finance issues are also managed by

Group Treasury.

The Group’s internal bank, Saab Treasury, is responsible for the Group’s

cash management, financing, management of interest rate and currency risks

and also electricity risks. Saab has an agreement with an external party to

manage the Group’s electricity risks through discretionary management.

Other commodity risk is managed primarily through contractual clauses.

To a limited extent, the Group Treasury Policy allows proprietary trading

in currency and fixed income derivatives. The main purpose of this trading is

to gain access to qualitative market information and maintain a high level of

market expertise. Saab Treasury has a risk mandate expressed as VaR (Value

at Risk) of msek 50 (50), which is divided between trading and management

of economic risks, expressed primarily in the Tender to Contract portfolio.

During the year, approximately msek 10 was allocated to the trading portfolio

and approximately msek 40 to the Tender to Contract portfolio.VaR is a

probability-based method based on historical price fluctuations and correla-

tions and is considered a standard in the financial industry. The method pro-

vides a measure of the probability of the maximum loss over a specific num-

ber of days. Saab uses three days and a 99-per cent probability. The Treasury

Risk Analysis unit reports each portfolio’s risk defined according to estab-

lished risk measures to Group Management on a daily basis.

Financial instruments

Financial assets in the Group mainly comprise accounts receivable, accrued

income, interest-bearing receivables, liquid assets, fixed income investments

and derivatives with positive market values. Saab’s financial liabilities mainly

comprise interest-bearing liabilities, accounts payable, accrued expenses and

derivatives with negative market values. The following tables show a sub-

divided statement of financial position categorised and classified according

to ias 39. A more detailed description of the categories can be found in note 1,

Accounting principles.



Classification and categorisation of

financial assets and liabilities

Fair value

through

profit and

loss for

trading

Designated

as at fair

value through

profit and

loss

Held-to-

maturity

invest-

ments

Loans

receivable

and

accounts

receivable

Financial

liabilities

Derivatives

identified

as cash

flow

hedges

Derivatives

identified

as fair

value

hedges

Total financial

assets

and liabilities

Measured at

fair value

2011

Financial assets

Financial investments - 54 143 - - - - 197 199

Long-term receivables - - - 1,046 - - - 1,046 1,046

Derivatives

Forward exchange contracts 15 - - - - 430 21 466 466

Currency options 29 - - - - - - 29 29

Interest rate swaps 1 - - - - - - 1 1

Electricity derivatives 23 - - - - 1 - 24 24

Total derivatives 68 - - - - 431 21 520 520

Accounts receivable and other receivables - - - 7,136 - - - 7,136 7,136

Short-term investments - 4,555 - - - - - 4,555 4,555

Liquid assets - - - 1,918 - - - 1,918 1,918

Total financial assets 68 4,609 143 10,100 - 431 21 15,372 15,372

Financial liabilities

Interest-bearing liabilities - - - - 1,738 - - 1,738 1,751

Derivatives




Electricity derivatives 22 - - - - 17 - 39 39


Other liabilities - - - - 6,201 - - 6,201 6,201

Total financial liabilities 111 - - - 7,939 509 8 8,567 8,580

2010

Financial assets

Financial investments - 56 147 - - - - 203 203

Long-term receivables - - - 856 - - - 856 856

Derivatives




Electricity derivatives - - - - - 74 - 74 74

Other derivatives 17 - - - - - - 17 17

Total derivatives 209 - - - - 875 21 1,105 1,105

Accounts receivable and other receivables - - - 6,883 - - - 6,883 6,883

Short-term investments - 1,544 - - - - - 1,544 1,544

Liquid assets - - - 2,544 - - - 2,544 2,544

Total financial assets 209 1,600 147 10,283 - 875 21 13,135 13,135

Financial liabilities

Interest-bearing liabilities - - - - 1,706 - - 1,706 1,714

Derivatives



Interest rate swaps 84 - - - - 39 - 123 123

Electricity derivatives - - - - - 44 - 44 44


Other liabilities - - - - 5,078 - - 5,078 5,078

Total financial liabilities 149 - - - 6,784 587 14 7,534 7,542

NOTE 41, CONT.



Outstanding derivatives

Currency derivatives Fair value 2011 Fair value 2010

MillionCur-rency

Nominal currency Asset SEK

Liability SEK Net


Liability SEK Net

Maturity up to one year EUR -299 160 46 114 -255 224 87 137

USD -342 57 160 -103 -310 202 126 76

Other - 67 79 -12 - 166 80 86

Outstanding currency derivatives with maturities up to one year, total 284 285 -1 592 293 299

Maturity one to three years EUR -119 78 39 39 -160 149 37 112

USD -186 46 115 -69 -142 59 125 -66

Other - 12 17 -5 - 57 45 12

Outstanding currency derivatives with maturities of one to three years, total 136 171 -35 265 207 58

Maturity three to five years EUR -32 22 11 11 -36 28 17 11

USD -172 27 49 -22 -143 27 48 -21

Outstanding currency derivatives with maturities of three to five years, total 49 60 -11 55 65 -10

Maturity over five years EUR -30 20 - 20 -19 18 3 15

USD -59 7 15 -8 -139 24 21 3

Outstanding currency derivatives with maturities over five years, total 27 15 12 42 24 18

Currency derivatives, total1) 496 531 -35 954 589 365

1) Retained premiums on open contracts amount to MSEK 28 (13).

Interest derivatives Fair value 2011 Fair value 2010

MillionCur-rency


Liability SEK Net


Liability SEK Net

Maturity up to one year SEK 600 - 4 -4 200 - 3 -3

USD - - 2 -2 - - - -

Outstanding interest derivatives with maturities up to one year, total - 6 -6 - 3 -3

Maturity one to three years SEK 1,021 1 22 -21 1,256 2 5 -3

NOK - - - - 500 104 111 -7

USD - - - - 10 - 9 -9

Outstanding interest derivatives with maturities of one to three years, total 1 22 -21 106 125 -19

Maturity three to five years SEK 100 - 6 -6 150 1 1 -

USD 20 - 16 -16 25 - 24 -24

Outstanding interest derivatives with maturities of three to five years, total - 22 -22 1 25 -24

Maturity over five years SEK - - - - 30 1 - 1

Outstanding interest derivatives with maturities over five years, total - - - 1 - 1

Interest derivatives, total2) 1 50 -49 108 153 -45

2) Market value includes accrued interest of MSEK -19 (-17) and retained premiums on open contracts of MSEK -0 (-1).

Electricity derivatives Fair value 2011 Fair value 2010

MillionMega-

watt Asset SEKLiability

SEK NetMega-

watt Asset SEKLiability

SEK Net

Maturity up to one year 15 24 34 -10 17 66 42 24

Outstanding electricity derivatives with maturities up to one year, total 24 34 -10 66 42 24

Maturity one to three years 14 - 5 -5 16 8 2 6

Outstanding electricity derivatives with maturities of one to three years, total - 5 -5 8 2 6

Electricity derivatives, total 24 39 -15 74 44 30

DERIVATIVES, TOTAL 521 620 -99 1,136 786 350

(of which derivatives used for cash flow hedges) - - -78 - - 288

Accrued interest and retained premiums, see Notes 1 and 2 above -9 - -9 - -5 5

Netting accrued interest and premiums 8 8 - -31 -31 -

DERIVATIVES ACCORDING TO GROUP’S FINANCIAL POSITION 520 628 -108 1,105 750 355

NOTE 41, CONT.




The Group hedges the entire order backlog with the help of currency deriva-

tives. As a result, changes in exchange rates do not affect the Group’s future

results with respect to the current order backlog. Future order bookings are

exposed to fluctuations in exchange rates in terms of competitive strength.

This is managed partly by Group Treasury, which hedges the economic expo-

sure in fixed price tenders.

Definitions

Foreign currency risk refers to the risk that fluctuations in exchange rates will

negatively affect income. Exchange rate fluctuations affect Saab’s income and

equity in various ways:

Income is affected when sales revenue and the cost of goods and services

sold are in currencies other than the functional currency (economic and

transaction exposure)

Income is affected when the income of foreign Group companies is

translated to sek (translation exposure)

Income or equity is affected when the assets and liabilities of foreign

Group companies are translated to sek (translation exposure)

Income can be affected by impairment tests of non-hedged future cash

flows in foreign currency in unprofitable contracts (impairment testing)

Saab distinguishes between the above-mentioned types of exposure. Policy

descriptions are provided under each exposure.

Framework agreements, which contain both transaction and economic

exposures, are in place mainly for various civil aeronautics programmes.

Economic exposure

Fixed-price tenders in foreign currency entail a foreign currency risk that

consitutes an economic exposure. The risk is limited primarily through con-

tract formulations (foreign currency clauses) or by bidding in the same cur-

rency as the Group unit’s expenses.

In cases where fixed-price tenders are issued in foreign currency, the net

exposure is hedged with financial instruments. The foreign currency risk that

arises for tenders are managed by Saab Treasury within the framework of the

Tender to Contract portfolio. The purpose of the portfolio is to minimise the

Group’s foreign currency risk during the tender period and reduce hedging

costs. The following table shows outstanding nominal net hedges by currency

as of year-end.

Forward contracts1) Options2) Total hedge

Net hedges

(million) 2011 2010 2011 2010 2011 2010

USD 6 -79 -177 -63 -171 -142

EUR -31 -43 -88 -49 -119 -92

GBP -6 -20 -11 -29 -17 -49

CAD - - -37 - -37 -

CZK 35 - - - 35 -

THB -1,382 -1,060 - -500 -1,382 -1,560

1) Also contains sold call and put options.

2) Refers to the net of purchased call and put options.

The tender insurance portfolio is governed by a risk measure based on a

probability-weighted VaR measure consisting of two parts. One part is the

VaR measure for the internal hedges multiplied by the estimated probability

of receiving the tenders. The other part relates to VaR for external hedges. A

risk-neutral situation is defined as one where the sum of the probability-

weighted internal VaR measure and the external VaR measure amounts to

nil, which means that the probability-weighted amount is hedged externally.

The VaR for tender hedges amounted to msek 24 (23) at year-end. Hedge

accounting is not applied to the portfolio’s hedges, due to which the Group’s

results are affected by the outcome of the tenders and the exchange rate for

the underlying currency pair. The portfolio’s effect on the Group’s result in

2011 was msek -32 (57).

Transaction exposure

Future cash flows in foreign currency from the order backlog and framework

agreements are hedged to safeguard gross margins. In 2011, countries outside

Sweden accounted for 63 per cent (62) of Saab’s sales. Since a large part of

production takes place in Sweden with expenses denominated in sek, Saab

has large net flows in foreign currency.

The order backlog contains contracted flows and therefore constitutes a

transaction exposure. The predominant contract currencies in the order

backlog of sek 37.2 billion (41.5) are sek, usd, eur and gbp. Of the total order

backlog, 63 per cent (70) is in fixed prices with or without indexing, while the

remaining 37 per cent (30) contains variable prices with index and/or cur-

rency clauses.

Netting is applied at the Group level to minimise the transaction expo-

sure in foreign currencies, i.e., incoming currency is utilised to pay for pur-

chases in the same currency. Currency clauses or transactions in the cur-

rency market with forward exchange contracts as hedging instruments are

used as well. Hedges are normally arranged for each specific contract. The

average forward rate is then used as the contract’s rate of revenue recogni-

tion.

An analysis has been made of the currency sensitivity of the market

value of outstanding external hedges for the order backlog and framework

agreements. The effect of a change in exchange rates in the net result of cash

flow hedges (pre-tax) where the sek depreciates (making foreign currency

more expensive) or appreciates is shown in the following table.

Market value

31-12-2011

SEK depreciation

of 10%

SEK appreciation

of 10%

Market value in MSEK -45 -880 790

Change -835 835

The currency sensitivity in the order backlog is shown in the table below, i.e.,

the effects of a changes in exchange rates when the krona depreciates or

appreciates in value. In the table, the order backlog for foreign subsidiaries

has been restated to msek.

Order backlog

31-12-2011

SEK depreciation

of 10%

SEK appreciation

of 10%

Order backlog,

MSEK 37,172 37,508 36,837

Change 336 -336

Hedge accounting according to ias 39 is applied to derivatives intended to

hedge the transaction exposure. The inefficiency in the cash flow hedges that

affected net income for the year amount to msek 1 (4).

NOTE 41, CONT.



Translation exposure

The translation exposure in the Group relates to the operations of foreign

subsidiaries. Saab Aircraft Leasing’s operations in Sweden have their eco-

nomic environments in usd (functional currency) and are translated from

the functional currency to sek. The translation exposure comprises net assets

in foreign currency and arises in connection with acquisitions and divest-

ments. The value of equity subject to translation exposure amounted to

msek 2,704 (2,247) at year-end; see the table below:

Net assets translated to SEK

MSEK 31-12-2011 31-12-2010

USD 1,861 727

EUR 33 56

AUD 470 465

ZAR 573 664

Other currencies 433 335

Total 3,370 2,247

The effect on net assets of a change in exchange rates where the krona depre-

ciates or appreciates is shown in the table below.

Sensitivity analysis of net assets

MSEK

Net assets

31-12-2011

SEK appreciation

of 10%

SEK depreciation

of 10%

USD 1,861 1,675 2,047

EUR 33 30 36

AUD 470 423 517

ZAR 573 516 630

Other currencies 433 391 476

Total 3,370 3,035 3,706

The foreign currency risk to the Group’s income and equity from translation

effects – the translation exposure – is not hedged according to the Group

Treasury Policy.

Impairment tests

Long-term contracts in commercial aircraft programmes consist of an order

backlog and estimated future orders (business case) with cash flows primarily

in usd. Cash flows from the latter are normally hedged when they become

confirmed orders. In connection with impairment tests of loss contracts, in-

come is affected by the revaluation of future cash flows at spot rates. Larger

changes in exchange rates, primarily in usd against sek, have a significant

impact on income. This exposure is not hedged.

Interest rate risks

Interest rate risk refers to the risk that Saab will be negatively affected by

changes in interest rate levels.

Interest rate risk has been identified in the following areas:

Saab is exposed to interest rate risk when the market value of certain

items in the statement of financial position is affected by changes in

underlying interest rates. Large such items refer to pension obligations

and leasing operations.

Saab’s net financial items are affected by changes in market rates.

Interest rate effects on advance financing affect gross income.

Interest rate risks in the Group’s financial investments are managed based on

high liquidity and a duration of 12 months, with the option of deviating by

+/– 12 months. As of year-end, the duration for investments was 18 months

(4). Interest rate risks in the Group’s funding are managed based on a bench-

mark with an 18-month duration, with the option of deviating by +/–18

months. As of year-end, the duration for financing was 14 months (18).

Interest rate futures and swaps are used for interest risk management to

achieve the desired duration in the financing. For a sensitivity analysis, see

also under liquidity and financing risk. Lending to subsidiaries in foreign

currency is normally financed in sek, which is converted to the subsidiary’s

currency through swaps. Interest rate swaps in usd are used mainly for inter-

est risk management in the leasing portfolio, where the interest rate risk is

fully matched.

The pension liability, the present value of future pension obligations, is

the largest interest rate risk due to the liability’s long duration; see also the

Saab Pension Fund.

NOTE 41, CONT.

The table below shows the cash flows corresponding to the derivatives recognised

as cash flow hedges in 2011 and 2010 expressed in millions in local currency.

Cash flow hedges by currency

CZK EUR GBP NOK THB USD ZAR

Million

Out-

flow

In-

flow Net

Out-

flow

In-

flow Net

Out-

flow

In-

flow Net

Out-

flow

In-

flow Net

Out-

flow

In-

flow Net

Out-

flow

In-

flow Net

Out-

flow

In-

flow Net

< 90 days -19 58 39 -43 116 73 -22 52 30 -2 5 3 -8 309 301 -91 199 108 -63 38 -25

91-180 days -15 32 17 -26 65 39 -9 29 20 -1 2 1 -4 359 355 -36 97 61 -16 2 -14

181-210 days - 4 4 -8 55 47 -7 21 14 -6 - -6 - 22 22 -14 46 32 -12 - -12

211-360 days - 19 19 -12 39 27 -8 19 11 - 1 1 -34 280 246 -23 54 31 -13 - -13

2013 - 25 25 -31 115 84 -5 29 24 - - - - 988 988 -66 167 101 -25 1 -24

2014 - 6 6 -20 50 30 - 8 8 - - - - 392 392 -13 111 98 - - -

2015 - 4 4 -9 23 14 - - - - - - - - - -2 91 89 - - -

2016 - - - -3 13 10 - - - - - - - - - - 86 86 - - -

2017 and forward - - - -1 25 24 - - - - - - - - - - 61 61 - - -

Total flows 2011 -34 148 114 -153 501 348 -51 158 107 -9 8 -1 -46 2,350 2,304 -245 912 667 -129 41 -88

Total flows 2010 -61 161 100 -230 585 355 -114 232 118 -15 6 -9 - - - -439 1,120 681 -154 70 -84



Liquidity and financing risks

Liquidity and financing risk refers to the risk that the company will not be

able to meet its payment obligations due to insufficient liquidity or difficulty

raising external loans on acceptable terms.

According to the Group Treasury Policy, Saab must always maintain unu-

tilised credit facilities or liquid assets corresponding to the higher of (but not

less than msek 3,000):

commitments

Liquidity and financing risks are minimised by diversifying financing

sources and maturities.

Saab’s policy is to insure on-demand guarantees for major projects

against unauthorised use. This applies to contracts where the counterparty is

classified as a developing country according to the definition of the Export

Credits Guarantee Board (ekn). Insurance can be obtained from state guar-

antee institutions or the private insurance market.

Saab has access to the following credit facilities:

Loan facilities

MSEK Facility Utilised Available

Club loan (matures 2016) 4,000 - 4,000

Total confirmed credit facilities 4,000 - 4,000

Commercial paper 5,000 - 5,000

Medium Term Notes (MTN) 3,000 1,100 1,900

Receivables financing 1,515 872 643

Total loan programmes 9,515 1,972 7,543

Total loan facilities 13,515 1,972 11,543

The club loan was renegotiated and extended one year before expiration. The

club loan is a credit facility with an equivalent value of msek 4,000 evenly

divided between eight banks and expiring in 2016. No financial covenants are

attached to the club loan or the other credit facilities.

A commercial paper programme with a limit of msek 5,000 is available as

well. Neither the commercial paper programme nor the club loan were used

in 2011.

In 2009, Saab established a Medium Term Note programme (mtn) with a

limit of msek 3,000 or an equivalent value in eur. The mtn programme pro-

vides access to financing for up to 15 years, which is an element in diversifying

loan maturities.

During the year, the entire shareholding in Aker Holding as was divested

and related loans of mnok 975 and derivatives were repaid.

Net liquidity

Net liquidity excluding interest-bearing receivables and provisions for

pensions amounted to msek 4,735 (2,382) on 31 December 2011. Liquidity var-

ied during the year, and surplus liquidity was placed as per the Group Treas-

ury Policy. At year-end, placements in interest-bearing securities and bank

deposits amounted to msek 5,638 (3,374).

Net liquidity

MSEK Note 31-12-2011 31-12-2010

Assets

Liquid assets 31 1,918 2,544

Short-term investments 25 4,555 1,544

Total liquid investments 6,473 4,088

Short-term interest-bearing receivables 27 368 617

Long-term interest-bearing receivables 27 99 150

Long-term interest-bearing financial investments 25 143 147

Total interest-bearing assets 7,083 5,002

MSEK Note 31-12-2011 31-12-2010

Liabilities

Short-term interest-bearing liabilities 35 520 589

Long-term interest-bearing liabilities 35 1,218 1,117

Provisions for pensions 37 12 5

Total interest-bearing liabilities 1,750 1,711

NET LIQUIDITY 5,333 3,291

As of 31 December 2011, net liquidity amounted to msek 5,333 (3,291) with an

average during the year of msek 4,560 (890). The net of interest expenses

paid and interest income received amounted to msek -70 (-89). Of the liquid

investments of msek 6,473 (4,088), msek 10 (10) was pledged as trading secu-

rity to omx. The sensitivity analysis below shows the effect on income of an

increase in market interest rates and the credit margin of 1 basis point for

Saab’s investments.

Placements in interest-bearing securities and bank deposits

Sensitivity analysis of financial risk

MSEK

Maturities

Fixed

interest

Effect of

market in-

terest rate,

1%

Tied-up

capital

Effect of

credit

spread,

1%

Effect on

financial

costs

1 year 2,632 26 1,992 20 46

2 years 1,348 13 1,785 18 31

3 years 697 7 900 9 16

4 years 730 7 730 7 14

5 years and

forward - - - - -

Total 5,407 53 5,407 54 107

Adjustment 1) 231 - - - -

Total 5,638 - - - -

1) Adjustment of nominal value compared to book value due to market valuation at a premium or discount.

Current interest-bearing liabilities mainly consist of liabilities to joint ven-

tures of msek 449 (428). Long-term interest-bearing liabilities amount to

msek 1,218 (1,117) and mainly consist of mtns in issue. Of the long-term inter-

est-bearing liabilities, msek 1,128 (1,100) matures within 1-5 years and

msek 90 (17) in more than 5 years.

The maturity structure of liabilities to credit institutions is indicated in

the tied-up capital column of the “Sensitivity analysis of financial risk” table.

The volume of tied-up capital includes interest rate swaps. The interest rate

risk in the loans given a 1 basis point parallel shift in the yield curve was

msek 21 (25) as of 31 December 2011. The sensitivity analysis below shows the

impact on results of an increase in market interest rates and an equally large

increase in the credit margin of 1 basis point for Saab’s refinancing of credits.

Financing (refers to utilised credit facilities)

Sensitivity analysis of financial risk

MSEK

Maturities

Fixed

interest

Effect of

market in-

terest rate,

1%

Tied-up

capital

Effect of

credit

spread,

1%

Effect on

financial

costs

1 year -1,472 -15 -872 -9 -24

2 years -250 -3 -1,100 -11 -14

3 years -150 -2 - - -2

4 years -100 -1 - - -1

5 years and

forward - - - - -

Total -1,972 -21 -1,972 -20 -41

NOTE 41, CONT.



Commodity risks

Price risks are divided into two parts:

Commodity price risk refers to the risk that purchasing costs for

material will rise.

Electricity price risk refers to the risk that Saab could be negatively

affected by changes in electricity prices.

According to the Group’s policy, commodity risk is minimised and managed

primarily through contract clauses with customers/suppliers. To minimise

the risk to Saab’s operating margin, future electricity consumption is hedged.

This is done by hedging projected consumption according to a model where

100 per cent of the next quarter’s consumption is hedged. The hedging level

then drops on a straight-line basis to 0 per cent in quarter 13. Swedish units

consume around 156 GWh per year with a spot price risk of msek 1.6 per

every time the price of electricity changes by sek 0.01. Electricity directives

are managed through a discretionary management mandate, where the man-

ager has the mandate to accept risks in relation to benchmarks (hedging

strategy) at the equivalent of msek 1 (1) expressed in VaR. The market value of

electricity derivatives as of year-end was msek -15 (30). After the introduction

of additional price areas in Sweden on 1 November 2011, the name sto was

changed to se3. Since 1 January 2010, electricity derivatives are used as cash

flow hedges for the Stockholm price area (se3). The ineffectiveness that

affected net income for the year amounted to msek 1 (-1).

Credit and counterparty risks

Credit risk is the risk that the counterparty in a transaction will not be able to

fulfill the financial obligations of a contract. In the course of its day-to-day

operations, Saab is exposed to credit risks as a result of transactions with

counterparties in the form of customers, suppliers and financial players. The

Group’s aggregate credit risks consist of commercial credit risks and financial

credit risks.

Commercial credit risks

According to the Group’s policy, commercial credit risks are identified and

actively managed on a case-by-case basis. Credit risks that arise in customer

contracts are managed by utilising available banking, insurance or export

credit institutions. According to the policy, credit risks that arise through

advances paid to suppliers are managed by always maintaining bank-guaran-

teed security for any advances. Commercial credit risks consist of outstand-

ing accounts receivable and advances paid to suppliers.

Accounts receivable

On 31 December 2011, the Group’s outstanding accounts receivable amounted

to msek 3,153 (3,052). The Receivables Financing Programme reduced

accounts receivable at year-end by approximately msek 872 (1,409). Defence-

related sales accounted for 84 per cent (83) of total sales, where the counter-

parties in most accounts receivable are nations with high creditworthiness.

The Group’s receivables are mainly in the EU, which accounted for 48 per cent

(51) of the total. Where counterparties’ creditworthiness is deemed unsatisfac-

tory, bank or insurance guarantees or guarantees from ekn are secured.

In connection with cash transactions, Saab generally requires that a letter

of credit is opened in its name to ensure that payment is received.

Write-downs of accounts receivable amounted to msek 19 (22), corre-

sponding to 0.5 per cent (0.5) of total accounts receivable. Write-downs of

accounts receivable have changed as follows.

MSEK 2011 2010

Write-downs, 1 January -22 -32

Write-downs for calculated losses -5 -12

Reversal of previous write-downs 3 15

Actual credit losses 5 7

Write-downs, 31 December -19 -22

The following table shows an age analysis of the Group’s overdue receivables:

MSEK 31-12-2011 31-12-2010

<30 days 221 265

30 to 90 days 393 225

91 to 180 days 303 52

>181 days 125 102

Accounts receivable overdue 1,042 644

Accounts receivable not overdue 2,111 2,408

Total accounts receivable 3,153 3,052

Since accounts receivable are largely secured via bank or insurance guaran-

tees or are from states, the commercial credit risk is low despite overdue

receivables.

Advances paid to suppliers

Advances paid to suppliers constitute a credit risk, since the counterparty’s

services have not been fully rendered. As of 31 December 2011, the Group had

paid its suppliers advances of msek 139 (282). As the Group’s policy is to

maintain bank-guaranteed security for any advances it pays, the commercial

supplier credit risk is considered low.

Financial credit risks

Financial credit risk consists of exposures to banks through deposits, securi-

ties investments and/ or the market value of outstanding derivatives.

The Group’s policy for managing financial credit risks is to:

Ensure that all financial counterparties have a long-term credit rating

of no lower than A from Standard and Poor’s or A3 from Moody’s

Assign each financial counterparty a credit limit based on its long-

term credit rating

Enter into isda master agreements with financial counterparties to

net the positive and negative market values of outstanding derivatives

Credit risk is calculated on established and anticipated risks according to the

recommendations of the Bank of International Settlements (bis I). On 31

December 2011, counterparty risks amounted to msek 5,859 (4,100), of which

deposits with banks, mortgage institutions, companies and the Swedish state

totalled msek 5,651 (3,300).

Trading

The Board has given Saab Treasury a risk mandate for trading in currency

and money market instruments. During the year, msek 10 was allocated to

trading expressed according to VaR. If the cumulative result for the year is

negative, the mandate is reduced correspondingly. In 2011, trading income

was msek 32 (35), which is reported as other operating income. The average

utilised risk mandate (VaR) during the year was msek 3 (1).

Hedge accounting

Hedge accounting to fair value is applied to foreign exchange contracts and

currency swaps, primarily for derivatives entered into before 31 December

2006. The market value of currency derivatives accounted for as fair value

hedges and the market value of hedged items are indicated in the table below.

For information on the impact on net income for the year of gains and losses

on derivatives accounted for as fair value hedges, see Note 6 Other operating

expenses.

Hedge accouting to fair value, MSEK 2011 2010

Foreign currency risk in order backlog (hedged item) -13 -7

Currency derivatives (hedging instrument) 13 7

Cash flow hedges are applied to forward exchange contracts and currency

swaps entered into after 31 December 2006 and to electricity derivatives.

Cash flows hedges are expected to affect profit and loss in the period

hedged cash flows occur, with the exception of those related to the manufac-

NOTE 41, CONT.



turing of inventory, which affect profit and loss on the day delivery is made to

the customer. The hedge reserve before tax amounted to msek 621 (872), of

which the value of derivatives was msek -78 (288) and the effects arising from

rollovers of derivatives were msek 699 (584).

The change in the hedge reserve in 2011 of msek -251 consists of a reversal

to profit or loss of msek -278, the change in the value of existing derivatives of

msek -13, the market value of hedges obtained during the year of msek -75,

and the change that arose due to the extension of derivatives of msek 115. For

information on the amount recognised in other comprehensive income, see

consolidated net comprehensive income.

The inefficiency in cash flow hedges that affected net income for the year

amounted to msek 2 (3).

Valuation methods for financial assets and liabilities

The fair value of listed financial assets is determined using market prices.

Furthermore, Saab applies various valuation methods to determine the fair

value of financial assets that are traded on an inactive market or are unlisted

holdings. These valuation methods are based on the valuation of similar

instruments, discounted cash flows or customary valuation methods such as

Black-Scholes.

The following instruments were valued at fair value (unadjusted) on an active

market on the closing date (Level 1):

Bonds

Electricity derivatives

Interest derivatives

The following instruments are valued at fair value according to accepted valu-

ation models based on observable market data (Level 2):

Forward exchange contracts: Future payment flows in each cur-

rency are discounted by current market rates to the valuation day and

valued to sek at year-end exchange rates

Options: The Black-Scholes option pricing model is used in the mar-

ket valuation of all options

Interest swaps: Future variable interest rates are calculated with the

help of current forward rates. These implicit interest payments are dis-

counted on the valuation date using current market rates. The market

value of interest rate swaps is obtained by contrasting the discounted

variable interest payments with the discounted present value of fixed

interest payments

Unlisted shares and participations: Valued according to accepted principles,

e.g., for venture capital firms (Level 3).

As of 31 December 2011, the Group had the following financial assets and

liabilities at fair value:

Assets at fair value

MSEK 2011 Level 1 Level 2 Level 3

Bonds and interest-bearing

securities 4,555 4,555 - -

Forward exchange contracts 466 - 466 -

Currency options 29 - 29 -

Interest rate swaps 1 - 1 -

Electricity derivatives 24 24 - -

Shares and participations 54 - - 54

Total 5,129 4,579 496 54

Liabilities at fair value

MSEK 2011 Level 1 Level 2 Level 3

Forward exchange contracts 515 - 515 -

Currency options 43 - 43 -

Interest rate swaps 31 - 31 -

Electricity derivatives 39 39 - -

Total 628 39 589 -

Pension fund

The Saab Pension Fund was established in 2006 to secure the main part of the

Group’s pension obligation and is not consolidated in the Group.

The fund has a long-term real yield requirement of 4 per cent per year.

The investment policy requires an asset distribution of a maximum of 50 per

cent equities/alternative investments (hedge funds) and 50-100 per cent

interest-bearing instruments. Investments are made in interest-bearing secu-

rities from issuers with a credit rating of no lower than bbb(Baa) according to

Standard & Poor’s and Moody’s. Of the fund’s capital at year-end, 53 per cent

(50) was invested in interest-bearing assets and the remaining 47 per cent

(50) in equity and alternative investments. The market value of the fund’s

assets as of 31 December 2011 was msek 4,050 (3,969) and the annual return

was 0 per cent (7). In 2011, the fund was capitalised by msek 105 (124) and

msek 3 (16) in refunds were paid. The table below shows the solvency margin

for the pension fund.

MSEK 31-12-2011 31-12-2010 31-12-2009 31-12-2008

Fair value of assets under

management 4,050 3,969 3,609 3,082

Present value of defined-

benefit obligations1) 5,866 4,675 5,002 4,432

Solvency margin 69% 85% 72% 70%

Pension obligation accord-

ing to PRI 4,489 4,042 3,844 3,678

Solvency margin 90% 98% 94% 84%

1) Refers to the pension obligation that the assets under management are designed to cover.

NOTE 42

ASSETS PLEDGED AND CONTINGENT LIABILITIES


MSEK 31-12-2011 31-12-2010 31-12-2011 31-12-2010

Assets pledged for own

liabilities and provisions

Chattel mortgages - 100 - 100

Bonds and other securities 10 10 10 10

Total 10 110 10 110

Contingent liabilities

Guarantees to insurance

company, FPG/PRI 90 81 90 81

Guarantees for Group

companies’ commitments

to customers - - 5,336 5,164

Contingent liabilities related

to legal dispute1) 301 302 301 302

Sureties for joint ventures 6 6 - -

Sureties for associated

companies 8 2 102 371

Total 405 391 5,829 5,918

1) Saab has an ongoing legal dispute in Denmark with the Danish Defence Acquisition and Logistics Organization

(DALO). The Maritime and Commercial Court in Copenhagen issued a judgment dismissing DALO’s claim against

Saab. DALO has filed an appeal against the judgment. DALO’s counterclaim amounts to approximately MDKK 250.

NOTE 41, CONT.



NOTE 42, CONT.

The table below shows the total sum of guarantees that do not represent con-

tingent liabilities and a distribution by category and issuer.

MSEK 31-12-2011

per cent of

total 31-12-2010

per cent of

total

Parent Company guarantees 1,540 21 2,275 21

Bank guarantees 5,674 79 8,407 79

Total guarantees 7,214 100 10,682 100

Bank guarantees:

On demand 5,014 88 5,700 68

Proprietary 660 12 2,707 32

Total bank guarantees 5,674 100 8,407 100

Type of guarantee:

Advances 3,177 44 4,127 39

Completion 3,365 47 3,666 34

Milestone payments - - 2,558 24

Tenders, credits and other 672 9 331 3

Total guarantees 7,214 100 10,682 100

With regard to the Group’s so-called fulfilment guarantees for commitments

to customers, the likelihood of an outflow of resources is extremely small

and, as a result, no value is recognised.

NOTE 43

TRANSACTIONS WITH RELATED PARTIES

The Group’s financial agreements conform to market principles. In January

2012, Combitech ab, a wholly owned subsidiary of Saab ab, acquired Sörman

Information ab. The largest shareholder in Sörman was Investor ab. In Saab’s

view, the purchase price corresponds to market value. Saab otherwise did not

have any material transactions with Investor. Neither does Saab have any sig-

nificant transactions with Board members or members of

Group Management. For information on remuneration, see Note 37.

Of the Parent Company’s sales, 3 per cent referred to sales to Group com-

panies, while 14 per cent of the Parent Company’s purchases were from

Group companies.

Sales to and purchases from the Group’s associated companies amounted

to approximately msek 26 (26) and msek 120 (127), respectively.

During the year bae Systems divested its shares in Saab and is no longer

considered a related party.

NOTE 44

GROUP COMPANIES

Significant Group company holdings

Group

company’s

Ownership

share,

per cent

Group company registered office, country 2011 2010

Combitech AB Växjö, Sweden 100 100

Saab Barracuda AB Västervik, Sweden 100 100

Saab Barracuda LLC USA 100 100

Saab Czech s.r.o. Czech Republic 100 100

Saab Dynamics AB Karlskoga, Sweden 100 100

Saab Danmark A/S Denmark 100 100

Saab Grintek Defence (Pty) Ltd South Africa 75 75

Saab Seaeye Ltd UK 100 100

Saab Sensis Corporation USA 100 -

Saab Systems Oy Finland 100 100

Saab Systems Pty Ltd Australia 100 100

Saab Training Systems AB Jönköping, Sweden 100 100

Parent Company

MSEK 2011 2010



New issues/shareholders’ contributions 566 20

Acquisitions 203 14

Sales and liquidations -23 -3

Reduction of purchase price - -72

Reclassifications 19 -

Closing balance, 31 December 17,086 16,321


Opening balance, 1 January -10,551 -10,477

Impairments for the year -128 -74

Closing balance, 31 December -10,679 -10,551

Carrying amount, 31 December 6,407 5,770

Impairment reversals and impairments for the year are reported in the

income statement on the line “Result from shares in Group companies.”



Specification of Parent Company’s holdings of shares

in Group companies

31-12-2011

Group company/Corp. ID no./Reg. office

No. of

shares

Share,

per cent

Carrying

amount,

MSEK

Celsius AB, 556194-4652, Linköping 5,000 100.0% 144

Celsius Invest AB, 556164-6588, Stockholm 1,720,000 100.0% 155

Combitech AB, 556218-6790, Växjö 100,000 100.0% 994

EMC Services Elmiljöteknik AB, 556315-6636,

Mölndal 2,000 100.0% 3

Fastighets AB Linköping Malmen 27, 556354-6349,

Linköping 20,000 100.0% 4

Fastighets AB Odengatan Jönköping, 556378-6226,

Järfälla 2,000 100.0% -

Fastighets AB Solhusgatan, 556230-7404, Göteborg 1,000 100.0% 67

FFV Ordnance AB, 556414-8194, Karlskoga 100,000 100.0% 10

Gripen International AB, 556628-6380, Linköping 1,000 100.0% 5

Kockums Holdings AB, 556036-4100, Linköping 48,000 100.0% 5

Lansen Försäkrings AB, 516401-8656, Linköping 500,000 100.0% 51

Linköping City Airport AB, 556366-8333, Linköping 5,000 100.0% 3

Saab d.o.o., Slovenia - 100.0% -

Saab Aerospace Overseas AB, 556628-6448,

Linköping 1,000 100.0% 3

Saab Aircraft Leasing Holdings AB, 556124-3170,

Linköping 30,000 100.0% 1,500

Saab Barracuda AB, 556045-7391, Västervik 200,000 100.0% 84

Saab Czech s.r.o, Czech Republic - 100.0% 24

Saab Danmark A/S, Denmark - 100.0% 103

Saab Dynamics AB, 556264-6074, Karlskoga 500,000 100.0% 357

Saab India Technologies Private Limited, Indien - 100.0% -

Saab International AB, 556267-8994, Stockholm 50,000 100.0% 11

Saab Microwave Systems AB, 556028-1627,

Mölndal 300,000 100.0% 49

Saab North America, Inc., USA - 100.0% 1,141

Saab Precision Components AB, 556627-5003,

Jönköping 2,000 100.0% 8

Saab Seaeye Holdings Ltd, UK - 100.0% 194

Saab South Africa (Pty) Ltd, South Africa - 95.0% 443

Saab Systems Oy, Finland - 100.0% 103

Saab Surveillance Solutions AB, 556627-1929,

Linköping 1,000 100.0% -

Saab Surveillance Systems AB, 556577-4600,

Järfälla 1,000 100.0% -

Saab Training Systems AB, 556030-2746, Jönköping 150,000 100.0% 42

Saab Training Systems B.V., Netherlands - 100.0% 6

Saab Training Systems Kenya Ltd, Kenya - 100.0% -

Saab Ventures AB, 556757-5211, Linköping 1,000 100.0% -

Dormant companies etc. - - 898

Carrying amount at year-end 6,407

NOTE 45

UNTAXED RESERVES

Parent Company

MSEK 2011 2010

Tax allocation reserve:

Opening balance, 1 January - -

Provision for the year 350 -

Closing balance, 31 December 350 -

Accumulated accelerated depreciation

Buildings and land:


Under depreciation for the year -17 -19


Machinery and equipment:


Under/accelerated depreciation for the year -40 102


Total untaxed reserves, 31 December 795 502

NOTE 46

STATEMENT OF CASH FLOWS, SUPPLEMENTAL INFORMATION

The Group’s operating cash flow and a reconciliation between operating cash

flow and cash flow for the year are shown below. Operating cash flow differs

in the following respect from the statement of cash flows on page 75:

Investments in or sales of short-term investments and other interest-

bearing financial investments as well as interest-bearing receivables

are not included in investing activities

OPERATING CASH FLOW

Group

MSEK 2011 2010



Transferred to pension fund -132 -147

Adjustments for items not affecting cash flow 141 2,317

Income tax paid -450 -196

Cash flow from operating activities before changes in

working capital 2,342 2,750

Working capital

Inventories -243 586

Current receivables -96 855

Advance payments from customers 409 194

Other current liabilities 610 399

Provisions -630 -297

Change in working capital 50 1,737


NOTE 44, CONT.



Group

MSEK 2011 2010




Investments in lease assets -1 -2


Sale of lease assets 301 65

Investments in operations and associated companies,

net effect on liquidity -1,135 -

Sale of subsidiaries and associated companies, net effect

on liquidity 1,264 161

Investments in and sale of financial assets -1 6

Cash flow from investing activities excluding change in

short-term investments and other interest-bearing

financial assets 85 -138


OPERATING CASH FLOW VS. CASH FLOW FOR THE YEAR IN STATEMENT

OF CASH FLOWS

MSEK 2011 2010


Investing activities – interest-bearing:

Short-term investments -2,967 -993

Other financial investments and receivables 307 -12

Financing activities:



Dividend paid to the Parent Company’s shareholders -367 -237

Cash flow for the year -600 1,077

SUPPLEMENTAL INFORMATION ON STATEMENT OF CASH FLOWS

Liquid assets

Group

MSEK 31-12-2011 31-12-2010

The following components are included

in liquid assets:

Cash and bank 681 703


Funds in escrow account 139 -

Deposits on behalf of customers 15 11

Total according to the statement of financial position 1,918 2,544


Parent Company

MSEK 31-12-2011 31-12-2010

The following components are included

in liquid assets:

Cash and bank balances 154 105


Total according to balance sheet 1,237 1,935


Interest paid and dividends received


MSEK 2011 2010 2011 2010

Dividends received 55 12 226 236

Interest received 69 40 212 130

Interest paid -139 -129 -198 -165

Total -15 -77 240 201

Adjustments for items not affecting in cash flow


MSEK 2011 2010 2011 2010

Depreciation and amortisation 1,240 1,295 601 582

Impairments 21 63 - -

Changes in the value of biological assets -6 -43 - -

Changes in the value of investment

properties 12 - -

Profit shares in associated companies 12 -40 - -

Dividends from associated companies 50 6 - -

Dividends and Group contributions

from/to Group companies - - -1,547 -1,457

Capital gains/losses from sales of Group

companies, associated companies and

other shares -1,169 -15 -181 -9

Capital gains/losses on sales of

tangible fixed assets -1 7 2 7

Inventory impairment - 60 - -

Impairment of shares and receivables 9 26 128 290

Provisions 9 717 94 541

Provisions for pensions -114 213 278 -187

Other 78 28 -17 -63

Total 141 2,317 -642 -296

Investments in operations and subsidiaries

Group

MSEK 2011 2010


Intangible fixed assets 1,007 1

Tangible fixed assets 286 -

Inventories 63 -

Current receivables 325 1

Liquid assets 127 -

Total assets 1,808 2

Provisions 34 -

Deferred tax liability 38 -

Interest-bearing liabilities 102 -



Purchase price paid 1,158 -

Less: Liquid assets in acquired operations -127 -

Effect on the Group’s liquid assets 1,031 -

Effect on the Group’s net liquidity 929 -

NOTE 46, CONT.



Acquisitions in 2011 relate to Sensis Corporation of the US, assets from

Scandinavian Air Ambulance Holding and assets from the Czech company

E-COM. The acquisition in 2010 relates to the remaining 66.7 per cent of

the shares in the associated company Opax as in Norway.

Acquisitions of associated companies

Group

MSEK 2011 2010


Financial fixed assets 104 -

Total assets 104 -

Purchase price paid 104 -

Effect on the Group’s liquid assets 104 -

Acquisitions in 2011 primarily relate to 36.6 per cent in Avia Satcom Co. Ltd

and shares in associated companies in the venture portfolio.

Sale of subsidiaries and associated companies

Group

MSEK 2011 2010

Divested assets and liabilities

Tangible fixed assets 11 -

Financial fixed assets 3 -

Current receivables 23 6

Assets held for sale 113 107

Liquid assets 8 -

Total assets 158 113



Sales price 1,272 161

Purchase price received 1,272 161

Less: Liquid assets in divested operations -8 -

Effect on the Groups net liquidity 1,264 161

where of interest-bearing receivables - 130

where of liquid assets 1,264 31

Divestments in 2011 relate to the shares in Grintek Ewation (Pty) Ltd, Denel

Saab Aerostructures (Pty) Ltd, C3 Technologies ab and Image Systems ab.

The divestment in 2010 relates to Saab Bofors Industrier ab and 16 per cent of

the associated company Hawker Pacific Ltd.

NOTE 47

INFORMATION ON PARENT COMPANY

Saab ab (publ) is a limited company registered in Sweden, with its registered

office in Linköping. The Parent Company’s shares are registered on the

nasdaq omx Stockholm. The address of the head office is Saab ab, Box 12062,

SE-102 22 Stockholm, Sweden.

The consolidated accounts for 2011 comprise the Parent Company and its

Group companies, together referred to as the Group. The Group also includes

the holdings in associated companies and joint ventures.

NOTE 48

ENVIRONMENTAL REPORT

Operations subject to permit requirements in the Parent Company

Production of aircraft and aircraft components by the Parent Company, Saab

ab, in the Tannefors industrial zone in the municipality of Linköping is sub-

ject to licensing according to the Swedish Environment Code due to aero-

nautics operations, surface treatment processes, manufacturing of composite

materials, handling of chemical substances and the size of the manufacturing

facilities. The environmental impact of these operations primarily arises from

emissions of volatile organic compounds (vocs) and aircraft emissions into

the atmosphere and of metals into waterways, the generation of industrial

wastes and noise disturbing local surroundings. The operations subject to

licensing predominantly entail manufacturing. The National Licensing Board

for Environmental Protection granted the license for aircraft manufacture in

1990. The supervisory authorities have decided on additional terms for these

operations against the backdrop of the eu’s ippc directive.

In Järfälla, Saab ab has operations involving the manufacture of advanced

command and control systems, among other things, which are also subject to

licensing according to the Environment Code. The licensing requirement is

due to surface treatment processes and the size of the manufacturing facili-

ties. The environmental impact of these operations primarily arises from voc

emissions into the atmosphere and of metals into waterways. The National

Licensing Board for Environmental Protection granted the license in 1990.

With the exception of a few exceeded limits, Saab ab did not exceed any

conditions in its permits or injunctions in 2011.

Operations subject to permit requirements in subsidiaries

The operations carried on by Linköping City Airport ab are subject to licens-

ing according to the Environment Code and are covered by the permit issued

by the National Licensing Board for Environmental Protection in 1990 for

Saab ab’s collective operations in the Tannefors industrial zone in the munic-

ipality of Linköping. This permit also covers the operations of Saab Dynam-

ics ab in the area, despite that they are not subject to licensing and notifica-

tion requirements according to the Environment Code.

Saab Dynamics ab and Saab Bofors Test Center ab carry on operations in

Karlskoga which are subject to licensing according to the Environment Code.

Saab Dynamics ab carries on similar operations in Eskilstuna. In addition,

Saab Barracuda ab carries on operations subject to licensing in Gamleby.

The environmental impact from subsidiaries subject to licensing primar-

ily consists of emissions of vocs and emissions from aircraft into the atmos-

phere, emissions of metals and deicing solvents into waterways, generation of

industrial wastes and noise disturbing local surroundings.

In 2011, none of Saab’s subsidiaries exceeded any conditions of their per-

mits or injunctions.

Operations subject to notification requirements

Saab ab has operations in Arboga, Gothenburg, Ljungbyhed, Malmslätt,

Nyköping and Östersund which are subject to notification requirements in

accordance with the Swedish Environment Code. Permits granted by the

county boards in Arboga and Malmslätt in 1993 and 1994, respectively, still

apply. The Group also has operations subject to notification requirements in

the subsidiaries Saab Underwater Systems ab in Motala, Saab Training Sys-

tems ab in Huskvarna and Saab Precision Components ab in Jönköping. The

environmental impact of these operations is very limited.

NOTE 46, CONT.



NOTE 49

EXCHANGE RATES USED IN FINANCIAL STATEMENTS

Year-end rate Average rate

Country 2011 2010 2011 2010

Australia AUD 1 7.03 6.92 6.70 6.61

Denmark DKK 100 120.33 120.75 121.26 128.13

Euro EUR 1 8.94 9.00 9.03 9.54

Canada CAD 1 6.78 6.81 6.57 6.99

Norway NOK 100 115.05 115.20 115.87 119.16

Switzerland CHF 1 7.36 7.24 7.35 6.91

UK GBP 1 10.68 10.55 10.41 11.13

South Africa ZAR 100 85.08 103.00 89.72 98.41

Czech Republic CZK 100 34.64 35.54 36.76 37.76

USA USD 1 6.92 6.80 6.50 7.20

NOTE 50

DEFINITIONS OF KEY RATIOS

Gross margin

Gross income as a percentage of sales.

Operating margin

Operating income as a percentage of sales.

EBITDA margin

Operating income before depreciation, amortisation and impairments less

depreciation and impairments of lease aircrafts as a percentage of sales.

Capital employed

Total capital less non-interest-bearing liabilities.

Return on capital employed

Operating income plus financial income as a percentage of average capital

employed.

Return on equity

Net income for the year as a percentage of average equity.

Profit margin

Operating income plus financial income as a percentage of sales.

Capital turnover

Sales divided by average capital employed.

Net liquidity/net debt

Liquid assets, short-term investments and interest-bearing receivables less

interest-bearing liabilities and provisions for pensions.

Equity/assets ratio

Equity in relation to total assets.

Interest coverage ratio

Operating income plus financial income divided by financial expenses.

Earnings per share

Net income for the year attributable to Parent Company shareholders’

interest , divided by the average number of shares before and after full

dilution. There is no dilution impact if the result is negative.

Equity per share

Equity attributable to the Parent Company’s shareholders divided by the

number of shares, excluding treasury shares, at the end of the year.

Operating cash flow per share

Operating cash flow divided by the average number of shares after dilution.

Cash flow from operating activities per share

Cash flow from operating activities divided by the average number of shares

after dilution.



Saab is one of the world’s leading high-technology companies,

because of which its operations are distinguished by complex devel-

opment assignments on the cutting edge of technology. Over the

years, Saab has conducted significant development projects and

managed the associated risks with great success. See also risks and

uncertainties in the annual report.

The Board of Directors’ proposed dividend amounts to sek 4.50

per share, corresponding to a total dividend of msek 474. Unrestricted

equity amounts to msek 3,988 in Saab ab and profit carried forward in

the Group before the dividend paid amounts to msek 10,204.

Net income for the year attributable to Parent Company’s share-

holders amounted to msek 2,225 for the Group and msek 1,589 for

the Parent Company.

After paying the dividend to the shareholders, the Group’s equity/

assets ratio amounts to 40.2 per cent, compared to the long-term

objective of 30 per cent. Since the ipo in 1998, the equity/assets ratio

has risen from 22 per cent to 41 per cent in 2011.

Saab’s gross capital expenditure in 2011 amounted to msek 325,

which is considered a good approximation of annual future invest-

ments in tangible fixed assets. Investments are also made in research

and development, which in 2011 amounted to msek 1,355, of which

msek 15 was capitalised in the balance sheet.

At year-end, Saab had a net cash position, which includes liquid

assets, short-term investments and interest-bearing recei v ables less

interest-bearing liabilities, including provisions for pensions,

amounted to msek 5,333. Saab’s ability to carry out its commitments

is not affected by the proposed dividend either on a short- or

a long-term basis.

The proposed dividend is considered justifiable with regard to what is

stated in chapter 17, § 3, paragraphs two and three of the Companies

Act (2005:551):

1. The demands that the company’s nature, scope and risks place on

the size of its equity, and

2. The company’s consolidation needs, liquidity or financial position

in other respects.

The Board of Directors of Saab ab

DIVIDEND MOTIVATION

The Board of Directors’ statement according to chapter 18, § 4 of the Companies Act with regard to the proposed

dividend – Saab AB


FINANCIAL INFORMATION > DIVIDEND MOTIVATION

The Board of Directors and the President propose that the unappro-

priated earnings in the Parent Company at disposal of the Annual

General Meeting, amounting to:

SEK

Retained earnings 2,398,918,842

Net income for the year 1,589,444,977

Total 3,988,363,819

Be disposed as follows:

To the shareholders, a dividend of SEK 4.50 per share 473,993,811

Funds to be carried forward 3,514,370,008

Total 3,988,363,819

After the proposed disposition, equity in the Parent Company will

be as follows:

SEK

Capital stock 1,746,405,504

Statutory reserve 542,471,135

Revaluation reserve 712,411,900

Retained earnings 3,514,370,008

Total 6,515,658,547

The company’s policy is to issue a dividend of 20–40 per cent of net

income over a business cycle. The Board of Directors and the President

propose that msek 474 (367), or sek 4.50 per share (3.50) be issued as a

dividend. Saab’s equity/assets ratio is currently 41.1 per cent (39.1) and

after the proposed disposition of earnings will be 40.2 per cent (38.3).

PROPOSED DISPOSITION OF EARNINGS

The undersigned certify that the consolidated accounts and the annual report have been prepared in accordance with International Financial Reporting Standards

(IFRS), as adopted for use in the European Union, and generally accepted accounting principles, and give a true and fair view of the financial positions and results

of the Group and the Parent Company, and that the management report gives a fair review of the development of the operations, financial positions and results of

the Group and the Parent Company and describes substantial risks and uncertainties that the Group companies faces.

Linköping, 10 February 2012

Marcus Wallenberg

Chairman

Johan Forssell Sten Jakobsson Per-Arne Sandström

Board member Board member Board member

Cecilia Stegö Chilò Joakim Westh Lena Treschow Torell Åke Svensson

Board member Board member Board member Board member

Catarina Carlqvist Stefan Andersson Conny Holm

Board member Board member Board member

Håkan Buskhe

President and Chief Executive Officer (CEO)

and Board member

Our audit report was submitted on 24 February 2012

Håkan Malmström

Authorised Public Accountant


FINANCIAL INFORMATION > PROPOSED DISPOSITION OF EARNINGS

Report on the annual accounts and consolidated accounts

We have audited the annual accounts and consolidated accounts of

Saab AB for the year 2011. The annual accounts and consolidated

accounts of the company are included in the printed version of this

document on pages 48–132.

Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts

The Board of Directors and the Managing Director are responsible

for the preparation and fair presentation of these annual accounts

and consolidated accounts in accordance with International Finan-

cial Reporting Standards , as adopted by the EU, and the Annual

Accounts Act, and for such internal control as the Board of Directors

and the Managing Director determine is necessary to enable the

preparation of annual accounts and consolidated accounts that are

free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these annual accounts

and consolidated accounts based on our audit. We conducted our audit

in accordance with International Standards on Auditing and generally

accepted auditing standards in Sweden. Those standards require that

we comply with ethical requirements and plan and perform the audit

to obtain reasonable assurance about whether the annual accounts and

consolidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evi-

dence about the amounts and disclosures in the annual accounts and

consolidated accounts. The procedures selected depend on the audi-

tor’s judgement, including the assessment of the risks of material

misstatement of the annual accounts and consolidated accounts,

whether due to fraud or error. In making those risk assessments, the

auditor considers internal control relevant to the company’s prepara-

tion and fair presentation of the annual accounts and consolidated

accounts in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the company’s internal control. An audit also

includes evaluating the appropriateness of accounting policies used

and the reasonableness of accounting estimates made by the Board of

Directors and the Managing Director, as well as evaluating the over-

all presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinions

In our opinion, the annual accounts have been prepared in accordance

with the Annual Accounts Act and present fairly, in all material

respects, the financial position of the parent company as of 31 Decem-

ber 2011 and of its financial performance and its cash flows for the year

then ended in accordance with the Annual Accounts Act, and the con-

solidated accounts have been prepared in accordance with the Annual

Accounts Act and present fairly, in all material respects, the financial

position of the group as of 31 December 2011 and of their financial per-

formance and cash flows in accordance with International Financial

Reporting Standards, as adopted by the EU, and the Annual Accounts

Act. The statutory administration report is consistent with the other

parts of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders

adopt the income statement and balance sheet for the parent com-

pany and the group.

Other matters

The annual accounts and consolidated accounts for 2010were audited

by other auditors who, in their audit report dated 16 February 2011,

expressed an unmodified opinion on those annual accounts and con-

solidated accounts.

Report on other legal and regulatory requirements

In addition to our audit of the annual accounts and consolidated

accounts, we have examined the proposed appropriations of the

company’s profit or loss and the administration of the Board of

Directors and the Managing Director of ABC AB for the year 2011.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropria-

tions of the company’s profit or loss, and the Board of Directors and

the Managing Director are responsible for administration under the

Companies Act.

Auditor’s responsibility

Our responsibility is to express an opinion with reasonable assurance

on the proposed appropriations of the company’s profit and on the

administration based on our audit. We conducted the audit in

accordance with generally accepted auditing standards in Sweden.

As a basis for our opinion on the Board of Directors’ proposed

appropriations of the company’s profit or loss, we examined the

Board of Directors’ reasoned statement and a selection of supporting

evidence in order to be able to assess whether the proposal is in

accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability, in

addition to our audit of the annual accounts and consolidated

accounts, we examined significant decisions, actions taken and cir-

cumstances of the company in order to determine whether any

member of the Board of Directors or the Managing Director is liable

to the company. We also examined whether any member of the

Board of Directors or the Managing Director has, in any other way,

acted in contravention of the Companies Act, the Annual Accounts

Act or the Articles of Association.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our opinion.

Opinions

We recommend to the annual meeting of shareholders that the profit be

appropriated in accordance with the proposal in the statutory adminis-

tration report and that the members of the Board of Directors and the

Managing Director be discharged from liability for the financial year.

Stockholm 24 February 2012

PricewaterhouseCoopers AB

Håkan Malmström


AUDIT REPORTTo the annual meeting of the shareholders of Saab AB, corporate identity number 556036-0793


FINANCIAL INFORMATION > AUDIT REPORT

Introduction

Saab ab is a Swedish public limited liability company listed on

nasdaq omx Stockholm.

Saab’s corporate governance is based on Swedish legislation, pri-

marily the Swedish Companies Act, the Swedish Annual Accounts

Act, nasdaq omx Stockholm Rules – which also includes the Swed-

ish Code of Corporate Governance – and other relevant Swedish and

foreign laws and guidelines.

Swedish Code of Corporate Governance

The Saab shares are admitted to trading at nasdaq omx Stockholm

and Saab must therefore follow good practices in the securities mar-

ket, which includes an obligation to comply with the Swedish Code

CORPORATE GOVERNANCE REPORT

of Corporate Governance (“the Code”). The Code is available at

www.bolagsstyrning.se

Saab applies the Code and strives to maintain a high standard in

its corporate governance. This Corporate Governance Report is in

accordance with the Annual Accounts Act and the Code, and

describes how Saab applied the Code during the financial year 2011.

Moreover, the Annual General Meeting 2011 was carried out in

accordance with the Code and the Annual General Meeting in 2012

will also be planned and carried out pursuant to the provisions of the

Code. Saab’s website has a special area for corporate governance

issues, which is updated in accordance with the Code.

The Board annually issues a report on how the internal control of

financial reporting is organised, which can be found at the end of

this report.

Organisation 2011

Nomination Commitee

Remuneration Committee

Audit Committee

Internal Audit

Shareholders’ Meeting

Board of Directors

External Auditors

President and CEO

Group ManagementInternal boards *

Finance Board

Operational Excellence Board

Strategy Board

Ethics and Compliance Board

Human Resources Board

* The internal boards handle and resolve issues within their respective areas on a Group level.

They also prepare certain issues to be resolved by the Group Management.



This Corporate Governance Report has been reviewed by the com-

pany’s auditor pursuant to the Annual Accounts Act, see the Audi-

tor’s Report attached to the Corporate Governance Report.

Saab has not deviated from the provisions of the Code during

2011 and hence does not report any deviations from the Code.

Ownership structure and number of shares

Saab’s share capital amounted to sek 1,746,405,504 on 31 December,

2011 and consisted of 1,907,123 series a shares and 107,243,221 series b

shares. Series a shares have ten votes each, while series B shares have

one vote each. One series a share may, on demand of the owner, be

converted into one series b share. The Saab shares are registered with

Euroclear Sweden ab. The quota value per share is sek 16. The series

B shares are listed on nasdaq omx Stockholm on the large cap list.

The series a shares are not listed. A round lot consists of 100 shares.

All series a shares are owned by Investor ab.

Largest shareholders, 31 December 2011

According to SIS Ownership Service

Share of

capital, %

Share of

votes, %

Investor AB, Sweden 30.0 40.8

Wallenberg Foundations, Sweden 8.7 7.7

Swedbank Robur funds, Sweden 4.8 4.3

Unionen, Sweden 2.5 2.2

AFA Insurance, Sweden 2.3 2.0

SEB funds, Sweden 2.1 1.9

Fourth AP Fund, Sweden 2.1 1.8

SHB funds, Sweden 2.1 1.8

Orkla ASA, Norway 1.6 1.5

Länsförsäkringar funds, Sweden 1.0 0.9

Total 57.2 64.9

At the end of December 2011, Saab held 3,818,386 own shares of series

B shares, corresponding to approximately 3.5 per cent of the share

capital. For additional information about the ownership structure,

see pages 147 and 149. The Board of Directors has an authorisation

from the Shareholders’ Meeting to repurchase shares. See page 68 for

further information.

Nomination Committee

The Annual General Meeting of Saab in April 2011 adopted a nomina-

tion committee process stating that Saab shall have a Nomination

Committee consisting of one representative of each of the four share-

holders or groups of shareholders with the greatest number of votes,

along with the Chairman of the Board. The names of the four share-

holder representatives and the shareholders they represent shall be

announced at least six months prior to the Annual General Meeting

based on known voting rights as per the last business day in August the

year before the Annual General Meeting. The nomination committee

process includes procedures, where necessary, to replace a member

who leaves the committee before its work has been completed.

According to the nomination committee process adopted at the

Annual General Meeting 2011, the Nomination Committee shall

provide proposals regarding the following issues, to be presented to

the Annual General Meeting for resolution:

(a) the Chairman of the Shareholders’ Meeting,

(b) the Board of Directors,

(c) the Chairman of the Board,

(d) the remuneration to the members of the Board, allocated

between the Chairman and other members of the Board, and

remuneration for committee work,

(e) election of auditors, if applicable, and

(f) audit fees.

Before the Annual General Meeting of Saab AB on 19 April 2012, it

was announced through a press release on 12 October 2011 that, in

addition to Chairman of the Board, Marcus Wallenberg, the follow-

ing shareholder representatives had been appointed to Saab’s Nomi-

nation Committee (shareholder’s name in parentheses): Petra

Hedengran (Investor AB), Peter Wallenberg Jr (Knut and Alice Wal-

lenberg Foundation), Thomas Eriksson (Swedbank Robur Funds)

and Thomas Ehlin (Nordea Investment Funds). Petra Hedengran is

the Chairman of the Nomination Committee.

These persons represent in the aggregate approximately 52 per-

cent of the votes in Saab based on the ownership structure as of 31

August 2011.

The proposal of the Nomination Committee will be presented

not later than in connection with the notice of the Annual General

Meeting 2012.

Members of the Nomination Committee for the

Annual General Meeting 2012

Member Representing

% of votes

31-8-2011

% of capital

31-8-2011

Petra Hedengran Investor AB 40.8 30.0

Peter Wallenberg Jr Knut and Alice Wallenberg

Foundation 7.7 8.7

Thomas Eriksson Swedbank Robur Funds 2.8 3.1

Thomas Ehlin Nordea Investment Funds 2.5 2.8

Marcus Wallenberg Chairman of the Board,

Saab AB - -

Board of Directors

Composition of the Board

According to Saab’s Articles of Association, the Board of Directors

shall, in addition to the employee representatives, consist of at least six

and not more than twelve members. Members of the Board shall be

elected each year by the Shareholders’ Meeting. According to a resolu-

tion at the Annual General Meeting on April 7, 2011, Saab’s Board of



Directors shall consist of ten members elected by the Shareholders’

Meeting, with no deputies. In addition, the employee organisations

appoint three Board Members, with an equal number of deputies.

At the Annual General Meeting on 7 April 2011, Johan Forssell,

Sten Jakobsson, Per-Arne Sandström, Cecilia Stegö Chilò, Åke Sven-

sson, Lena Treschow Torell, Marcus Wallenberg and Joakim Westh

were re-elected. Håkan Buskhe and Michael O’Callaghan were

elected as new board members at the Annual General Meeting. Erik

Belfrage and George Rose declined re-election. Michael O’Callaghan

later resigned from the Board of Directors on 16 June 2011 as a result

of BAE Systems’ divestment of its shareholding in Saab. The Saab

Board of Directors has thereafter consisted of nine Board Members

elected by the Shareholders’ Meeting.

Marcus Wallenberg was elected Chairman of the Board of Direc-

tors. Only Håkan Buskhe, President and CEO of Saab, is employed

by the company.

Information on the remuneration to the members of the Board as

resolved by the Annual General Meeting 2011 is set forth in the

Annual Report, note 37.

Members of the Board elected by the Shareholders’ Meeting

Marcus Wallenberg Per-Arne Sandström

Håkan Buskhe Cecilia Stegö Chilò

Johan Forssell Åke Svensson

Sten Jakobsson Lena Treschow Torell

Michael O’Callaghan 1) Joakim Westh

1) Resigned on 16 June 2011 as a result of BAE Systems’ sale of its shareholding in Saab.

Other significant professional commitments, work experience, etc.

are set forth in the presentation of the Board of Directors. See

pages 141–142.

Employee representatives

Regulars Deputies

Stefan Andersson Göran Gustavsson

Catarina Carlqvist Jan Kovacs

Conny Holm Nils Lindskog

Independence requirement

The following table sets forth the members of the Board elected by the

Shareholders’ Meeting who, according to the provisions of the Code,

are considered independent in relation to the company and the man-

agement, as well as in relation to the company’s major shareholders.

Composition and independence of the Board in 2011

Board member Elected

Independent of the

company/ management

Independent of major

share holders

Marcus Wallenberg 1992 Yes No 1)

Håkan Buskhe 2011 No 2) Yes

Johan Forssell 2010 Yes No 3)

Sten Jakobsson 2008 Yes Yes

Michael O’Callaghan 4) 2011 Yes No4)

Per-Arne Sandström 2005 Yes Yes

Cecilia Stegö Chilò 2010 Yes Yes

Åke Svensson 2003 No 5) Yes

Lena Treschow Torell 2005 Yes No 6)

Joakim Westh 2010 Yes Yes

1) Former President and CEO of Investor AB

2) President and CEO of Saab

3) Employed by Investor AB

4) Employed by BAE Systems. Resigned on June 16, 2011, as a result of BAE Systems’ sale

of its shareholding in Saab

5) Former President and CEO of Saab

6) Member of Investor AB’s Board

Board of Directors, Saab AB.


ATTENDANCE AND BOARD REMUNERATION IN 2011

NameAudit

Committee

Remu-neration

Committee

Attendance Board-

meetings1)

Attendance Committee meetings 2)

Board fees, kSEK 3)

Audit Commit-tee fees, kSEK

Remuneration Committee fees, kSEK

Total remu-

neration, kSEK

Marcus Wallenberg X 9 3 1,100 80 1,180

Håkan Buskhe 4) 9 - -

Johan Forssell X 9 8 425 100 525

Sten Jakobsson 5) X 8 2 425 80 505

Michael O’Callaghan 6) 1 - -

Per-Arne Sandström X 9 8 425 150 575

Cecilia Stegö Chilò 9 425 425

Åke Svensson 8 425 425

Lena Treschow Torell X 7 3 425 135 560

Joakim Westh X 9 8 425 100 525

1) Of a total of 9 meetings

2) Of a total of 8 meetings for Audit Committee and 3 meetings for Remuneration Committee

3) The President and CEO Håkan Buskhe does not receive a fee.

4) New election April 2011, Håkan Buskhe participated in the year’s first two meetings as President and CEO.

5) Member of the Remuneration Committee since 7 April 2011, and thereafter two meetings of Remuneration Committee were held.

6) New election April 2011. Resigned from the Board on 16 June 2011

Accordingly, the company fulfils the requirements of the Code that a

majority of the Board Members appointed by the Shareholders’

Meeting are independent of the company and the management, and

that at least two of them are independent of the major shareholders.

Work of the Board

According to the Board’s rules of procedure, six ordinary meetings

shall normally be held each year, in addition to the statutory meet-

ing. The Board may also meet whenever circumstances demand.

During 2011, the Board held one statutory meeting, six ordinary

meetings and two extraordinary meetings, totalling nine meetings.

The Board annually adopts rules of procedure and an instruction on

the allocation of work between the Board and the President and CEO,

as well as an instruction on financial reporting to the Board.

The rules of procedure contain, i.a. provisions on the number of

board meetings to be held, a list of matters to be considered at the meet-

ings, reporting from the auditor and special decisions to be taken at the

statutory meeting. The rules of procedure and special instruction for

the CEO set forth the delegation of responsibilities between the Board

and its two committees, the Remuneration Committee and the Audit

Committee, as well as between the Board and the CEO. The instruction

for the CEO sets out the CEO’s duties and authority. The instruction

also includes policies on investments, financing and reporting.

During the course of the year, the Board was assisted by the Secre-

tary of the Board of Directors, General Counsel Anne Gynnerstedt,

who is not a member of the Board. Anne Gynnerstedt left her position

as General Counsel of Saab in January 2012.

The Board of Directors’ meetings follow a determined and pre-

approved agenda. Prior to the meetings the Board Members receive

documentation in support of the issues that are on the agenda. At each

Board meeting, the CEO presents a Market and Operations Report.

Financial reports are prepared monthly and submitted to the Board.

The reports are presented at each Board meeting and before the quar-

terly reports and year-end report. Furthermore, the Board regularly

reviews and considers investments, mergers and acquisitions and

divestments. In 2011, the Board of Directors has reviewed and adopted a

budget and a business plan. The Board has also focused on the compa-

ny’s strategy and followed up on significant export opportunities and

related marketing investments.

Committee work represents an important part of the Board’s work.

After meetings of the Audit and Remuneration Committees, the issues

that have been handled are reported to the Board, and resolutions are

adopted on issues where the committees have prepared matters for res-

olution by the Board.

Board of Directors’ committee work

Audit Committee

The Board of Directors has, in accordance with the principles set out

in the Swedish Companies Act and the Code, appointed an Audit

Committee consisting of three members. The work of the Audit

Committee is mainly of a preparatory nature, i.e., it prepares matters

for the ultimate resolution by the Board. However, the Audit Com-

mittee has certain limited decision-making power. The Audit Com-

mittee has e.g. established guidelines for services other than auditing

that the company may procure from auditors.

Since the Annual General Meeting in April 2011, the Audit Com-

mittee has consisted of the following members: Per-Arne Sandström

(Chairman), Johan Forssell and Joakim Westh, of whom Per-Arne

Sandström and Joakim Westh are independent of the company and

the management as well as of the major shareholders. All members

of the committee have accounting competence and auditing compe-

tence. The General Counsel, Anne Gynnerstedt, was Secretary to the

Audit Committee during 2011.



The Audit Committee’s assignment is set forth in the Board’s rules of

procedure. Among other things, the Audit Committee shall monitor

the company’s financial reporting, monitor the efficiency of the com-

pany’s internal control, internal audit and risk control in respect of

the financial reporting, keep itself informed about the audit of the

annual report and the group accounts, review and monitor the audi-

tor’s neutrality and independence, and assist the Nomination Com-

mittee in preparing proposal for the Shareholders’ Meeting’s deci-

sion on election of auditors. The company’s internal and external

auditors are both co-opted to the meetings of the Audit Committee.

During 2011, the Audit Committee focused particularly on the finan-

cial reporting, the budget, Saab’s business plan, and the recruitment

of a new internal auditor.

The Audit Committee keeps minutes of its meetings, which are

promptly distributed to the other members of the Board.

In 2011, the Committee held eight meetings.

Remuneration Committee

The Board of Directors has in accordance with principles set out in

the Code appointed a Remuneration Committee consisting of three

members: Marcus Wallenberg, Sten Jakobsson and Lena Treschow

Torell. Lena Treschow Torell is Chairman of the committee. All of

the members are independent of the company and the management.

The General Counsel, Anne Gynnerstedt, was secretary to the com-

mittee during 2011.

The Remuneration Committee prepares Board matters concern-

ing principles for remuneration, remunerations and other terms of

employment for the Group Management, monitors and evaluates

programmes for variable remuneration for the Group Management,

both ongoing and those that have ended during the year, and moni-

tors and evaluates the application of the guidelines for remuneration

for the Group Management that the Annual General Meeting has

adopted as well as the current remuneration structures and levels in

the company. The Remuneration Committee shall also propose

guidelines for remuneration of senior executives to be submitted to

the Annual General Meeting following resolution by the Board of

Directors. Matters concerning employment terms, compensation and

other benefits for the CEO are prepared by the Remuneration Com-

mittee and adopted by the Board. It is the Remuneration Committee

who is responsible for the interpretation and application of the guide-

lines of remuneration for senior executives. The Remuneration Com-

mittee has no decision-making powers of its own. During the year,

the Remuneration Committee was particularly involved in a review

of fixed and variable salaries and structuring the long term incentive

programme for senior executives and strategic key employees.

The Remuneration Committee keeps minutes of its meetings,

which are promptly distributed to the other members of the Board.

In 2011, the Committee held three meetings.

Evaluation

The Chairman of the Board annually performs an evaluation of the

quality of the Board’s work and possible improvements to the forms

and efficiency of its work. The members fill out a questionnaire on

their opinions of how well the Board is functioning. The results are

then compared with previous years. The questionnaire consists of

five parts covering the breadth of competence represented in the

Board, the manner in which its work is performed, the Chairman,

the Board’s composition and the co-operative atmosphere. The pur-

pose of the evaluation is to understand the Board Members’ opinion

about the Board’s work. The results are then discussed by the Board.

No external consultants are involved in the evaluation.

The Nomination Committee is also informed of the results of the

evaluation in connection with its analysis, evaluation and appoint-

ment of Board Members.

The Board continuously evaluates the CEO’s work by monitoring

business results in relation to established objectives. During 2011 the

Board Members have also evaluated the CEO’s work by responding

to a questionnaire about the CEO within the areas of strategy, per-

formance, organisation, people and leadership.

President and CEO

The President and CEO of Saab, Håkan Buskhe, is also a Member of

the Board. His significant professional commitments outside the

company, work experience, etc. are set forth in the presentation of

the Board of Directors and the Group Management, see 141-143.

Håkan Buskhe does not own shares in any company with which Saab

has material business ties.

Guidelines for remuneration and other benefits for

senior executives

The guidelines for remuneration and other benefits for senior execu-

tives can be found in the administration report.

Auditor

On behalf of the shareholders and in accordance with current laws

and regulations, the external auditor examines the financial state-

ments, group accounts, annual report and administration and man-

agement of the company by the Board of Directors and the CEO and

also the Corporate Governance Report. In addition, the Half-Year

Report has been reviewed by the auditor. The auditor also presents

an Auditor’s Report to the Annual General Meeting.

The Shareholders’ Meeting elects the auditors. The firm that was

elected as new auditor by the Shareholders’ Meeting 2011 is the regis-

tered accounting firm PricewaterhouseCoopers. Previous auditors

were the accounting firms Ernst & Young and Deloitte.

PricewaterhouseCoopers

Elected in 2011 for the term 2011-2015

Auditor in charge is Håkan Malmström

Other audit assignments: Gambro, Karo Bio, NCC and Nord-

stjernan



PricewaterhouseCoopers AB is a member of PwC’s global network

with operations in around 150 countries. PwC has competence and

experience in areas important to Saab: auditing of large and listed

companies, accounting issues, industry experience and experience

in international business.

The Audit Committee is responsible for ensuring that the inde-

pendent position of the auditor is maintained, i.a. by staying

informed of ongoing consulting assignments. The Audit Committee

has also established guidelines for the services other than auditing

that the company may procure from its auditors.

Audit fees

Saab’s auditor receives a fee according to approved invoices as

resolved by the Shareholders’ Meeting.

PricewaterhouseCoopers has during 2011 carried out services on

behalf of the company in addition to their audit assignments, con-

sisting of consultations closely associated with the audit, including

accounting and tax issues.

Auditors’ fees 2009–2011, the Group

MSEK 2011 2010 2009

Audit assignments:

PricewaterhouseCoopers AB 15 1 -

Ernst & Young AB - 10 13

Deloitte AB - 3 4

Other assignments:

PricewaterhouseCoopers AB 7 - -

Ernst & Young AB - 5 3

Deloitte AB - 2 2

Other, audit assignments 1 1 3

Financial reporting

The Board documents the manner in which it ensures the quality of

the financial reports and how it communicates with the company’s

auditor.

The Board ensures the quality of financial accounting through its

Audit Committee, according to the report submitted above. The Audit

Committee considers not only critical accounting questions and the

financial reports presented by the company, but also matters of internal

control, regulatory compliance, potential material uncertainty in

reported values, post-statement events, changes in assessments and

evaluations and other circumstances that may affect the quality of the

financial statements. The auditors have participated in six regular meet-

ings with the Audit Committee. They have not participated in meetings

when the election of external auditors was discussed.

The entire Board reviews the interim reports before they are pub-

lished.

The company’s auditor attends the Board meeting at which the

annual accounts are approved.

The Board has met with the auditor to discuss their review of the

company for the financial year 2011. The Board has also met on one

occasion with the auditor without the presence of the CEO or any

other members of the Group Management.

The Board’s report on internal control of financial reporting

According to the Swedish Companies Act and the Code, the Board is

responsible for internal control. This report on internal control of the

financial reporting has been drafted on the basis of the Swedish

Annual Accounts Act.

Internal control over financial reporting

Saab’s system of internal control is designed to assist the business

achieve its goals and manage the associated risks. Internal control

over financial reporting is a part of all internal control processes

within Saab, the framework for which is developed by the Committee

of Sponsoring Organizations of the Treadway Commission (COSO).

Internal control over financial reporting aims to provide reasona-

ble assurance of the reliability of external financial reporting and to

ensure that it is prepared in accordance with legislation, applicable

accounting standards and other requirements on listed companies.

Control environment

The delegation of responsibilities is based on the Board’s rules of

procedure and an instruction, which sets forth the roles, responsibil-

ities and activities of the Board and the CEO.

Internal control is based on Saab’s organisation, where operating

responsibilities and powers are delegated to business areas and sup-

port units, which also receive support and are supervised by Group

functions with specific competencies. These Group functions issue

Group guidelines that clarify responsibilities and powers and consti-

tute part of the internal control in specific areas such as finance,

accounting, investments and tenders.

Risk assessment

Saab’s operations are mainly characterised by the development, pro-

duction and supply of technologically advanced hardware and soft-

ware for customers around the world. The major part of sales are

generated from countries outside of Sweden. As a rule, projects

entail considerable sums of money, stretch over long periods of time

and involve technological development or refinement of products.

Based on Saab’s operations, the material risk areas in financial

reporting are project accounting, acquisitions and goodwill, devel-

opment costs, hedging and other financial transactions, leasing

operations, taxes and accounting for pensions. In addition to busi-

ness risks, the processes are also assessed on the basis of the risk of

exposure to any improprieties.

Group Finance continuously co-ordinates an overall risk assess-

ment of the financial reporting. This process involves self-assess-

ments by the Group functions and business areas. The current risk

assessment is reviewed with Saab’s Internal Audit, which adjusts its

annual audit plan accordingly. Information on developments in



essential risk areas as well as a report on planned and executed activ-

ities in these areas are communicated regularly to Saab’s Audit Com-

mittee. Saab’s risk assessment is also communicated regularly to

Saab’s external auditors.

Information, communication and control activities

Internal control within Saab is based on clearly defined areas of

responsibility and authority, issued Group guidelines, processes and

controls.

Uniform handling of financial reporting is assured by adopting

and issuing Group guidelines approved by the CEO or by function

managers appointed by the CEO. All Group directives are updated

on an ongoing basis, are clearly communicated and are available on

the internal website.

Each business area designs its risk management routines and

structure for internal control based on overall routines and Group

guidelines.

The most significant risks identified as regards financial report-

ing are managed through control structures within the business

areas and Group functions and are based on Saab’s minimum

requirements for good internal control in significant processes.

Monitoring and evaluation

All operating units report monthly and quarterly according to a

standardised routine. Quarterly reports serve as the basis of Saab’s

external financial reporting. In operating reports, each business

area’s measures of profitability and financial position are consoli-

dated to measure the Group’s total profitability and financial posi-

tion. Accounting managers and controllers are continuously in con-

tact with Group Finance concerning any questions related to finance

and accounting.

To assist in evaluating internal control in each business area, Saab

uses an annual self assessment. In addition to the processes that

serve as a basis for the financial reporting, these assessments cover

operating risks, reputational risks and compliance with laws, regula-

tions and internal rules. This is also reported to the Audit Commit-

tee. The Internal Audit department, which is part of the internal con-

trol structure, is a dedicated resource for independent review of the

effectiveness of internal control processes. At the same time, Internal

Audit supports locally applied internal controls and the central con-

troller staff. Together they serve as a resource to monitor financial

reporting routines. Internal Audit’s assignments are initiated by the

Audit Committee, Group Management and its members, and on its

own initiative.

Activities in 2011

During 2010, an extensive review was made of Saab’s internal finan-

cial control system. Based on the evaluation of the risk controls, cor-

rective measures were identified and evaluated. An independent

evaluation of all identified controls launched at the end of 2010 was

concluded in 2011. The analysis and evaluation of the internal con-

trols in 2010 resulted in a modified reporting process in 2011.

Risk self-assessments were conducted on a continuous basis in

the Swedish operations in 2011. This process was also implemented

during the year in Saab’s operations in Australia and South Africa.

Implementation has begun in the U.S. as well.

Focus in 2012

A self-assessment will be conducted at least twice in 2012 in all of

Saab’s business areas and an independent assessment will be made at

least once. At the same time, improvements to existing control sys-

tems are being made continuously.

The annual assessment process of internal financial controls as of 2011

January 1

June 30

Continuous Risk Assess

men

t

Independent review of self

assessment results

Preparation of Corporate

Governance Report

Q3 Self Assessment

Q1 Self Assessment

Remediation of issues identified during

Q1 Self Assessment

√ Status of financial controls

reported to Group Manage-

ment monthly.

√ Self assessments communi-

cated to the Audit Committee,

Internal Audit and External

Auditors.



MARCUS WALLENBERG

Chairman of the Board since 2006.

Deputy Chairman of the Board 1993-

2006 and Member of the Board since

1992, Member of Saab’s Remunera-

tion Committee

Born 1956

Bachelor of Science of Foreign

Service

Lieutenant in Royal Swedish Naval

Academy

Shares in Saab: 100,150

Other board commitments:

Chairman of SEB, Electrolux AB and

LKAB. Deputy Chairman of Telefo-

naktiebolaget L M Ericsson

Board member of AstraZeneca PLC,

Stora Enso Oyj, the Knut and Alice

Wallenberg Foundation and Temasek

Holding Ltd.

Former employment

and positions:

President and CEO, Investor AB

Director, Stora Feldmühle AG,

Düsseldorf

Skandinaviska Enskilda Banken,

Stockholm and London

Citicorp (Hong Kong)

Citibank N.A. (New York)

HÅKAN BUSKHE

Member of the Board since April

2011

President and Chief Executive Officer

of Saab AB

Born 1963

M.S.c., Licentiate of Engineering

(Transportation & Logistics)

Employed 2010



Chairman of Green Cargo AB

Board member of the Association of

Swedish Engineering Industries

(Teknikföretagen)

Board Member of Inlandsinnovation

AB

Former employment

and positions:

President and CEO of E.ON Nordic

AB and E.ON Sverige AB

Executive Vice President of E.ON

Sverige AB, Senior Vice President of

E.ON Sverige AB, CEO of Schenker

North and member of the Schenker

AG’s Executive Management

Production Manager Falcon Brewery

JOHAN FORSSELL

Member of the Board since 2010

Member of Saab’s Audit Committee

Managing Director Investor AB, Head

of Core Investments

Born 1971

M.Sc. in Finance, Stockholm School

of Economics



Board member of Atlas Copco

Former employment

and positions:

Head of Research Core Investments,

Investor AB, Head of Capital Goods

and Healthcare Sector, Investor AB,

Head of Capital Goods Sector, Inves-

tor AB, Analyst Core Holdings, Inves-

tor AB

STEN JAKOBSSON

Member of the Board since 2008 and

Deputy Chairman since 2010

Born 1949

M.Sc.



Chairman of Power Wind Partners

Board member of Stena Metall AB

Board member of FLSmidth A/S

Board Member of Xylem Inc

Former employment and

positions:

President and CEO, ABB Sweden,

Executive Vice President, Asea

Brown Boveri AB, Sweden, Business

Area Manager, Business Area Cables

President, ABB Cables AB, Presi-

dent, Asea Cylinda, Production Man-

ager, Asea Low Voltage Division,

Asea central staff – Production, Asea

trainee

PER-ARNE SANDSTRÖM


Chairman of Saab’s Audit Committee

Born 1947

Upper secondary engineering school



Chairman of Infocare AS

Board Member of TeliaSonera AB

Former employment

and positions:

Deputy CEO and COO of Telefonak-

tiebolaget L M Ericsson, President

and CEO, Ericsson Inc., USA, Vice

President and General Manager,

GSM business unit, Ericsson Radio

Systems AB, Executive Vice Presi-

dent and Managing Director, Cellular

Systems, Ericsson Ltd, UK, Vice

President and General Manager,

GSM Western Europe, Ericsson

Radio Systems AB, Vice President

and General Manager, Airborne

Radar Division, Ericsson Microwave

Systems AB, Department Manager,

Naval Command and Control Sys-

tems, Ericsson Microwave

Systems AB

BOARD OF DIRECTORS

The shares held by Board members include any holdings by closely affiliated persons.


CORPORATE GOVERNANCE REPORT > BOARD OF DIRECTORS

CECILIA STEGÖ CHILÒ


Adviser to management of corpora-

tions and organizations

Born 1959

Studies in political science and

economics

Shares in Saab: 600


Chairman of Gotlands Bryggeri

Board member of Spendrups Bryg-

gerier

Board member of Linköping Univer-

sity Holding AB

Board Member of the Expo Founda-

tion

Former employment

and positions:

Board member of AMF Fonder and

Länsförsäkringar Liv,

Managing Director of the foundation

Fritt Näringsliv, Head of the think tank

Timbro, Cabinet member and Head

of the Ministry of Culture, Editorial

writer and foreign policy commenta-

tor at Svenska Dagbladet, Commen-

tator at Sveriges Radio, Swedish Em-

ployer’s Confederation Moderate

Party

ÅKE SVENSSON


Director General of the Association of

Swedish Engineering Industries

Born 1952

M.Sc.



Board member of Parker Hannifin

Corporation, Board member of the

Swedish Export Credit Corporation

Board member of the Swedish Na-

tional Agency for Higher Education

Member of the Royal Swedish Acad-

emy of Engineering Sciences (IVA),

Member of the Royal Swedish Acad-

emy of War Sciences, Member of

IVA’s Business Executives Council

Board member of VA (Public & Sci-

ence)

Former employment

and positions:

President and CEO of Saab AB

General Manager, Business Area

Saab Aerospace, Saab AB

General Manager, Business Unit Fu-

ture Products and Technology, Saab

AB

Project Manager for RBS15, Saab

Dynamics AB

Other positions in the Saab Group

LENA TRESCHOW TORELL


Chairman of Saab’s Remuneration

Committee

Professor in Physics

Born 1946

B.Sc. and Ph.D. in Physics



Vice Chairman of ÅF AB and Micronic

Mydata AB

Board member of Investor AB, SKF

AB and The Chalmers University of

Technology Foundation

Chairman of European Council of Ap-

plied Sciences, Technology and Engi-

neering (Euro-CASE), the Foundation

for Strategic Environmental Research

(MISTRA) and the Royal Swedish

Academy of Engineering Sciences

(IVA)

Former employment and

positions:

President of the Royal Swedish Acad-

emy of Engineering Sciences (IVA)

Board member of Getinge AB, Telefo-

naktiebolaget L M Ericsson and Gam-

bro AB, Director, Joint Research Cen-

tre, European Commission (Brussels)

Vice President, Chalmers, Gothen-

burg, Professor of Material Physics,

Chalmers, Professor of Solid State

Physics, Uppsala University

JOAKIM WESTH


Member of Saab’s Audit Committee

Born 1961

M.S.c.



Chairman of EMA Technology AB

Board member of Rörvik Timber AB

Board member of Absolent AB

Board member of Swedish Match AB

Board member of Intrum Justitia AB

Former employment

and positions:

Chairman of Absolent AB, Board

member of Telelogic AB and VKR

Holding A/S, Deputy Board member

of Sony Ericsson Mobile Communi-

cations AB, Senior Vice President,

Group function Strategy & Opera-

tional Excellence and member of the

Group Management Team,

Ericsson, J Westh Företagsutveckling

AB, Group Vice President and mem-

ber of the Executive Management

Group, Assa Abloy AB, Partner,

McKinsey & Co, Inc

STEFAN ANDERSSON


President of the Local Industrial Sala-

ried Employees’ Association at Saab

Dynamics AB, Linköping

Born 1974

B.Sc

Shares in Saab: 1 029

CATARINA CARLQVIST


Member of the Local Swedish Asso-

ciation of Graduate Engineers, Saab

Dynamics AB, Karlskoga

Born 1964

Luleå University of Technology

Shares in Saab: -

CONNY HOLM

Member of the Board since 2008 and

deputy Board Member 1995-2008

President of the Local Workers’

Union IF Metall at Electronic Defence

Systems, Saab AB, Jönköping

Born 1947

Upper secondary engineering

education

Shares in Saab: 696

DEPUTIES, EMPLOYEE REPRESENTATIVES

AUDITOR

GÖRAN GUSTAVSSON

Deputy Board member since 2008

President of the Local Workers’

Union IF Metall at Saab AB,

Linköping

Born 1953

Shares in Saab: 734

JAN KOVACS


President of the Local Industrial Sala-

ried Employees’ Association at Saab

AB, Linköping

Born 1960

Upper secondary technical school

Shares in Saab: 807

NILS LINDSKOG


Member of the Local Swedish Asso-

ciation of Graduate Engineers at

Saab AB, Göteborg

Born 1955

M.S.E.E. from Chalmers University of

Technology

Shares in Saab: 354

PRICEWATERHOUSECOOPERS AB

HÅKAN MALMSTRÖM

The shares held by Board members include any holdings by closely affiliated persons.


CORPORATE GOVERNANCE REPORT > BOARD OF DIRECTORS

GROUP MANAGEMENT

HÅKAN BUSHKE

President and Chief Executive

Officer (CEO).

Member of the Board of Saab AB

since April 2011

Born 1963, M.Sc., Licentiate

of Engineering (Transportation and

Logistics)

Employed 2010



Chairman of Green Cargo AB

Board member of Teknikföretagen

Board Member of Inlandsinnova-

tion AB

Former employment and positions:

President och CEO of E.ON Nor-

dic AB and E.ON Sverige AB, Ex-

ecutive Vice President of E.ON

Sverige AB, Senior Vice President

of E.ON Sverige AB, CEO of

Schenker North and member of

Schenker Ag’s Executive Manage-

ment , Production Manager Falcon

Brewery

LENA OLVING

Deputy Chief Executive Officer

and Chief Operating Officer (COO)

Born 1956, M. Sc., Mechanical

Engineering

Employed November 2008


LENNART SINDAHL

Executive Vice President and

Head of Business Area

Aeronautics

Born 1956, M.Sc.

Employed 1986


TOMAS SAMUELSSON

Senior Vice President and Head

of Business Area Dynamics

Born 1953, M.Sc.

Employed 2000


MICAEL JOHANSSON

Senior Vice President and Head of

Business Area Electronic Defence

Systems

Born 1960, B.Sc.

Employed 1985


CARINA BRORMAN


of Group Communications

Born 1958, B.Sc.

Employed 2011

Shares in Saab: -

ANNIKA BÄREMO


Group Legal Affairs, General

Counsel, Secretary of the Board of

Directors

Born 1964, LLB

Employed 2012

Shares in Saab: -

JONAS HJELM

Executive Vice President and Chief

Marketing Officer (CMO), Head of

Group Marketing & Business

Development

Born 1971

Employed 2006


DAN JANGBLAD

Senior Vice President and Chief

Strategy Officer (CSO), Head of

Group Strategy

Born 1958, M.Sc.

Employed 2000


PETER SANDEHED


Group Corporate Investments

Born 1952, MBA

Employed 1981


GUNILLA FRANSSON


of Business Area Security and

Defence Solutions

Born 1960, M.Sc. and PhD

(Tec. Lic)

Employed 2008


LARS-ERIK WIGE


of Business Area Support and

Services

Born 1954

Employed 2001


LARS GRANLÖF

Senior Vice President and Chief

Financial Officer (CFO), Head of

Group Finance

Born 1962, MBA

Employed 2007


LENA ELIASSON


Group Human Resources

Born 1967, M.Sc.

Employed 2012

Shares in Saab: -

In 2011, Group Management also included Anne Gynnerstedt, Senior Vice President, Head of Group Legal Affairs and Secretary of the Board of Directors, and Mikael Grodzinsky, Senior Vice Presi-

dent and Head of Group Human Resources. Lars Granlöf left his position at the end of February 2012. He thereafter is available to the company during a transition period.


CORPORATE GOVERNANCE REPORT > GROUP MANAGEMENT

It is the Board of Directors who is responsible for the Corporate

Governance Report for 2011 on pages 134-143 and for ensuring that it

has been prepared in accordance with the Annual Accounts Act. We

have read the Corporate Governance Report and based on his read-

ing and our knowledge of the company and the group are of the

opinion that we have a sufficient basis for our statement. This means

that our statutory review of the Corporate Governance Report has a

different approach and is of a significantly lesser scope than an audit

according to the International Standards on Auditing and accepted

auditing standards in Sweden.

In our opinion, a Corporate Governance Report has been pre-

pared and its statutory content is consistent with the Annual Report

and the consolidated accounts.

AUDITOR’S REPORT ON THE CORPORATE GOVERNANCE REPORT

To the Annual General Meeting of the shareholders of Saab AB

Corporate identity number 556036-0793

Stockholm, 24 February 2012

PricewaterhouseCoopers AB

Håkan Malmström




Annual General Meeting

The Annual General Meeting will be held at 3:00 pm (cet) on Thurs-

day, 19 April 2012 at Annexet, Stockholm Globe Arenas, Globen-

torget 2, Stockholm.

Notification

Shareholders must notify the company of their intention to partici-

pate in the meeting not later than Friday, 13 April 2012:

by telephone: +46 13 18 20 55

by mail with separate invitation

by mail: Saab Annual General Meeting, Box 7839,

103 98 Stockholm, Sw eden

online: www.saabgroup.com/arsstamma

Please indicate your name, personal ID number (Swedish citizens),

address and telephone number. If you are attending by power of

proxy, registration certificate or other authorisation, please submit

your documentation well in advance of the meeting. The informa-

tion you provide will be used only for the Annual General Meeting.

Shareholders or their proxies may be accompanied at the Annual

General Meeting by a maximum of two people. They may only attend,

however, if the shareholder has notified Saab ab as indicated above.

Right to participate

Only shareholders recorded in the share register maintained by

Euroclear Sweden ab on Friday, 13 April 2012 are entitled to partici-

pate in the meeting.

Shareholders registered in the names of nominees through the

trust department of a bank or a brokerage firm must temporarily re-

register their shares in their own names to participate in the meet-

ing. To ensure that this re-registration is recorded in the share regis-

ter by Friday, 13 April 2012, they must request re-registration with

their nominees several business days in advance.

Dividend

The Board of Directors proposes a dividend of sek 4.50 per share and

Tuesday, 24 April 2012 as the record day for the dividend. With this

record day, Euroclear Sweden ab is expected to distribute the divi-

dend on Friday, 27 April 2012.

Distribution of the annual report

The annual report will be available on Saab’s website, www.saab-

group.com, approximately four weeks prior to the Annual General

Meeting on 19 April. It can also be ordered from Saab’s head office,

Investor Relations. A printed version of the annual report will be dis-

tributed to those who became shareholders in December 2011, Janu-

ary and February 2012, as well as other shareholders who request a

printed version.

INFORMATION TO SHAREHOLDERS


SHAREHOLDER INFORMATION

Capital stock and number of shares

Saab’s capital stock amounted to sek 1,746,405,504 on 31 December

2011 and consisted of 1,907,123 unlisted Series a shares and 107,243,221

listed Series b shares. Series a shares have ten votes each, while Series b

shares have one vote each. The quota value per share is sek 16. The

Series b share is listed on nasdaq omx Stockholm’s Large Cap list. A

round lot consists of 100 shares.

Saab’s Series a shares are owned by Investor ab.

Saab’s market capitalisation was sek 15.3 billion at year-end 2011.

The price of the Series b share rose during the year by 16 per cent, com-

pared to an increase of 17 per cent for the omx index. The total return

on Saab’s Series b share – i.e., the dividend plus the change in the share

price – has been -24 per cent over the last five years.

Trading volume and statistics

A total of 47,073,222 Series b shares (48,704,378) were traded on nas-

daq omx Stockholm in 2011, where approximately 80 per cent were

traded. The marketplaces bats, boat, Burgundy, Chi- X and Turqou-

ise accounted in total for about 20 per cent of turnover. The share’s

price reached a high of sek 155.00 on 11 May and a low of sek 104.20

on 25 November.

Ownership structure

Saab had 29,056 shareholders (31,125) as of year-end 2011. Swedish

investors accounted for 73.6 per cent (73.3) of the capital stock and 76.5

per cent (76.1) of the votes.

Dividend and dividend policy

Saab’s long-term dividend policy is to distribute 20–40 per cent of

income after tax over a business cycle. For 2011, the Board of Direc-

tors is proposing a dividend of sek 4.50 (3.50) per share. This would

correspond to 21 per cent of net income for 2011 (85).

Saab’s Share Matching Plan

In April 2007, Saab’s Annual General Meeting resolved to offer employees

the opportunity to participate in a voluntary share matching plan where

they can purchase Series B shares in Saab during a 12-month period. Pur-

chases are made through deductions of between 1 and 5 per cent of the

employee’s monthly salary. If the employee retains the purchased shares

for three years after the investment date and is still employed by the Saab

Group, the employee will be allotted a corresponding number of Series B

shares. The plan was introduced in autumn 2007 in Sweden and Norway.

In 2008 it was expanded to include employees in Denmark, Germany, the

UK, the U.S., Switzerland and Australia, and in 2009 it was expanded

again to cover employees in South Africa. In April 2008, Saab’s Annual

General Meeting resolved to introduce a performance-based plan for

senior executives and key employees entitling them to 2–5 matching

shares depending on the category the employee belongs to. In addition to

the requirement that the employee remain employed by Saab after three

years, there is a requirement that earnings per share grow in the range of 5

to 15 per cent.

The Annual General Meetings in 2009, 2010 and 2011 resolved to

renew the share matching plan and performance share plan. The 2011

share matching plan comprises all employees, including senior executives

and key persons. The performance share plan for 2011, which is directed

to senior executives and key persons entitles participants to 1–4 matching

shares, depending on the category the employee belongs to.

In 2007, Saab repurchased 1 million shares, in 2008 and 2009 it repur-

chased 1,340,000 shares per year, and in 2010 it repurchased 838,131 shares

to hedge the plans.

The Annual General Meeting on 7 April 2011 renewed the Board of

Directors’ mandate to repurchase up to 10 per cent of the Company’s

shares, of which 1,340,000 shares to hedge the share matching plan and

performance share plan.

The purpose of the authorisation was to provide the Board with

greater scope in working with the company’s capital structure and enable

acquisitions when considered appropriate, as well as to secure the Group’s

share matching plan. The mandate applied until the next Annual General

Meeting. Repurchases may be effected over the stock exchange or

through offerings to shareholders. It was also proposed that the Board’s

mandate include the possibility to transfer repurchased shares as allowed

by law. Repurchased shares can also be transferred in connection with the

company’s share matching plan and performance share plan.

During the second quarter 2011, Saab announced that the Board had

decided to utilise its authorisation for repurchases and that the repur-

chases could be made on NASDAQ OMX Stockholm at a price within

the registered share price interval on each occasion.

No shares were repurchased in 2011.

THE SAAB SHARE


SHAREHOLDER INFORMATION > THE SAAB SHARE

Swedish owners

Investor 30.0

Wallenberg Foundations 8.7

Swedbank Robur funds 4.8

Unionen 2.5

AFA Insurance 2.3

SEB funds 2.1

Fourth AP Fund 2.1

Other Swedish owners 21.1

Foreign owners

Orkla ASA, Norway 1.6

Norweigan State 0.8

DFA Funds, USA 0.6

Abu Dhabi Investment Authority, UAE 0.5

Other Foreign owners 22.9

SHARE OF CAPITAL, %

SAAB B, 1 JANUARY 2007–31 DECEMBER 2010 EQUITY PER SHARE, SEK

60

90

120

150

20112010200920082007

2 000

4 000

6 000

8 000

50

100

150

200

250

2007 2008 2009 2010 2011

B share, SEK OMX Stockholm_PL, SEK Thousands of shares traded (incl. off-floor trading)

-5

0

5

10

15

20

25

20112010200920082007 1)

EARNINGS AND DIVIDEND PER SHARE, SEK

Earnings after dilution Dividend per share

1) Proposal by Board of Directors



Data per share 2006–2011

2011 2010 2009 2008 2007 2006

Closing prices 1)

at year-end, SEK 142.40 123.00 118.00 71.50 129.50 210.00

high for the year, SEK 155.00 128.75 118.00 180.00 216.50 218.00

low for the year, SEK 104.20 84.10 50.50 51.00 116.50 154.50

Market capitalisation, MSEK 2) 15,543 13,425 12,879 7,804 14,135 22,921

Average daily turnover, no. of shares1) 186,060 192,507 234,069 255,782 240,390 148,965

Yield, % 3.2 2.8 1.9 2.4 3.5 2.0

Price/equity, % 116 114 118 83 128 234

P/E ratio 7.0 31.0 18.8 -32.2 7.4 17.6

P/EBIT, multiple 5.3 13.8 9.4 47.0 5.4 13.1

Sales

before dilution, SEK 223.8 232.2 231.8 221.33 211.85 192.97

after full dilution, SEK 215.3 223.9 225.8 218.01 210.91 192.97

Net income for the year (attributable to Parent Company’s shareholders)

before dilution, SEK 21.2 4.12 6.45 -2.31 17.68 11.91

after full dilution, SEK 20.4 3.97 6.28 -2.313) 17.60 11.91

Equity per share, SEK 122.94 107.66 99.91 86.49 101.53 89.80

Cash flow from operating activities

before dilution, SEK 22.78 42.65 15.95 8.87 -12.40 8.88

after full dilution, SEK 21.91 41.11 15.54 8.74 -12.34 8.88

Dividend (2011 proposal), SEK 4.50 3.50 2.25 1.75 4.50 4.25

Dividend /net income, % 21 85 35 - 25 36

Total dividend, MSEK 474 367 237 187 491 464

Dividend growth, % 29 55 27 - 6 6

Number of shareholders 29,059 31,125 32,555 32,164 28,181 29,413

Share of foreign ownership, capital, % 26 27 40 40 39 38

Share of foreign ownership, votes, % 24 24 35 34 34 32

Average number of shares before dilution 104,982,315 105,217,786 106,335,553 107,515,049 108,668,700 109,150,344

Number of shares, excluding Treasury shares, at year-end 105,331,958 104,717,729 105,511,124 106,829,893 108,150,344 109,150,344

Number of shares after full dilution 109 150 344 109,150,344 109,150,344 109,150,344 109,150,344 109,150,344

1) Saab B on NASDAQ OMX Stockholm.

2) At full dilution

3) No dilution effect if net income is negative.



Shareholders

As of 31 December 2011 according to SIS Ägarservice

Thousands of shares

Per cent of share

capitalPer cent of

votes

Investor AB, Sweden 32,778 30.0 40.8

Wallenberg foundations, Sweden 9,469 8.7 7.7

Swedbank Robur funds, Sweden 5,288 4.8 4.3

Unionen, Sweden 2,734 2.5 2.2

AFA Insurance, Sweden 2,465 2.3 2.0

SEB funds, Sweden 2,277 2.1 1.9

Fourth AP Fund, Sweden 2,258 2.1 1.8

SHB funds, Sweden 2,250 2.1 1.8

Orkla ASA, Norway 1,790 1.6 1.5

Länsförsäkringar funds, Sweden 1,081 1.0 0.9

Nordea funds, Sweden 1,003 0.9 0.8

RAM One Fund, Sweden 902 0.8 0.7

Norwegian state 840 0.8 0.7

Foundation Asset Management AB, Sweden

722 0.7 0.6

DFA funds, USA 674 0.6 0.6

SHB, Sweden 541 0.5 0.4

Abu Dhabi Investment Authority, UAA

529 0.5 0.4

SEB Trygg Liv, Sweden 472 0.4 0.4

Svolder AB, Sweden 454 0.4 0.4

SEB AB, Sweden 446 0.4 0.4

Subtotal, 20 largest shareholders 68,973 63.2 70.3

Other Swedish shareholders 11,392 10.4 9.3

Other international shareholders 24,967 22.9 20.4

Repurchased shares 3,818 3.5 -

Total 109,150 100 100

Distribution of shareholders

Number of shares

Number of share-

holders

Per cent of share-

holdersNumber of

shares

Per cent of share

capital

1–500 24,703 85.01 2,887,703 2.64

501–1,000 2,711 9.33 2,039,287 1.87

1,001–5,000 1,244 4.28 2,266,004 2.07

5,001–10,000 113 0.39 825,260 0.76

10,001–15,000 61 0.21 761,829 0.70

15,001–20,000 17 0.06 303,452 0.28

20,001– 210 0.72 100,066,809 91.68

Total1) 29,059 100.00 109,150,344 100.00

1) Including 3,818,386 repurchased B shares

Shares and votes, 31 December 2011

Share classNumber of

sharesPer cent of

total sharesNumber of

votesPer cent of

votes

Series A 1,907,123 1.7 19,071,230 15.6

Series B 107,243,221 98.3 103,424,835 84.4

Total1) 109,150,344 100.0 122,496,065 100.0

1) The number of votes excludes 3,818,386 B shares which were repurchased to secure the Group’s

Share Matching Plan. The repurchased shares are kept as Treasury stock.

Share issues, etc.

Increase in share capital, MSEK

Paid-in amount MSEK

2002, Conversion1) 50,699 shares 0.8 4.6

2003, Conversion1) 7,189 shares 0.1 0.7

2004, Conversion1) 2,632,781 shares 42.1 239.6

1) 1998 convertible debenture loan

ANALYSTS WHO COVER SAAB

ABG SUNDAL COLLIER, STOCKHOLM

CARNEGIE, STOCKHOLM

DANSKE MARKETS EQUITIES, STOCKHOLM

ENSKILDA SECURITIES, STOCKHOLM

GOLDMAN SACHS, LONDON

SWEDBANK, STOCKHOLM

ERIK PETTERSSON, [email protected]

MIKAEL LASÉEN, [email protected]

CARL GUSTAFSSON, [email protected]

BJÖRN ENARSON, [email protected]

STEFAN CEDERBERG, [email protected]

DAVID H. PERRY, [email protected]

MATS LISS, [email protected]



January–March April–June

MSEK 2011 Operating margin 2010 Operating margin 2011 Operating margin 2010 Operating margin

Sales

Aeronautics 1,508 1,703 1,835 1,698

Dynamics 962 986 1,084 1,167

Electronic Defence Systems 1,035 940 1,094 1,159

Security and Defence Solutions 1,303 1,200 1,272 1,427

Support and Services 907 743 781 834

Combitech 239 219 257 232

Corporate 4 - 4 1

Internal sales -506 -407 -466 -525

Total 5,452 5,384 5,861 5,993

Operating income

Aeronautics 79 5.2% 53 3.1% 157 8.6% 18 1.1%

Dynamics 89 9.3% 85 8.6% 123 11.3% 174 14.9%

Electronic Defence Systems 36 3.5% 37 3.9% 181 16.5% 114 9.8%

Security and Defence Solutions 71 5.4% -96 -8.0% 67 5.3% -106 -7.4%

Support and Services 75 8.3% 56 7.5% 107 13.7% 119 14.3%

Combitech 28 11.7% 18 8.2% 20 7.8% 21 9.1%

Corporate -10 - -27 - 42 - -64 -

Total 368 6.7% 126 2.3% 697 11.9% 276 4.6%

Net financial items 16 -27 -149 -65

Income before taxes 384 99 548 211

Net income for the period 277 72 418 174

Attributable to Parent Company’s

shareholders

279 69 425 177

Earnings per share after dilution 2.56 0.63 3.89 1.62

No. of shares after dilution, thousands 109,150 109,150 109,150 109,150

July-September October–December

MSEK 2011 Operating margin 2010 Operating margin 2011 Operating margin 2010 Operating margin

Sales

Aeronautics 1,268 1,278 1,740 2,062

Dynamics 724 1,023 1,565 1,565

Electronic Defence Systems 979 905 1,453 1,350

Security and Defence Solutions 1,310 1,382 1,819 2,201

Support and Services 786 756 954 1,070

Combitech 200 187 304 277

Corporate - 37 - 36

Internal sales -429 -564 -488 -508

Total 4,838 5,004 7,347 8,053

Operating income

Aeronautics 22 1.7% 57 4.5% 74 4.3% 63 3.1%

Dynamics 60 8.3% 31 3.0% 212 13.5% 32 2.0%

Electronic Defence Systems 42 4.3% 6 0.7% 38 2.6% -58 -4.3%

Security and Defence Solutions 109 8.3% 130 9.4% 147 8.1% 209 9.5%

Support and Services 79 10.1% 69 9.1% 165 17.3% 107 10.0%

Combitech 3 1.5% 7 3.7% 41 13.5% 35 12.6%

Corporate 902 - 22 - -18 - -137 -

Total 1,217 25.2% 322 6.4% 659 9.0% 251 3.1%

Net financial items 12 -48 -37 -59

Income before taxes 1,229 274 622 192

Net income for the period 1,103 188 419 20

Attributable to Parent Company’s

shareholders

1,108 179 413 8

Earnings per share after dilution 10.15 1.64 3.78 0.08

No. of shares after dilution, thousands 109,150 109,150 109,150 109,150

QUARTERLY INFORMATION


SHAREHOLDER INFORMATION > QUARTERLY INFORMATION

MSEK, unless otherwise indicated 2011 2010 2009 2008 2007 2006 2005 2004 4) 2003

Order bookings 18,907 26,278 18,428 23,212 20,846 27,575 17,512 16,444 19,606

Order backlog at year-end 37,172 41,459 39,389 45,324 47,316 50,445 42,198 43,162 45,636

Sales 23,498 24,434 24,647 23,796 23,021 21,063 19,314 17,848 17,250

Foreign market sales, % 63 62 69 68 65 65 56 48 46

Defence sales, % 84 83 83 83 81 79 82 80 80

Operating income (EBIT) 2,941 975 1,374 166 2,607 1,745 1,652 1,853 1,293

Operating margin, % 12.5 4.0 5.6 0.7 11.3 8.3 8.6 10.4 7.5

Operating margin before depreciation/am-

ortisation and write-downs excluding

leasing (EBITDA), % 17.4 9.0 10.5 6.4 16.0 12.0 11.3 13.1 11.1

Income after financial items 2,783 776 976 -406 2,449 1,693 1,551 1,712 1,073

Net income for the year 2,217 454 699 -242 1,941 1,347 1,199 1,310 746

Total assets 31,799 29,278 30,430 32,890 33,801 32,771 30,594 27,509 28,704

of which Saab Aircraft Leasing 2,625 3,049 3,362 3,226 3,415 3,397 4,887 5,314 6,181

of which advance payments, net 1,022 643 442 897 2,558 3,642 3,528 2,860 3,990

of which shareholders’ equity 13,069 11,444 10,682 9,330 11,008 10,025 9,493 8,221 7,003

equity per share, SEK 1) 122.94 107.66 99.91 86.49 101.53 89.80 84.10 74.89 65.75

Net liquidity/Net debt excluding interest-

bearing receivables and after deduction of

provisions for pensions 4,735 2,382 -1,631 -3,061 -2,802 -261 5,144 3,211 3,149

Net liquidity/ debt 5,333 3,291 -634 -1,693 -1,627 605 2,856 781 495

Cash flow from operating activities 2,392 4,487 1,696 954 -1,304 969 2,541 865 1,348

Operating cash flow 2,477 4,349 1,447 659 -1,603 -1,900 2,645 325 545

Average capital employed 13,987 13,743 13,775 13,994 13,430 12,789 12,925 12,386 11,629

Return on capital employed, % 22.2 7.9 10.3 1.4 19.4 14.5 14.6 17.3 12.7

Return on equity, % 18.1 4.1 7.0 -2.4 18.5 13.8 13.5 16.7 10.8

Profit margin, % 13.21 4.47 5.78 0.82 11.4 8.83 9.73 11.74 8.5

Capital turnover rate, multiple 1.68 1.78 1.79 1.70 1.71 1.65 1.49 1.47 1.48

Equity/assets ratio, % 41.1 39.1 35.1 28.4 32.6 30.6 31.0 29.9 24.4

Interest coverage ratio, times 9.58 3.20 3.16 0.35 21.4 13.47 6.08 6.08 3.70

Earnings per share before dilution, SEK 2) 21.19 4.12 6.45 -2.31 17.68 11.91 10.89 11.78 7.00

Earnings per share after dilution, SEK 3) 20.38 3.97 6.28 -2.31 17.60 11.91 10.89 11.78 6.91

Dividend, SEK 4.50,5) 3.50 5) 2.25 1.75 4.50 4.25 4.00 3.75 3.50

Gross capital expenditures for tangible

fixed assets 325 262 197 386 395 433 296 348 472

Research and development costs 5,116 5,008 4,820 4,141 4,523 3,537 3,546 3,929 3,690

Number of employees at year-end 13,068 12,536 13,159 13,294 13,757 13,577 12,830 11,936 13,414

1) Number of shares, excluding treasury shares, as of 31 December 2011: 105,331,958; 2010: 104,717,729; 2009: 105,511,124; 2008: 106,829,893; 2007: 108,150,344; 2006/2005/2004: 109,150,344 and 2003: 106,517,563.

2) Average number of shares 2011: 105,214,551; 2010: 105,217,786; 2009: 106,335,553; 2008: 107,515,049; 2007: 108,668,700, 2006/2005: 109,150,344; 2004: 108,234,126 and 2003: 106,513,969.

3) Average number of shares 2011/2010/2009: 109,150,344; 2008: 107,515,049; 2007/2006/2005: 109,150,344; 2004: 108,234,126; 2003: 109,247,175. Conversion of debenture loan concluded 15 July 2004.

4) Restated according to IFRS, previously not restated.

5) 2011 Board of Directors proposal.

MULTI-YEAR OVERVIEW


SHAREHOLDER INFORMATION > MULTI-YEAR OVERVIEW

ANNUAL GENERAL MEETING 2012 19 APRIL

INTERIM REPORT JANUARY–MARCH 2012 19 APRIL

INTERIM REPORT JANUARY–JUNE 2012 19 JULY

INTERIM REPORT JANUARY–SEPTEMBER 2012 18 OCTOBER

Financial information can be ordered by Telephone +46 13 16 92 08

or accessed online at www.saabgroup.com

Contact

Ann-Sofi Jönsson, Investor Relations,

Telephone +46 8 463 02 14, [email protected]

FINANCIAL INFORMATION 2012

Headquarters

Saab AB

p.o Box 12062

se-102 22 Stockholm, Sweden

Visiting address: Gustavslundsvägen 42

Phone: +46 8 463 00 00

Fax: +46 8 463 01 52

www.saabgroup.com

For contact details to all offices, visit www.saabgroup.com

Linköping

Saab AB

P.O. Box 14085

se-581 88 Linköping, Sweden

Visiting address: Bröderna Ugglas gata

Phone: +46 13 18 00 00

Fax: +46 13 18 00 11

CONTACT DETAILS


SHAREHOLDER INFORMATION > FINANCIAL INFORMATION 2012 AND CONTACT DETAILS

Production: Intellecta Corporate Print: Larsson Offsettryck AB 2012 Photo: Peter Karlsson, Christian Hagward, Shutterstock and Saab’s image bank

GLOSSARY

GLOSSARY

AESA Active Electronically Scanned Array

AEW&C Airborne Early Warning & Control

AMB Agile Multi-Beam

ATM Air Traffic Management

ASD Aerospace and Defence Industry Association

BOL High capacity counter measure dispenser for chaff or flares

C4I Command, control, communications, computers and

intelligence

C4ISR Command, control, communications, computers,

intelligence and surveillance and reconnaissance

CISB Swedish-Brazilian Centre for Research and Innovation

EDA European Defence Agency

ETPS Empire Test Pilot’s School

FMV The Swedish Defence Materiel Administration

GIS Geographic Information Systems

HOTAS Hands On Throttle And Stick

ICT Information and communications technology

IDAS Integrated self-defence for airborne platforms

IFBEC Forum on Business Ethical Conduct

ILS Instrument Landing System

LEDS Land Electronic Defense System

LFV Board of Civil Aviation

MidCAS Mid Air Collision Avoidance System

MMRCA Medium Multi-Role Combat Aircraft

NATO North Atlantic Treaty Organization

NLAW Next Generation Light Anti-tank Weapon

OECD Organisation for Economic Co-operation and Development

PPP Public-Private Partnership

R&D Research and development

RAKEL Sweden's national communication system for collaboration

and management

RT Remote Tower

RTAF Royal Thai Air Force

SAFE Situation Awareness for Enhanced Security

SESAR Single European Sky ATM Research

SIPRI Stockholm International Peace Research Institute

SITC Saab India Technology Centre

STRiC Operations Room and Air Surveillance

TUAV Tactical Unmanned Aerial Vehicle

UCAV Unmanned Combat Aerial Vehicle

UN United Nations

WISE Widely Integrated Systems Environment