Annual Report 2008

42 45 43 85 83 86 84 90 46 44 88 113 112 110 102 104 100 – 46 husqvarna.se, +46 8 738 83 35 @

husqvarna.se, +46 80 8 738 70 @ Income statement Balance sheet Cash flow statement Change in equity husqvarna.se, +46 8 738 64 94 @ Parent Company Definitions Notes Proposed Distribution of Earnings Auditor’s Report Five-year review Quarterly data Corporate Governance Report 2008 Board of Directors and Auditors Group Management Sustainable development The Husqvarna share Annual General Meeting 2009 History Press Hotline press Tobias Norrby Investor Relations Manager tobias.norrby Contacts Åsa Stenqvist Head of Group Staff Communications and Investor Relations ir 8 7 6 4 1 2 13 12 41 14 39 20 38 34 40 14–25 26–37 38–45 2008

Annual General Meeting Interim report January–March Interim report January–June Interim report January–September

ontents Efficient supply chain Broad product offering Powerful global distribution network Strong brands Professional Products Balance sheet Cash flow statement Statement of shareholders´ equity Consumer Products management Risk Income statement Financial goals Business areas

Report by the Board of Directors

Highlights of the year Report by the President Strategy Financial Statements Group C Financial information 2009 23 April 8 May July 17 23 October The Annual Report is distributed to all new shareholders for the year and to those who have explicitly requested one. The Annual Report and other financial reports are also available at www.husqvarna.com/ir. Printed copies can be ordered from the web site. 2008eport R nnual A 8 HUS QVARNA AN NUAL REP ORT 200

HUSQVARNA ANNUAL REPORT 2008 200 ORT REP NUAL AN QVARNA HUS 8 : SE-561 82 Huskvarna82SE-561 : www.husqvarna.com • Telefax:10 68 +4614 36 • Mailingaddress • Telephone:00 65 +4614 36 • Telephone:00 65 +4614 36 Mailing address: 30224,BoxStockholm25 SE-104 • • Husqvarna (publ) AB Jönköping Registered office Registered HeadHusqvarnaoffice (publ)AB Visitingaddress: Lindhagensgatan 126 Visitingaddress: Drottninggatan 2 42 45 43 85 83 86 84 90 46 44 88 113 112 110 102 104 100 – 46 husqvarna.se, +46 8 738 83 35 @

Annual General Meeting Interim report January–March Interim report January–June Interim report January–September

Report by the Board of Directors

Husqvarna Europe history 10 6 iN BRIEF North America 300 years 9 4 of INNOVATION

Husqvarna is the world’s largest manufacturer of lawn mowers and chainsaws as well as handheld, petrol-POWERED garden prod- Net sales 2008, SEKbn Rest of the World ucts such as trimmers and blowers. the group is also the global Consumer Products 1 2 leader in cutting equipment and diamond tools for the construc- Professional Products tion and stone industries. The modern logotype reflects the past, but also signals that Husqvarna still aims for the future. The product range includes products for both consumers and Production facilities professional users. The Group’s products are sold in more than 100 Subsidiaries or distributors countries world wide. Husqvarna’s products are sold net sales in 2008 amounted to SEK 32.3 BILLION and the average through 25,000 dealers world wide. Through the acquisition of Gardena the product range was number of employees was approximately 15,700. 2007 extended to include equipment and garden tools.

Consumer products product offering market position brands Husqvarna once again becomes an independent 2006 stock listed company.

Lawn mowers, garden tractors, trimmers, chain- World’s largest producer of lawn mowers and 29%* saws, leaf blowers, hedge trimmers and snow chainsaws, as well as handheld petrol-powered gar- Launch of Automower® the world’s first solar powered robotic a m e r i c a throwers. den equipment such as trimmers and leaf blowers. 1995 lawn mower. One of the two largest in garden tractors. Gardena is the market leader in Europe for irrigation prod- n o r t h ucts and garden tools. 1986 Production start for the first riding lawn mower developed in-house.

Lawn mowers, garden tractors, trimmers, chain-

t h e saws, leaf blowers, hedge trimmers and snow 32%* throwers. Products for irrigation and ponds as well

o f Electrolux acquires Husqvarna, start of the expansion within as garden tools. 1978 w o r l d outdoor products. r e s t

Husqvarna starts production of chainsaws and engine-driven 1959 lawn mowers. professional products

Product range is extended to include motor bikes, Premium chainsaws, clearing saws and accessories Husqvarna and Jonsered are two of the top three 1903 17%* which were manufactured until 1987. such as chains, blades, protective clothing and leading brands for professional chainsaws in the tools. global market, with a combined market share of approximately 40%. f o r e s t r y 1896 Production of bicycles starts, continues until 1962.

12%* Riders and walk-behind lawn mowers, zero-turn One of the world’s largest manufacturer of hand- Husqvarna starts production of sewing machines and mowers, specialty turf-care equipment, trimmers, held products. 1872 kitchen equipment in cast-iron. a n d hedge trimmers and leaf blowers. g a r d e n

l a w n Husqvarna is founded as a weapons foundry for 1689 the Swedish armed forces.

10%* Floor saws, wall and wire saws, tile and masonry World leader in diamond tools and cutting equip- saws, drill motors, machines for surface prepar ment for the construction and stone industries. ation, power cutters and diamond tools, diamond The oldest version of Husqvarna’s logotype symbolizes the tools for the stone industry. 1689sight and the barrel on the musket. construction

* The graphs show share of total Group sales. husqvarna in brief

Husqvarna Europe history 10 6 iN BRIEF North America 300 years 9 4 of INNOVATION

Consumer products product offering market position brands Husqvarna once again becomes an independent 2006 stock listed company.

Lawn mowers, garden tractors, trimmers, chain-

t h e saws, leaf blowers, hedge trimmers and snow 32%* throwers. Products for irrigation and ponds as well

o f Electrolux acquires Husqvarna, start of the expansion within as garden tools. 1978 w o r l d outdoor products. r e s t

Husqvarna starts production of chainsaws and engine-driven 1959 lawn mowers. professional products

l a w n Husqvarna is founded as a weapons foundry for 1689 the Swedish armed forces.

* The graphs show share of total Group sales. times rate, turn-over Capital % equity, on Return employees of number Average flow,SEKm cash Operating % employed, capital on Return SEK** share, per Dividend SEK** share, per Earnings SEKm period, the for Income % margin, Operating SEKm income, Operating Gross margin, % margin, Gross ** • o high * SEKm sales, Net Key data* • • • •

particularly in the second half of the year. the of half second the in particularly Europe, and America North both in demand Lower growth for premium chainsaws in North America. North in chainsaws premium for growth good to mainly due well, perform to continued Forestry channel. dealer servicing the in products sumer con Husqvarna-branded for growth high Continued Products. Professional within area product Construction the to and Products, Consumer to mainly referred income operating in decline The 2,361m 34%SEK by to (3,564). income operating and (33,284) 32,342m SEK to 3% by declined sales Net 2006 are restated for bonus issue. The Board proposes no dividend for 2008. 2008. for dividend no proposes Board The issue. bonus for restated are 2006 For defintions, see page 46. Key data for 2004 are combined financial statements, 2005 is pro forma. pro is 2005 statements, financial combined are 2004 for data Key 46. page see defintions, For f t Net sales by geographical area bygeographical sales Net area bybusiness sales Net h l igh e y Rest of the World, 10% World, the of Rest Professional Products, Professional Products, Consumer North America, 40% America, North SEK 12,493m SEK SEK 19,849mSEK Europe, 50% Europe, 32,342 ear 15,720 1,288 2,361 2,013 2008 0.00 3.34 15.8 10.7 29.0 ts 1.5 7.3 - 33,284 16,093 3,564 2,036 1,843 • • • 2007 5.29 2.25 28.6 10.7 29.4 17.6 robotic lawn mower, Automower lawn robotic the of version anew included 2008 in launched Products in Jenn Feng. Jenn in strengthened by acquisition of outdoor-products operation Asia in capacity production and presence Group’s industry. construction the for robot ademolition and performance, mental environ improved with chainsaws new cells, solar and as of 1 October 2008. 1October of as CEO and President new as office took Yngen Magnus 1.8 Employees by geographical area bygeographical Employees area bybusiness income Operating

29,402 11,412 1,862 3,121 2006 4.83 23.8 32.5 10.6 1.73 27.0 535 2.4

Rest of the World, 15% World, the of Rest Professional Products, Professional Consumer Products, Products, Consumer North America, 40% America, North Europe, 45% Europe, SEK 1,587mSEK 28,768 11,681 ® SEK 963m SEK 2,927 1,641 powered by battery battery by powered 2005 4.26 26.6 10.2 40.1 24.1 949 2.6 —

27,202 11,657 2,323 2,073 2,983 2004 26.9 11.0 7.78 41.9 31.1 - 2.9 —

1 HUSQVARNA ANNUAL REPORT 2008 report by the president

“I took over as ceo on 1 october 2008. In November we started work on further devel opment of the Group’s str ategic pl an. This involves“ making proper use of the potential of our brands, simultan eously making the supply chain more efficient.

Although 2009 will be a difficult year in terms of market conditions, I am convinced that there are very good opportun ities for Husqvarna to strengthen its

ANNUAL REPORT 2008 market positions.” HUSQVARNA

2 report by the president

Husqvarna has a history of stable growth and high profit- ing the year. Integration of this operation has also gener- ability over many years. The Group’s performance in 2008 ated opportunities for increasing efficiency in product was weak however, as a result of the sharp deterioration in development and production. market conditions during the year. In December the Group completed the acquisition of Group sales in 2008 declined by 3%. Excluding costs for Jenn Feng in China, which has annual sales of approxi- personnel cutbacks of SEK 316m, operating income declined mately SEK 800m. The company focuses on chainsaws and by 25% and margin was 8.3% in comparison with 10.7% in 2007. other outdoor products for the lower price segments, The decline in operating income was due mainly to which are produced at a plant in China. In the long term lower sales volumes for consumer products, particularly in there is a substantial potential for creating growth for sev- the US, and for professional products for the construction eral of our tactical brands in both Asia and in our traditional industry, as well as higher material costs. In light of the markets, on the basis of Jenn Feng’s product range and its weaker demand, we implemented substantial production cost-efficient production. cutbacks in order to reduce inventories, which had a considerably adverse effect on income, due to lower cost Strategic review absorption at our plants. In November we started work on further development of the Group’s strategic plan. Continued growth in core areas Although Husqvarna has a strong position, we must set Despite difficult market conditions, there were positive priorities for both the short and the long term. This involves trends during the year in several product areas. Sales of pro- making proper use of the potential of our brands, simultan fessional chainsaws increased, particularly in the US. Total eously making the supply chain more efficient by consoli- sales and operating income for forestry products were dating production, and utilizing opportunities in low-cost unchanged. This was enabled mainly by launches of new countries. We have to maintain a high rate of product ANNUAL REPORT 2008 products with both improved performance and lower pro- development in prioritized areas. This is especially import duction costs, and by rationalization of production. ant with reference to the demands for greater energy effi- Other products showing positive performance included ciency and reduced emissions which our petrol-powered Riders, the robotic lawn mower Automower®, and premium products will have to satisfy. Husqvarna aims to be the HUSQVARNA

Husqvarna-branded products for consumers. leader also in this respect. We must also continue to

expand our distribution network. 3 Decision on cost-cutting measures With reference to the weak market conditions, we imple- Outlook for 2009 mented substantial reductions in capacity in order to Market conditions will remain weak in 2009, with lower reduce costs within the Group. This affects 960 of the com- demand in both Europe and the US. We will maintain a high pany’s approximately 15,700 employees. The total cost for level of flexibility and be prepared to make rapid adjust- these adjustments amounts to SEK 316m, which was ments if market conditions deteriorate further. charged against income for 2008. Estimated annual savings We will focus on maintaining costs and inventory at low amount to approximately SEK 350m, and are expected to levels and prioritizing cash flow. With regard to costs, the take full effect as of the third quarter of 2009. implemented cutbacks will generate effects during the second half of 2009. Integration of acquisitions will also make a Integration of acquisitions positive contribution, as we are increasing our efforts to Work on integrating acquired operations continued during realize potential synergies. the year. As retailers have been cautious in terms of inventory The Gardena sales organization is now fully integrated in build-ups for the coming season, production will be ramped the Group’s organization for the mass market in Europe. The up later. We expect a significantly weaker start of the season ongoing coordination of logistics will enable a reduction in in 2009 in comparison with the very strong start in 2008. the number of warehouses. The Gardena product offering Although 2009 will be a difficult year in terms of market for 2009 has been expanded with electrically powered lawn conditions, I am convinced that there are very good oppor- mowers and new trimmers, developed by our joint product tunities for Husqvarna to strengthen its market positions development resources, and based on models in the Group’s both this year and in the years to come. product range. These products have been received very well and have expanded Gardena’s presence with retailers. In the Zenoah operation, work is continuing on develop ing common platforms for such products as chainsaws and Magnus Yngen leaf blowers, and several new products were launched dur- President and CEO Leading Global market positions

No. 1 Chainsaws No. 1 Other handheld petrol-powered products, e.g. clearing saws and trimmers No. 1 Lawn mowers No. 1–2 Garden tractors No. 1 Cutting equipment and diamond tools for the construction and stone industries No. 1 Consumer products for irrigation in Europe ANNUAL REPORT 2008 HUSQVARNA

Products Professional

organic growth and acquisitions, while good profitability has been maintained. been has profitability good while acquisitions, and growth organic H approx for

and a competitive product offering based on advanced technical competence. technical advanced on based offering product acompetitive and H points Strong g T products. power H date. acquisition of as * Annualized Products Consumer 2006–2008 Acquisitions Asia. in suppliers of number the and base production the expanding by as well as products, complementary and G the strengthened have sitions S approximately of sales combined with operations ten S positions market reinforce Acquisitions demand. in variations weather-related G the enables chain supply flexible highly The s ubsequent to the stock-exchange listing in June 2006, H 2006, June in listing stock-exchange the to ubsequent usqvarna’s market positions have been built over a long period through both both through period along over built been have positions market usqvarna’s usqvarna has a portfolio of strong brands, a broad global distribution network, network, distribution global abroad brands, strong of aportfolio has usqvarna usqvarna i usqvarna lobal market for product cate product for market lobal The G The trate

roup has a cost-efficient production system based on large volumes. volumes. large on based system production acost-efficient has roup

2008 s 2008

2007 2007

s 2007

2007 2006

d 2006

2008

Y g 2007 ear i mately sales. 85% of s the world’s lar world’s s the Meco, U Meco, Australia g Concepts, King Klippo, S Klippo, Japan Zenoah, Komatsu China Jikai, Jenn F Jenn Company andvik Nora, S Nora, andvik off-Cut, U off-Cut, ixon, U ixon, ardena, G ardena, he Group has lead has Group he China eng, ** M& ** S S weden A A S roup additionally by providing strong brands brands strong providing by additionally roup i ermany A = Marketing and S and S =Marketing d weden g g est producer of outdoor of producer est Y F

equipment polishing mowers Lawn concrete in sawing early for Equipment

blowers leaf trimmers, Chainsaws, D

mowers lawn Zero-turn

etc. generators, mowers lawn Chainsaws,

equipment and garden garden and Products S roup to manage seasonal and and seasonal manage to roup rrigation systems systems rrigation saws loor g iamond tools tools iamond tools iamond and rinding or ales. ales. i i es wh es n EK 7,000m. These acqui These EK 7,000m. g pos

usqvarna has acquired acquired has usqvarna i ch accountch i t i ons i ons S s EKm* 3,800 1,200 ales, ales, n the 400 800 240 160 150 54 30 65

- range Product d range Product range Product range Product range Product Japan in distribution range, Product China in Production distribution range, Product brand McCulloch products, lowspec. China, in Production brand, distribution range, product s complementary New, acquisition for Reason

c Effi o P Stron Broa network dis ower hai ffer tr c

n i d pro ib s ent i g b n f ut g ul g distribution Product exchanges, exchanges, Product administration administration distribution exchanges, Product distribution production, distribution Purchasing, exchanges, Product production, M& purchasing, exchanges, product development, purchasing Product Production, production development, M& Product purchasing, production, Components, production administration, purchasing, development, S i ran on ynergies** ales, product product ales, ist uppl d S ribution, lo uct , distribution ds b y al

5 HUSQVARNA ANNUAL REPORT 2008 6 HUSQVARNA ANNUAL REPORT 2008 Higher sales under premium brands premium under sales Higher G of 10% approximately for accounts and segment, premium the in position strong avery has brand The market. consumer European the in equipment den Gardena G The market. this in sales higher to contributed which S mately Products. Consumer by sales of share stantial sub a for account now and years five past the over 10% approximately of growth annual average shown have They dealers. servicing through mainly sold are products These products. consumer performance high- includes also and expanded, steadily been has segment. premium the in sold are quality. and formance per high leadership, technical for stands brand The products. handheld other and chainsaws for larly particu years, many for brand global astrong been Products. Professional for sales of G total of 40% than Husqvarna channels. sales ponding corres and segments customer specific addresses The b g Stron roup sales. Market research has consistently shown shown consistently has research Market sales. roup brand-building. in invest to continue will roup *Other pr I H the under products of range The 44% ran nvestment in marketing increased by approxi by increased marketing in nvestment Husqvarna Pr G oduction forothercompanie’ roup has a portfolio of strong brands which which brands strong of portfolio a has roup EK 100m in 2008, primarily in North America, America, North in primarily 2008, in EK 100m emium brandsincludeJonser is the leading brand for irrigation and gar and irrigation for brand leading the is 2003 is the major brand, accounting for more more for accounting brand, major the is ds T actical brands roup sales as well as the majority majority the as well as sales roup 2008 H usqvarna-branded products products usqvarna-branded s brands ed, Zenoah,KlippoandDiamantBoart. Gar dena H usqvarna has has usqvarna usqvarna brand brand usqvarna Other pr 62% Pr emium emium brands - - - - - S The G The brands Other a strong position in S in position a strong with Kingdom, United the in market consumer the for Flymo market. Japanese Zenoah H to position asimilar with products, maintenance land and estry Jonsered S in strong particularly is and Europe Partner market. mass American North the in products garden and saws Poulan are: sales of terms in them of largest The level. global the at expanded be not will but important are brands These categories. product specific within and markets regional or local in itions in new markets, including Eastern Europe. Eastern including markets, new in presence geographical brand’s the as well as offering G the under G sumers. con among high very is brand the of awareness that * 62 % in 2003–2008. 2003–2008. %in 62 to sales of 44% from rose segment premium the in positioned are that brands under sales of share The TRATE roup has a number of brands with strong pos strong with brands of anumber has roup , a market leader in electrical garden products products garden electrical in leader , amarket and WeedEater and GY , with a similar position to Jonsered in the the in Jonsered to position asimilar , with , which has a corresponding position in in position acorresponding has , which , a leading brand for high-performance for high-performance for brand , aleading ood opportunities exist for increasing sales sales increasing for exist opportunities ood ardena brand by expanding the product product the expanding by brand ardena usqvarna’s in certain markets. certain in usqvarna’s candinavia. , well-known brands for chain for brands , well-known candinavia. - - - dis existing customers. customers. existing G the strengthening and dealers of number total the increasing to as well as dealers, to service and support improving continuously to mitted com is organization sales The advantage. competitive asignificant is and time of period along over built countries. 40 than more in panies com operates which organization, sales global own G the by provided are dealers these for support S world-wide. dealers servicing mately 25,000 approxi through sold are consumers and professionals H dealers. vicing ser and retailers major both at positions strong with H P 1) Refers to the Construction product area. product Construction the to 1) Refers Products Consumer sales of share channels, Distribution Products Professional usqvarna has a powerful global distribution network, network, distribution global apowerful has usqvarna Rest of the World the of Rest America North ower The comprehensive distribution network has been been has network distribution comprehensive The tr ib usqvarna-branded products for both both for products usqvarna-branded f ut Major retailers Major ul g 83% 69% 4% i on network Sears, Lowe’s, Lowe’s, Sears, Walmart etc. Walmart Bauhaus etc. etc. Bauhaus Merlin, OBI, OBI, Merlin, B&Q, Leroy Leroy B&Q, lo roup’s positions with with positions roup’s

Servicing Servicing al dealers ales and and ales 87% 17% 31% roup’s roup’s - Construction - contractors - S TRATE ers in Europe, which creates new growth opportunities. growth new creates which Europe, in ers retail among presence agreater and offering product G of acquisition at egories 8 of the 10 major inretailers Europe. The U the in 25% approximately of share amarket with products, outdoor of retailer S to products Craftsman-branded of supplier main chain. supply the in efficiency greater and renewal product in ments invest through positions these reinforced steadily has U the and Europe both in chains leading the with years many for positions strong maintained ears since the 1980’s. S 1980’s. the since ears I G G The n terms of consumer products, H products, consumer of n terms 9% ardena has leading positions for its product cat product its for positions leading has ardena — — GY 1)

roup’s American operation has been the the been has operation American roup’s Construction Construction contractors, 4% 48% retailers, Major 48% dealers, Servicing channel bydistribution Sales ardena gives the G the gives ardena ears is the world’s largest largest world’s the is ears S . roup a broader abroader roup usqvarna has has usqvarna S . The G . The roup roup - -

7 HUSQVARNA ANNUAL REPORT 2008 STRATEGY

Broad product OFFERING

Husqvarna has a broad, competitive product offering. The Coordination involves establishing a Group-wide process Group has particularly strong positions for handheld prod- for product development that covers all phases, from iden- ucts such as chainsaws, clearing saws and trimmers, as well tification of business opportunities based on customer as for wheeled products such as tractors and lawn mowers. benefits to the launch of a new product. The process is The Group’s goal is to be the leader in the most import being introduced gradually throughout the Group’s oper ant categories. In order to ensure strong partnership with ations, and will also be aligned with Group-wide processes customers, the Group must provide a complete product for purchasing and quality assurance. offering that includes competitive products even in cat egories where it does not aim to be the leader. Reduced environmental impact Husqvarna is the leader in several areas in terms of prod- Advanced technical expertise ucts with reduced environmental impact. The Group’s new Husqvarna has extensive resources and advanced compe- engines comply with the strictest exhaust-emission criteria tence for product development. Expertise in engine tech- in the US and Europe and are also considered to be in com- nology for two-stroke engines for handheld petrol-powered pliance with all currently known future regulations. products has been decisive for achieving a leading position Husqvarna launched environmentally adapted fuels and in the global market. The Group has succeeded in combining lubricants at an early stage. high performance with such vital features as low weight, The Group uses a mix of technological solutions, includ- improved ergonomics, simplified service, reduced exhaust ing catalysts, in order to reduce exhaust emissions and emissions and lower energy consumption. The Group’s achieve optimal performance. Chainsaws with the new expertise and patents in engine technologies, particularly patented X-TORQ® engine feature reductions of up to 60% for handheld products, represent a substantial competitive in exhaust emissions and up to 20% in fuel consumption. advantage. Automower® Solar Hybrid, the latest version of the ANNUAL REPORT 2008 Group’s robotic lawn mower, is powered by batteries and Faster rate of product launches solar cells and is unique in the market. In recent years the Group has been able to launch new Over the next few years the Group will increase invest- products at a faster rate without incurring higher develop- ments in development and marketing of products with ment costs. Coordination with acquired companies can improved environmental performance. HUSQVARNA contribute to even greater efficiency. 8

A revolution in lawn care Automower®, the world’s first robotic lawn mower, was developed by Husqvarna. Automower® is silent and emission-free, and features low energy consumption. It mows the lawn automatically and returns to the docking station when battery power drops to a predefined level. Automower® is available in several versions, tailored for lawn surfaces of up to 3,000 m2. In 2008 Husqvarna launched the Automower® Solar Hybrid , which is driven by both solar cells and a battery. The solar cells enable reduced energy consumption and longer battery life. designed for lawn surfaces of up to 6,000 m 6,000 to up of surfaces lawn for designed fuel consumption. fuel and emissions lower with combined torque and power maximum enable E-TEC X-TORQ in and technology Unique safety. and ergonomics H productivity optimal for Chainsaws Automower 60%. to up by emissions and 20% to up by consumption fuel reducing enables ogy X-TORQ technol ented H X-TORQ interrupted, the mower sends a text message to the cell phone. cell the to message atext sends mower the interrupted, I lawns. large with homeowners as well as users sional I mance, which in turn reduces fuel consumption and emissions. and consumption fuel reduces turn in which mance, perfor chainsaw of optimization automatic enables This engine. the to fuel of flow the control to chip acomputer uses AutoTune technology chainsaws. professional for breakthrough environmental and atechnological sents n 2009 H n 2009 usqvarna’s new pat new usqvarna’s usqvarna chainsaws are built to meet strict demands for performance, performance, for demands strict meet to built are chainsaws usqvarna The new 576 XP new The ® usqvarna will launch the Automower the launch will usqvarna

® 260 ACX for large surfaces large for ACX 260 ® - AutoTune chainsaw will be launched in 2009, and repre and 2009, in launched be will AutoTune chainsaw - means less fatigue. fatigue. less means which grip, stable a more for inlay asoft features dle han rear asymmetric The design handle Improved 2 , and ideal for profes for ideal , and ® 260 ACX, ACX, 260 - f mowing is is f mowing well as reduced emissions. reduced as well as performance of mization opti automatic enables This engine. the to fuel of flow the control to chip computer a uses AutoTune technology AutoTune S TRATE - engines H engines GY - - -

9 HUSQVARNA ANNUAL REPORT 2008 10 HUSQVARNA ANNUAL REPORT 2008 be fitted with attachments for year-round use. year-round for attachments with fitted be 15V2sAW The snow. or clay grass, wet on traction maximum enables easy mowing under bushes or close to fences and walls. and fences to close or bushes under mowing easy enables deck cutting front-mounted The diameter. in cm 20 about only is circle uncut the lock, steering full at and maneuverability, superior Riders the gives steering rear-wheel unique The users. professional H users demanding for Riders Broa BioClip enables deck cutting Combi The seat. acomfort and lighting front gun or a spray lance. aspray or gun aspray anozzle, store can holder Aheight-adjustable terrain. uneven on or grass tall through B tangling. without unwinded I hose. the unwind to order in down G new The Gardena from hose-trolley efficient More garden. the of contours the match to sprinkler the enables settings adjustable 50 of Arange pop-up. installed apermanently or mobile either is unit entire lawns of up to 380 m 380 to up of lawns entire of watering uniform perfectly ensures which system, irrigation Automatic tur I system irrigation Automatic n 2008 G n 2008 usqvarna Riders meet advanced criteria for both consumers and and consumers both for criteria advanced meet Riders usqvarna The 15V2sAW The d pro ® as well as rear discharge. All-Wheel- discharge. rear as well as ardena launched the AquaCon the launched ardena ardena hose-trolley features a folding crank handle, so there’s no need to bend bend to need no there’s so handle, crank afolding features hose-trolley ardena d O uct Rider offers features such as power steering, steering, power as such features offers D Rider FF ER I N G 2 . The irrigation irrigation . The road, large-diameter wheels make it easier to pull the trolley trolley the pull to easier it make wheels large-diameter road, t also features a control that enables the hose to be be to hose the enables that acontrol features t also - D rive (AW rive D ) ensures ) ensures can D can S TRATE GY ensure perfect mowing. perfect ensure to height, cutting and speed appropriate gest S sion. colli of arisk is there e.g. if messages, warning as well as requirements, service and time tery bat remaining width, cutting height, cutting speed, as such information displays screen LC An wheel. steering the on regulators aluminum. and plastic recycled of made mower, Zero-turn years. five within areality become could mower, lawn ride-on ronment-friendly envi and battery-driven silent, This product. aH is Leo Panthera The Leo Panthera Husqvarna B the as award internal materials. of recycling for opportunities new provides which structures, metal complex and large through cut also can “Cobra” purify. to expensive is which water, radioactive secondary generate not does sawing water, no requires S problems. environmental major involves which plants, power nuclear of demolition for used be thus can wire” “Cobra The alubricant. as water for need the without stone, or concrete of sawing difficult for oped H wire diamond Innovative usqvarna’s new C 1200 “Cobra wire” has been devel been has wire” “Cobra C1200 new usqvarna’s Cutting height and width are controlled by by controlled are width and height Cutting a and aRider of ahybrid is Leo Panthera I n 2008 the “Cobra wire” received H received wire” “Cobra the n 2008 ensors enable the Panthera Leo to sug to Leo Panthera the enable ensors est G est usqvarna concept concept usqvarna reen I reen nnovation. usqvarna G usqvarna D - ince the wire wire the ince - - - - roup’s roup’s - shoulder strap. shoulder a into fits that control B friendly plants. ing process as such environments sensitive in as well as outdoors and indoors both demolition light for designed H is robot The industry. construction H to addition latest D radio-controlled new The robot demolition New S TRATE The robot is controlled by auser- by controlled is robot The luetooth-assisted remote remote luetooth-assisted GY usqvarna’s product offering for the the for offering product usqvarna’s XR 310 demolition robot is the the is robot 310 demolition XR usqvarna’s first, first, usqvarna’s -

11 HUSQVARNA ANNUAL REPORT 2008 STRATEGY

Efficient supply chain

Husqvarna has a well-developed production system Increased production and purchasing in with high flexibility in order to handle seasonal and low-cost countries weather-related variations in demand. The Group Acquisitions have given the Group new plants in operates 22 large facilities and the greater share of China and the Czech Republic, and have also pro- production is located at four major specialized plants vided access to a network of local suppliers. In 2009 in the US. Fixed costs comprise approximately 22% of the Group will open a new plant in China with pro- the Group’s total costs. duction that includes chainsaws for the consumer The Group’s American plants are very competitive, market and an annual capacity of approximately on the basis of cost-efficiency and proximity to cus- 1 million units. tomers in the US, which is the largest market for garden The share of production in low-cost countries will products. Husqvarna is a net exporter from the USA. gradually increase in terms of components and prod- The short season for garden products and the ucts for lower price segments. There will also be an dependence on weather conditions can involve rapid increase in purchases of components from low-cost fluctuations in demand. This requires locating part of countries, which amounted to more than 20% in 2008. production close to the major markets in order to ensure prompt deliveries and quality customer service. ANNUAL REPORT 2008 Major plants and product flows Sweden • Premium chainsaws • Clearing saws • Riders HUSQVARNA

• Power cutters 12

China • Low-end chainsaws, USA trimmers, and lawn mowers • Tractors • Construction products • Lawn mowers • Sourcing of low-end handheld • Trimmers electrical products and • Chainsaws components

Major plants before acquisitions Acquired plants Acquisitions in low-cost countries Product ﬂows Organic net sales growth sales net Organic 12 16 –8 –4 % 0 4 8 g T F lon g rapid downturn in demand during the year. the during demand in downturn rapid sharp, the to primarily due was is 2008 in performance G the with line in S unchan stock establ to correspond should • In dividend the term long the Dividend credit long-term for criteria meet should • Capital structure structure Capital a of course the over 10% than • Operating more of margin Profitability acquisitions. complementary through growth • Additional the over 5% • approximately of Annual growth organic sales Net goals financial Long-term ales growth and operating margins have historically been been historically have margins operating and growth ales he Group has alon has Group he 25–50% of income for the period. the for income of 25–50% term. EBI to relation in debt net adjusted seasonally that require to BBB least at to corresponding rating cycle. business cycle. abusiness of course row th and and th row Net salesgrowth, organic, % 04 T g- i D A should not exceed a multiple of 2.5 in the long long the in 2.5 of amultiple exceed not A should 05 oal nanc term f term - i exchan shed shed g 06 ed. 07 roup’s stated goals. H goals. stated roup’s i i nanc n connect n g 08 g ood prof ood e l e >5 i i al al st s g h i n g Operating margin Operating g oals that were were that oals 10 15 % 0 5 i i i

on w on . This is considered considered is . This story of stable of story tab i n 20 06 are are 06 20 n 04 Operating margin, % i usqvarna’s weaker weaker usqvarna’s i l al 05 i i th the the th t y. y. t 06 T he he 07 08 >10 third quarter of 2009. of quarter third S approximately at estimated are savings Annual 2008. for income against S is cutbacks the of cost G the of 960 G the reduce to order in implemented be would cutbacks personnel that decided I reductions cost Ongoing n light of the deterioration in market conditions, it was was it conditions, market in deterioration the of n light Capital structure Capital times 0 1 2 3 4 5 To be achieved by To achieved be produc of relocation e.g. through • Greater cost-efficiency, categories. product profitable • Focus most growing on margin operating high Maintain operations. Group in integration successful and • Rapid technologies. or brands e.g. distribution, in • Synergies acquisitions Complementary network. distribution expand and • Reinforce Husqvarna particularly • Utilize brands, of potential launches. product new of rate • Faster growth Organic tion and increased purchasing from low-cost countries. low-cost from purchasing increased and tion G and Net debt/EBITDA,times ardena. roup’s approximately 15,700 employees. The The employees. 15,700 approximately roup’s 06 EK 350m and will take full effect as of the the of as effect full take will and EK 350m 07 08 roup’s costs. These cutbacks affect affect cutbacks These costs. roup’s EK 316m, which was charged charged was EK 316m, which <2,5 Dividend 10 20 30 40 50 10 20 30 40 50 0 0 % % 0 1 2 3 4 5 * The Board proposes no dividend for 2008. for dividend no proposes Board The Dividend pay-outratio, % Share ofnetincome,% 06 06 07 07 06 07 08 08 08 * - 25 50 25 50

13 HUSQVARNA ANNUAL REPORT 2008

14 HUSQVARNA ANNUAL REPORT 2008 employees of number Average SEKm expenditure, Capital % sales, Group of Share SEKm sales, Net *2004 according to Electrolux reporting for the Outdoor Products segment. For definitions, see page 46. page see definitions, For segment. Products Outdoor the for reporting Electrolux to according *2004 SEKm assets, Net % margin, Operating SEKm income, Operating Key data* PRO C on D s U umer ct 15,778 19,849 8,655 2008 61.4 s 686 963 4.9 20,621 13,640 1,638 8,851 2007 62.0 514 7.9 Gardena is the E the is Gardena 18,335 6,034 5,751 1,415 2006 62.4 524 7.7 uropean leader in irrigation systems. irrigation in leader uropean 18,360 6,054 1,332 5,719 2005 63.8 859 7.3 17,579 4,646 6,041 1,607 2004 64.6 587 9.1

mated at 20–40%. at mated esti are categories product major the in shares market G The tractors. garden of producers largest two the of one is and chainsaws, and blowers leaf trimmers, H growth. show are products branded N tems and garden tools. garden and tems lead four years particularly within wheeled products. wheeled within particularly years four past the over demand declining continuously shown has ket mar American North The America. North and Europe both weather conditions. of aresult as markets, between as well as year-on-year occur can variations Considerable 2–3%, approximately H thirds. two- approximately for accounts America North which the latter accounts for a somewhat greater share of sales. sales. of share greater asomewhat for accounts latter the and World, the of Rest and America –North areas graphical prehens H Share of Group net sales net Group of Share G the by produced equipment of type the for market global The market The usqvarna is the world’s largest producer of lawn mowers, mowers, lawn of producer largest world’s the is usqvarna usqvarna has the market’s most com most market’s the has usqvarna orth A orth G Operations in Consumer Products comprise two geo two comprise Products Consumer in Operations D emand in 2008 was lower than in the previous year in in year previous the in than lower was 2008 in emand ardena is the European market leader in irrigation sys irrigation in leader market European the is ardena roup is estimated at approximately S approximately at estimated is roup i n istorically, annual growth in volume has been been has volume in growth annual istorically, g i pos mer ve product offer product ve Rest oftheWorld, 32% i i ca. P ca. t North America,29% i ons ons rem i n both both n i um H um i usqvarna n E urope and and urope g i n , as well as as well as , Net sales and operating margin operating and sales Net 12,000 15,000 18,000 21,000 EK 80 billion, of of billion, EK 80 SEKm g stron 3,000 6,000 9,000 roup’s global global roup’s 0 C 04 - on Operating margin, % Net sales,SEKm 05 - s g P umer -

06 - - 07 ro the length of the growing season are also important factors. important also are season growing the of length the H equipment. used of ment replace to refers demand of share Asubstantial goods. capital household of consumption private for trends as S margins. profit higher enable normally marketing tained sus and quality high development, product successful S profitability. for essential are development product continuous and cost-efficiency H annually. 1–2% approximately of average an by ing H products. low-end for particulary prices, on pressure ward S Market trends Market European companies G companies European Tool D and Modern D John companies American the are competitors important most The users. professional and consumers H of Most Competitors products. high-performance advanced more or simple years. recent in equipment garden for I ncreasing interest in garden care has stimulated demand demand stimulated has care garden in interest ncreasing 08 tihl. uch brands include H include brands uch istorically, prices for identical products have been declin been have products identical for prices istorically, d D The market features intense competition and down and competition intense features market The The long-term market trend shows a polarization to either either to apolarization shows trend market long-term The uct emand is driven by the general business cycle as well well as cycle business general the by driven is emand 10 12 14 % 0 2 4 6 8 s usqvarna’s competitors sell products for both both for products sell competitors usqvarna’s by quarter sales net of Distribution 10 20 30 40 % 0 ie Company (MT Company ie usqvarna, F usqvarna, Q1 lobal G lobal 4 yearaverage Net sales,% Q2 trong brands that are created by by created are that brands trong owever, weather conditions and and conditions owever, weather Q3 arden Products ( Products arden Q4 lymo and G and lymo D ) and Toro,) and the and ardena. GG eere, eere, P) and and P) igh igh - - - -

15 HUSQVARNA ANNUAL REPORT 2008

16 HUSQVARNA ANNUAL REPORT 2008 listed companies. listed den irrigation and garden ponds, primarily in the UK. the in primarily ponds, garden and irrigation den B the while products battery-powered and electrically within such as chainsaws and trimmers in the high-end segment. high-end the in trimmers and chainsaws as such products handheld petrol-powered within particularly but Highlights of 2008 of Highlights quarter. fourth the in start normally season coming the for inventory-buildups and tion Produc quarter. second the after ends usually and shorter normally is products irrigation for season The quarter. third the of end the by over essentially is and quarter ond 15). page on graph (see year the of half first the during sales of majority the with variations, seasonal considerable show Operations Considerable seasonal variations S as such brands under market consumer European the in ers market. consumer the U the in competitor a Toro also is tractors. garden and mowers lawn within ily tiga. The G The tiga. ritish company H company ritish Report by the Board of Directors. of Board the by Report the in 30 page see 2008, on information additional For • • • • John D John H S The season for garden equipment peaks during the sec the during peaks equipment garden for season The GG ucts in the servicing dealer channel. dealer servicing the in ucts prod Husqvarna-branded for growth good Continued absorption. cost lower involved which cutbacks, duction pro by affected adversely also was income Operating materials. for costs higher and mix product favorable aless sales, lower of aresult as income operating in decline Substantial America. North in particularly sales, Lower tihl is a competitor within several product categories, categories, product several within acompetitor is tihl usqvarna competes with John D John with competes usqvarna P has a leading position within lawn mowers and rid and mowers lawn within position aleading P has eere and Toro are the only competitors who are are who competitors only Toro and the are eere erman company B company erman ozelock has a strong position within gar within position astrong has ozelock S , within lawn mowers and trimmers for for trimmers and mowers lawn , within osch is mainly a competitor acompetitor mainly is osch eere and MT and eere

D primar C on s - P umer ------also offer technical service. technical offer also who retailers independent i.e. smaller dealers, servicing U the in 25% approximately of share amarket has and brand, Craftsman the under ucts, sales. of share a growing 1980’s. S 1980’s. market. the of 70% approximately H and Wal-Mart Lowe’s, –S chains largest four the with consolidated, highly is U The outlets. DIY and chains retail major through mainly sold are market mass the for products Consumer distribution and Customers chainsaws. and trimmers tractors, garden mowers, lawn G The position Market H S to as well as brands, WeedEater and Poulan the under channels mass-market Products. Consumer within sales of half than less somewhat I America North Products Consumer Product offering ro n 2008, the North American operation accounted for for accounted operation American North the n 2008, igh-end products under the H the under products igh-end • • • • • • H S I d n North America, the greater share of sales are through through are sales of share greater the America, n North Electrically powered robotic lawn mowers, Automower mowers, lawn robotic powered Electrically mowers. lawn powered Electrically blowers. leaf and trimmers hedge as such products handheld powered Electrically trimmers. and chainsaws as such products handheld Petrol-powered throwers. snow and tractors garden mowers, lawn as such products wheeled Petrol-powered and shovels. and rakes shears, pruning as such equipment gardening as well as ponds, garden and irrigation for Products ears has been H been has ears usqvarna-branded products are sold mainly through through mainly sold are products usqvarna-branded uct roup has strong market positions, particularly for for particularly positions, market strong has roup ears is the world’s largest retailer of outdoor prod outdoor of retailer largest world’s the is ears s usqvarna’s largest customer since the the since customer largest usqvarna’s ears under its Craftsman brand. brand. Craftsman its under ears ome D ome S . epot – accounting for for –accounting epot usqvarna brand account for for account brand usqvarna market S market ears, ears, ® . -

competitors Major locations production Major Major competitors and production Brands,

brands H usqvarna’s R usqvarna’s C on iders are available in a range of versions for both consumers and professional users. professional and consumers both for versions of arange in available are iders s Stihl, ToroStihl, MTD, Deere, John USA Husqvarna America North WeedEater P umer

ro ® ® d , Poulan

uct s ® , Rest of the World the of Rest Stihl, TTI Stihl, GGP,Bosch, Hozelock, Britain Great Republic, Czech Germany, Partner Husqvarna ® , McCulloch ® , Gardena ® ®

, Flymo ® ,

17 HUSQVARNA ANNUAL REPORT 2008 18 HUSQVARNA ANNUAL REPORT 2008 strong growth in recent years. recent in growth strong H the under products premium S pumps. and ponds garden tools, garden in itions pos leading has also and products, irrigation for Europe G navia. F the under UK the in products electrically-powered in leader ply chain. ply sup the in efficiency greater and renewal product in ments invest through reinforced steadily been have which ers, under the H the under riders and tractors garden for as well as brands, McCulloch H the under market consumer the G The position Market G the dealers. servicing on focused other the and channels, i.e. mass-market retailers, major covering one sectors, Europe. Western to refers sales of share greater The products. consumer of sales of half than I World the of Rest Products, Consumer through servicing dealers. servicing through H n 2008, Rest of the World accounted for somewhat more more somewhat for accounted World the of Rest n 2008, lymo brand, which also has a strong position in S in position astrong has also which brand, lymo usqvarna brand represent premium products and are sold sold are and products premium represent brand usqvarna The G The S two into divided are World the of Rest in Operations ales through mass-market channels are mainly under under mainly are channels mass-market through ales ardena, F ardena, roup has strong market positions within chainsaws for for chainsaws within positions market strong has roup ardena is the leader in the consumer market in in market consumer the in leader the is ardena roup has strong positions with the leading retail leading the with positions strong has roup usqvarna brand. The G The brand. usqvarna lymo, Partner and McCulloch brands. The The brands. McCulloch and Partner lymo, usqvarna brand have shown shown have brand usqvarna usqvarna, Partner and and Partner usqvarna, roup is also a market amarket also is roup candi ales of of ales C on - s - P umer - ucts in China. in ucts G the 2008 Republic. Czech the G in plants three at manufactured are produced at a small plant in I in plant asmall at produced are trimmers and chainsaws lawnmowers, Petrol-powered Asia. from sourced are products electrical handheld other produced at four plants in the U the in plants four at produced G the of Most Production products. high-end within position astrong have who dealers, K-Rauta. and B as such outlets DIY and chains retail international and national of anumber features and channels, distribution of terms in fragmented more I distribution and Customers G The demand. in variations weather-related and seasonal to response enable to order in flexible highly are and ized Automower ro n comparison with North America, the European market is is market European the America, North with n comparison roup is a net exporter from the U the from exporter anet is roup F H Electric lawn mowers and the robotic lawn mower mower lawn robotic the and mowers lawn Electric d ollowing the acquisition of Jeng F Jeng of acquisition the ollowing usqvarna-branded products are sold through servicing servicing through sold are products usqvarna-branded uct s roup now operates a plant for consumer prod consumer for aplant operates now roup ® are manufactured at a plant in the UK, while while UK, the in aplant at manufactured are roup’s products for the consumer markets are are markets consumer the for products roup’s &Q, Leroy Merlin, O Merlin, Leroy &Q, taly. The G The taly. S . The plants are special are plants . The S . ermany and three in in three and ermany eng in D in eng ardena products products ardena BI ecember ecember , B auhaus auhaus - - total of 11 lawn mowers in a new series will be launched by H by launched be will series anew in 11 of mowers lawn A total C on s P umer ro d uct s usqvarna in 2009 and 2010. and 2009 in usqvarna

19 HUSQVARNA ANNUAL REPORT 2008

20 HUSQVARNA ANNUAL REPORT 2008 Operating income, S income, Operating S *2004 according to Electrolux reporting for the Outdoor Products segment. F segment. Products Outdoor the for reporting Electrolux to according *2004 % margin, Operating S sales, Net Key data* PRO pro employees of number Average S expenditure, Capital S assets, Net hare of G of hare roup sales, % sales, roup EKm EKm EKm fe D EKm U ssi ct onal 12,493 2008 1,587 7,040 7,875 38.6 s 12.7 475 or definitions, see page 46. page see definitions, or 12,663 6,790 7,242 2,123 2007 38.0 16.8 343 H usqvarna is the world’s largest producer of chainsaws. of producer largest world’s the is usqvarna 11,067 5,661 1,875 4,714 2006 16.9 37.6 366 10,408 5,627 4,626 1,739 2005 36.2 16.7 400 3,905 9,623 1,521 5,616 2004 35.4 15.8 453

accounted for approximately 25%. approximately for accounted Construction and 30% approximately for accounted garden and Lawn while 2008, in area’s sales business the of 45% F struction. H DEALERS 25,000 S PROFES FOR PRODUCTS OTHER HANDHELD three product areas -F areas product three H industries. stone and construction the for tools diamond and equipment cutting G The segment. professional the in 40% approximately of share market acombined with years, many for market global the in brands chainsaw ing WORLD-W SOLD MANY G THE Share of Group sales Group of Share S industry. construction the and forestry in activities by as industries. stone and construction the for equipment to refers which of S approximately at estimated is products G the for market total The market The ubstantial variations in demand can arise for Lawn and and Lawn for arise can demand in variations ubstantial I usqvarna and Jonsered have been two of the three lead three the of two been have Jonsered and usqvarna usqvarna-branded products. usqvarna-branded ONAL The Professional Products business area comprises comprises area business Products Professional The to refers area business this in sales of share greater The D emand is driven by general business conditions as well well as conditions business general by driven is emand

BEEN AG HAS ROUP YEARS

USERS orestry equipment accounted for approximately approximately for accounted equipment orestry I N Lawn andgarden, 12% . . HUSQVARNA

. I TERMS THROU DE Construction, 10% orestry, Lawn and garden, and Con and garden, and Lawn orestry, Forestry, 17% roup’s range of professional professional of range roup’s

roup is also the world leader in in leader world the also is roup OF

FOR LEADER LOBAL G CHA

H APPROX PRODUCTS I NSAWS EK 60 billion, half half billion, EK 60 Net sales and operating margin operating and sales Net 12,000 15,000 SEKm 3,000 6,000 9,000 prof I

MATELY

AND ARE 0 e ssi 04 Operating margin, % Net sales,SEKm

onal -

- 05 06

pro is favorably affected by storms and fallen trees. fallen and storms by affected favorably is D conditions. weather on depending markets, within and year to year from equipment garden currently anticipated future requirements. requirements. future anticipated currently with compliance in be to considered also are and Europe, U the in emissions exhaust regarding demands G The criteria. such introduce to expected also are Japan, as such countries, Other 2007–2012. period the over market S 2010. through in phased being are year latter the from teria introduced in the U the in introduced were chainsaws and equipment garden petrol-powered years. several over segment customer agrowing comprised thus have contractors These services. such in specialize that companies to maintenance landscape sourced out increasingly have individuals private and palities ticu steadily. increasing been has chainsaws premium for demand consumer ition, I America. Latin and Europe Eastern Russia, as such markets in demand increasing of basis the on growing been S 1990’s. early the until chainsaws for market the in decline asubstantial in resulted This felling. manual of instead machines of use increased toward F trends Market or many years there has been a trend in the forest industry industry forest the in atrend been has there years many or imilar criteria are being phased in within the European European the within in phased being are criteria imilar 07 roup’s new engines comply with the most stringent stringent most the with comply engines new roup’s

S par equipment, gardening professional for trend One larly in the U the in larly duct tricter criteria for reduction of exhaust emissions from from emissions exhaust of reduction for criteria tricter 08 s 12 16 20 % 0 4 8 S A, has shown that corporations, munici corporations, that shown has A, in 1997 and 2002. The regulatory cri regulatory The 2002. and 1997 S in by quarter sales net of Distribution 10 20 30 % 0 Q1 4 yearaverage Net sales,% Q2 ince then the market has has market the then ince Q3 emand for chainsaws chainsaws for emand Q4 and S and n add - -

21 HUSQVARNA ANNUAL REPORT 2008

22 HUSQVARNA ANNUAL REPORT 2008 Highlights of 2008 of Highlights G the of 45% mately I Forestry 21). page on graph (see year the over evenly more spread are industry construction S half. second the during sold are chainsaws most year, while the of half S patterns Seasonal H Competitors tenstein, Tyrolit in Austria, S Austria, Tyrolitin tenstein, H are industry construction the garden. and lawn for equipment professional within mainly Toro compete D John while trimmers, and chainsaws as such products handheld petrol-powered within primarily petes D John companies American the G the are segment market sional in F in n 2008, the F the n 2008, ales of lawn and garden equipment refer mainly to the first first the to mainly refer equipment garden and lawn of ales usqvarna’s most important competitors in the profes the in competitors important most usqvarna’s Report by the Board of Directors. of Board the by Report the in 30 page see 2008, on information additional For • • • H The most important competitors within equipment for for equipment within competitors important most The John D John rance, and S and rance, 2007.with line in were Forestry for income operating and Sales garden. and Lawn for income operating and sales in Decline area. product Construction the for particularly income, operating and sales Lower usqvarna manufactures a wide range of premium premium of range awide manufactures usqvarna eere, Toro S eere, and orestry product area accounted for approxi for accounted area product orestry

ales of equipment and diamond tools for the the for tools diamond and equipment of ales tihl in G in tihl roup’s total sales of professional products. professional of sales total roup’s ermany for power cutters. power for ermany aint G aint aint G aint ilti, which is based in Liech in based is which ilti, obain are listed companies. listed are obain erman company S company erman eere and Toro. and S eere obain and Wheelabrator Wheelabrator and obain eere and and eere tihl com tihl prof tihl and and tihl - - e ssi - - onal and tree care. tree and management forest for needs most satisfies range product The ergonomics. and durability performance, of levels high tools. and clothing protective blades, chains, as such accessories and saws clearing includes also range product The climates. and areas geographical various for chainsaws products are also sold in the U the in sold also are products Zenoah blowers. leaf and trimmers saws, clearing as such products handheld other for as well as Japan in chainsaws for position market strong a has Zenoah markets. specific in H complements and position, asimilar has sered Jon products. handheld other and chainsaws for ticularly par years, many for position global astrong had has brand H The sales. of share adominant for accounting H the under sold mainly are products forestry Professional position market and Brands Product offering dealers. 25,000 than more of atotal through countries 100 G The distributors. through sold are G The majority of sales are to servicing dealers through the distribution and Customers

pro usqvarna, Jonsered and Zenoah brands, with H with brands, Zenoah and Jonsered usqvarna, roup’s own sales companies. • • • • These products are developed for users who demand demand who users for developed are products These tools, and diamond tools for the stone industry. stone the for tools diamond and tools, diamond related and cutters power machines, grinding and polishing stands, and motors drill saws, concrete saws, wire and wall saws, masonry and tile saws, Floor clothing. and tools protective blades, as such chains, Accessories blowers. leaf and trimmers hedge trimmers, equipment, turf-care specialty mowers, zero-turn mowers, lawn walk-behind Riders, cutters. brush- and saws clearing chainsaws, High-performance duct s I n smaller markets, products under the RedMax brand. RedMax the S under roup is represented in over over in represented is roup usqvarna usqvarna usqvarna usqvarna usqvarna usqvarna - - professional products

Husqvarna’s Riders feature unique rear-wheel steering for greater maneuverability and a minimum turning radius. ANNUAL REPORT 2008 HUSQVARNA

Brands, production and competitors

Forestry Lawn and garden Construction Major brands Husqvarna®, Jonsered®, Husqvarna®, Jonsered®, Husqvarna® , Diamant Boart® Zenoah® Klippo® , Dixon®, RedMax® Major production locations Sweden, USA, Sweden, USA Sweden, USA, Japan China, Belgium Major competitors Stihl John Deere, Hilti, Saint Gobain, Stihl, Toro Tyrolit, Wheelabrator 24 HUSQVARNA ANNUAL REPORT 2008 and demolition. demolition. and preparation surface for machines and stands, drill with motors drill saws, masonry and tile saws, wire and wall saws, floor cutters, power industries. stone and construction the for tools mond H G the of 25% I Construction dent distributors. H through dealers servicing to distributed are Products distribution and Customers D The sales. H The position market and Brands than at are more priced riders in larger area, this where success for is essential also and service support for technical ization organ An effective and comfort. durability for performance, blowers. leaf and trimmers hedge trimmers, as such equipment handheld includes also range The care. turf for products special as well as mowers, zero-turn and mowers 2008. G the of 30% mately approxi for accounted area product garden and Lawn The garden and Lawn sional walk-behind lawn mowers. lawn walk-behind sional S the in position astrong has U the in products of range alimited for tractors as well as municipalities and institutional users. institutional and municipalities as well as tractors n 2008 this product area accounted for approximately approximately for accounted area product this n 2008 usqvarna’s product offering includes machines and dia and machines includes offering product usqvarna’s indepen through as well as companies, sales usqvarna’s The machines for the construction industry include include industry construction the for machines The con landscape professional are end-users primary The demands meet must and garden Lawn within Products lawn walk-behind riders, includes offering product The S usqvarna brand accounts for the greater share of of share greater the for accounts brand usqvarna EK 100,000. ixon, B ixon, roup’s total sales of professional products. products. professional of sales total roup’s luebird and Y and luebird roup’s sales of professional products in in products professional of sales roup’s candinavian market for profes for market candinavian azoo/Kees brands are used used are brands azoo/Kees S . The Klippo brand brand Klippo . The prof e ssi - - - - - onal is essential for success. for essential is service technical of level ahigh and reliability performance, for demands their satisfying and professionals, by sively profiling. and grinding calibration, for tools and drills, wires, diamond blades, saw includes industry stone H extent. large G the buy also machines above the buy who Customers machines. the on mounted are that H are sold the under industry for the construction Products position market and Brands number of countries. countries. of number I S in mainly manufactured B and S H in plant the at manufactured are riders and saws S in marily G The Production D distribution and Customers cess stone. cess pro and/or quarry that companies to directly exclusively contractors. large to directly also but dealers, ized special and companies rental through mainly sold are try global market for diamond tools used by the stone industry. stone the by used tools diamond for market global

n addition, H n addition, pro weden. Chainsaws are also manufactured in the U the in manufactured also are Chainsaws weden. usqvarna brand. D brand. usqvarna iamond tools and equipment for the construction indus construction the for equipment and tools iamond Products for the construction industry are used exclu used are industry construction the for Products D Products for the construction and stone industries are are industries stone and construction the for Products D iamond tools, which are consumables are cutting tools tools cutting are consumables are which tools, iamond iamond tools for the stone industry are sold almost almost sold are industry stone the for tools iamond duct razil. razil. roup’s professional products are manufactured pri manufactured are products professional roup’s weden, the U the weden, s usqvarna operates small servicing units in a in units servicing small operates usqvarna usqvarna’s range of diamond tools for the the for tools diamond of range usqvarna’s iamant B iamant and Japan. Chainsaws, clearing clearing Chainsaws, Japan. S and weden, the U the weden, oart is the leading brand in the the in brand leading the is oart roup’s diamond tools to a to tools diamond roup’s S , China and B and , China S uskvarna, uskvarna, , Japan , Japan elgium. elgium. - - - - - professional products ANNUAL REPORT 2008 HUSQVARNA

The new generation of Husqvarna power cutters features a reduction of up to 70% in emission as well as a better fuel economy. 26 HUSQVARNA ANNUAL REPORT 2008 Average number of employees of number Average expenditure Capital times ratio, debt/equity Net Return on equity, % equity, on Return Return on capital employed, % employed, capital on Return S dilution, after share per Earnings I % Margin, I 1) Excluding costs for personnel cutbacks, acquisitions and adjusted for currency transaction and translation effects. translation and transaction currency for adjusted and acquisitions cutbacks, personnel for costs 1) Excluding Operating margin, % margin, Operating income Operating E • E sales Net S Key data • I • • • Boar R ncome for the period the for ncome ncome after financial items financial after ncome EKm BI BI for materials. for costs higher and levels production lower sales, to lower primarily due was income in decline the cutbacks, personnel for costs from Apart costs. of these exclusive 8.3% was gin of S amount the in backs (3,564), and operating margin was 7.3% was margin (10.7). operating and (3,564), to S by34% declined income Operating rates. exchange parable com in and acquisitions for by6%and adjusted to S by3% declined sales Net year. of the half second the in particularly Europe, and America North both in demand Lower ncome was charged with costs for personnel cut personnel for costs with charged was ncome T T D DA A margin, % A margin, eport by t d o EK 316m. Operating mar EK 316m. Operating EK EK 32,342m (33,284), (33,284), EK 32,342m EK 2,361m f D 32,342 15,720 - 3,524 1,288 2,361 1,163 1,767 2008 3.34 - 1.54 10.7 15.8 10.9 - 5.5 7.3 h • • • • • i

holders. I subject to approval byaG to approval subject S of approximately issue arights on acquisitions and in comparable exchange rates. exchange comparable in and acquisitions cutbacks, personnel for costs for 19%, adjusted by Products Professional for and by50%, declined Products Consumer for income Operating be paid for 2008. for paid be B The to S rose flow cash Operating share. to S corresponding (2,036), to S amounted year the for Earnings n rector F ebruary 2009 the 2009 ebruary e 33,284 16,093 3,564 oard of D oard 4,645 2,889 2,036 2007 5.29 28.6 1.63 10.7 14.0 17.6 857 8.7 irectors proposes that no dividend dividend no that proposes irectors Change, % Change, B –34 –39 –37 –37 –24 oard of 36 –3 –2 — — — — — — eneral Meeting of S Meeting eneral EK 3.34 (5.29) per per (5.29) EK 3.34 currency and acquisitions and currency EK 2,013m (1,843). D irectors decided decided irectors Change adjusted for for adjusted Change EK 3 billion, EK 3billion, EK 1,288m EK 1,288m s hare –34 –26 1) , % –6 — — — — — — — — — — —

- Net sales and operating margin operating and sales Net S of effect adverse an S of amount the in income operating on effect positive atotal had tracts, con currency-hedging of net and effects transaction and Products. Professional within products Construction to and World, the of Rest and America North both in Products sumer costs. of absorption lower involved which inventories, reduce to order in levels production lower for materials. costs is income due mainly to and higher lower sales operating costs. these excluding 8.3% was margin Operating tions. condi market weak the of light in implemented cutbacks S of acharge includes income 7.3% of amargin to (10.7). Operating corresponding S to 34% by decreased income Operating income Operating i.e. G acquisitions, major Products. Professional within area product struction Con the to and America, North in particularly Products, Consumer to mainly refers decline The rates. exchange able compar in and acquisitions for adjustment 6% by after and S to 3% by declined 2008 in sales Net sales Net N and in comparable exchange rates. rates. exchange comparable in and acquisitions for adjustment after Products, Professional and 10,000 15,000 20,000 25,000 30,000 35,000 SEKm 5,000 et sales and operat and sales et Changes in exchange rates, including both translation translation both including rates, exchange in Changes I in the decline cutbacks, for personnel from the costs Apart the include not do 2007 for figures comparative The Net sales decreased by 6% for both Consumer Products Products Consumer both 6% by for decreased sales Net n terms of business areas, the decline refers to Con to refers decline the areas, business of n terms 0 *

89 1989–2004 according to Electrolux reporting for the Outdoor Product segment i.e. i.e. segment Product Outdoor the for reporting Electrolux to according 1989–2004 excluding corporate costs. For comparison, corporate costs have not been included 2005–2008. 2005–2008. included been not have costs corporate comparison, For costs. corporate excluding Operating margin, % Net sales,SEKm EK 184m (–21). Currency-hedging contracts had had contracts (–21). Currency-hedging EK 184m 90 91 I ncome was also adversely affected by by affected also adversely was ncome 92 EK –89m (–148). EK –89m EK 316m for costs related to personnel personnel to related costs EK 316m for ardena and Zenoah, for the full year. full the for Zenoah, and ardena 93 94 i 95 n g i 96 EK 32,342m (33,284), (33,284), EK 32,342m ncome 97 EK 2,361m (3,564) EK 2,361m (3,564) R by t eport 98 99 00 - - - h - 01 e Boar 02 03 after dilution. after S to corresponds which (2,036), 4.3% (5.2). (5.2). 4.3% was borrowings total for rate interest average the year-end of As rates. interest lower to mainly due is improvement to S amounted income financial Net income financial Net 2008 income Operating rates exchange in Changes cutbacks personnel of Cost materials of Cost mix and Volume Price Acquisitions 2007 income Operating S income operating in Change I share per Earnings rates. tax high with countries in profits lower to G the in changes to due was taxes in decrease The items. 27.1% financial after income of (29.5) S to Taxes amounted Taxes (8.7). 5.5% was margin the and (2,889), I items financial after Income d o ncome after financial items declined by 39% to S 39% by declined items financial after ncome ncome for the year declined by 37% to S 37% to by declined year the for ncome EKm 04 f D 05 i rector

06 07 s 08 EK –479m (–853), corresponding to to corresponding (–853), EK –479m 10 12 14 % 0 2 4 6 8 SEK return on equity on return and share per Earnings 10 EK 3.34 (5.29) per share share per (5.29) EK 3.34 0 2 4 6 8 EK –594m (–675). The The (–675). EK –594m 04 Return onequity, % Earnings pershare, SEK roup’s structure and and structure roup’s 05 EK 1,288m EK 1,288m 06 07 EK 1,767m 08 2,361 2,361 –1,110 3,564 –348 –316 208 184 179 10 20 30 40 50 % 0

27 HUSQVARNA ANNUAL REPORT 2008 28 HUSQVARNA ANNUAL REPORT 2008 remuneration, see Note 24. Note see remuneration, rate for 2008 was 10% (10). 10% was 2008 for rate (1,687). is due mainly toThe decline lower income. The WACC ness area, sector, product category and regions. regions. and category product sector, area, ness G total by measured is created Value operations. in employed capital of cost the with efficiency asset and G the in managers senior to remuneration variable for basis the is and ance, perform financial evaluating for indicator an is created Value created Value quarter. third the of as effect full take will and 2009, during gradually achieved be will annually, Net sales byquarter sales Net quarter and S which of S was measures these of cost total The employees. 960 approximately of acutback involved which costs, G the reduce to order in implemented were I measures Cost-cutting Poland Japan Australia Sweden UK Russia Canada G France US by country sales net Group half of 2009. n light of the weak market conditions, cost-cutting measures measures cost-cutting conditions, market weak the of n light 12,000 15,000 SEKm 3,000 6,000 9,000 ermany A F Total value created in 2008 amounted to S to amounted 2008 in created Total value The measures will be fully implemented during the first first the during implemented fully be will measures The or more information on value created as a basis for for abasis as created value on information more or 0 06 EK 15m was charged against income in against the third charged EK 15m was S S Q1 07 EK 301m in the fourth quarter. avings are estimated at approximately 08 roup. The model links operating income income operating links model The roup. 06 Q2 07 08 06 Q3 07 S hare of G of hare 08 R roup’s fixed fixed roup’s by t eport EK 168m EK 168m 06 roup sales, % sales, roup roup, busi roup, S Q4 EK 316m, 07 EK 350m 08 35.6 2.2 2.3 4.6 3.4 3.7 4.4 2.1 7.0 h 7.1 e Boar - Operating income byquarter income Operating Acquisitions of operations of Acquisitions flow cash Operating investments from flow Cash operations from flow Cash liabilities and assets operating in Changes liabilities and assets operating in changes excluding operations, from flow Cash S flow Cash year. previous the with compared year-end at build-up inventory lower and quarter fourth the in production lower by primarily accomplished income. in decline the to mainly due liabilities, and assets operating in changes excluding operations, from flow Cash to S increased flow cash operating The flow cash Operating flow Cash systems. I to 3% approximately and capacity, of 14% expansion to approximately production, in equipment of replacement and 19% rationalization to approximately products, new to America. North in equipment production to and China in factory anew to mainly refers year previous the from increase The sales. net of (2.6) 3.6% to corresponding S to amounted 2008 in expenditure Capital expenditure Capital sional users. sional for profes robot a and demolition for consumers al trimmers electric mowers, lawn tractors, of garden as models new well as consumers, and users professional for both of chainsaws operations and investments and operations from flow cash Total d o SEKm 1,000 1,500 2,000 EKm –500 500 Changes in working capital had a positive effect. This was was This effect. apositive had capital working in Changes I referred 51% inApproximately 2008 expenditure of capital

nvestments related to new products include new models models new include to products new related nvestments f D 0 06 i rector Q1 07 08 s 06 Q2 07 08 06 Q3 07 EK 2,013m (1,843). EK 2,013m (1,843). 2,013 –1,131 3,144 1,168 2,703 08 –845 2008 441 EK 1,163m (857), 06 Q4 07 –7,033 –8,876 2,656 1,843 08 3,232 –576 –813 2007 T- - Operating cash flow cash Operating S of facilities quarter. first the during capital working of build-up seasonal the finance to utilized was facility credit revolving committed S approximately quarter, fourth S approximately by debt net increased that rates exchange in changes S G The debt Net G Equity 2008 31 December changes Other rates exchange in Changes Acquisitions 2007 31 December S capital working operating in Change S against substantially appreciated U both as rates, exchange in changes to mainly S to payables S to receivables (7,758), trade S to increased year-end at capital working Operating capital working Operating Financial position above. mentioned products 1.8% to (1.4) sales. net of corresponded thus expenses S which of (480), S to correspond development and Total research development and Research assets ratio was 25.7% (25.7). 25.7% was ratio assets S S to amounted interests, Note 2. Note SEKm 1,200 1,600 2,000 EKm EK 13,552m (12,012). The increase is mainly an effect of of effect an mainly is (12,012).EK 13,552m increase The I (8,939). EK 9,460m EK 22.91 (19.11) share. per roup equity as of 31 of D as equity roup 400 800 At year-end the G the year-end At S to amounted funds Liquid R& Major The net debt/equity ratio was 1.54 (1.63) and the equity/ the (1.63) and 1.54 was ratio debt/equity net The F or more information about the G the about information more or 0 roup’s net debt as of 31 of D as debt net roup’s 04 Operating cashﬂow/netsales,% Operating cashﬂow, SEKm 05 projects during the year referred mainly to the the to mainly referred year the during D projects EK 6,500m. 3,280m (2,731). The increases are related related are (2,731). increases The EK 3,280m EK 254m (159) was capitalized. R& (159) capitalized. was EK 254m EK 1,500m. 06 07 nventory amounted to S to amounted nventory roup had unutilized committed credit credit committed unutilized had roup ecember 2008, excluding minority minority excluding 2008, ecember 08 EK 8,772m (7,349) corresponding to to corresponding (7,349) EK 8,772m 10 4,184m (3,912) and trade EK 4,184m (3,912) trade and % 0 2 4 6 8 EK 2,735m (1,306). D (1,306). EK 2,735m EK 1,500m of the G the of EK 1,500m ecember 2008 increased to to increased 2008 ecember EK during the year. the EK during roup’s funding, see see funding, roup’s R by t eport 8,556m EK 8,556m and EUR EUR and SD 588m EK 588m D roup uring the the uring 9,460 8,939 1,057 –736 ’ s 200 h e Boar also to Lawn and garden within Professional Products. Professional within garden and Lawn to also but Products Consumer to particularly refers This strongest. the being normally quarter second year,the the of half first the during sales higher significantly with variations, sonal D products. irrigation for demand increase to but tractors, and mowers lawn as products D conditions. tion of sales throughout the year. the throughout sales of tion distribu even amore shows normally industry construction the for year. Equipment the of half second the during sales quarter. second the of ance G the of seasonality the increased thus G the of rest the than year the of half first the in income ating Capital expenditure mally increases after storms. storms. after increases mally D income and sales in Seasonality I S debt Net Liquid funds Liquid Equity/assets ratio, % ratio, Equity/assets times ratio, debt/equity Net debt Net d o nterest-bearing liabilities nterest-bearing SEKm 1,200 1,500 EKm emand for the G the for emand roup’s consumer products. The acquisition of G of acquisition The products. consumer roup’s 300 600 900 I Chainsaws show stronger demand and somewhat higher higher somewhat and demand stronger show Chainsaws H rrigation products have a larger share of sales and oper and sales of share alarger have products rrigation f D 0 usqvarna’s sales and income are subject to marked sea marked to subject are income and sales usqvarna’s i 04 rector Capex/net sales,% Capex, SEKm 05 ry weather tends to reduce demand for such such for demand reduce to tends weather ry 06 s roup’s products is dependent on weather weather on dependent is products roup’s 07 08 10 % 0 2 4 6 8 emand for chainsaws nor chainsaws for emand 13,552 roup and the import the and roup 16,287 2,735 2008 25.7 1.54 ardena has has ardena 12,012 13,318 1,306 2007 25.7 1.63 - - - -

29 HUSQVARNA ANNUAL REPORT 2008 30 HUSQVARNA ANNUAL REPORT 2008 margin, % margin, Operating income Operating Construction. and den, Net debt/equity and equity/asset ratios equity/asset and debt/equity Net favorable a less and volumes sales to lower due is decrease year. The previous the with comparison in sharply declined equipment. handheld for primarily growth, good continued showed dealers servicing to sold H categories. product other several as well as equipment irrigation for America, North shipments. industry in downturn the with G chainsaws. of exception the with categories product most in decline substantial a showed demand consumer and shipments industry where America, North to mainly due is decrease 2007. in The than S 1) sales Net S Products Consumer products Husqvarna-branded for • Continued growth good produc by affected adversely also • Operating was income lower of aresult as income operating in • Substantial decline America. North in • Lower particularly sales, Consumer Products i.e. F areas, three comprises Products Professional world. the of Rest and America i.e. North areas, Products. Professional and Products Consumer H in Operations P Times EKm ales for the Consumer Products business area were lower lower were area business Products Consumer the for ales erformance by bus erformance in the servicing dealer channel. channel. dealer servicing the in absorption. cost lower involved which cutbacks, tion materials. for costs higher and mix product favorable aless sales, rency transaction and translation effects. translation and cur transaction for rency adjusted and acquisitions cutbacks, personnel for costs Excluding 0.4 0.8 1.2 1.6 2.0 Operating income and margin for this business area area business this for margin and income Operating outside operation the for reported also were sales Lower geographical two into divided is Products Consumer 0 Equity/assets ratio,% Net debt/equityratio,times 04 05 usqvarna comprise two business areas – areas business two comprise usqvarna 06 19,849 2008 07 963 4.9 08 roup deliveries decreased in line line in decreased deliveries roup usqvarna-branded products products usqvarna-branded 20,621 i 16 24 32 40 1,638 % ness area ness 0 8 2007 7.9 Change, % Change, orestry, Lawn and gar and Lawn orestry, R –41 by t eport –4 — change, % change, Adjusted Adjusted –50 h –6 — - e Boar 1) - - margin, % margin, Operating income Operating Maturity profile of loans of profile Maturity 1) sales Net S Professional Products • and Lawn for income • Decline operating and sales in the for particularly income, • Lower operating and sales Professional Products most operations. most in production in cutbacks substantial by affected adversely level. a high at remained margin year, and previous the with comparison F for income Operating products. Construction of sales in drop sharp the from mainly lower than in 2007, and margin decreased. The decline resulted U the in marketing in investment increased launches, product to mainly due is ucts prod fortrend forestry The favorable America. in saws North U the in year,previous for chain premium due mainly to growth good particularly garden, and Lawn for sales Lower reported America. also North were and Europe both in lower stantially sub was demand which in area, product Construction the to mainly refers Products Professional for sales in decline The reduce inventories, which means lower cost absorption. absorption. cost lower means which inventories, reduce to order in Europe and America North both in production in cutbacks by substantial affected adversely also was income U the in particularly materials for costs higher as well as Europe and America North both in mix product d o SEKm 1,000 2,000 3,000 4,000 5,000 6,000 EKm

garden area product Construction rency transaction and translation effects. translation and cur transaction for rency adjusted and acquisitions cutbacks, personnel for costs Excluding with 2007 with Sales Operating income for the business area as a whole was was awhole as area business the for income Operating substantially was area business this for income Operating F for sales hand, other the On f D 0

and i 09 Utilized partofcommittedrevolving credit facility Bank andotherloans Bond loans rector

operating 10 11 s 12,493 1,587 12 S 2008 12.7 , and rationalization of production. of rationalization , and

income orestry was largely unchanged in in unchanged largely was orestry 13 14 12,663

– 2,123 for 2007 16.8 orestry were in line with the the with line in were orestry

Forestry 2012/13. in expires that 8,000m SEK of facility credit revolving committed a has Husqvarna Change, % Change,

–25 were — –1 S . Operating . Operating

in change, % change,

line Adjusted Adjusted

–19 –6

- — 1) S - - - . 10,000 15,000 20,000 25,000 Consumer Products H Y Magnus management Group in Changes 2008 GroupaccountsintheamountofapproximatelySEK23m. I acquisitions Other 1,250. approximately was 2009, 1January of as included were which employees, of number The chainsaws. to referred S of sales with 2008 for accounts world. the of rest the H America. H gives G the generators. and cleaners, pressure high- mowers, lawn includes also range product The ket. mar consumer the for trimmers and chainsaws of producer D in completed was ucts F Jenn the of acquisition The Feng Jenn Acquisitions O G and joined America in North Products Consumer G trolux Elec of member been has and 1995 since Electrolux in itions S mately approxi of sales annual has which sector, business Europe H and Electrolux of President Y Magnus Andersson. S mately S S approximately of sales annual has operation This industry. construction the for products to related operation S of approximately sales annual has Meco of roads. repair and construction for primarily asphalt, and concrete for saws floor of producer a leading Company), Engineering (Masterpiece n April the G the n April SEKm 5,000 EK 54m. ales subsequent to the acquisition amounted to approxi to amounted acquisition the to subsequent ales usqvarna as of 1 October 2008. H 2008. 1October of as usqvarna roup Management. H Management. roup ther i ther The acquired operation has been consolidated in the the in consolidated been has operation acquired The expands acquisition The China. in located is Production As of 1 July 2008, Roger Leon was appointed as new head of I n April the the n April 0 roup’s presence and production base in Asia. I Asia. in base production and presence roup’s usqvarna access to the McCulloch brand in North North in brand McCulloch the to access usqvarna roup Management since 2002. since Management roup EK 45 billion. H billion. EK 45 EK 28m. 05 Net sales,SEKm S ngen was appointed new President and CEO for for CEO and President new appointed was ngen nformat ales subsequent to ales subsequent the acquisition are included in the usqvarna already owns the rights to this brand in in brand this to rights the owns already usqvarna 06 roup acquired S acquired roup G roup also acquired the U the acquired also roup 07 08 ngen was previously Executive Vice- Executive previously was ngen e succeeded Robert E. Cook, who who Cook, E. Robert e succeeded i e has held a number of leading pos leading of anumber held e has on ecember. Jenn F Jenn ecember. eng operation in outdoor prod outdoor in operation eng ead of the Major Appliances Appliances Major the of ead andvik Nora A Nora andvik EK 89m, half of which which of half EK 89m, SEKm 1,000 1,500 2,000 2,500 500 e succeeded B e succeeded 0 company Meco Meco S company 05 Operating income,SEKm eng is a leading aleading is eng R B by t eport 06 ’s assets and and ’s assets H 07 engt engt usqvarna usqvarna EK 65m. EK 65m. t also t also 08 h - - e Boar - - - Professional Products B S in capital share the year-end At share Husqvarna The for H for Officer Operating Chief previously was Leon Roger retired. I 24. Note in outlined as except company, the in shares acquire to bid apublic of aresult as terminated is employment if or posts, their leave persons such if remuneration require which employees or B and company the between agreements or B of dismissal or appointment regarding ation Associ of Articles the in stipulations no are there addition, I shares. transfer to right the limit might which shareholders company. the in shares of acquisition for bid apublic of aresult as change to were company the of control if terminated or changed affected, be might which agreements significant any to party pany A the in participate to right the or rights earnings. and assets company’s the of terms in rights equal entitle 1/10 shares All avote. of programs will be made without consideration. without made be will programs the under shares of transfers and programs, the of conditions the with accordance in shares of number amaximum receive The participants in the incentive programs shall be entitled to obligations pursuant to the implemented incentive programs. the number of shares that it holds as a hedge of the company’s 2008. and 2007 2006, for programs incentive long-term the to pursuant contributions, employer including obligations, company’s the hedge to order in Stockholm shares, and to pay for the shares in cash. in shares the for pay to and shares, B acquire G Annual The shares own of Repurchase 110–111. pages see shareholders, 13.1% F with gen votes. the of d o nvestor A nvestor 10,000 15,000 20,000 25,000 EK 770m, comprising 98,380,020 A-shares and 286,756,875 286,756,875 and A-shares 98,380,020 comprising 770m, EK -shares. Each A-share carries one vote, and each B each and vote, one carries A-share Each -shares. SEKm 5,000 As of 31 of D As between agreements any of aware not is company The voting shares, of transfer on restrictions no are There The company has the right to adjust on an ongoing basis The shares may be purchased on the NA the on purchased be may shares The f D usqvarna Consumer Products in North America. America. North in Products Consumer usqvarna 0 i rector -shares totalling up to 3% of the total number of of number total the of 3% to up totalling -shares 05 Net sales,SEKm with 28.7% of the votes and LE Lundbergföreta LE and votes the of 28.7% B with ecember 2008 the largest shareholders were were shareholders largest the 2008 ecember eneral Meeting 2008 authorized the B the authorized 2008 Meeting eneral 06 s 07 08 or more information on major major on information more or H SEKm 1,000 1,500 2,000 2,500 usqvarna amounted to to amounted usqvarna 500 0 G 05 M. Nor is the com the is Nor M. Operating income,SEKm SD oard members members oard 06 oard members members oard AQ OMX AQ OMX 07 oard to to oard -share -share 08 - n -

31 HUSQVARNA ANNUAL REPORT 2008 32 HUSQVARNA ANNUAL REPORT 2008 B to one employee the entitles award share Each achieved. is level target lowest the if options stock based performance and award, share one grant will company the program, of the B sponding to 0.76% of the total number of outstanding shares. outstanding of number 0.76% to total the of sponding H comprise no more than 0.45*% of the share capital. share the of 0.45*% than more no comprise will program 2008 the that estimated is it exercised, fully are I 2008–2010. period the during share per earnings company’s the of development B of number the on depends granted be may that options stock of number The grant. the of day the from years eight latest the at and earliest the at years four in exercised be B in pants partici by the investment involved conditions The agers. chase price was S was price chase S of atotal for shares own 950,000 Employees U the in six Europe, in H Environmental activities 22. Note in given is matters legal current of H on effect amaterial have, may or had, have recently G the H circumstances, known currently of basis the On business. H matters Legal * 2007. for program the as parameters similar on based program incentive long-term ance-based G Annual The 2008 for program incentive term Long the total number of employees was 16,284 (17,362). 16,284 was employees of number total the (2,178) 2,075 S in whom of were (16,093), 15,720 was 2008 in employees of number average The dles a relatively large volume of chemicals and waste. and chemicals of volume large arelatively dles han also plant This substances. of types several of emissions generates testing Product metals. of emissions generates components of treatment surface and particles, of emissions generates plant this in foundry The impact. vironmental facility in H in facility S in plants four for required are permits operations. current for required permits environmental the have plants All Japan. in f all share awards and a maximum of granted stock options options stock granted of amaximum and awards share f all following the decision regarding the rights issue. rights the regarding decision the following recalculated be may options stock and shares of number The -share free of charge, three years after grant. grant. after years three of charge, free -share framework the within purchased employee the which -share -shares that the employee has purchased, as well as the the as well as purchased, has employee the that -shares S of price apurchase at -share usqvarna operates 22 major plants, of 22 major ten plants, which are located operates usqvarna usqvarna owned 2,919,000 re-purchased B re-purchased 2,919,000 owned usqvarna usqvarna’s financial situation or profitability. A description description A profitability. or situation financial usqvarna’s which in disputes the of none that estimates usqvarna of course ordinary its in disputes in involved is usqvarna The program comprise a maximum of a 1,745,000*maximum comprise The program one purchase to holder the entitles option stock Each The program comprises approximately 40 senior man senior 40 approximately comprises program The I I n the third quarter of 2008 H 2008 of quarter third n the n accordance with S with n accordance roup is presently involved or which have been settled settled been have which or involved presently is roup H usqvarna usqvarna uskvarna is the largest and has the greatest en greatest the has and largest the is uskvarna eneral Meeting 2008 adopted a new perform anew adopted 2008 Meeting eneral EK 50.30. As of 31 of D As EK 50.30. B -shares at market price. price. market at -shares S , one in B in , one wedish environmental legislation, legislation, environmental wedish EK 72. The stock options may may options stock EK 72. The usqvarna repurchased repurchased usqvarna razil, four in China and one one and China in four razil, EK 48m. The average pur average The EK 48m. ecember 2008, 2008, ecember weden. At year-end, year-end, At weden. weden. Of these, the the these, Of weden. R by t eport -shares corre -shares F or each each or B -shares. -shares. -

h - e Boar - - expected to be published on 23 March 2009. March 23 on published be to expected later than the date of notification of the A the of notification of date the than later (3,973), of which S which (3,973), of G of members other as well as CEO and President the for employment of conditions other and remuneration to apply shall principles These 2009. for also apply to Management H for employment of conditions other and remuneration for principles current approve 2009 Meeting 2008. for The B The management senior of remuneration for Guidelines B The 2008 for Dividend A the to proposal full The P Members of G of Members ”STI”) incentive (Short-term salary Variable performance. reward correctly to and tiveness competi continued ensure to order in review) salary annual S position. the in involved responsibility of degree the reflect shall and market relevant the to related be shall salary The F salary Fixed remuneration. total of component substantial a constitute can remuneration variable that means This payment”. ”performance-related on focus aprimary with remuneration total competitive to offer aim shall Husqvarna pay. severance and termination of notice to apply tions I benefits. other and pensions, incentives, long-term targets, performance yearly on based incentives short-term of form the in salary variable salary, afixed of sist G of amember to remuneration Total employment. of country the in competitive be shall G the and performance, individual position, on based be shall ment G to remuneration for principles overall The principles Overall meet (10,193) were men and 5,721 (5,900) were women. were 5,721 (5,900) (10,193) and men were mined mined by the are into force. Remuneration which of employment to contracts amendments subsequent entered into after the Annual the Annual intoentered after of special interest to the company. the to interest special of questions on focus to order in used be can indicators ance I responsible. is member the which for G the for results financial in S emphasis The salary. fixed the to tion from from the d o alary levels shall be reviewed regularly (usually through an an through (usually regularly reviewed be shall levels alary ixed salary shall comprise the basis for total remuneration. remuneration. total for basis the comprise shall salary ixed roposals to the annual annual the to roposals roup Management. roup F S 9,999 2008, in employees of number average total the Of The principles shall apply to contracts of employment of employment toshall apply contracts The principles alaries and remuneration in amounted 2008 to or more information, see also Note 19. Note also see information, more or f D oard of D of oard D of oard i i n rector B roup’s income for the period, and remuneration remuneration and period, the for income roup’s g i oard of B n 2009 roup Management shall receive S receive shall Management roup oard of irectors proposes that the Annual G Annual the that proposes irectors paid be dividend no that proposes irectors s EK 838m (874) refers to S to (874) refers EK 838m D irector’s Remuneration Committee. Remuneration irector’s D irectors on the basis of proposals on ofthe basis proposals irectors roup or for the sector or function function or sector the for or roup G M 2009 will be announced no no announced be will M 2009 G G eneral Meeting and also toMeeting eneral roup Management is deter roup Management roup Management shall con shall Management roup n addition, perform n addition, g ener al al ener G T n addition, condi n addition, weden. usqvarna G usqvarna shall be on the the on be I shall M, which is is which M, roup Manage roup T in addi I in S EK 4,037m eneral eneral roup roup - - - - - - 150% shall apply, or if a lower percentage is appropriate. is percentage alower if or apply, shall 150% level. stretch the of attainment on salary the of 150% of amaximum and level target the of attainment on 100% of amaximum to amount the reasons. the G Annual next the ation, I guidelines. these from deviate I S the for cap the is also which level, stretch the of ment attain on salary the of 100% of amaximum and level get tar the of attainment on salary the of 50% of amaximum to policy. I guidelines the from to deviate Board the for Authority references. 24, with Note in given are employment of contracts current in agement the to remuneration for conditions principal The payable become not has which remuneration determined Previously period. notice the of end the from 24 months than more for apply not shall S period. notice the of end the after apply also may payment continued with obligation B period. notice the during company the with compete to not of Members employed. is the member where in the country practice accepted notice and paylevels ofare which inseverance line with G of Members pay severance and termination of Notice remuneration. total of part asignificant constitute H employed. is agement G of member the where country the in practice normal with accordance in provided be can benefits Other benefits Other the with in accordance plans contribution country. the within levels accepted normally match shall of benefits the value the and of employment, in country the practice and lations regu to reflect bedesigned shall benefits health and Pension insurance and Pensions G Annual the to proposed be shall a long-term incentive program (e.g. share or share-price based) The incentives Long-term Meeting adopt a new performance-based incentive program program incentive performance-based a new adopt Meeting B The 2009 program incentive Long-term year and shall reflect the plans approved by the B the by approved plans the reflect shall and year each of start the at stated be shall performance of levels n the U n the f special circumstances exist, the B the exist, circumstances f special ased on the circumstances in each case, a non-compete anon-compete case, each in circumstances the on ased The B The S and ”stretch” ”target” for objectives defined Clearly B T oard of shall be dependent on the position and may amount amount may and position the on dependent be I shall oard of D of oard S oard of D of oard , the S , the D roup Management shall be offered periods of of periods offered be shall Management roup irectors shall evaluate on a yearly basis whether irectors proposes that the Annual G Annual the that proposes irectors T component is normally higher and may may and higher normally is I component 50/100/ full the if decide shall irectors I f possible, pension plans shall be defined be defined shall plans pension f possible, G eneral Meeting shall be informed of of informed be shall Meeting eneral owever, these benefits shall not not shall benefits these owever, roup Management shall be obliged shall be obliged roup Management uch non-compete obligations obligations non-compete uch n the event of such adevi such of event n the eneral Meeting. eneral oard of D of oard G R roup’s pension roup’s pension by t eport irectors may may irectors roup Man roup G oard. roup Man roup eneral eneral T - I h - . e Boar - - arate press release. press arate F 2009. 5March on announced D B the by decided as period later such or 2009, March, 30 to 16 is March period subscription The 2009. 12be March gen A gen Euroclear S Euroclear underwritten. and committed is issue rights of 100% the and Nordea. Consequently, Markets ken Capital by underwritten conditions, to certain ject sub is, issue rights the of remainder The issue. rights the of 74.4% to amount approximately the total bringing guaranteed shares, for additional subscribe conditions, to certain subject to, an undertaking include which agreements underwriting National Pension Swedish the rights issue. issue. the rights 35.6% to ofapproximately corresponding issue, in the rights proshares rata for respective their to subscribe undertaking F ment ment A A without preferential rights. preferential without B of holders to B and A-shares of holders to issued be will A-shares i.e. holdings, existing their to proportion in shares for scribe ordinary S ordinary programs. the of conditions the with accordance in all similar, or issue arights asplit, issue, abonus implements company the case in recalculation to subject be will programs the with tion programs. incentive long-term pany’s com the to pursuant contributions, employer including obligations, company’s the hedge to order in Stockholm, rights issue is to strengthen the G the strengthen to is issue rights S raising of intention the cash. in shares the for pay to and shares, of number total the of 3% to B the authorize Meeting The B The issue rights for Proposal 31 D after events B The shares own of Repurchase is described in Note 19. Note in described is (LT 2008 for program the as principles similar on based is program The managers. senior 50 of amaximum for d o und (AP4) have entered into agreements which include an und (AP4) include which have intoentered agreements B irectors. The subscription price and offer ratio will be be will ratio offer and price subscription The irectors. , LE Lundbergföretagen A Lundbergföretagen , LE The record date at the S the at date record The S S The number of shares that may be transferred in connec in transferred be may that shares of number The The rights issue is subject to approval by an Extra an by approval to subject is issue rights The NA the on only purchased be may shares The ix major shareholders in ix major shareholders hareholders will have primary preferential rights to sub to rights preferential primary have will hareholders f D oard of D of oard D of oard B B , Alecta, , Alecta, i Öresund and the Öresund rector hareholders’ Meeting to be held on 9 March 2009. 9March on held be to Meeting hareholders’ weden A weden -shares. S -shares. irectors has resolved on a rights issue with with issue arights on resolved has irectors G Annual the that proposes irectors I I nvestment A nvestment n addition, n addition, s B , for participation in the rights issue will will issue rights the in participation , for oard to acquire B acquire to oard ubscription may also be submitted submitted be also may ubscription EK 3 billion. The objective of the the of objective The EK 3billion. F ecember, 2008 ecember, F und und (AP4) have into entered wedish S wedish ourth ourth I nvestor A nvestor H B B , Alecta, A , Alecta, usqvarna, including including usqvarna, Öresund and the Öresund or further details, see the sep the see details, further or wedish National Pension Swedish roup’s balance sheet. sheet. balance roup’s ecurities register Center, Center, register ecurities B , LE Lundbergföreta F A I -shares totaling up up totaling -shares S E nsurance, I nsurance, B , H F 2008) which which I 2008) andelsban SD ourth ourth I nvestor nvestor eneral eneral AQ OMX AQ OMX -shares -shares oard of of oard nvest ------

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ave

and credit is lower. is credit and receivables to related risk of level the but chains e.g. retail for than higher are dealers servicing to sales for costs Unit approach. active amore of basis the on products, branded H sell who dealers of number the increasing involves G the for significant vidually indi not are and volumes smaller purchase customers these that means which end-users, to directly or dealers vicing risks. credit and receivables trade of levels higher in resulted has which customers, individual on dependence of degree agreater involved has dation Consoli market. geographical awider in outlets retail of ber G the displaying by growth H vides Variable costs, 78% costs, Variable 22% costs, Fixed Group structure, Cost H Production H power. bargaining greater them gives which number, in fewer and larger are ucts prod consumer for customers that implies way. This under is consolidation Europe in while America, North in dated consoli highly is market This chains. retail large through mainly sold are market mass the for products Consumer Customers I prices. lower I demand. than less or greater be may supply as competition, price and demand in changes short-term to lead can tions competition. price to related risks reduces which brands, G the of utilization and innovation product on tuations in demand resulting from seasonal variations and and variations seasonal from resulting demand in tuations fluc meet to flexible sufficiently is and components, chased demand. actual meet to notice short at adjusted be can which costs, fixed low relatively with ture H tion, f supply is greater than demand, competition may lead to to lead may competition demand, than greater is f supply usqvarna’s production consists mainly of assembly of pur of assembly of mainly consists production usqvarna’s Professional products are sold mainly through local ser local through mainly sold are products Professional S easonal variations and dependence on weather condi weather on dependence and variations easonal usqvarna has established a flexible production struc production aflexible established has usqvarna usqvarna with an opportunity to generate higher higher generate to opportunity an with usqvarna n order to minimize the risk of over-produc of risk the minimize to n order roup’s products in a large num alarge in products roup’s roup. H roup. owever, this situation also pro also situation this owever, usqvarna’s strategy strategy usqvarna’s R by t eport roup’s strong strong roup’s usqvarna- For more information, see Note 2 on page 57. page 2on Note see information, more For USD currencies Other RUB CAD EUR SEKm 2009 flows commercial forecast by currency, exposure Transaction SEK GBP PLN - h - - e Boar ------flexibility of production. of flexibility and systems quality-assurance stability, financial suppliers’ the monitors and deliveries, manage to order in suppliers production and for deliveries of finished products. finished of deliveries for and production for consequences negative have could asupplier by deliveries ing on the specific materials and components. A shortfall in depend vary deliveries interrupted of effects The needs. term G the cover individually who suppliers single by prices of raw materials at the time of purchase. purchase. of time the at materials raw of prices num and 60,000 tons of plastics. plastics. of tons 60,000 and num alumi of tons 43,000 steel, of tons 200,000 approximately comprises and volume production to linked obviously H them. deliver to suppliers of ability the or materials raw for prices world in changes of aresult ayear, of as course the in considerably ate fluctu can prices These plastics. of types various and minum alu steel, mainly materials, raw of prices the in fluctuations G The components and materials other materials, raw for to prices related Risks plastics for S for plastics S for accounted S S approximately for chainsaws and clearing saws, for which the the which for saws, clearing and chainsaws H conditions. weather materials and components. of purchases to refers cost single largest The costs. fixed in-house. produced are that ponents com of proportion agreater feature engines, factures increases during the peak production season. production peak the during increases G the d o 4,090m referred to raw materials. Purchases of steel steel of Purchases materials. raw to referred EK 4,090m H A major share of H of share A major I H Approximately 22% of the G the of 22% Approximately n 2008 H n 2008 f D usqvarna’s purchasing organization works closely with with closely works organization purchasing usqvarna’s usqvarna does not use financial instruments to hedge hedge to instruments financial use not does usqvarna roup’s operations, the number of temporary employees employees temporary of number the operations, roup’s roup’s operations and its performance are affected by by affected are performance its and operations roup’s i rector usqvarna purchased materials and components components and materials purchased usqvarna EK 924m. Net flow Net –4,529 –2,174 EK 2,082m, aluminum for S for aluminum EK 2,082m, 2,597 1,043 1,652 s 542 459 410 EK 18,300m, of which approximately approximately which of EK 18,300m, usqvarna’s material requirements is met met is requirements material usqvarna’s owever, handheld products such as as such products handheld owever, Hedge amount I n light of the seasonal variations in usqvarna’s total consumption is is consumption total usqvarna’s roup’s total costs consist of of consist costs total roup’s –2,370 3,009 1,802 –628 –345 –362 –335 –771 EK 735m, and and EK 735m, G roup also manu also roup roup’s short- roup’s exposure net Transaction Transaction 1,520 1,024 227 180 272 372 114 75 - - - - -

35 HUSQVARNA ANNUAL REPORT 2008 36 HUSQVARNA ANNUAL REPORT 2008 YEN EUR GBP CAD see Note 2. Note see F in U were assets net foreign most 2008, year-end At equity. impact that differences translation generate which changes, by these affected is currencies in foreign sidiaries sub of foreign liabilities and assets the between difference extent. some to offset be to effects exchange-rate enable sales and duction U exposure. action i.e. trans market, export the on products of sale the as well as exposure, i.e. translation subsidiaries, foreign in ments USD Translation exposure and exchange rates exchange and exposure Translation G The currencies. foreign in purchased materials of prices the affect can rates exchange G the G the H G the on tions fluctua exchange-rate of effects adverse short-term the ize H of goal The Currency exposure 2. 1and Notes see principles, accounting and exposure F limits. and mandates risk specified with accordance in operates which G in centralized mainly is and instruments financial of use the on largely based is risks such of ment B the by authorized and updated G H risks Financial expected. than lower be may effects ergy syn and anticipated, than higher be may integration of costs S risks. involves always integration such acquisitions, integrate successfully to G the Although years. H Acquisitions or more information on risks related to currency expos to currency related risks on information more or SD usqvarna sells its products in approximately 100 countries, countries, 100 approximately in products its sells usqvarna the of basis the on managed are risks financial usqvarna’s few past the in acquisitions several made has usqvarna roup’s financial and credit policies, which are annually annually are which policies, credit and financial roup’s Changes in exchange rates also affect affect also rates in exchange Changes in earnings to primarily related is exposure Translation , EUR, CA , EUR, roup’s earnings in terms of translation of income state income of translation of terms in earnings roup’s affect These fluctuations. currency to exposed is roup or more information on risk management, risk risk management, risk on information more or usqvarna’s currency management is to mi to is management currency usqvarna’s D roup’s earnings and financial position. As position. financial and earnings roup’s , RU and GB B and roup has historically shown an ability ability an shown historically has roup ales may be adversely affected, the the affected, adversely be may ales roup’s globally widespread pro widespread globally roup’s P. I n addition, changes in in changes n addition, oard of D of oard Net sales, SEKm SEKm sales, Net G roup Treasury, Treasury, roup irectors. Manage irectors. R roup equity. The The equity. roup by t eport 11,423 8,386 1,268 1,488 2008 842 and EUR. EUR. SD and

nim ure, ure, h e Boar - - - - - - - Average exchange rate, SEK rate, exchange Average hedging of foreign net assets in 2008 amounted to S to amounted 2008 in assets net foreign of hedging in the amount of –/+ of S amount the in affect would rate interest the in point centage per one of change a year-end, at period fixed-interest the and borrowings of volume the of basis the On 5months. was period 4.3%was fixing (5.2),rowings interest and the average bor rate on external interest the average At year-end 2008, risks Interest-rate S to amounted exposure transaction to G the of value market the 2008 end year- At hedged. is subsidiaries foreign in statements cial finan of translation nor exposure currency Neither months. 6–12 next the for 50–75% and hedged, is 6months next the for flow currency estimated and invoiced the of 75–100% Normally, 0–12 months. of ahorizon on exposure transaction H rates exchange of Hedging maturity profile for available but unutilized credit facilities. facilities. credit unutilized but available for profile maturity loans. outstanding of refinancing of H financing to related F risks Financing items. net financial under are reported hedging equity. under directly booked are and hedges on net assets and gains losses Currency derivatives. as well currency currency, as through country’s inloans through the respective are hedged eign net assets less than 12 months are normally maximized to S to maximized normally are 12 months than less of periods maturity with Loans profile. maturity distributed evenly an show to and years two than less not be to loans G The variations. seasonal to reference without long-term, G The liquidity. current exceed not do borrowings short-term that ensuring by and loans for profile maturity distributed interest-rate risks, see Note 2. Note see risks, interest-rate d o inancing risks refer to possible delays or increased costs costs increased or delays possible to refer risks inancing usqvarna uses currency derivatives to hedge estimated estimated hedge to derivatives currency uses usqvarna roup’s goal is for the average maturity period of long-term long-term of period maturity average the for is goal roup’s be should debt net that stipulates policy financial roup’s 12.11 2008 6.21 0.06 6.59 9.67 I Evaluation of financial risks involves adjustment of the the of adjustment involves risks financial of Evaluation F n accordance with the with n accordance inancing risks can be reduced by maintaining an evenly evenly an maintaining by reduced be can risks inancing f D i rector s 13.48 6.30 2007 0.06 9.25 6.74 EK 80m. F EK 80m. usqvarna’s capital requirements and and requirements capital usqvarna’s G roup’s for policy, financial certain I ncome and costs related to and ncome costs or more information on on information more or Year-end exchange rate, SEK rate, exchange Year-end roup’s hedges referring referring hedges roup’s 11.20 10.94 2008 6.25 0.09 7.70 EK –35m. G I ncome for ncome roup income income roup EK 3,000m. EK 21m. 12.86 2007 6.43 6.57 0.06 9.45 - - - - Total materials raw Other Aluminium Plastics Steel SEKm Raw material spending material Raw 2. Note F agencies. similar or &Poor’s Standard to according A-, least at of rating credit a with institutions by issued instruments interest-bearing liquid highly in placed are funds Liquid loans. of repayment G The Europe. in receivables trade of share aminor in risk credit reduce D of B the by annually approved are credits Major tinuously. con monitored is receivables trade uncertain for reserves for need The receivable. trade of follow-up for routines and credits, of monitoring active ratings, credit dardized amounting to S to amounting above, to referred as remuneration and pensions for costs includes 2008 for statement income The increases. salary and expected life average regarding expectancy assumptions in e.g. changes by affected are commitments Pension rates. interest and prices share for trends on primarily depend investments. other or assets liquid 6% in and bonds in 53% shares, in placed were funds these S to amounting funds S to amounted employment terminated following remuneration other and H 2008, year-end At commitments Pension G The risks Credit F H for period maturity average The planning. liquidity in account taken into are continuously therefore variations seasonal for ofevaluation risks. financial component important I ment is centralized in G in centralized is ment G the of agement G the into n addition, seasonal variations in cash flow comprise an comprise flow cash in variations seasonal n addition, or more information on financing risks, see Note 2. Note see risks, financing on information more or To some extent, the G the To extent, some Annual changes in the value of assets and liabilities liabilities and assets of value the in changes Annual I n the interest of effective control and cost-efficient man cost-efficient and control effective of interest n the irectors. irectors. usqvarna’s loans was 3.4 years (3.5) at year-end 2008. 2008. year-end at (3.5) years 3.4 was loans usqvarna’s roup’s credit risks are managed on the basis of stan of basis the on managed are risks credit roup’s roup’s pension funds. pension roup’s roup’s financial assets are used primarily for for primarily used are assets financial roup’s EK 2,855m. The G The EK 2,855m. EK 210m. D EK 210m. roup’s pension commitments, manage commitments, pension roup’s or more information on credit risks, see see risks, credit on information more or usqvarna’s commitment for pensions pensions for commitment usqvarna’s EK 1,383m. At year-end 2008, 41% of 2008, year-end At EK 1,383m. roup Treasury and is conducted in in conducted is and Treasury roup roup utilizes credit insurances to to insurances credit utilizes roup uring 2008, S 2008, uring roup manages pension pension manages roup EK 88m was paid paid was EK 88m 4,092 4,092 R 2,082 by t eport 2008 735 924 351 F uture uture oard oard - h - e Boar - Operating margin Operating Other expense Adminstrative expense Selling margin Gross Other Direct wages Direct R&D, tools OH, Factory materials Raw Cost structure Cost Components sold: goods of Cost G all of distribution and production design, the into grated inte is safety product that ensuring include Committee the of tasks The Management. Risk including Affairs, Legal G as well as units, operational from sentatives and financial position. financial and G the on effect adverse aclearly have not may liability product regarding claims that or case, specific in a sufficient or valid is cover insurance such that guarantee H insurers. external through partly and subsidiaries, captive own in insurance through partly claims, H property. or persons to damage caused have to claimed are products that event I liability Product development. under rently G the by met be can they that estimated is it changes drastic to subject not are they as long as and known, currently are years few next the over introduced be will which criteria The future. the in criteria stricter with comply to development product for resources sufficient have to estimated is and engines, 2-stroke of e.g. of development terms in leader market the is G The respect. this in steadily improved have products H safety. and noise emissions, exhaust as such them, of recycling as well as products the of use from arising and issues other impact environmental regarding regulations H legislation in Changes D B the by adopted policy pension the with accordance future. the in introduced be may respect this in regulations stricter and New circumstances. specific certain, in products recall d o n many countries, legislation may require H require may legislation countries, n many usqvarna products are subject to national and international international and national to subject are products usqvarna irectors. F irectors. roup products. roup The G The H f D usqvarna is also exposed to product liability in the the in liability product to exposed also is usqvarna i rector roup’s Product S Product roup’s or more information on pension, see Note 19. Note see pension, on information more or roup’s existing products, as well as those cur those as well as products, existing roup’s s usqvarna is insured against such such against insured is usqvarna afety Committee includes repre includes Committee afety % of sales % of owever, there is no no is there owever, 29.0 43.9 12.7 17.0 roup’s earnings earnings roup’s 4.6 0.8 4.0 7.3 9.6 0.1 usqvarna to to usqvarna taff Staff roup usqvarna’s usqvarna’s 2008 14,210 2,361 9,377 4,092 1,280 5,496 3,109 1,474 SEKm oard of of oard 274 roup roup - 46 - -

37 HUSQVARNA ANNUAL REPORT 2008 38 HUSQVARNA ANNUAL REPORT 2008 Other operating expenses operating Other income operating Other expenses Administrative S income operating Gross sold goods of Cost sales Net S Group b shares of number Average b share per Earnings period the for income in interest Minority Taxes items financial after Income net items, Financial F F income Operating S Company Parent the of holders Equity I period the for Income ncome for the period attributable to: attributable period the for ncome elling expenses elling inancial expenses inancial income inancial hares of income in associated companies associated in income of hares EKm After dilution, S dilution, After After dilution, million dilution, After efore dilution, million dilution, efore S dilution, efore EK i EK ncome s tatement FI NANC I AL S TATEMENT S Note 3, 4 3, 17 6 5 9 8 8 –22,965 32,342 –5,496 –1,474 1,288 2,361 9,377 1,767 383.2 383.0 1,288 1,278 –594 2008 –479 –716 3.34 3.34 –48 122 –2 10 4 –23,509 33,284 –4,927 –1,303 2,889 3,564 2,036 9,775 384.6 384.6 2,036 2,029 –675 –853 –719 2007 5.29 5.29 44 –5 21 7 3

Contingent liabilities Contingent Total equity and liabilities and equity Total provisions Other liabilities non-current Total provisions Other benefits post-employment other and pensions for Provisions D Total current liabilities current Total D S liabilities Other Tax liabilities payables Trade liabilities Current borrowings Long-term liabilities Non-current equity Total interest Minority assets current Total S Company Parent the in holders equity to attributable Equity E assets Pledged Retained earnings Retained reserves Other assets Total equivalents cash and Cash assets current Other Tax receivables D equipment and plant Property, assets Non-current A S Group Trade receivables Trade I assets Current G Other intangible assets intangible Other Total non-current assets non-current Total F I D nventories nvestments in associates in nvestments hort-term borrowings hort-term hare capital hare inancial assets inancial EKm quit eferred tax liabilities tax eferred erivatives erivatives eferred tax assets tax eferred ssets oodwill liabilities y and b shalance FI NANC eet I AL S TATEMENT S Note 7, 11 22 20 20 26 21 10 10 19 16 15 14 17 12 13 9 2 2 2 2 2 2 9 34,337 34,337 16,603 14,379 17,734 11,143 31 Dec 10,694 8,772 8,815 3,280 8,556 2,434 5,035 6,788 1,829 1,062 6,940 4,789 1,828 4,184 3,159 1,474 1,170 2008 686 907 928 429 577 367 770 551 187 24 49 43 7 28,803 28,803 15,208 15,208 13,882 14,921 10,130 31 D 6,206 7,389 7,349 1,666 6,570 6,570 4,031 1,520 5,461 1,059 2,731 4,312 1,216 3,912 7,758 2,911 2007 208 208 650 256 898 342 207 207 277 570 570 770 44 20 40 90 12 ec 9

39 HUSQVARNA ANNUAL REPORT 2008 40 HUSQVARNA ANNUAL REPORT 2008 Cash and cash equivalents at beginning of year of beginning at equivalents cash and Cash Cash and cash equivalents at year-end at equivalents cash and Cash equivalents cash and cash to referring differences rate Exchange Total cash flow cash Total financing from flow Cash holders minority to paid Dividend Total cash flow from operations and investments and operations from flow cash Total investments from flow Cash Repurchase of shares of Repurchase D loans long-term New loans long-term of Amortizations loans short-term in Change investments short-term in Change Financing Other software and development product of Capitalization Capital expenditure in property, plant and equipment and plant property, in expenditure Capital S operations of Acquisitions Investments Cash flow from operations from flow Cash liabilities and assets operating from flow Cash Change in other operating assets/liabilities operating other in Change payables trade in Change I Operations S Group Change in trade receivables trade in Change inventories in Change liabilities and assets operating in Change liabilities and assets operating in change excluding operations, from flow Cash Taxes paid D Change in accrued and prepaid interest prepaid and accrued in Change loss/ Capital provision Restructuring ncome after financial items financial after ncome ale of fixed assets fixed of ale EKm ividend paid to shareholders to paid ividend epreciation and amortization and epreciation I mpairment ca sh f low s FI NANC tatement I AL S TATEMENT S Note 23 10 11 –1,976 7 8 0 6 –7, 2,703 1,828 3,144 1,168 1,216 7,783 –746 1,767 1,163 –862 –845 –909 –543 2008 –254 –129 422 441 –48 264 260 190 196 114 –11 30 40 — 12 0 2 –9,689 –7,033 –4,546 –8,876 –1,468 10,157 2,656 3,232 1,216 7,556 2,889 2,778 1,081 –576 –667 –698 –166 –159 –767 2007 523 –85 992 698 –15 44 29 –5 0 0 0 0 0 Closing balance 31 Dec 2008 31 Dec balance Closing D differences Translation operations foreign of translation on differences Exchange statement income to Transferred G hedges flow Cash statement income to Transfer instruments sale for Available and expense for the period the for expense and income recognized Total period the for Income equity in directly recognized period the for Income payment Share-based hedge Equity 2007 31 Dec balance Closing minority of Acquisition holders equity with transactions Total D shares of Repurchase B Total transactions with equity holders equity with transactions Total D shares of Repurchase and expense for the period the for expense and income recognized Total period the for Income equity in directly recognized period the for Income payment Share-based hedge Equity differences Translation operations foreign of translation on differences Exchange statement income to Transferred G hedges flow Cash 2007 1Jan balance Opening S Group G instruments sale for Available EKm onus issue issue onus ividend to minority holders minority to ividend ividend S ividend ividend S ividend ain/loss taken to equity to taken ain/loss ain/loss taken to equity to taken ain/loss ain/loss taken to equity to taken ain/loss EK 2.25 per share per EK 2.25 EK 2.25 per share per EK 2.25 Statement o Attributable to equity holders of the company the of holders equity to Attributable capital S FI 770 770 593 hare hare 177 177 NANC 0 0 0 0 0

f sh I AL paid-in capital Other Other S TATEMENT 0 0 0 0 0 0 0 0 0 are reserves 1,062 1,053 1,053 Other 1,497 –105 –105 –463 114 –47 –52 –31 S –3 –3 47 9 0 0 3 0 h Retained earnings –1,010 old 5,545 2,035 2,029 1,280 6,570 1,278 6,940 –910 –862 –667 –166 –177 –48 2 2 6 6 er 2,333 2,029 6,252 8,772 1,278 1,055 1,930 7,349 –833 1,497 –910 –463 –862 –667 –166 Total –99 –48 –47 –52 –31 –3 –3 47 2 6 3 0 0 s’ equ Minority interest –11 43 40 10 12 14 21 0 4 0 7 0 0 7 4 i 6,264 equity 2,036 2,347 1,288 8,815 1,059 7,389 1,937 1,501 –833 –910 –463 –862 –667 Total Total t –166 –99 –48 –47 –52 –31 –11 –3 –3 21 47 2 6 3 0 0 y

41 HUSQVARNA ANNUAL REPORT 2008 42 HUSQVARNA ANNUAL REPORT 2008 S income operating Gross sold goods of Cost F income Operating expenses operating Other income operating Other expenses Administrative sales Net S Parent (Corporate Company Parent the of operations The Parent tions of S of tions G the in changes to related gains capital to mainly refers improvement The (2,208). S which of S to amounted 2008 in Company Parent H G the of tions func the as well as care garden and forestry for products motor-driven of sales and marketing manufacture, opment, Appropriations items financial after Income F I S and panies Income for the period the for Income Taxes taxes before Income ncome after financial items in 2008 amounted to S amounted 2008 in items financial after ncome inancial income inancial expenses elling inancial expenses inancial EKm uman Resources and Communications. Net sales for the the for sales Net Communications. and Resources uman EK 61m (–302) and taxes of S of taxes and EK 61m (–302) EK 7,569m (7,750) related to sales to G to sales to EK 7,569m (7,750) related I dentity Number 556000-5331) include the devel the include 556000-5331) Number dentity EK 2,442m (2,406) to external customers. customers. external to (2,406) EK 2,442m roup’s head office including F including office head roup’s C C ompan ompan roup structure. After appropria After structure. roup EK –290m (–358), net net (–358), EK –290m EK 10,011m (10,156), H usqvarna A usqvarna inance, Legal, Legal, inance, y y roup com roup Income s FI EK 6,312m NANC B - - I AL - S TATEMENT Note 26. 26. Note (–356) and are reported in non-restricted reserves. reserves. non-restricted in reported are and (–356) S to amounted S to amounted S to amounted ation, see Note 19. Note see ation, S were year the during assets fixed intangible and tangible year the was for income EK 596m (230). (230). EK 596m F G year-end at Company Parent the in equity Unrestricted F or information on employees, salaries and remuner and salaries employees, on information or or information on shareholdings and participations, see see participations, and shareholdings on information or roup contributions in 2008 amounted to S to amounted 2008 in contributions roup S tatement Note 18 18

6 5 3 8 8 9 EK 0m (199) and cash and bank balances balances bank and cash (199) and EK 0m EK 12,042m (7,738).EK 12,042m (158). EK 682m S hort-term investments at the end of the year investments hort-term S EK I m6,083 (1,548). 10,011 7 281 –7, –1,510 2,730 6,373 6,539 6,083 6,312 5,025 1,283 –336 –290 2008 –861 –19 61 nvestments in in nvestments EK –1,174m 10,156 –7,389 2,208 1,548 1,487 1,906 2,767 1,448 –302 –902 –902 –358 –727 –376 –376 2007 –2 0 Contingent liabilities Contingent liabilities and equity Total Total current liabilities current Total D Other liabilities Other provisions Other Tax liabilities payables Trade G to Liabilities liabilities Current liabilities interest-bearing Total S provisions Total commitments similar and pensions for Provisions Provisions Pledged assets Pledged assets Total assets current Total Long-term loans Long-term G to Liabilities liabilities Interest-bearing reserves Untaxed equity Total I forward brought loss or Profit Cash and cash equivalents cash and Cash S F equity: Non-restricted reserve Revaluation reserves Statutory S equity Restricted Equit I assets Current assets non-current Total F I assets Non-current A S P d d Receivables assets Tangible ncome for the period the for ncome nventories assets ntangible air value reserve value air hort-term loans hort-term assets inancial hort-term investments hort-term hare capital hare EKm erivative instruments erivative ssets Prepaid expenses and accrued income accrued and expenses Prepaid receivables Other claim Tax-refund receivables Trade G from Receivables arent C erivative instruments erivative assets tax eferred y

roup companies roup roup companies roup roup companies roup ompan y Balance FI NANC I AL S TATEMENT S sheet Note 22 20 21 10 18 19 15 17 12 13 11

30,824 12,834 36,861 36,861 17,551 31 Dec 10,287 29,731 5,466 6,037 4,665 6,083 4,056 2,392 2,599 6,047 1,299 2,746 1,810 2008 902 108 160 –88 682 502 532 948 347 591 770 378 173 34 86 83 27 18 — 74 0 0 4 16,345 28,316 28,316 23,261 20,931 21,578 31 D 8,530 5,055 2,416 4,308 2,548 6,253 1,548 1,326 9,826 3,971 1,100 2007 963 –63 365 293 223 547 199 524 770 158 131 411 62 71 30 30 88 65 32 32 18 — ec 4 1

43 HUSQVARNA ANNUAL REPORT 2008 44 HUSQVARNA ANNUAL REPORT 2008 G D shares own of Repurchase investments short-term in Change loans long-term in Change Change in current liabilities and provisions and liabilities current in Change assets current other in Change receivables trade in Change inventories in Change liabilities and assets operating in Change liabilities and assets operating in change excluding operations, from flow Cash Taxes paid income operating in included gain/loss Capital items non-cash for Adjustment D I Operations S Parent Total cash flow cash Total financing from flow Cash loans short-term in Change Financing investments and operations from flow cash Total investments from flow Cash I equipment and plant property, in expenditure Capital participations and shares in Change Investments operations from flow Cash Change in inter-company claims inter-company in Change Cash and cash equivalents at year-end at equivalents cash and Cash year of beginning at equivalents cash and Cash ncome after financial items financial after ncome ntangible assets ntangible EKm ividend paid to shareholders to paid ividend epreciation according to plan charged against above against charged plan to according epreciation roup contribution paid contribution roup C ompan y C FI NANC a I sh f AL S TATEMENT low s S tatement –20,513 21,591 –19,919 –5,003 18,631 7 226 –7, 1,272 1,078 1,526 –554 2,451 6,312 7,739 –809 –862 –457 –356 2008 –254 –137 682 524 –48 –28 245 199 158 27 19 –6,275 5,146 – –1,129 –1,989 6,401 –7,112 2,110 2,208 2,390 9,771 –899 –667 –280 –349 –359 –166 –199 –143 2007 158 126 –87 –52 207 61 – 241 60 32 2 Closing balance, 31 Dec 2008 31 Dec balance, Closing I S reserve hedge in Change Tax effect of G of Tax effect G B equity restricted and non-restricted between Transfer 2007 1Jan balance, Opening S Parent Valuation of available for sale investments sale for available of Valuation shares own of Repurchase D G of Tax effect G 2007 31 Dec balance, Closing I S Change in hedge reserve hedge in Change investments sale for available of Valuation shares own of Repurchase D ncome for the period the for ncome ncome for the period the for ncome hare-based payments hare-based hare-based payments hare-based EKm onus issue onus ividend paid to shareholders to paid ividend ividend paid to shareholders to paid ividend roup contributions roup roup contributions roup roup contributions roup roup contributions roup C ompan y Ch FI NANC S hare capital hare I an AL S 770 770 593 TATEMENT 177

g e Restricted i reserves S n 22 22 21 1

equ F air value value air reserve –63 –88 –28 61 – –3 i 1 3 t y Profit or loss loss or Profit 12,130 brought brought forward 7,801 –1,174 7,516 6,083 1,548 –862 –667 –356 –166 –177 –48 329 100 –1 1 4 12,834 8,530 –1,174 8,131 6,083 1,548 –862 –667 –356 –166 Total –48 329 100 –28 61 – –3 1 3 0 0 4

45 HUSQVARNA ANNUAL REPORT 2008 46 HUSQVARNA ANNUAL REPORT 2008 DE Five-year review on page 86–87. page on review Five-year the see information, more For statements. financial combined on based or proforma calculated are 2004–2006 for figures key historical the of Some financial costs divided with financial costs. financial with divided costs financial –I ratio coverage Interest S of sales annual with acquisitions for made is year. Adjustment previous the in period corresponding the with comparable period current the make to order in reported –F acquisitions Excluding assets). net xaverage –(WACC income) =operating costs ating –oper sales (Net assets: net average on (WACC) capital of cost average weighted the less income –Operating creation Value and EBITDA software. and development product of capitalization and equipment and plant –Property, expenditure Capital operations. of divestment and acquisitions excluding ments, invest and operations from flow –Total cash flow cash Operating employed. capital average of apercentage as income financial plus income –Operating employed capital on Return equity. average –I equity on Return sales. net of apercentage as income –Operating margin Operating sales. net –G margin Gross period. preceding the of apercentage as sales –Net growth sales Net shares. of ber –I share per Earnings key ratios Other liabilities. tax deferred including debt bearing non-interest- less equity and –Total liabilities employed Capital assets. total of apercentage as –Equity ratio Equity/assets equity. adjusted total to relation in debt –Net ratio debt/equity Net assets. derivative value fair and ments invest term short equivalents, cash and –Cash funds Liquid funds. liquid less liabilities –Total interest-bearing debt Net provisions. non-interest-bearing and liabilities operating less receivables financial interest-bearing and funds liquid of exclusive assets –Current capital Working payables. trade less –I capital working Operating liabilities. tax deferred and provisions interest-bearing non- liabilities, operating less receivables financial bearing interest- and funds liquid of exclusive –Total assets assets Net indicators Capital amortization. FI N – Earnings before interests, taxes, depreciation depreciation taxes, interests, before –Earnings I T ION ross operating income as a percentage of of apercentage as income operating ross S ncome for the period as a percentage of of apercentage as period the for ncome ncome for the period divided by the num the by divided period the for ncome ncome after financial items plus plus items financial after ncome igures excluding acquisitions are are acquisitions excluding igures nventories and trade receivables EK 100m or more. or EK 100m NOTE

- - - - S

20 24 22 23 25 26 21 10 18 15 12 16 13 19 14 17 11 content 9 8 F 7 6 5 4 3 S 2 F 1 S I F B I F S provisions Other equity in reserves Other institutions credit to liabilities for pledged Assets liabilities Contingent liabilities Other benefits employee and Employees Company Parent reserves, Untaxed assets current Other equipment and plant Property, Remuneration to the B the to Remuneration G of members other and President the Taxes Leasing expenses operating Other income operating Other income operating and sales Net principles valuation and Accounting Note instruments financial nventories assets ntangible auditors to ees assets inancial expense and income inancial and management risk inancial shares of number and capital hare information egment participations and hares Combinations usiness Management roup s

note oard of D of oard s irectors, irectors, 66 80 60 54 68 68 68 63 63 65 83 62 62 62 62 82 77 69 69 69 47 67 67 76 76 76 income statement. Acquisitions from minority interests interests minority from Acquisitions statement. income the in recorded losses and gains in result interests minority • consolidated the in included • Companies are acquired divestments: to and control common under participations. and shares all to referring rights voting the of 50% than more of ashareholding by panied accom generally policies, operating and financial the ern gov to power the has Company Parent the which in panies actions with external parties to the G the to parties external with actions year. the during divested been have companies No The financial statements include H include statements financial The companies Group of Definition values. surplus acquired of • depreciation amortization and unrealized and transactions • elimination intra-group of after: subsidiaries owned indirectly and directly its and Company Parent the for statements income the G the for income consolidated The statement. income the in immediately recognized is reassessment that after remaining excess Any assets. acquired the of urement H bination, com business the of cost the exceeds assets net acquired I goodwill. as recognized is difference the liabilities, contingent and liabilities assets, identifiable the of value fair the exceeds combination business the of G the to value acquisition the determine to value fair at valued are acquisition of date the on subsidiary a in liabilities contingent and liabilities assets, the whereby control, common under not subsidiaries of acquisitions H consolidation for applied Principles R S the and Act S the with accordance in prepared R standard the of basis the on disclosed is information tional Addi presented. years all to applied consistently been have H H I by required As Union. European F I the with accordance in prepared are (publ.) of H statements financial consolidated The preparation of Basis stated. otherwise unless SEKm in Amounts tandards ( Standards Reporting inancial F F usqvarna applies the purchase method to account for for account to method purchase the applies usqvarna below out set policies The Manual. Accounting usqvarna usqvarna apply uniform IF uniform apply usqvarna H which on date the including and to up statement income consolidated the in included are divested Companies control. H which on date the of as statement income intra-group profits in stock, and and stock, in profits intra-group NOTE 1 R 2.1. R 1.1 S the of The following applies to acquisitions of companies not not companies of acquisitions to applies following The Transactions with minority interests are treated as trans as treated are interests minority with Transactions The Parent Company’s financial statements have been been have statements financial Company’s Parent The usqvarna loses control. control. loses usqvarna usqvarna reassesses the identification and meas and identification the reassesses usqvarna wedish F wedish ACCOUNT wedish F wedish inancial Reporting B Reporting inancial inancial Reporting B Reporting inancial I N R G AN rules as defined in the the in defined as S rules IF A R wedish Annual Accounts Accounts Annual wedish usqvarna A usqvarna S 1, entities within within S 1, entities D VALUAT ) as adopted by the the by adopted ) as roup. D roup. f the fair value of the the of value fair f the oard’s standard standard oard’s usqvarna A usqvarna roup. I roup. nternational nternational oard. isposals to to isposals usqvarna gains gains usqvarna and all com all B and roup includes includes roup I ON PR ON f the cost cost f the B I NC - - I - - PLE NOTE S the different business models for end-customers, consumers consumers end-customers, for models business different the H reporting Segment rate. closing the at translated and entity foreign the of liabilities and assets as treated are entity aforeign of sition sale. on loss or gain the of part as statement income the in recognized are equity in recorded were that differences exchange sold, is operation foreign a When equity. shareholders’ to taken are investments, such of hedges as designated instruments currency other and borrowings of and operations, foreign in investments net of translation the from arising differences exchange solidation, con year. On the for rates average at translated been have S into translated H the of currency tion presenta the and currency functional Company’s Parent the transactions. the of dates the at prevailing rates exchange the using currency tional F translations currency Foreign basis. length arm’s onout an are carried related parties with All transactions transactions party Related associate. the in interest ing G the to relation in recognized been have any, if companies, associated with transactions on losses or G associate. the of behalf on payments made or gations obli incurred has it unless losses, further recognize not does H associate, that in interest its of value the exceeds H When acquisition. of date the after company associated that of loss H recognize to decreased or increased cost, at reported initially are company ated as part of the operating income. I income. operating the of part as reported is result the reason the is which nature operational H statement. income the in reported is company associated an in tax after according to the equity method. method. toaccording the equity I rights. voting the of 50% and 20% between of shareholding by a accompanied generally control, not but influence cant H which over companies are Associates companies Associated 118 and companies. units, subsidiary. the in assets net the of value rying car the of portion acquired the and paid consideration the between difference the to corresponding goodwill, in result S nvestments in associated companies have been reported have reported been companies in associated nvestments oreign currency transactions are translated into the func the into translated are transactions currency oreign usqvarna’s primary segments (business areas) are based on on based are areas) (business segments primary usqvarna’s G been have subsidiaries foreign of sheets balance The in S presented are statements financial The At year-end 2008, the G the 2008, year-end At oodwill and fair value adjustments arising on the acqui the on arising adjustments value fair and oodwill usqvarna’s share of losses in an associate equals or or equals associate an in losses of share usqvarna’s usqvarna’s investments in associates are of of are associates in investments usqvarna’s EK at year-end rates. I rates. year-end EK at usqvarna G usqvarna usqvarna’s share of the profit or profit the of share usqvarna’s roup comprised 152 operating 152 operating comprised roup H roup. roup. nvestments in an associ an in nvestments usqvarna’s share ofusqvarna’s income ncome statements statements ncome usqvarna has signifi has usqvarna roup’s participat roup’s EK, which is is which EK, usqvarna usqvarna ains ains ------

47 HUSQVARNA ANNUAL REPORT 2008 48 HUSQVARNA ANNUAL REPORT 2008 ACCOUNT principles. length arm’s applying terms, commercial strictly for costs include under are shown in segments the not included costs Operating out. is carried and net assets of costs of allocation amount a where certain units legal in multi-segment as as well divisions units ate legal as for total the ciples prin same the using are consolidated of segments the assets and net results operating The segment. per not reported are as and equity as well net debt and taxes income/expense net financial whereas operations, in their used net the assets H on based are G the facing return of rates differing the and risks of nature and source predominant the identifying for basis the form which users, professional and stated. otherwise unless SEKm in Amounts using the effective interest method. D method. interest effective the using performed. been has repairs, product as such service, the when recorded are services from Revenues delivery. of terms agreed with accordance in customers the of disposal the at placed been have goods the when recorded are sales that means This reliably. measured be can revenue of amount the when and goods those of control effective nor goods, the of dispose G the and buyer the to transferred been have goods the of ownership with associated rewards and risks significant the when recognized S products. finished of sales from exclusively almost arise Revenues discounts. trade and returns taxes, sales S recognition Revenue G grants Government established. is payment receive to right the when ognized liabilities are accounted for on all differences between the the between differences all on for accounted are liabilities and assets tax deferred that meaning method, liability the of application with taxes deferred and current Taxes include Taxes incurred. are they which in B costs Borrowing expenses. related such of adeduction as statement income the in recognized are expenses to relating G assets. the of life useful the over income as recognized and income deferred as sheet balance the in G received. be will grants the that and them to attaching conditions H that assurance sonable area is there when recognized are These bodies. national inter or national, local, similar and authorities public ments, ales are recorded net of VAT (Value-Added Tax), specific Tax), specific VAT of net (Value-Added recorded are ales orrowing costs are recognized as an expense in the period period the in expense an as recognized are costs orrowing overnment grants relate to financial grants from govern from grants financial to relate grants overnment Transactions between segments are carried out on on out carried are segments between Transactions and result for operating the are responsible segments The I nterest income is recognized on a time-proportion basis basis atime-proportion on recognized is income nterest overnment grants relating to assets are included included are assets to relating grants overnment I N VALUATG AND usqvarna’s sales per geographical market. market. geographical per sales usqvarna’s roup retains neither a continuing right to to right acontinuing neither retains roup H H usqvarna’s corporate functions. functions. corporate usqvarna’s usqvarna’s common costs, which mainly mainly which costs, common usqvarna’s G roup. The segments consist of separ consist segments The roup. usqvarna will comply with the the with comply will usqvarna roup. The secondary segments segments secondary The roup. I PR ON ividend income is rec is income ividend I overnment grants grants overnment NC I PLES ales are are ales - - - - NOTE - recognized. Capitalized development costs are amortized amortized are costs development Capitalized recognized. is development, product’s new the to attributable directly is which expenditure, Only development. the complete to exist resources that and markets existing on sellable is product the that degree the to recognized only is asset gible intan An high. is lives useful and benefits economic future their to as certainty of level the that provided products new H Product development expenses lives. useful unlimited having as identified are trademarks other No life. useful G trademark The 10 at years. estimated life, useful the during basis astraight-line on amortized are lives useful limited with trademarks All impairment. accumulated and amortization accumulated any after cost at reported are Trademarks Trademarks combination. business the from fit bene to expected are that units generating cash the to cated G impaired. be might asset the that indication is an if there or regularly more for impairment annually tested losses. ment impair accumulated less cost at life useful unlimited an with G Goodwill related) transactions in the individual individual the in transactions related) tax- (or taxable other and appropriations by affected are or substantially enacted tax rates. Taxes incurred by and base. the tax sheet balance the in liabilities and assets of amount carrying of the temporary difference is controlled by the the by controlled is difference temporary the of reversal the of timing the where associates and subsidiaries in investments on arising differences temporary on for vided periods. future in utilized be will they that probable is it extent to the recognized are differences panies. This applies to both to both applies This panies. com to acquired or years to previous referring forward carried losses tax of utilization the by affected also are They Intangible fixed assets assets fixed Intangible hedges. net-investment qualifying of tion por effective the for equity in deferred when except ment, state income the in included are differences exchange-rate the and rates exchange year-end at valued are foreign currency in denominated liabilities and assets Monetary currency foreign in liabilities and assets Monetary liabilities. tax against assets tax off to set right enforceable a legally has etc., schemes, consolidation tax through com of a group or a company when and authority tion taxa same to the refer they when net shown are liabilities tax future. foreseeable the in will not be reversed difference is that the probable temporary companies. S usqvarna capitalizes certain development expenses for for expenses development certain capitalizes usqvarna AR asset intangible life indefinite an as reported is oodwill The value of goodwill is continuously monitored, and is is and monitored, continuously is goodwill of value The D ENA is reported as an intangible asset with unlimited unlimited with asset intangible an as reported is ENA D eferred tax assets on tax losses and temporary temporary and losses tax on assets tax eferred D eferred taxes are calculated using enacted using enacted are taxes calculated eferred D eferred tax assets and deferred deferred and assets tax eferred S wedish and foreign foreign and wedish D G eferred tax is not pro not is tax eferred roup companies. companies. roup oodwill is allo is oodwill G G roup and it it and roup H roup roup usqvarna usqvarna panies, panies, - - - - - - an unlimited useful life. D life. useful unlimited an have to considered is it as depreciated not is Land incurred. are they which in period the during statement income the to are charged ial costs and value. maintenance All repairs other G the by captured be will item the with associated benefits economic future that probable is it when only amount carrying asset’s the in included are costs quent or loss; loans and receivables; and available-for-sale financial financial available-for-sale and receivables; and loans loss; or profit through value fair at assets financial categories: lowing H assets financial of Classification Construction. and G and Lawn Commercial –Masstrade, world –D world the of Rest Consumer G The assets. of group or assets other from inflows cash the of independent substantially are that inflows cash generating assets of group identifiable smallest the are which units, ing cash-generat in grouped are assets impairment, assessing F use. in is asset the which in region or country the in parameters financial other and capital of cost the reflect used rates discount The amount. recoverable its exceeds asset an of amount carrying the which by amount the by recognized is loss impairment An use. in value and sell to cost less value fair asset’s an of higher the is amount recoverable The asset. the of amount recoverable the I assets long-lived of Impairment impaired. are assets fixed company’s the of any that indication any is there whether as well as date sheet balance Other equipment equipment Other machinery and Plant B lives: useful estimated ing S assets. the of acquisition the to attributable directly H charges. ment impair any for adjusted depreciation, accumulated less cost historical at reported are equipment and plant, Property, equipment and plant Property, 5–12 years. between life useful mated H 10 of 13 to years. range the in life useful estimated an have acquisitions, with connection in recognized mainly Patents, is 3 years. software for life computer mated recognized useful esti The lives. useful estimated their over basis straight-line a on amortized are and cost acquisition at recognized are assets These rights. other and relations customer software, computer licenses, patents, include assets intangible Other assets intangible Other impaired. be may asset intangible the that indication an is there whenever or annually impairment for tested are assets The 5years. 3to between ranging lives, useful their over stated. otherwise unless SEKm in Amounts f there is an indication of impairment the G the impairment of indication an is f there uildings and land improvements improvements land and uildings usqvarna classifies its financial assets according to the fol the to according assets financial its classifies usqvarna usqvarna has recognized customer relations with an esti an with relations customer recognized has usqvarna roup’s cash generating units are Consumer North America, America, North Consumer are units generating cash roup’s The G The roup assesses the estimated useful lives at each each at lives useful estimated the assesses roup istorical cost includes expenditure that is is that expenditure includes cost istorical epreciation is based on the follow the on based is epreciation ealers, Consumer Rest of the the of Rest Consumer ealers, or the purposes of of purposes the or roup and are of mater of are and roup roup estimates estimates roup arden, F arden, 10–40 years 10–40 3–10 years 3–10 3–15 years orestry orestry ubse - - - - - - - NOTE ables in the balance sheet. balance the in ables receiv trade in included are receivables and Loans assets. non-current as classified are These date. sheet balance the after 12 months than greater maturities of exception the with assets current in included are They market. active an in quoted not are that payments determinable or fixed with assets financial non-derivative are receivables and Loans receivables and Loans in the fair value of the category “ category the of value fair the in from changes arising Realized and and unrealized gains losses impairment. for provision less method interest effective the using cost amortized at carried are receivables and Loans value. fair at carried subsequently are loss or profit through value fair at recognized assets financial and assets financial Available-for-sale ownership. of rewards and risks the of G the when and ferred trans been have or expired have investments the from flows I loss. or profit through value fair at carried not assets financial all for costs transaction plus value fair at recognized tially I asset. the sell or purchase to commits G the which on date the trade-date, on recognized are assets) (financial investments of sales and purchases Regular assets financial of measurement and Recognition date. sheet balance the of 12 months within investment the of dispose to intends management unless assets financial as of the other categories. They are included in non-current assets any in classified not or category this in designated either are that non-derivatives are assets financial Available-for-sale assets financial Available-for-sale months of the balance sheet date. of sheet the months balance 12to within be realized or are held for expected trading if theyare either assets ascurrent are classified category this in Assets as hedges. are they designated unless sheet, ance in the bal derivatives under and presented held for trading by management. category this in the short-term or if the asset is designated as belonging to if egory acquired principally for the purpose of selling the asset cat in this is classified asset A financial or at loss inception. profit at through value fair designated and those for trading, held assets financial sub-categories: has two category This loss or profit through value fair at assets Financial date. reporting each at designation this reviews and recognition initial at investments of classification the determines Management acquired. was investment the which for purpose the on depends classification The assets. impaired, the accumulated fair value adjustments are are adjustments value fair accumulated the impaired, or sold are available-for-sale as classified securities When equity. in recognized are available-for-sale as classified securities non-monetary of value fair the in changes from arising losses and gains Unrealized result. operating the of part as reported are and arise they which in period the in statement income the in included are loss” or profit through S nvestments are derecognized when the right to receive cash cash receive to right the when derecognized are nvestments roup has transferred substantially all all substantially transferred has roup D erivatives are categorized as are categorized erivatives F inancial assets at fair value value fair at assets inancial nvestments are ini are nvestments roup roup - - - -

49 HUSQVARNA ANNUAL REPORT 2008 50 HUSQVARNA ANNUAL REPORT 2008 Appropriate provisions have been made for obsolescence. for made been have provisions Appropriate of cost the inventory. in the initial measurement also included are transactions forecast hedged on equity in deferred ously G formula. cost average weighted the bymarket value. The value of using is inventories determined at sale the execute to necessary costs estimated the and completion of costs estimated the less business of course ordinary the in price selling estimated the as defined is value realizable Net value. realizable net the and cost of amount I Inventories G the in agreements leasing Most agreements. leasing under equipment office certain as well as premises office and line basis over the leasing period. period. leasing the over basis line astraight- on statement income the in recognized are leases operating under made payments The leases. operating as assets. the of life useful the or term lease the either of period shorter the over depreciated fully are assets the term, lease the of end the by ownership obtain will lessee I lives. useful mated esti their over depreciated are assets leased The payments. lease minimum the of value present the or property leased the of value fair the either of amount lower the at lease F loan. the of cost interest and asset leased the of depreciation the to correspond period the for Expenses loan. as recognized are payments leasing future the and sheet balance the in G the which in leases finance under Assets transferred. eventually be not may or may Title asset. an of ownership with associated rewards and risks the of all substantially transfers that lease is a lease A finance Leasing statement. income the through reversed not are ment ment. I ment. state income the in recognized and equity from removed is loss cumulative the assets, financial available-for-sale I impaired. is assets financial of group or a asset afinancial that evidence objective is there the I prices. bid rent investment securities and reported as operating income. income. operating as reported and securities investment from losses and gains as statement income the in included stated. otherwise unless SEKm in Amounts issuer’s specific circumstances. specific issuer’s the reflect to refined models option-pricing and analysis, flow cash discounted nature, and type same the stantially sub of are that instruments other to reference transactions, the ofuse arm’sinclude recent These length techniques. nventories and work in progress are valued at the lower lower the at valued are progress in work and nventories roup are operating leases. operating are roup The G The categorized are leases other all leases finance from Apart The fair values of quoted investments are based on cur on based are investments quoted of values fair The At each balance sheet date the G the date sheet balance each At G roup establishes fair value by utilizing different valuation valuation fair value by different utilizing roup establishes inance leases are capitalized at the inception of the the of inception the at capitalized are leases inance mpairment losses recognized in the income state income the in recognized losses mpairment roup rents certain production facilities, warehouses warehouses facilities, production certain rents roup f the market for a financial asset is not active, active, not is asset afinancial for market f the f no reasonable certainty exists that the the that exists certainty reasonable f no roup is a lessee are recognized recognized are alessee is roup f any such evidence exists for for exists evidence such f any roup assesses whether whether assesses roup ains and losses previ losses and ains ------NOTE ing lifetime in accordance with the corridor approach. corridor the with accordance in lifetime ing work remaining average expected employees’ the over ized amort are losses or gains Actuarial losses. or gains actuarial as treated are assets plan on return actual and expected the between differences and assumptions actuarial revised to due obligations of value present the in Changes date. sheet balance the to close determined assumptions actuarial using annually made are calculations The costs. and tions obliga the of value present the measure to used is Method Credit Unit Projected The plans. benefit defined are plans due. are they when expensed are tributions Con benefits. employee all pay to assets sufficient hold not does fund the if contributions further pay to obligation legal no have will and entity separate a into contributions fixed plans. benefit defined or plans contribution defined either as sified clas are plans benefit post-employment other and Pensions benefits post-employment other and Pensions restructuring. the by affected those to features main its nicated commu or plan the of implementation the started either has and restructuring the for plan formal adetailed adopted has products. similar for data historical of basis the on lated calcu are and warranty the by covered products the of sale expenditures. estimated the of value present the is recognized amount the material, is money of value time the of effect the Where date. sheet balance the at obligation present the settle to required expenditure the of estimate best the is aprovision as recognized amount The obligation. the of amount the of made be can estimate areliable and obligation, the settle to required be will resources of outflow an that probable is it event, apast of aresult as obligation G the when recognized are Provisions Provisions less. or months three of maturities with investments liquid highly short-term other and deposits bank hand, on cash of consist equivalents cash and Cash equivalents cash and Cash expense. selling in recognized is vision pro the of amount the in change The rate. interest effective the at discounted flows, cash future estimated of value present the and amount carrying asset’s the between ence differ the is provision the of amount The receivables. the of terms original the to according due amounts all collect to H that evidence objective is there when established is receivables trade of impairment for sion Aprovi impairment. for provision less method, interest ive effect the using cost amortized at measured subsequently and value fair at recognized initially are receivables Trade receivables Trade S All other pensions and other post-employment benefit benefit post-employment other and pensions other All pays Company the plan, contribution adefined Under G the when recognized are provisions Restructuring of date the at recognized are warranties for Provisions usqvarna will not be able able be not will usqvarna roup has a present apresent has roup roup roup - - - - - - - - - hedged item will affect profit or loss (for instance when the the when instance (for loss or profit affect will item hedged the which in periods the in statement income the in nized statement as financial items. financial as statement income the in immediately recognized is portion ineffective the to relating loss or gain The equity. in recognized are hedges cash-flow as qualify and designated are that tives deriva of value fair the in change of portion effective The hedge Cash-flow G the in hedges fair-value no are there Currently maturity. of period the over loss or profit to amortized is used, is method interest effective the which for item ahedged of amount carrying the to ing, adjustment the risk. hedged the to attributable are that liability or asset hedged the of value fair the in changes any with along statement, income the in items cial finan as recorded are hedges fair-value as qualify which and designated are that derivatives of value fair the in Changes Fair-value hedge stated. otherwise unless SEKm in Amounts G the as well as items, hedged and instruments hedging between relationship the transaction, the of inception the operations. foreign in ments invest net of hedges or hedges), (cash-flow transactions cast fore probable highly of hedges either as derivatives certain G The hedged. being item the of nature the so, if and instrument, ahedging as designated is derivative the whether on depends loss or gain resulting the ognizing rec of method The value. fair their at remeasured sequently sub are and into entered is contract derivative the which on D activities hedging and instruments financial derivative of Accounting date. sheet balance the after 12 months least at for liability the G the B method. interest effective the using cost amortized at valued are borrowings recognition, initial After incurred. costs action B Borrowings costs. past-service unrecognized and losses and gains actuarial unrecognized assets, plan of value market the less year-end at gations G the of value present the represent sheet ance in fair values or cash flows of hedged items. items. hedged of flows cash or values in fair hedging transactions are highly effective in offsetting changes in used are that derivatives the whether of basis, ongoing an on and inception hedging the at both assessment, its ments G The transactions. hedging various taking orrowings are initially recognized at fair value net of trans of net value fair at recognized initially are orrowings erivatives are initially recognized at fair value on the date date the on value fair at recognized initially are erivatives roup’s risk-management objectives and strategy for under for strategy and objectives risk-management roup’s Amounts accumulated in equity are reversed and recog and reversed are equity in accumulated Amounts I When hedges are entered into the G the into entered are hedges When bal the in benefits post-employment for provisions Net

f the hedge no longer meets the criteria for hedge account hedge for criteria the meets longer no hedge f the roup has an unconditional right to defer settlement of of settlement defer to right unconditional an has roup orrowings are classified as current liabilities unless unless liabilities current as classified are orrowings roup. roup documents at at documents roup roup also docu also roup roup designates designates roup roup’s obli roup’s ------NOTE - - - posed of, or in the event of a partial disposal. apartial of event the in of, or posed dis is operation foreign the when statement income the of the cost of the asset or liability. or asset the of cost the of measurement initial the in included and equity from ferred trans are equity in deferred previously losses and gains the inventory), example, (for item anon-financial of nition recog the in results hedged is that transaction forecast the H place). takes hedged is which sale forecast VALUAT PARENT COMPANY method. indirect the to according prepared been has statement cash-flow The flow Cash date. closing each at instruments the of value fair the of basis the on revalued periodically is provision The period. vesting the over statement income the to charged are costs The programs. compensation based share- the with connection in paid be to expected tions income statement, with a corresponding adjustment to equity. any, the if in estimates, original to revision the of impact the H vest. to expected are that instruments G the date, sheet balance each At receive. not will employees which dividends future of value discounted the for adjusted date, grant at value market the is instruments the of value fair The period. vesting the over recognized is date grant at value fair of instruments’ that the means cost the granted which grams, pro equity-settled as programs compensation share-based H options. and shares are granted instruments The 2008. and 2007 2006, in granted grams principles of F of principles B Employee IF compensation Share-based items. financial as statement income the in immediately recognized are accounting hedge for qualify not do that instruments derivative any of value fair the in Changes accounting. hedge for qualify not do instruments derivative Certain accounting hedge for qualify not do that Derivatives items. financial as statement income the in immediately recognized is portion fective inef the to relating loss or gain the equity; in recognized is hedge the of portion effective the to relating instrument ing hedg the on loss or gain Any hedges. cash-flow to similarly H hedge investment Net the Parent Company H Company Parent the by applied are above described principles accounting The tions and additions. H additions. and tions S edges of net investments in foreign operations are treated treated are operations foreign in investments net of edges R I G 2 is applied for the share-based compensation pro compensation share-based the for applied S 2is n addition, the G the n addition, ains and losses accumulated in equity are included in in included are equity in accumulated losses and ains ION roup revises the estimates of the number of of number the of estimates the revises roup enefits while the Parent Company applies the the applies Company Parent the while enefits

AR’s recommendation No 4 “Accounting of of 4“Accounting No recommendation AR’s PR I NC roup provides for employer contribu employer for provides roup usqvarna G usqvarna I usqvarna A usqvarna ’ PLES S ACCOUNT roup applies I applies roup with only a few excep afew only B with usqvarna classifies its its classifies usqvarna I N usqvarna recognizes recognizes usqvarna G AND owever, when when owever, A S 19

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51 HUSQVARNA ANNUAL REPORT 2008 52 HUSQVARNA ANNUAL REPORT 2008 1 ( ACCOUNT NEW tax. current the for adjustment after earnings, retained against directly reported G the reduce to received or paid cost. torical reserves. untaxed in included are these sheet, I statement. income the in appropriations as by S permitted depreciation, fiscal additional reports Company Parent the Equipment, and Plant erty, benefits. employee and 19 Note Employees in described are differences costs”. The pension and liabilities pension stated. otherwise unless SEKm in Amounts IFRIC 11,IFRIC “ H for applicable standards I The NEW G the on impact G and parent the of accounts stand-alone the in transactions payment share-based cash-settled or equity-settled as for accounted be should share) aparent’s over options example G involving or shares treasury involving transactions share-based whether on guidance provides will have no impact on the will have no impact structure. this on of the basis segments the reportable and is to determine structure reporting on internal its pany is to division this base the Com to the standard, According segments. into different stand The 2009. on 1 or after January beginning years, for financial is effective The interpretation segments. IFRS 8, Operating separately. income hensive compre of statement the and statement income the present H 2009. 1January from (Revised) H income). comprehensive of ment state and statement income (the statements two or income) comprehensive of statement (the statement formance per one present to whether choose can entities but ment, state aperformance in shown be to required be will equity in changes non-owner All equity. in changes owner from separately presented be to equity” in changes “non-owner requiring equity, in changes of statement the in equity”) in changes “non-owner is, (that expenses and income of items of presentation the prohibit will standard revised F of 1Presentation IAS standards. these of tion implementa the of effect complete the evaluating of cess The effect. into come yet not have interpretations and amendments standards, following The ONWARDS roup companies. This interpretation does not have an an have not does interpretation This companies. roup S G I I wedish F wedish nvestments in associated companies are reported at his at reported are companies associated in nvestments Prop in above described depreciation the to n addition roup contributions are reported in accordance with U with accordance in reported are contributions roup A ard addresses the division of the Company’s operations operations of the Company’s the division ard addresses

has issued interpretations and amendments to to amendments and interpretations issued has SB ACCOUNT IF inancial Reporting B Reporting inancial R S 2–G H usqvarna has evaluated this standard and it standard this has evaluated usqvarna roup’s financial statements. financial roup’s I I N N roup and treasury share transactions”, transactions”, share treasury and roup G PR G G tatements (Revised). The The (Revised). Statements inancial PR G usqvarna as from 2008. from as usqvarna I I roup’s reportable segments. segments. roup’s reportable NC NC I I usqvarna has decided to to decided has usqvarna roup’s tax burden are are burden tax roup’s oard). G oard). 2008 FROM AS PLES PLES G usqvarna will apply I apply will usqvarna roup has or is in the pro the in is or has roup

roup entities (for (for entities roup FROM roup contributions contributions roup n the balance balance n the wedish tax law, tax wedish 20 09 09 20 AND A S 1 - - F - - R - NOTE - - - - ing treatment. The G The treatment. ing account same the receive should parties, other by or entity the by whether cancellations All date. grant to sequent sub thereof valuation or vest to expected awards of number the impact not would they services; similar providing others and employees with transactions for value fair date grant the in included be to need would features These conditions. ing vest not are payment ashare-based of features Other only. conditions performance and conditions service are ditions I cancellations. and conditions ing vest with deals standard amended The 2009. 1January from “ 2(Amendment). IFRS limit placed by I by placed limit the determine should entities how issues: three addresses F imum aD on 14, 19: Limit IAS IFRIC The 2009. 1 January after or on beginning years financial for effective is standard The assets. such of cost the of part as costs borrowing italize H arise. they as assets such for costs borrowing expenses H above, mentioned As sale. or use for prepare to time of period asubstantial take that assets to relate that costs borrowing expense an as recognizing ately immedi of option the of removal the is version previous the 23, B IAS G the on impact I 2009. 1January from that otherwise recognized under I under recognized otherwise that to addition in aliability as recognized be should that tion obliga onerous an creates requirement funding a minimum when limit; that affects requirement funding aminimum how asset: an as recognize can they plan apension in a surplus (Revised). “ 3(Revised). IFRS 2010. 1January from interests non-controlling with transactions to prospectively (Revised) G The loss. or profit in recognised is loss or again and value fair to re-measured is entity the in interest remaining Any lost. is control when accounting the specifies also standard The losses. and gains or goodwill in result longer no will transactions these and control in change no is there if equity in recorded be to interests ling noncontrol with transactions all of effects the requires ard stand revised The 2009). 1July from (effective statements”, financial separate and “Consolidated (Revised). 27 IAS is a choice on an acquisition-by-acquisition basis to measure measure to basis acquisition-by-acquisition an on achoice is There statement. income the through re-measured quently subse debt as classified payments contingent with date, acquisition the at value fair at recorded be to are business F changes. significant some with combinations, business to method acquisition the apply to continues standard revised The 2009). July S usqvarna will therefore change accounting policy and cap and policy accounting change therefore will usqvarna unding Requirements and their interaction. IF interaction. their and Requirements unding orrowing costs (Revised). The main change from from change main The (Revised). costs orrowing A roup’s accounts. roup’s S 19, B Employee B usiness combinations” (effective from 1 from (effective combinations” usiness roup will apply IF apply will roup or example, all payments to purchase a purchase to payments all example, or t is not expected to have a material amaterial have to expected not t is S hare-based payment” effective effective payment” hare-based A roup will apply I apply will roup t clarifies that vesting con vesting that t clarifies efined B efined enefits, on the amount of amount the on enefits, usqvarna currently currently usqvarna S 19. R S 2 (Amendment) 2 (Amendment) enefit Asset, Min Asset, enefit A 27 S 27 R I C 14 - - - - - - - - - S 2010. 1January from combinations business all to prospectively G The expensed. be should costs acquisition-related All assets. net acquiree’s the of share proportionate interest’s non-controlling the at or value fair at either acquiree the in interest non-controlling the stated. otherwise unless SEKm in Amounts result in different asset valuations. asset in different result may used rates discount the and results future expected results. future on expected based method flow cash discounted the by using estimated I is not recoverable. of an asset amount carrying the that cated indi has information this when recorded have been charges impairment and used been has value market available, When of information. availability on the depending tion, available. available. information of best the basis on the amount recoverable its to down is written asset impaired An may not be recoverable. of an asset amount carrying the that indicate circumstances in or changes events or whenever yearly for impairment ated are evalu goodwill, including lives, useful long with assets All impairment Asset uncertain. are inherently that of matters effects the regarding or estimates assumptions in making management from judgment subjective more require that policies accounting or conditions. assumptions different under estimates these from may differ results Actual period. reporting the during expenses and sales of net amounts reported the affects also and date sheet ance at bal liabilities and assets of contingent disclosure the and liabilities and of assets amounts reported the affects tions assump and estimates of these application The cumstances. cir on related the based realistic and to be mined reasonable deter assumptions and of experience on basis the estimates applies Management judgments. or subjective complex cult, on diffi may be that based policies and methods accounting certain to apply management requires statements financial of these preparation The Union. by European the as adopted ance with with ance in accord prepared been have which statements, financial on arebased position financial and operations UNCERTA fer from these estimates. these from fer dif could results Actual principles. accounting accepted ally gener with conformity in statements financial these prepare to order in liabilities and assets contingent of disclosure the and liabilities and assets of reporting the to relating tions assump and estimates of anumber made has Management estimates of Use f market value has not been available fair value has been been has value fair available not been has value f market IG The discussion and analysis of analysis and discussion The N I F I CANT D I nternational nternational ifferent methods have been used for this evalua for this used have been methods ifferent I FACTORS I NTY

ACCOUNT F inancial Reporting Reporting inancial S D roup will apply IF apply will roup ummarized below are those are those below ummarized ifferences in the estimation of in estimation the ifferences I N N EST G G H POL usqvarna’s results of results usqvarna’s I MATED VALUE I C I ES tandards ( Standards R

3 (Revised) S 3(Revised) H AND usqvarna’s usqvarna’s

IF R S - - ), ------NOTE - - tions are based on assumptions concerning expected return return expected concerning assumptions on based are tions calcula Pension countries. certain in employees its of tain increase in customer defaults. H defaults. customer in increase H situation, financial D date. sheet balance at known stances circum on based are expectations These received. be to expected amount the represents value net The receivables. doubtful for allowance of net reported are receivables Trade receivables Trade assets. tax deferred S of differences temporary deductible other and carry-forwards S of amount The G The benefits post-employment other and Pensions S to amounted provision S was end year at accounts doubtful for provision total The valuations. ferent dif to lead could customer significant of a situation financial G the of rating credit lower somewhat shows model rating taxes. As of 31 of D As taxes. deferred of valuation the in differences significant in result may rates, tax in changes as well as income taxable future of projection the in assumptions in Changes assets. tax those of recovery the for allow to expected is income able tax future which in cases those in recognized are ferences, dif temporary and carry-forwards loss tax to relate primarily D differences. temporary on based H which in jurisdictions taxing the of each for tax income estimates I taxes Deferred situation. impairment an to lead sibly H amounts. able recover the exceeding amounts carrying the in result would upon based are amounts recoverable units cash-generating the which on assumptions key the in changes reasonable any that believe not do management environment business rent assets at year-end amounted to S to amounted year-end at assets intangible other and goodwill for amount carrying The G the within equipment and plant, property for amount carrying The equipment. other for years 3–10 and installations technical and machinery and plant for 3–15 years buildings, for years 10–40 between estimated are equipment and plant, property, for lives Useful lives. useful estimated their over basis straight-line on a depreciated are lives, indefinite with assets gible S n the preparation of the financial statements, H statements, financial the of preparation n the roups’s customers. An increase in defaults or changes in in changes or defaults in increase An customers. roups’s Long-lived assets, excluding goodwill and other intan other and goodwill excluding assets, Long-lived EK 2,039m have not been included in computation of of computation in included been not have EK 2,039m roup sponsors defined benefit pension plans for cer for plans pension benefit defined sponsors roup usqvarna operates as well as any deferred taxes taxes deferred any as well as operates usqvarna EK 901m as deferred tax liabilities. Tax loss Tax loss liabilities. tax deferred EK 901m as owever a future market decline could pos could decline market afuture owever ecember 2008, H 2008, ecember EK 137m and the trade receivables, net of of net receivables, EK 137m trade the and usqvarna has not seen any significant significant any seen not has usqvarna EK 4,184m. roup amounted to S to amounted roup owever, the G the owever, EK 11,577m. Under the cur EK 11,577m. the Under usqvarna recognized a net anet recognized usqvarna eferred tax assets, which which assets, tax eferred espite the present present the espite roup’s credit credit roup’s usqvarna usqvarna EK 5,035m. EK 5,035m. - - - - - - - -

53 HUSQVARNA ANNUAL REPORT 2008 54 HUSQVARNA ANNUAL REPORT 2008 F D Restructuring S approximately by expense the of component cost service the increased have would rate this in 0,5% of 5,1%. was Adecrease 2008 during expenses of calculation the and 2007 of end the at liabilities estimate S approximately G the in increase an to lead will S was assets on return actual the 2008 D results. historical on based is which 6,3%, was 2008 in used assets on return expected average The approach. corridor the using employees the of life working remaining average expected the over allocated are assumptions, in changes to due adjusted are liabilities actuarial when and returns, expected from differ assets on returns actual G expense. the of components asset on return expected and costs interest costs, service the affect directly assumptions in Changes etc. increases salary future mortality, inflation, rates, discount assets, on stated. otherwise unless SEKm in Amounts instruments are: instruments these with associated risks primary The instruments. tive deriva and borrowings, payables, trade receivables, trade funds, liquid example, for including, instruments financial G the with accordance in undertaken F management risk Financial principles. valuation and Accounting 1, Note the in presented is adopted policies valuation and complementary information disclosing the accounting and ance with F S which S was income operating against charge total The ment applicable to H to applicable ment D as such risks, and exposures of avariety regards as tives) (cap subsidiaries insurance wholly-owned through insured H reserves Claims G the reducing at aimed are that activities for plans detailed of basis the on lated inancial instruments are defined in accordance with I with accordance in defined are instruments inancial inancial risk management for H for management risk inancial I inancial usqvarna maintains third-party insurance coverage and is is and coverage insurance third-party maintains usqvarna escribed below are the principles of financial risk manage risk financial of principles the are below escribed uring 2008 H 2008 uring NOTE 2 H usqvarna is exposed to a number of risks relating to to relating risks of anumber to exposed is usqvarna 52m were paid in 2008. The charges are calcu are charges The 2008. in paid were EK 52m IF nstruments: Presentation and presented in accord in presented and Presentation nstruments: R S FI 7 usqvarna announced a restructuring program. program. arestructuring announced usqvarna NANC F 11m. The average discount rate used to to used rate discount EK 11m. average The inancial usqvarna. I AL R AL roup’s fixed cost structure. structure. cost fixed roup’s I nstruments: EK 7m. IS K MANA ains and losses arising when when arising losses and ains roup’s pension costs of of costs pension roup’s usqvarna entities has been been has entities usqvarna roup F roup D EK I –103m. isclosure. Additional G EMENT AN EMENT inancial Policy. Policy. inancial EK 316m of n 2009 this this n 2009 uring uring A 32, S 32, D FI - - - - NOTE NANC ma raw on expenditure affecting • Commodity risks price plus flows import and export on • Foreign risks exchange borrowings. and funds liquid on risks rate • Interest • Financing G activities. commercial and financial to relating risks • Credit in the in the stated limitations to the according to managed are be risks These risks. of these control and management the regulate position. financial and operations of G the on impact adverse asignificantly in result may adispute of outcome disadvantageous the that out ruled be cannot it and foresee, to difficult also is disputes H profitability. or ition H on effect a material have, may or had, have recently settled been have that or in involved ently H which in disputes the of none that mates H business. of course ordinary its in time to G The liabilities Contingent reserves. the of valuation the in differences significant in result may assumptions these in changes and assumptions several on based are calculations actuarial These terns. pat payment and reporting benchmark experience, ment develop loss historical on based reserves the of adequacy the assess to undertaken are calculations Actuarial reported. not but incurred claims for reserves and reserves case of acombination of basis the on calculated are claims, liability product for mainly captives, the in reserves Claims claims. liability product and interruption business damage, property ive management of the of the management ive the minimize to available funding to enough is have policy of the purpose The assets. fund to pension relating of risks management S earnings and net investments in foreign subsidiaries. foreign in investments net and earnings terials and components for goods produced. produced. goods for components and terials I roup financial policy, as well as a aswell policy, financial roup AL I AL The The roup is involved in various disputes arising from time time from arising disputes various in involved is roup F NS inancial Policy. The The Policy. inancial B oard of oard TRUMENT

risks G roup’s cost of capital and to achieve an effect an to achieve and of capital cost roup’s

in D

relation irectors of irectors S owever the outcome of complicated complicated of outcome the owever G

roup’s financial risks. financial roup’s to F

inancial Policy also describes the the describes also Policy inancial the H usqvarna has adopted a adopted has usqvarna

Group’s G usqvarna’s financial pos financial usqvarna’s roup credit policy, to policy, credit roup

capital usqvarna is pres is usqvarna usqvarna esti usqvarna

requirements. roup’s results results roup’s - - - - Adjusted equity/assets ratio equity/assets Adjusted debt/E financial Adjusted Less: liquid funds liquid Less: any external capital requirements during the year. the during requirements capital external any year. H the during substantially G liabilities. pension for adjusted debt net as defined is ture, struc capital the assessing when debt, financial Adjusted interests. minority less profits retained and reserves other I stated. otherwise unless SEKm in Amounts E debt* financial Adjusted liabilities pension Net assets Total minorities excl. equity Total debt Net funds to the required currency. S currency. required the to funds I injections. capital or loans internal as subsidiaries to ferred D G of H financing debt The Borrowings risk financing and Borrowings * ate for a shorter period of time due to acquisitions. acquisitions. to due time of period ashorter for ate devi to allowed or situation, macroeconomic the to changes of event the in adjusted be may indebtedness financial for target This long-term. the in 2.5 than higher be not should of the management to the proactive as well as to contribute knowledge, and market information a are to flow ofof maintain aims quality trading highsuch F the of framework the within set tight with is permitted instruments and interest-bearing cation of powers of trading attorney. in Proprietary currencies and the allo of responsibilities assignment the clear through e.g. instruments, to financial relating risk operating managing control of financial risks within within risks of financial control to tralized interest, tax, depreciations and amortizations (E amortizations and depreciations tax, interest, before earnings the to proportion in debt, net adjusted seasonally that imply to interpreted is this Currently, agency’s. asimilar or &Poor’s Standard of assessment credit for principles the to according rating, BBB to equivalent least at creditworthiness along-term to correspond to H structure Capital more, the function. control on risk by a basis a daily separate nterest-bearing liabilities nterest-bearing n this process, various derivatives are used to convert the the convert to used are derivatives various process, n this adjusted for acquisitions and extraordinary items. extraordinary and acquisitions for adjusted E and debt financial Adjusted BI usqvarna’s target is for the capital structure of H of structure capital the for is target usqvarna’s ebt is primarily raised at Parent Company level and trans and level Company Parent at raised primarily is ebt iven the seasonality of the business, this key ratio varies varies ratio key this business, the of seasonality the iven roup Treasury in order to ensure efficiency and risk control. control. risk and efficiency ensure to order in Treasury roup H The management of financial risks has largely been cen been has largely risks of financial The management T D usqvarna defines its equity as the sum of share capital, capital, share of sum the as equity its defines usqvarna A (12m)* BI T H D H usqvarna usqvarna A* usqvarna usqvarna G G roup’s policies include guidelines for guidelines include roup’s policies roup Treasury. The measurement and Treasury. The measurement roup BI usqvarna is managed centrally by by centrally managed is usqvarna T D A have in the table above not been been not above table the in A have G inancial Policy. The primary primary The Policy. inancial usqvarna has not breached breached not has usqvarna roup Treasury is performed is performed Treasury roup hort-term financing is also also is financing hort-term 31 Dec 2008 31 Dec G 34,337 roup’s financial risks. roup’s financial 14,586 16,287 –2,735 13,552 25.5% 8,772 3,524 1,034 4.14 BI 31 D usqvarna usqvarna T F urther D 28,803 ec 2007 ec A) A) –1,306 12,909 13,318 12,012 25.5% 7,349 4,645 2.78 limits limits 897 - - - - - NOTE - rowings, allocated by different funding sources. funding different by allocated rowings, dividend into account. account. into dividend yearly the taking borrowings, year-end of excess in 6,000m S of borrowings additional implies normally ness indebted the of peak seasonal The borrowings. its in ation ted credit facilities. credit ted commit unutilized available for adjusted is profile maturity H When period. 12-month next the in mature to allowed normally is borrowings S of Amaximum maturities. of spread even an and years, two least at of maturity to time average an include G The Policy. cial F the to according long-term, be shall debt net ations, D liquidity. available exceed not do borrowings short-term total that and time, over distributed evenly are dates maturity that ensuring by decreased be can risk This costly. more or difficult more become could loans G F Financing risk by bilateral loan agreements. loan by bilateral G of portion, remaining S was loans long-term of previously portion short-term The market. domestic in the Termissued Notes Medium and agreements loan to bilateral pertains borrowings long-term of the portion major The loans. (2,911) to long-term referred the 2008, At year-end Interest-bearing liabilities account. into facility credit committed the of part unutilized the taking 2008, of end the at (3.5) years 3.4 was financing fluctuations. seasonal future include must planning H Consequently, risk. financing the of assessment the in factor S a through and agreements loan bilateral through ducted G the of bulk The Company. Parent the through financing preventing restrictions legal are there which in countries in mostly locally, undertaken amounted to amounted lizing the revolving credit facility. facility. credit revolving the lizing uti by extent, asmaller to and, program paper commercial G the of use the by primarily managed been 2008 during have variations These needs. funding its in ations G the business, its of nature the 2013. D in matures facility this of part major The 2008. S which of ity, G S 1,099m, which is lower than last year. last than is lower which EK 1,099m, wedish Medium Term Note program. I program. Term Note Medium wedish inancing risk refers to the risk that the financing of the the of financing the that risk the to refers risk inancing usqvarna always takes into account the fact that financial financial that fact the account into takes always usqvarna ardena and Zenoah, has been fully amortized and replaced replaced and amortized fully been has Zenoah, and ardena roup’s capital requirements and the refinancing of existing existing of refinancing the and requirements capital roup’s roup has aS has roup S The table below sets out the amount of the G the of amount the out sets below table The I H G the for maturity to time adjusted average The n addition, seasonality in the cash flows is an important important an is flows cash the in seasonality n addition, 8,000m, raised in connection with the acquisition of acquisition the with in connection raised EK 8,000m, usqvarna has, as mentioned, substantial seasonal vari seasonal substantial mentioned, as has, usqvarna S 1,500m was utilized as of D of as utilized was EK 1,500m 8,000m guaranteed syndicated credit facil credit syndicated guaranteed EK 8,000m EK 16,287m (13,318), of which usqvarna assesses its refinancing risk, the the risk, refinancing its assesses usqvarna roup’s goals for long-term borrowings borrowings long-term for goals roup’s S 6,000m, of the original credit facility facility credit original of the EK 6,000m, G roup’s total interest-bearing liabil interest-bearing roup’s total roup’s financing is currently con currently is financing roup’s roup has major seasonal vari seasonal major has roup isregarding seasonal vari seasonal isregarding n addition, the the n addition, D uring 2008, the the 2008, uring S ecember 31, ecember 10,694m EK 10,694m 3,000m in in EK 3,000m EK 4,000– roup’s bor roup’s roup’s roup’s roup’s roup’s ue to to ue inan ities ities - ------

55 HUSQVARNA ANNUAL REPORT 2008 56 HUSQVARNA ANNUAL REPORT 2008 Long-term bank loans bank Long-term facility credit Revolving loans bond Other F Total I Program Term Note Medium S is program the of amount total year. The the ing dur executed were 60m EUR of value nominal aggregated atotal with transactions, of Anumber markets. capital S in denominated (MTN), H programs Market 2008 December of 31 as instruments financial other and loans of profile Maturity stated. otherwise unless SEKm in Amounts F loans short-term Other papers Commercial F D F2) 1) 2008–2016 2007–2009 Net payables Trade receivables Trade funds Liquid profile maturity Adjusted Total Borrowings B B facility credit revolving Committed of part Utilized 2007–2015 2007–2012 2007–2012 2007–2009 covering short-term financing financing short-term covering facilities credit revolving Committed 2007–2010 2007–2010 ssued –Maturity ssued air value derivative liabilities liabilities derivative value air inancial leases inancial inancial leases inancial ank and other loans loans other and ank ond loans ond Please note that the table includes the forecast future nominal interest payment and, thus, does not correspond to the carrying amounts in the balance sheet. balance the in amounts carrying the to correspond not does thus, and, payment interest nominal future forecast the includes table the that note Please usqvarna has established a Medium Term Note program program Term Note aMedium established has usqvarna erivative liabilities, balance sheet balance liabilities, erivative or more detailed information on derivative contracts, see table under “Credit risk in financial activities” in Note 2 on page 59. page on 2 Note in activities” financial in risk “Credit under table see contracts, derivative on information detailed more or EK, to issue long-term debt in the the in debt long-term issue to EK, t2) borrowings Total –5,852 –2,213 –8,000 –2,735 4,184 – 5,787 3,280 2,434 1,220 1,511 2009 552 Program 16,287 70 3,205 2,434 1,500 EK 5,000m. EK 5,000m. 8,184 MTN MTN MTN MTN MTN MTN MTN MTN 2008 386 515 CP 63 0 - 2010 573 573 573 511 NOTE 62 amount Facility I these two programs. programs. two these under amounts outstanding shows below table year. The last S of increase an is which 7,000m, S is program the of amount total The (CP). program S n addition, H n addition, 5,157 5,157 5,157 5,038 Nominal 2011 amount 64 8,000 5,000 55 7,000 2008 500 350 550 550 250 250 100 60 0

usqvarna has aS has usqvarna 3,579 3,579 2,769 2,150 2012 566 810 53 borrowings Total 1) Currency 8,295 8,295 1,105 13,318 1,000 ,90 7,19 wedish Commercial Paper Paper Commercial wedish 2013 2,548 6,357 3,757 2007 EUR 53 S S S S S S S S 52 EK 2,000m compared with with compared EK 2,000m 277 315 EK EK EK EK EK EK EK EK 64 0 0 1,604 1,604 1,604 1,331 EUR 2014 273 S S S S S T T T T T F IB IB IB IB IB IB amount acility OR +0.29% OR OR +0.39% OR OR +0.28% OR OR +0.82% OR OR +0.25% OR OR +0.46% OR EK Coupon Coupon 13,356 16,995 16,995 4.875% –2,735 4,184 – 4.30% 8,000 5,000 5,000 3,280 2,434 3,744 8,740 1,511 Total 2007 566 Total RU AU JP USD EUR S debt Net Other BRL D CA CHF factor determining this risk is the interest-fixing period. interest-fixing the is risk this determining factor G the on rates interest market I borrowings and funds liquid on risks rate Interest 2008. of end the at (17) days 29 was funds liquid the for maturity to time average The institutions. similar or &Poor’s by Standard defined as A–, least at of rating along-term with issuers involve and liquidity high with instruments interest-bearing in I 12 months. next the during capital working in build-up seasonal expected G (27.7%). 28.6% was I ratio this year-end, At sales. 12-month rolling of 2.5% least, at to pond corres to facilities, credit committed unutilized including H value. market fair at assets derivative including deposits short-term other and equivalent cash and cash of consist funds Liquid funds Liquid currency distribution. currency preferred the obtain to used are derivatives Currency assets. G the of distribution currency the upon dependent H of composition currency The Currency composition stated. otherwise unless SEKm in Amounts period for these current investments was 7 days (13) at the (13) the 7days at was investments current these for period interest-fixing The 3months. 0and between of maturities with undertaken are investments of majority The term. short- mainly are investments of periods holding The risk. rate interest the manage to used are agreements, rate ward G funds liquid in risk rate Interest limited by a risk mandate. arisk by limited is benchmark the from deviation Any period. holding day one- as a defined position abenchmark to relation in ments nterest rate risk refers to the adverse effects of changes in in changes of effects adverse the to refers risk rate nterest EK roup shall have sufficient liquid resources to finance the finance to resources liquid sufficient have shall roup roup Treasury manages the interest rate risk of the invest the of risk rate interest the manages Treasury roup Y B D D erivative financial instruments, such as futures and for and futures as such instruments, financial erivative usqvarna’s goal is for the level of liquid funds, funds, liquid of level the for is goal usqvarna’s debt Net currency 13,552 swaps 6,080 31 Dec 2008 31 Dec ,670 7, –255 excl. –89 –25 –14 174 27 –9 nvestments in liquid funds are mainly made made mainly are funds liquid in nvestments –7

debt Net currency 13,552 swaps 1,004 4,628 6,792 –563 incl. n addition to this liquidity, the the liquidity, this to n addition 586 236 397 153 145 174 roup’s net income. The main main The income. net roup’s usqvarna’s borrowings is is borrowings usqvarna’s

debt Net currency 12,012 swaps 4,785 6,147 31 D excl. 389 602 –49 –29 –25 161 38 –7 ec 2007 ec

roup’s roup’s debt Net currency 12,012 swaps 4,307 6,017 –264 643 incl. 487 272 183 311 38 18 - -

NOTE B the by established mandate arisk of basis the on benchmark G months. of 6 period interest-fixing average an is portfolio loan term F The borrowings in risk Interest-rate G through flows currency commercial in risks their cover marily G 75%. and 50% between hedged are 6–12months for flows forecast while 6months, to up hedged are flows forecast and invoiced the of 75–100% Normally, environment. competitive the and periods fixing price the consideration into taken currencies foreign in purchases and F The flows commercial from exposure Transaction S S approximately by the reduce would point centage per one of curve yield the in shift Adownward 2008. of end and equity. and equity. on rates in exchange foreign changes F risk exchange Foreign indebtedness. financial the hedging derivatives rate interest outstanding any have not did 4.3%was (5.2). At the total year-end, loan portfolio nature. short-term its to due calculated not is risk interest the which for debt seasonal has G The point. percentage one by simultaneously curves yield all of shift aparallel on based is calculation This formly. uni change not may currencies different and maturities H S approximately by expenses interest G the impact would rates interest in shift point age one-percent a 2008, of end the at fixings interest and umes vol of basis the year. On the of end the at years (0.3) 0.4 was debt non-seasonal the for period fixing interest average The vice-versa. or floating to fixed from interest the changing by risk rate interest the manage to used are agreements, D 3years. is period rate and hedges at year-end 2008. 2008. year-end at hedges and 2009 of period the 12-month for exports) and (imports flows applied. is accounting hedge which for tives, deriva currency utilizing by externally risks such covers and The The of the the framework within risks these covers rencies. rencies. U S EK 13m (8). oreign exchange risk refers to the adverse effects of effects to refers the risk adverse exchange oreign oard of D of oard SD usqvarna acknowledges that the interest rates on different different on rates interest the that acknowledges usqvarna roup Treasury. G Treasury. roup As per 31 D per As The table on page 58 shows the forecasted transaction transaction forecasted the shows 58 page on table The The major currencies to which H which to currencies major The G , EUR, CA , EUR, inancial Policy states that the benchmark for the long- the for benchmark the that states Policy inancial inancial Policy stipulates hedging of forecasted sales sales forecasted of hedging stipulates Policy inancial roup’s overall currency exposure is managed centrally. is managed exposure currency roup’s overall roup Treasury can choose to deviate from this this from deviate to choose can Treasury roup irectors. H irectors. I n order to manage such effects, the n to effects, such order manage D ecember 2008, the average interest rate in in rate interest average the 2008, ecember , RU roup Treasury assumes the currency risks risks currency the assumes Treasury roup EK 18m (12) and the G EK 18m (12) the and B , GB owever, the maximum average fixed- average maximum the owever, erivatives, such as interest swap swap interest as such erivatives, P and S P and EK against a range of cur of arange EK against G usqvarna is exposed are are exposed is usqvarna roup’s interest income income interest roup’s EK +/–80m (+/–106).EK +/–80m H roup subsidiaries pri subsidiaries roup usqvarna’s income income usqvarna’s roup’s equity by by equity roup’s F inancial Policy. inancial G roup roup H roup’s roup’s usqvarna usqvarna roup roup ------

57 HUSQVARNA ANNUAL REPORT 2008 58 HUSQVARNA ANNUAL REPORT 2008 S to amounted contracts forward on result rate exchange ized S to amounted income operating on hedging of effect The distributed evenly throughout the calendar year. calendar the throughout evenly distributed H in sonality I rates. exchange in changes such from arising behavior consumer or tiveness competi in changes as such effects, dynamic any include not does and 2008 in as costs and earnings of distribution same the assumes This calculation. astatic year, using one from hedges, would affect the G the affect would hedges, from F The versa. vice and contracts, derivative exchange eign for and borrowings Company’s Parent the on gain exchange S of rate exchange the in arise from resulting investment, anet of value in decline the that means This contracts. derivative exchange foreign and borrowings on based conducted is hedging differences, translation from G on effects negative limit to order I consolidation. with connection in difference translation a generates which currency, foreign in investment anet tute consti subsidiaries foreign in liabilities and assets net The exposure) sheet (balance investments net from Exposure bycial and items tax approximately U of value the in decrease or increase A10% currencies. other to U exposures significant S of rates exchange H exposure translation and transaction from sensitivity exchange Foreign below. analysis sensitivity the in included is subsidiaries eign for of statements income from arising exposure translation S into subsidiaries foreign of statements income of translation on G the affect also rates exchange in Changes Sweden outside entities of Translation exposure on consolidation Amounts in SEKm unless otherwise stated. otherwise unless SEKm in Amounts measurement. G measurement. risk for benchmark the sets also and hedged be can ments S Other PLN RU USD GB CA EUR Currency flows Commercial EK –23m (–86), all of which will mature in 2009. in mature will which of all (–86), EK –23m unreal the 2008, year-end At 2008. (–152) during EK –89m inancial Policy stipulates the extent to which the net invest net the which to extent the stipulates Policy inancial EK SD usqvarna is particularly exposed to changes in the the in changes to exposed particularly is usqvarna B P D , EUR and CA and , EUR EK. H EK. flow SEKm flow usqvarna does not hedge such exposures. The The exposures. such hedge not does usqvarna usqvarna’s sales, these flows and results are not not are results and flows these sales, usqvarna’s Forecast –4,529 –2,174 2,597 1,043 1,652 2009 2009 roup Treasury is allowed to deviate from the the from deviate to allowed is Treasury roup t is also worth noting that, due to the sea the to due that, noting worth also t is 542 against S D against 459 410 EK and EUR. F EUR. EK and

31 Dec 2008 31 Dec Total hedge hedge Total SD amount amount –2,370 SEKm 3,009 , CA 1,802 EK, disregarding any effects effects any disregarding EK, –628 –362 –345 –335 –771 roup’s income before before finan income roup’s D urthermore, the G the urthermore,

, GB S roup equity resulting resulting equity roup EK, is offset by the the by offset is EK, EK +/– flow S flow P and a number of of anumber P and F orecast –1,867 4,178 –

2,460 1,064 1,193 2008 2008

EKm 546 307 276m (287) for for 276m (287) 476 roup’s income income roup’s

31 D Total hedge hedge Total

roup has has roup amount amount 2007 ec –1,914 –677 1,358 S 2,715 –622 –339 –332 –188 EKm n ------NOTE - receivables have been divided into three different intervals. intervals. different three into divided been have receivables H to Risk Low from levels, different has classification The customers. its of worthiness S D B The debts. bad of management and levels sion deci limits, credit rating, customer includes credits tomer flows amounted to S amounted flows commercial of hedges for result unrealized total The rency. cur foreign in investments net of hedging the for and flows H risk currency of accounting Hedge of the G the of Policy Credit The parties. third by arranged normally also are solutions financing Customer terms. payment and delivery S users. professional and stores independent groups, buying retailers, large ing H receivables trade in risk Credit risk Credit S of results on effect an give would plastics of price the in change 10% –/+ by results the impact would aluminum of price the on effect same The equal. being else everything –/+ approximately by tax and items financial H in used steel of price the in fall or rise cent per A ten derivatives. of use the through than rather suppliers the with contracts through managed is risk price Commodity ponent. com of a portion a only from arising exposures as defined are which exposures, commodity indirect and exposures, commodity pure to refer which exposures, commodity direct into divided be can exposure This market. world the on price material raw the to linked is price the whereby suppliers, with agreements through prices commodity in fluctuations H markets. global the on rise prices commodity underlying as increase could materials indirect and direct of cost the that risk the is risk price Commodity risks price Commodity accounting. hedge of S loss. and profit affected ations. A total amount of oper foreign in investments net of hedging the in occurred has ineffectiveness of degree minor a while flows mercial com of hedging the to relation in occurred has fectiveness S and Q3 for S be would 2009 for loss and profit on effects the rate, exchange unchanged an S which ition of the G the of ition compos currency the of analysis the in included is hedging the of effect The mandate. risk agiven under benchmark S EK 100m. 100m. EK usqvarna applies hedge accounting for its commercial commercial its for accounting hedge applies usqvarna usqvarna sells to a substantial number of customers includ customers of number asubstantial to sells usqvarna usqvarna’s products will affect the G the affect will products usqvarna’s irectors decides on customer credit limits exceeding exceeding limits credit customer on decides irectors H usqvarna uses an internal classification of the credit the of classification internal an uses usqvarna EK –42m is reported in the hedge reserve. Assuming Assuming reserve. hedge the in reported is EK –42m roup ensures that the management process for cus for process management the that ensures roup EK –/+92m. EK –11m D 2009. Q4 for roup’s net debt, as shown on page 57. page on shown as debt, net roup’s EK 7m Q1, for S EK –35m as of D of as EK –35m ales are made on the basis of normal normal of basis the on made are ales S ee Note 16 for the effect on equity equity on effect 16 the Note for ee EK 0.9m (–0.3) has negatively igh Risk. I Risk. igh n the table below, trade trade below, table n the EK 11m ,S Q2 for usqvarna is exposed to to exposed is usqvarna uring the year, inef no the uring ecember 31 2008, of of 31 2008, ecember roup’s results before before results roup’s S EK 74m a and S EK 208m, EK 208m, oard of of oard EK –49m EK –49m - - - - - - - enforced. be security other or repossessed be may products unpaid stage, alater At surveillance. special under placed is account the as time same the at receivables overdue with tomers S was payment for due receivables trade for held collateral of value fair The account. into receivables trade outstanding of volume total the taking year-end previous since significantly changed not has receivables overdue regarding situation The >3 months 3months 1 to 1month to Up D receivables trade overdue for analyses Ageing 31 D S to amounted down written yet not but due were that receivables Trade rate. interest effective the at discounted flows, cash future estimated of value present the and amount carrying asset’s the between difference the gin ori the to according due amounts all collect to able be not H that evidence objective is there when lished estab is receivables trade of impairment for A provision receivables trade Overdue (112). to S amounted year financial the of end the at ables receiv trade doubtful for year. Provisions calendar each of months nine to six first the during higher significantly is ure H of pattern seasonal the upon dependent directly however, is, portfolio credit the of size The receivables. the of value market fair the H receivables. trade in losses to exposure maximum the equals consequently (3,912), which S to amounted accounts, doubtful for visions 2008. in ers custom our of rating credit the in adecrease shows model D H Elevated to Risk Medium Risk Moderate to Low Total portfolio Credit stated. otherwise unless SEKm in Amounts igh Risk igh down written not but ue rating credit our climate, economic general the to ue As of 31 of D As A plan for repayment is normally first designed for cus for designed first normally is repayment for A plan al terms of the receivables. The amount of the provision is is provision the of amount The receivables. the of terms al ecember 2008. 2008. ecember usqvarna’s sales. This means that credit expos credit that means This sales. usqvarna’s ecember 2008, net trade receivables, after pro after receivables, trade net 2008, ecember EK 66m (225). EK 66m ence, the book value equals equals value book the ence, payment D ue for for ue 2,294 1,491 4,184 2008 2008 EK 782m (694) as of of (694)EK 782m as 200 402 782 271 311

EK 4,184m usqvarna will will usqvarna payment payment EK 137m D ue for for ue 2,918 3,912 2007 2007 2007 - 620 327 694 195 374 172 - - -

NOTE - risk in Europe increased somewhat. somewhat. increased Europe in risk G of acquisition U the in primarily customers, large of ber H corresponding to the carrying amount. amount. carrying the to corresponding as determined is value fair the depreciation, any less value acquisition accrued at booked liabilities, and assets bearing non-interest other and payables trade receivables, trade F leases. financial of value fair determining when disregarded been have spreads credit in Changes instruments. similar for rates currency and rates interest market current using flows payment future counting dis by determined been has value fair available, not are quotations market reliable When market. active an is there which for liabilities and assets those for used been have quotations market liabilities, and assets financial of value fair the To determine rates. interest market in changes of result a e.g. as value, fair the from deviate can sheet balance the in liabilities and assets interest-bearing of amount carrying The instruments financial of value Fair Net (N derivatives settled Net Maturity Maturity of credit risk credit of Concentration funds and through counterparty risks related to derivatives. Exposure to credit risk arises from the investment of liquid activities financial in risk Credit > Exposure S Exposure < Exposure receivables trade in risk credit of Concentration Amount purchased Amount sold Amount standing derivative transactions. out of volume gross the shows below table The transactions. A–. A substantial part of the exposure arises from derivatives with counterparties having a long-term credit rating of at least for each counterparty. Normally, transactions are executed only been created specifying the maximum permissible exposure order to limit exposure to credit risk, a counterparty list has S EK 15–100m S S usqvarna has substantial exposure towards a smaller num asmaller towards exposure substantial has usqvarna EK 100m EK 15m DF ardena in 2007, the concentration of credit credit of concentration 2007, in the ardena Number of of Number customers ) As of 31 Dec 2008 31 Dec of As N/A 17 –43,062 2 or financial instruments such as such instruments financial or –1,569 31 Dec 2008 31 Dec 41,511 2009 portfolio –18 Percent Percent of total total of 75% 12% 13% 2010–

— — — — Number of of Number customers As of 31 Dec 2007 31 Dec of As S . Through the the . Through –16,570 16,408 N/A 31 D –136 2008 16 3 26 ec 2007 ec portfolio Percent Percent of total total of 2009– - 73% 13% 14% — — — — I n - -

59 HUSQVARNA ANNUAL REPORT 2008 60 HUSQVARNA ANNUAL REPORT 2008 as well as power cutters, diamond tools and related equip related and tools diamond cutters, power as well as equipment, garden and lawn professional and cutters brush chainsaws, performance high comprises Products fessional Pro chainsaws. light-duty and equipment garden comprises Products Consumer Products. Professional and Products Consumer segments: two in classified are operations The areas –Business format reporting Primary as segments geographical F segments. secondary as areas geographical the and ments seg primary as serve areas business the which in segments, S – F assets Financial stated. otherwise unless SEKm in Amounts – – F receivables trade and Loan

Total financial assets financial Total – F liabilities Financial – – liabilities financial Other ent Company. The description of the financial risks and pos and risks financial the of description The Company. ent Par the within management risk financial all practically forms H mentioned, previously As Company Parent iabilities financial Total f inancial information for the Parent Company is classified into for the isParent information inancial classified Company inancial assets held for trading valued at fair value fair at valued trading for held assets inancial egment reporting is classified into primary and secondary secondary and primary into classified is reporting egment inancial assets available for sale for available assets inancial inancial liabilities that are held for trading at fair value value fair at trading for held are that liabilities inancial is not applied not is accounting hedge where derivatives currency which of for net investment in foreign currency is applied applied is currency foreign in investment net for accounting hedge where derivatives currency which of applied is hedges flow cash for accounting hedge where derivatives currency which of accounting is not applied applied not is accounting hedge where derivatives which of for cash flow hedges is applied applied is hedges flow cash for accounting hedge where derivatives currency which of in foreign currency where hedge accounting is applied applied is accounting hedge where currency foreign in investments net to related derivatives currency which of NOTE 3 Equity instruments Equity Trade receivables Trade Other receivables receivables Other Cash and bank and Cash Trade payables Trade Other liabilities Other Loans inancial leases inancial S E G MENT I MENT I N A usqvarna G usqvarna S F 14 not apply.does ORMAT I roup Treasury per Treasury roup ON ON - - - NOTE - - reported below: reported F stone. and concrete as such material cutting for ment G the on eliminated are that G all concerns difference main The Company. Parent the for relevant also consequently, is, itions Total G Total Products Professional Products Consumer S inancial information related to the above segments is is segments above the to related information inancial roup common costs costs common roup Carrying Carrying amount 19,767 13,467 7,283 3,280 1,828 1,736 4,184 200 364 386 302 260 396 271 376 0 2008 Fair value Fair 19,449 13,052 7,283 3,280 1,828 1,736 4,184 200 364 483 302 260 396 271 376 32,342 32,342 0 12,493 19,849 2008 roup level. roup Net sales Net 33,284 33,284 20,621 12,663 roup internal transactions transactions internal roup Carrying Carrying 16,260 2007 amount 12,726 5,636 2,731 1,216 3,912 123 406 406 315 211 64 90 22 67 12 1 Operating income Operating 2,550 2,361 2007 1,587 2008 –189 963 F air value air 16,339 12,735 5,636 3,564 2,731 3,761 1,216 1,638 3,912 2,123 –197 385 2007 211 406 123 90 22 64 67 12 1 Rest of the World the of Rest North America North Total Europe Professional Products Professional Assets and capital expenditure, per geographical area geographical per expenditure, capital and Assets Total World the of Rest America North Europe market geographical per sales, External Products Consumer stated. otherwise unless SEKm in Amounts Professional Products Professional Products Consumer I2) 1) I funds Liquid Other Total Acquisitions Total equity I Other F goods were produced. were goods the where of regardless market, geographical per sales Total Taxes paid S World. the of Rest the and America North Europe, areas; ical H areas –Geographical format reporting Secondary segments. business the to allocated not are equity and ities liabil interest-bearing receivables, interest-bearing funds, G at Treasury by H managed is operations the of financing the while criteria, same the to according measured is ments seg respective the of performance the and basis segment a on out carried is assets operational the of Management Total nterest-bearing receivables nterest-bearing nterest-bearing liabilities nterest-bearing ales by market are presented below and show H show and below presented are market by ales inancial items inancial Cash flow from operations and investments. and operations from flow Cash usqvarna’s business segments operate in three geograph three in operate segments business usqvarna’s ncludes deferred taxes and common G common and taxes deferred ncludes 2) roup or country level. Consequently, liquid liquid Consequently, level. country or roup roup services such as H as such services roup 34,337 20,802 10,035 3,500 2008 32,342 13,079 16,114 3,149 2008 Assets usqvarna G usqvarna 30,543 34,337 10,648 31,602 19,895 2,735 1,059 2008 2008 expenditure Capital 909 346 563 28,803 usqvarna’s usqvarna’s olding, Treasury and Risk Management. Risk and Treasury olding, — — — — — — — Tangible assets Tangible 73 6 17,35 2,372 9,075 2007 33,284 15,456 15,106 Assets 2,722 2007 roup roup - 28,803 26,373 27,497 NOTE 17,027 1,306 9,346 1,124 2007 2007 698 433 265 — — — — — — — Total World the of Rest America North Europe sales Net information company Parent S 2008 909 365 422 122 expenditure Capital Tangible assets Tangible 34,337 16,287 6,890 2,345 2,773 9,235 8,815 4,117 2008 2008 Capital expenditure Capital 254 129 123 I ntangible assets ntangible — — — — — 2 Liabilities 2007 698 290 362 28,803 46 13,318 5,944 3,388 2,556 8,096 , 89 7,3 2,152 2007 2007 159 81 78 — — — — — — 10,011 8,274 2008 2008 254 3,056 923 191 814 1,163 1,168 1,536 1,520 expenditure Capital 3,138 –845 –543 –582 2008 2008 35 28 I 690 471 ntangible assets ntangible 82 — — — — D 2 amortization epreciation/ Cash flow Cash 10,156 –7,033 –8,876 3,349 1,081 3,256 8,232 1) 1,802 1,049 1,547 –646 –767 2007 2007 2007 2007 159 664 –93 875 417 119

40 — — — — — —

61 HUSQVARNA ANNUAL REPORT 2008 62 HUSQVARNA ANNUAL REPORT 2008

1) F of sale on Loss 1) G the for sales Net stated. otherwise unless SEKm in Amounts Total I Total income operating Other The The sales of finished products. Net sales in sales Net products. finished of sales S refers to entities within the the within to entities refers to amounted amounted to amounted benefits post-employment other and pensions for expenses to amounted contributions employer to amounted sold. goods of G S to amounted which differences exchange-rate net includes G mpairment, shares mpairment, 1,073m (1,167). Exports from from EK 1,073m (1,167). Exports –57m (84). Costs for research and development for the the for development and research for Costs (84). EK –57m a surplus of S of a surplus H of restructuring the to connection in The sale of the shares in H in shares the of sale The Norway A Norway I ain on sale of sale on ain roup amounted to amounted roup to amounted roup NOTE 6 NOTE 5 NOTE 4 nc of S of nc and shares and Operations and equipment and plant Property, equipment and plant Property, rom write-down in Khimki A/O of S of A/O Khimki in write-down rom G roup’s reported net sales mainly refer to revenues from from to revenues refer mainly sales net reported roup’s 13m. EK generated a surplus of S of asurplus S generated 4,975m. F 4,975m. EK S S S OT OT OPERAT S NET EK 9,310m (9,675), which of 210m (143).EK 210m EK 1,163m (1,081). D epreciation and amortizations for the year year the for amortizations and epreciation G H H roup amounted to amounted roup ER OPERAT ER OPERAT S S ALE urthermore, the liquidation of H of liquidation the urthermore, usqvarna Consumer Outdoor Products N.A. Products Outdoor Consumer usqvarna 332m (322) and are included in Cost Cost in included are and (322) EK 332m income Operating EK 2,361m (3,564). I N S AN G I G 2008 2008 –48 –35 47m.EK 2m and write-down in F in write-down and 2m EK – roup. Operating income for the the for income Operating roup. NCOME — — 13 usqvarna's U usqvarna's D 4 4 G G I I S N N S roup roup alaries, remuneration and and remuneration alaries, weden during the year year the during weden S G EXPEN G I 2007 2007 S S NCOME 21 –5 –5 21 — — — 32,342m (33,284). (33,284). EK 32,342m 4,949m (4,858) and and EK 4,949m (4,858) S weden amounted to amounted weden operations, generated generated S operations, S EK 7,522m (7,907) 5,025 usqvarna H usqvarna 5,022 Parent Company Parent Company Parent 2008 2008 E –19 – –4 15 irefly Energy Energy irefly 0 3 1) 1) olding olding I 2007 2007 nc., nc., –2 –2 — — 0 0 0 NOTE nized as non-current assets, consisted of: consisted assets, non-current as nized At 31At D country. each in applicable rates interest market the follows and variable is portion interest The portion. interest an and portion acapital comprises fee lease minimum The facilities. of leasing the to related contracts the in restrictions any nor results, period’s the in expenses contingent any there are Neither sub-contracted. H Within leases Financial Total 2014– 2010–2013 2009 follows: as time in distributed are leases operating for payments minimum of amount future The S to amounted H among restrictions or expenses contingent material no are There leases Operating Long-term liabilities Long-term S liabilities leasing financial of value Present fees lease minimum future of value Present F 1year After 1year Within fees lease – minimum leasing to referring financial Liabilities 31 Dec amount, Carrying 31 Dec balance, Closing equipment other and Machinery Buildings depreciation Accumulated 31 Dec balance, Closing equipment other and Machinery Buildings costs Acquisition S uture financial costs for financial leasing financial for costs financial uture hort-term liabilities hort-term NOTE 7 The present value of the future lease payments is of value The payments lease present the future fees) leasing (minimum payments rental for Expenses ecember 2008, H 2008, ecember usqvarna no financial non-cancellable contracts are are contracts non-cancellable financial no usqvarna usqvarna’s operating leases. operating usqvarna’s LEA 334m (280) in 2008. 2008. in (280) EK 334m SI N G usqvarna’s financial leases, recog leases, financial usqvarna’s 2008 250 269 519 436 221

48 83 S EK 1,210 386m. –179 2007 565 386 386 381 183 198 324 496 341 370 179 767 119 45 69 11 - 4 expenses, net expenses, and income Financial expenses financial Total expenses financial Other

differences Exchange-rate D Current taxes Current I income Financial stated. otherwise unless SEKm in Amounts Total differences Exchange-rate I expenses Financial Total financial income financial Total income financial Other D nterest income nterest nterest expense nterest ividends eferred taxes eferred NOTE 9 NOTE 8 for trading for held derivatives on on cashflow hedges cashflow on investments net on hedging of foreign on loans on whereof trading for held derivatives on investments net on hedging of foreign loans on whereof from subsidiaries subsidiaries from from others from to others to subsidiaries to from others from subsidiaries from trading for held derivatives on hedges cashflow on investments net on hedging of foreign loans on whereof TAXE AN FI NANC S D EXPEN S

I AL I AL –479 –594 1,017 –716 – – 2008 2008 – –929 – – NCOME NCOME 122 203 –23 628 693 276 114 E 85 –3 37 49 — — — — — — — — — — — G G roup roup –853 –675 –719 –667 –667 –597 –237 – 2007 2007 –58 –25 –27 186 216 –12 44 –6 39 — — — — — — — — — — 5 –1,510 1,283 – Parent Company Parent Parent Company Parent –290 –227 –660 1,159 1,131 – – –687 2008 2008 – – –114 336 869 624 769 211 –15 412 46 48 — — — — — — — – 1 2 1,448 –358 –727 –606 –365 –536 –237 2007 2007 721 643 –58 264 793 –51 –51 –72 –19 –12 –6 — — — — — — — 12 7 NOTE deferred tax liabilities by S by liabilities tax deferred increased have 2008 during companies Acquired (7). S to amounted differences (–186). Exchange-rate to amounted statement income in the recognized S totalling equity in recognized sheet. balance the in recognized not losses tax unused S was differences temporary deductible regards as year previous the from change The expire as follows: as expire will carry-forwards loss tax The assets. tax deferred of tation S of differences temporary deductible other and forwards 31 of D As carry-forwards Tax loss G in rates tax statutory the of reduction to due mainly 2008 in reduced was rate tax theoretical The rates. tax statutory local the by multiplied G total weighted the of basis G the for rate tax theoretical The Company. S Total % Actual tax rate tax Actual Other tax Withholding change rate tax of Effect rate tax Theoretical rates tax actual and Theoretical hedges. external and losses tax recognized to mainly refer and (32) S totaled Company Parent the in assets tax deferred S with included G on taxes Calculated Without time limit time Without S 2013 2012 2011 2010 2009 Utilized tax loss carry-forwards loss tax Utilized tax deferred to relating estimates in Changes net items, statement income Non-taxable/non-deductible have not made been fordeductions which Losses S 2,039m (1,324), which have not been included in compu in included been not have (1,324), which EK 2,039m Parent the in reserves untaxed to referring EK –237m (–270) ubsequent years ubsequent As of 31 of D As The G The roup accounts include deferred tax liabilities of of liabilities tax deferred include accounts roup ecember 2008, the G the 2008, ecember ecember 2008, the G the 2008, ecember –329m (–100) in the Parent Company. The The Company. Parent the in (–100) EK –329m roup Contributions for 2008 are are 2008 for Contributions roup ermany and the UK. the and ermany EK 0m. EK –161m (110), excluding

roup’s net sales per country, country, per sales net roup’s 170m (38). D EK 170m (38). roup reported tax loss carry- loss tax reported roup roup is calculated on the the on calculated is roup roup had deferred taxes taxes deferred had roup 2,039 1,600 2008 2008 27.1 –0.3 –8.6 –3.5 31.4 –1.7 347 1.2 1.3 7.3 92 — — — — eferred taxes taxes eferred –100m EK –100m G S roup EK 86m EK 86m

1,324 –203m –203m 1,184 29.5 2007 2007 –0.5 –0.4 –0.7 33.0 –0.9 –3.1 2.0 0.1 63 — — — — 74 -

63 HUSQVARNA ANNUAL REPORT 2008 64 HUSQVARNA ANNUAL REPORT 2008 mitments com similar and pensions for Provision receivables Current Non-current assets assets Non-current statement income the in Recognized Other items Other F provisions Other I Other H equity in Recognized I assets Non-current differences Exchange-rate losses tax unused Recognized 1Jan liabilities, and taxes deferred Net taxes deferred in Changes I assets Non-current companies Acquired items Other F provisions Other commitments similar and pensions for Provision receivables Current liabilities, 31 Dec 31 Dec liabilities, and assets tax deferred Net losses tax unused Recognized F provisions Other commitments similar and pensions for Provision receivables Current Net deferred tax assets and liabilities and assets tax deferred Net S Provisions for pensions and similar commitments similar and pensions for Provisions receivables Current Deferred tax assets and liabilities and assets tax Deferred F provisions Other I Recognized unused tax losses losses tax unused Recognized Non-current assets assets Non-current liabilities and assets tax Deferred 1) stated. otherwise unless SEKm in Amounts 1) items Other nventories nventories nventories nventories inancial and operating liabilities operating and inancial inancial and operating liabilities operating and inancial inancial and operating liabilities operating and inancial et-off of tax of et-off inancial and operating liabilities operating and inancial Other items include tax allocation reserves of S of reserves allocation tax include items Other edge accounting edge the Parent Company and its subsidiaries in S in subsidiaries its and Company Parent the S of reserves allocation tax include items Other weden. –153m ( –163m) referring to the Parent Company and its subsidiaries in S in subsidiaries its and Company Parent the to referring (–163m) –153m EK –153m (–163m) referring to to referring (–163m) –153m EK - –203 –901 –100 –768 2008 –145 –138 170 –66 –90 175 – 115 –11 22 –5 43 — — — — — — — 17 74 0 5 2 5 9 3 1) –688 –768 –186 –940 2007 –20 –77 –93 107 –13 38 61 –6 –4 –4 44 –5 43 25 –9 –3 –2 72 10 16 — 13 13 7 1 3 1) NOTE 1,061 util S to amounted abilities S for restructuring, obsolescence allowance and tax losses. tax and allowance obsolescence restructuring, for provisions pensions, for provisions gains, value fair reserve, allocation tax assets, intangible depreciation, excessive D S 2008 – EK eferred tax assets eferred amounted tax toassets 928 133 451 167 The above items mainly reflect the deferred tax effects of effects tax deferred the reflect mainly items above The ized within 12 months. within ized 56 98 35 82 96 76

119m will be utilized within 12 months. D 12 months. within 119m utilized be will Assets 1,176 –278 2007 898 501 140 107 138 119 77 70 24 1,829 1,962 1,565 2008 – 1,829m, whereof S whereof EK 1,829m, 180 133 153 44 — 11 Liabilities 7 2 G 1) roup weden. 1,666 1,944 1,585 S –278 2007 EK 100 163 29 23 42 —

2 928m, 928m, whereof 1) – –901 –901 eferred tax li tax eferred 0m will be be will EK 0m 2008 1,114 –118 – 167 38 65 82 49 94 — Net –1,084 –768 –768 –139 2007 107 138 54 96 19 — 41 Acquired during the year the during Acquired Product development Product estimated using the discounted cash-flow model on the stra the on model cash-flow discounted the using estimated is use in Value calculations. use in value on based mined deter been have operations the of amounts recoverable The impairment. of indications are there which in cases in regularly more tested be can assets individual and a year once least at impairment for tested are lives useful indefinite S of amount carrying G the assigned S S whereof G lives useful indefinite with assets Intangible 2007 1Jan balance, Opening costs Acquisition stated. otherwise unless SEKm in Amounts Acquired companies Acquired year the for Amortization 2007 1Jan balance, Opening 1) I Acquired companies Acquired I F Exchange-rate differences Exchange-rate F Acquired companies Acquired Acquired during the year the during Acquired 2007 31 Dec balance, Closing Amortization for the year the for Amortization Exchange-rate differences Exchange-rate F Closing balance, 31 Dec 2007 31 Dec balance, Closing F companies Acquired development Product I Exchange-rate differences Exchange-rate Accumulated amortization Accumulated Closing balance, 31 Dec 2008 31 Dec balance, Closing Exchange-rate differences Exchange-rate Closing balance, 31 Dec 2008 31 Dec balance, Closing Carrying amount, 31 Dec 2007 31 Dec amount, Carrying Carrying amount, 31 Dec 2008 31 Dec amount, Carrying mpairment mpairment NOTE 10 1,873m to Professional Products. H Products. Professional EK 1,873m to ully amortized ully ully amortized ully ully amortized ully ully amortized ully oodwill as per 31 D per as oodwill n the income statement amortization is primarily accounted for within Cost of goods sold. goods of Cost within for accounted primarily is amortization statement income n the 4,915m relates to Consumer Products and and Products Consumer to EK 4,915m relates I NTAN ardena trademark indefinite life, with a total total a with life, indefinite trademark ardena 3,523m. All intangible assets with with assets intangible All EK 3,523m. ecember 2008 amounts to S to amounts 2008 ecember GIB LE A LE 1) SS ET S usqvarna has has usqvarna 6,788m, EK 6,788m, G oodwill 6,788 6,788 1,780 5,461 5,461 3,779 - 346 –98 981 — — — — — — — — — — — — — — — — — — — NOTE - Trademark future market decline could possibly lead to an impairment impairment an to lead possibly could decline market future H amounts. recovorable the exceeding amounts carrying the in result would upon based are amounts able recover unit's cash-generating the which on assumptions key the in changes reasonable any that believe not do management environment, business current the Under 10%. was 2008 in used rate discount pre-tax The included. 2% of rate growth estimated an with onwards and year fourth the for used normally is year third the of flow cash The 2008. of fall the in made tests impairment the for used are plans 2011. to These i.e. 2009 years, three coming the covering unit cash-generating each for established are that plans tegic S 3,300 3,880 3,733 3,198 3,050 102 213 147 516 74 64 25 26 37 — — — — — — — — — — — — 19 3 develop Product G 1,135 roup ment 408 540 207 522 859 595 451 –50 –50 129 242 195 159 141 –13 –4 –4 84 –5 77 — — — — — 41 4 -

Other 535 382 687 226 153 461 116 488 –87 –87 –31 –31 107 127 59 –8 64 26 32 70 — 51 — — — 12 3 2 12,490 11,577 10,155 2,631 9,492 1,687 7,512 Total 340 663 913 204 –82 205 –81 –81 237 –91 –91 242 475 159 92 26 — 12 4 1 2 owever a owever and other and Company develop Parent Parent Product 1,079 ment 304 534 488 223 398 621 591 324 127 - 90 87 94 — — — — — — — — — — — — — — 7 -

65 HUSQVARNA ANNUAL REPORT 2008 66 HUSQVARNA ANNUAL REPORT 2008 Exchange-rate differences differences Exchange-rate Carrying amount, 31 Dec 2008 2008 31 Dec amount, Carrying Exchange-rate differences differences Exchange-rate Acquired during the year year the during Acquired companies Acquired 1) I companies Acquired 2007 1Jan balance, Opening Carrying amount, 31 Dec 2007 2007 31 Dec amount, Carrying 2008 31 Dec balance, Closing S D companies Acquired 2007 31 Dec balance, Closing were S were buildings for amounts carrying corresponding The land. for differences Exchange-rate S advances and progress in work of Transfer companies Acquired 2007 31 Dec balance, Closing The carrying amount for land is S is land for amount carrying The S advances and progress in work of Transfer 2007 1Jan balance, Opening costs Acquisition Group stated. otherwise unless SEKm in Amounts Exchange-rate differences differences Exchange-rate S D panies was S was panies depreciation Accumulated 2008 31 Dec balance, Closing year the during Acquired NOTE 11 ales, scrap, etc. etc. scrap, ales, ales, scrap, etc. etc. scrap, ales, ales, scrap, etc. etc. scrap, ales, ales, scrap, etc. etc. scrap, ales, epreciation for the year year the for epreciation epreciation for the year year the for epreciation n the income statement depreciation is primarily accounted for within Cost of goods sold. sold. goods of Cost within for accounted primarily is depreciation statement income n the The tax assessment value of the S the of value assessment tax The EK 137m (133), S and 283m (271) for buildings, and S and (271) buildings, for EK 283m PROPERT Y , PLANT AN , PLANT EK 14m (14) land. for 1) EK 219m (170). wedish G wedish D EQU improvements land and Land roup com roup 53m (49) (49) EK 53m I PMENT PMENT 244 207 301 153 261 40 23 37 38 35 53 28 –3 10 – –1 2 0 3 0 1 0 7 0 2 3 1 NOTE B uildings 2,863 1,500 2,470 1,363 1,326 1,810 1,144 762 – 334 307 –33 102 –21 157 –76 equipment. S were land 674 –12 S 44 40 33 97 –2 75 16 –1 0 Accumulated impairments at year-end on buildings and and buildings on year-end at impairments Accumulated technical and installations Machinery –1,566 – 2,293 2,584 6,603 5,580 4,572 5,587 8m (8) and S and (8) EK 8m 7,873 8,171 1,850 1,533 1,378 –888 –897 1,110 –253 –187 386 357 705 184 341 721 819 56 0

equipment 1,068 Other 0m (0) on machinery and other other and machinery on (0) EK 0m 863 303 253 232 765 315 610 –44 –85 507 –25 –77 101 125 374 90 89 23 94 10 71 13 4 7 9

and advances and Construction progress in –380 –233 283 233 387 233 387 434 104 186 –19 – 16 — — — — — — — — — — — 0 4 0

12,790 11,683 –1,678 –1,617 5,589 5,035 4,312 7,371 G 7,755 9,164 2,069 3,100 1,072 1,701 –292 –987 –967 –196 Total roup 909 925 698 876 175 4 0 0

buildings, and S and buildings, correspon The S was Company Parent the of value assessment tax The 2008 31 Dec amount, Carrying Carrying amount, 31 Dec 2007 2007 31 Dec amount, Carrying 2008 31 Dec balance, Closing S D Closing balance, 31 Dec 2007 2007 31 Dec balance, Closing S D Total Note 26. Note in provided is participations and shares of A specification 2) 1) 3) Opening balance, 1 Jan 2007 2007 1Jan balance, Opening depreciation Accumulated 2008 31 Dec balance, Closing S advances and progress in work of Transfer year the during Acquired 2007 31 Dec balance, Closing S S 2007 1Jan balance, Opening costs Acquisition Company Parent stated. otherwise unless SEKm in Amounts in securities in holdings Long-term Pension assets Pension receivables long-term Other G Receivables and advances and progress in work of Transfer year the during Acquired NOTE 12 S and buildings, for (238) EK 238m ales, scrap, etc. etc. scrap, ales, ales, scrap, etc. etc. scrap, ales, ales, scrap, etc. etc. scrap, ales, ales, scrap, etc. etc. scrap, ales, hares in subsidiaries in hares of S of H of restructuring in B entities finance established newly three S totalling contributions shareholder's by explained marily pri is subsidiaries in shares company's parent the of value in change The Available for sale financial assets are included in an amount of S amount an in included are assets financial sale for Available Pension assets refer to U to refer assets Pension epreciation for the year year the for epreciation epreciation for the year year the for epreciation 4,963m. EK 2) FI roup ding book values were S were values book ding 3) usqvarna's U usqvarna's NANC 7m (7) for land. for EK 7m (7) S A, S A, 1) I AL A AL weden and S and weden operations resulted in a value adjustment adjustment avalue in resulted S operations 2008 187 136 SS 49 — — 2 G ET roup witzerland. S witzerland. elgium. F elgium. S 44m (44) for land. land. for (44) EK 44m 2007 207 162 33 — — 12 EK 114m (115) for urthermore, the the urthermore, improvements land and Land ee Note 19. Note ee 29,731 29,219 Parent Company Parent 19,837mEK to 2008 495 16 — 1 0m (12). 0m EK 18 15 13 13 19 — — — — — — — 4,308 6 5 5 1 1 3 4,290 2007 - — 12 0 6 NOTE B uildings 265 260 257 145 139 151 115 114 Products in progress in Products downs have been reversed by a total of S of atotal by reversed been have downs F materials Raw inventory. inventory. the of value the in included are obsolescence for Provisions S to amounted sold goods of cost in included and expense as recognized inventories of cost The Total suppliers to Advances S S — — — — — — NOTE 13 234m (190). EK 234m inished products inished 6 6 5 3 I S totaled Write-downs nventories valued to net realizable value amounted to to amounted value realizable net to valued nventories technical and installations Machinery Machinery 1,048 1,024 –153 –149 348 680 368 991 626 676 I –85 –82 103 107 136 145 NVENTOR 22 39 equipment 91m (62) and previous write- previous EK 91m and (62) Other I 8,556 E 2,072 6,134 2008 S 339 54 36 36 33 55 52 18 19 –4 –3 — — –1 –1 11 3 4 3 4

G roup and advances and Construction 7,758 progress in 5,737 1,693 22,372m (23,072). (23,072). EK 22,372m 2007 325 3 EK 31m (27). –39 –22 17 22 31 — — — — — — — — — 9 9 9 9 1,299 Parent Company Company Parent

1,011 2008 283 4 1 1,390 1,332 1,326 1,371 1,022 –157 –152 Total 2007 866 803 502 524 869 –86 –83 286 144 146 138 155 15 0 0 3

67 HUSQVARNA ANNUAL REPORT 2008 68 HUSQVARNA ANNUAL REPORT 2008 Closing Balance, 31 Dec 2008 31 Dec Balance, Closing Transactions recognized directly in equity in directly recognized Transactions Tax hedge on Equity hedge Equity Translation differences Translation operations foreign of translation on differences rate Exchange Transferred to profit and loss on sale on loss and profit to Transferred Tax hedge on G hedges flow Cash 2007 31 Dec Balance, Closing equity in directly recognized Transactions Transferred to profit and loss and profit to Transferred instruments sale for Available Tax hedges on Equity hedges Equity Translation difference Translation operations foreign of translation on differences rate Exchange Transferred to profit and loss on sale on loss and profit to Transferred Provision for doubtful accounts Provision for doubtful receivables short-term Miscellaneous tax added Value Tax hedge on G hedges flow Cash G instruments sale for Available 2007 1Jan balance Opening stated. otherwise unless SEKm in Amounts Total leases and rents Prepaid Other prepaid expenses prepaid Other premiums insurance Prepaid NOTE 14 NOTE 16 ains/losses recognized in equity in recognized ains/losses ains/losses recognized in equity in recognized ains/losses ains/losses recognized in equity in recognized ains/losses OT OT H H ER CURRENT A ER CURRENT ER RE S ERVE S I N EQU SS ET S I T 2008 551 184 182 169 Y –19 20 15 G roup 2007 650 206 230 193 –17 21 17 NOTE Other mortgages Real-estate the local U local the by financed issue abond to refer mortgages estate real The Total S NOTE 15 instruments Available Available for sale sale for S I –3 –3 –3 — — — — — — — — — — — — 0 3 0 3 ndustrial D ndustrial A CRE

SS ET DI T I S PLE H reserve edging edging NS evelopment Authority. evelopment –50 –47 –31 –65 – 16 –3 42 47 — 18 — — — — — — — 11 T DG 2008 3 I TUT

49 39 10 E G D F roup I S ON translation Currency OR L OR 2007 reserve 44 1,093 34 1,034 10 1,497 – –52 111 627 164 –72 59 20 I — — — — — — — — A 0

BI Parent Company Parent 2008 L I T — — — I E S TO reserves 1,062 1,053 Other 1,497 –105 – Total 2007 114 –65 – 627 164 –72 20 –3 –3 42 47 18 — — — 11 9 3 0

Total 286,756,875 Class B Class 286,756,875 98,380,020 Class A-shares, par value S value par A-shares, Class 98,380,020 31 D On S capital Share stated. otherwise unless SEKm in Amounts and economically unstable countries. unstable economically and politically in companies in receivables to referring priations appro permissible fiscally include reserves financial Other B aclass and vote B class and Number of shares of Number The share capital in H in capital share The b on plan of excess in tion deprecia Accumulated buildings Other financial reserves financial Other reserve Tax allocation Total Class A-shares Class shares Repurchased B Class A-shares Class 2007 31 Dec Shares, Class B Class A-shares Class 2008 31 Dec Shares, B Class EKm NOTE 17 NOT 18 equipment and Machinery rands etc rands -shares -shares -shares ecember 2008, the share capital comprised: capital share the 2008, ecember -shares. A class A-share entitles the holder to one one to holder the entitles A-share Aclass -shares. NUM U P SH C arent ntaxe ARE CAP ARE -share to one-tenth of a vote. All shares shares All avote. of one-tenth to -share -shares, par value S value par -shares, B ER O usqvarna A usqvarna d re - ompan F SH I TAL AN s erve 31 Dec 31 Dec ARE consists of class A-shares A-shares class of B consists 2008 902 582 246 y 37 26 11 s, s, D S EK 2 EK 2 priations Appro –61 –32 –23 –6 — — Owned by H by Owned 31 D 2007 770 963 582 278 196 574 43 1, 969,000 2 ,919,000 34 26 ec ec - usqvarna

950,000 NOTE — — — ings, and carry equal rights in terms of dividends. of terms in rights equal carry and ings, earn and assets of proportion same the to holder the entitle request from H from request on available is and Office Registration Companies ish S the to submitted been has gender and country by ees employ of number average the of specification A detailed G Company Parent 2008 emp Num G Company Parent 2007 Group Total Total Group Total S roup Companies Companies roup roup Companies roup NOT 19 Owned by other shareholders other by Owned loyees ber of of ber E mplo usqvarna A usqvarna 283,837,875 284,787,875 98,380,020 98,380,020 –950,000 y Average number number Average ee of employees of B s an , I — nvestor Relations. nvestor 16,093 15,720 13,940 14,214 1,780 1,879 d emplo 10,193 9,999 y 8,623 1,465 8,728 1,376 Men ee b 286,756,875 286,756,875 98,380,020 98,380,020 ene Women 5,900 5,721 5,486 fi 5,317 Total wed 404 414 t — — - s - -

69 HUSQVARNA ANNUAL REPORT 2008 70 HUSQVARNA ANNUAL REPORT 2008 entities that exist solely to finance employee benefits. employee finance to solely exist that entities F unfunded. G in plans the for except funded are countries these in plans pension The Japan. and Pension costs Pension salaries) variable (of which S Companies Group costs Pension salaries) variable (of which sion plans are in the UK, G UK, the in are plans sion Company. Parent the in employed were women 5(5) and men G B the Of S Company Parent management senior other and President Board, to contributions employer and remuneration other Salaries, defined benefit plans. benefit defined or plans contribution defined either as classified are plans G the which in H benefits post-employment other and Pensions more or days 60 which Of hours working normal total of apercentage as illness, to due absence Total World the of Rest America North Europe G area by geographical employees of number Average stated. otherwise unless SEKm in Amounts Total Group Total 1) % of total normal working hours within each category, respectively. category, each within hours working normal 1) total %of Women Employee absence due to illness to due absence Employee Absence due to illness, by category illness, to due Absence 29 years or younger or years 29 Men 50 years or older or years 50 years 30–49 alaries and other remuneration other and alaries alaries and other remuneration other and alaries eographical area eographical usqvarna provides pension plans in many of the countries countries the of many in plans pension provides usqvarna roup, 88 (86) were men and 13 (12) women, of whom 13 13 (13) whom of and (12) men women, were (86) 88 roup, The G The oard members and other senior management in the the in management senior other and members oard roup’s most comprehensive defined benefit pen benefit defined comprehensive most roup’s unded plans imply that there are assets in legal legal in assets are there that imply plans unded roup has operations. The various pension pension various The operations. has roup ermany where the main plan is is plan main the where ermany ermany, S ermany, weden, the U the weden, 1) 15,720 2,284 6,285 2008 2008 7,151 (12) (0) 68 20 32 7

S , Norway , Norway 16,093 2,088 6,948 , 57 7,0 2007 2007 (17) (13) 68 20 42 - 5 NOTE in the Parent Parent the in benefit plan is financed through a pension fund. I fund. pension a through financed is plan benefit ( plan benefit defined bargained collectively salary afinal by covered are G the for costs pension excluding contributions Employer (110). 100m of management senior other and President B the to remuneration and aries S to amounted S S to according amounted, Company S to amounted Company Parent the in costs pension excluding tions contribu (42). Employer 32m of management senior other B the to remuneration S to amounted ition of the of the ition 24. Note of members other and President for costs pension and remuneration aries, ance plan. ance G many, the 2003. after hired employees for applies which plan salary career-average the or ees, employ new for 2003 since closed been has which plan, ary sion costs according to I to according costs sion S pages 100–103. pages Parent Company and its subsidiaries in subsidiaries its and Company Parent in the employees for to illness due absence Act Accounts the table below. The Parent Company comprises the the comprises Company Parent The below. table the employs the majority of the of the majority the employs and plants, and ofunits asas a well number office head S Employees Employees 58m (79). EK 58m alaries and other remuneration for the total G total the for remuneration other and alaries roup amounted to S to amounted roup Company F White collar employees in S in employees collar White G the for plan pension main The I S I n the UK the employees are covered by either a final sal afinal either by covered are employees the UK n the n accordance with the regulations in the in the regulations the with n accordance or more information concerning fixed and variable sal variable and fixed concerning information more or alaries and other remuneration in the Parent Company Company Parent the in remuneration other and alaries 38.3 4.5 3.8 6.0 4.0 5.7 4.1 F 2008 or a presentation and description of the compos of the description and a or presentation

B ardena Rente Plus plan, is an unfunded cash bal cash unfunded an is plan, Plus Rente ardena oard and members of members and oard I TP 2). The retirement provision of the defined defined the of provision retirement 2). The TP 4,037m (3,973). This amount includes sal includes amount (3,973).EK 4,037m This 252m (255). Pension costs in the Parent Parent the in costs Pension (255). EK 252m and salaries includes This (782). EK 748m employees employees in Sweden in 912m (886). The G The EK 912m (886). oard, President, former President and and President former President, oard, 40.7 4.6 4.2 4.2 5.9 5.9 4.1 All A 19 amounted to 210m (143). 210m to S 19 amounted

G roup’s personnel in personnel roup’s weden, born 1978 or earlier, 1978 earlier, or born weden, oard, the President, former former President, the oard, in the Parent Parent the in G Employees roup Management, see see Management, roup G roup’s employees in G in employees roup’s Company Company wedish G wedish roup Management, see see Management, roup S 47.6 weden is reported in is reported weden 4.4 6.5 3.8 4.6 5.9 2.9 B roup’s total pen total roup’s 2007 oard of oard

S wedish Annual Annual wedish AAP, to roup roup n two sub n two S employees in S in weden. D irectors, irectors, G weden roup’s roup’s 48.8 4.7 4.8 6.9 6.1 3.1 4.1 - All er - - - -

- - which is an unfunded plan. plan. unfunded an is which other post-employment benefits post-employment other and pensions for provisions Net A the called plan, retirement early an provides also H company. insurance an with insured is which plan, C Zenoah the to transferred been C Zenoah the to ferred trans been has obligation the 2008, in exist to ceased plan This plan. benefit adefined by covered 2007, in were Zenoah G The unfunded. both directors, for aplan and plan retirement early an also is There similar. or salary career-average on based is and unfunded is employees all covering plan) (RAP (C plan balance cash afunded is ees employ regular full-time all covering plan largest The Japan. covered by a new defined contribution plan. contribution defined anew by covered are plan benefit defined the in members plan the 2009 from As 2008. after plan the in benefits pension further accrue not will they i.e. frozen, were benefits pension members’ plan active remaining the 2008 of end the At employees. sated compen highly 50 approximately for frozen were benefits I 2003. after hired employees for closed been post-employment benefits post-employment other and pensions for Provisions cost pension prepaid as reported Whereof cost past-service Unrecognized gains/losses actuarial Unrecognized F plans funded for obligations of value Present plans unfunded for obligations of value Present sheet. balance the in recognized benefits post-employment other and pensions for provisions net of Specification plan. contribution defined bene adefined as plan the of accounting the for needed tion informa the provide not i.e. does company, member each for assets pension the separate not does company ance insur The company. insurance an with insured completely I the employees, of numbers small with sidiaries, stated. otherwise unless SEKm in Amounts air value of plan assets plan of value air roup’s employees in Japan before the acquisition of of acquisition the before Japan in employees roup’s I There are four defined benefit plans within the G within plans benefit defined four are There The G The n Norway the employees are covered by a final salary salary afinal by covered are employees the n Norway fit plan and therefore this plan has been treated as a treated been has plan this therefore and plan fit roup’s defined benefit pension plan in the U in plan pension benefit defined roup’s B P plan and the plan members have have members plan the and P plan B P and RAP plans. RAP P and B P plan). The other plan plan other The P plan). benefit plans benefit Pensions, Pensions, n 2007, pension n 2007, pension defined defined –1,383 1,007 1,143 2,001 TP plan is is plan TP –430 822 136 F –3 usqvarna usqvarna roup in in roup P-plan, P-plan, has S has

- - employment employment - 2008 Other post- Other - NOTE - benefits most comprehensive defined benefit plans described above. described plans benefit defined comprehensive most G the for assets plan of value market fair the as well as Norway of the employees participating in the plans. the in participating employees the of lifetime working remaining average expected the over nized recog is plan each in losses or gains of portion This assets. plan the and obligation benefit defined the of greater the of 10% exceeding plan each in losses or gains unrecognized cumulative the of portion that statement income the in nize recog to is losses and gains actuarial recognizing for policy year. H the during provisions net in changes the of and assets plan of value fair the of balances closing and opening as well as obligation, benefit defined the of value present the of balances closing and opening the of ciliations recon include schedules The sheet. balance and statement income the in recognized amounts the as well as plans, benefit the to relating assets the and obligations these H in plans S shown below as Other post-employment benefits. post-employment Other as below shown are obligations These retirement. with conjunction in ments, agree collective or law with accordance in payments, sum S Total Japan US Sweden UK Country G S 27 27 –5 32 — — — — et forth below are schedules showing the obligations of the the of obligations the showing schedules are below forth et hare of total of hare ermany The table below shows the present value of obligations obligations of value present the shows below table The I n a few countries, H countries, n afew –1,383 1,034 1,170 2,001 usqvarna, the assumptions used to determine determine to used assumptions the usqvarna, –435 Total 854 136 –3 benefit plans benefit benefit obligation benefit usqvarna provides mandatory lump lump mandatory provides usqvarna Pensions Pensions defined defined –1,447 1,034 1,723 Present value value Present –239 872 840 162 –5 of defined defined of

2,724 95% 838 291 526 754 198 117 employment employment 2007 Other post- Other

benefits 25 25 27 –2 — — — — of plan assets plan of usqvarna’s usqvarna’s F air value value air –1,447 1,320 1,059 roup’s roup’s 1,723 –241 Total 95% 897 587 328 867 188 162 –5 45 93 79 - - - -

71 HUSQVARNA ANNUAL REPORT 2008 72 HUSQVARNA ANNUAL REPORT 2008 other post-employment benefits post-employment other and plans benefit defined for Expenses post-employment benefits post-employment other and pensions for expenses Total plans contribution defined for Expenses settlements and curtailments any of Effect cost service past of Amortization /gains losses actuarial of Amortization assets plan on return Expected I costs service Current r benefits Expenses Closing balance Closing (losses) and gains Actuarial B Plan amendments Plan foreign plans foreign on differences Exchange contributions Employee contributions Employer Expected return Expected Acquisitions balance Opening assets plan of value fair the in Change stated. otherwise unless SEKm in Amounts Opening balance balance Opening obligation benefit defined the of value present the in Change Acquisitions Curtailments I cost service Current S Employee contributions Employee B plans foreign on differences rate Exchange Closing balance balance Closing Actuarial losses (gains) (gains) losses Actuarial nterest expenses nterest nterest expenses nterest ettlements enefits paid enefits enefits paid enefits for pensions and other post-employment post-employment other and pensions for ecognized in the income statement. statement. income the in ecognized Pension, Pension, Pension Pension benefits benefits 2,563 2,822 1,383 1,447 2008 – – – 183 129 123 – –14 44 80 88 38 –5 93 69 18 — — 7 9 9 2008 129 210 –80 131 –15 69 81 15 employment employment 9 Other post- Other Pension, Pension, benefits 2008 1,342 1,447 benefit 2007 2007 143 –44 –85 –38 108 –21 –78 75 68 85 62 93 15 74 1 8 33 27 – — — — — — — NOTE 2 3 3 4 employee in question. in employee the of function the on depending expense administrative or selling manufacturing, as classified been have and expenses operating as recognized been have benefits employment F Historical information Historical on plan liabilities plan on Experience adjustment F obligations benefit defined of value Present S was assets plan on return Actual Other Property D instruments Equity % are: assets plan of value fair total The major categories of plan assets as a percentage of the Funded status status Funded on plan assets plan on adjustment Experience S air value of plan assets plan of value air or H or ebt instruments ebt 2,855 2,590 usqvarna, total expenses for pensions and other post- other and pensions for expenses total usqvarna, Total – 127 131 – – 96 69 18 — 41 7 5 9 Pension, Pension, benefit 2,563 1,701 –47 106 –72 819 –17 –9 73 — 1 8 1,472 2,855 1,383

2008 –183 32 employment employment D Other post- Other EK – efined benefit pension plans pension benefit efined 2007 1,143 2,590 benefits 1,447 2007 103m (64). 103m –21 35 –23 45 27 –5 — — — 2 5 1 1 1 1,342 1,746 2006 404 –26 –3 2,590 1,746 1,864 1,296 Total 2005 52.6 40.9 568 –46 –40 108 –77 819 5.3 1.2 –8 –8 59 — 74 6 8 G the in out set is schemes major all for which allocation, asset benchmark scheme’s respective the using by determined is classes asset of weighting The yields. bond current on based is investments related income fixed and income fixed on return The applied. are yields bond current and equities for premium risk historical the instruments related equity and equity on return return, expected the To determine rate. discount the determine to used are bonds government I applied. are obligations pension the of duration the matching indexes I mately S mately obligations. benefit ment G the on impact material no have would rate trend cost medical assumed the in point percentage one of decrease or increase S with losses actuarial increased has This expected. than lower significantly been has assets pension Amounts in SEKm unless otherwise stated. otherwise unless SEKm in Amounts 31 Dec 2007 31 Dec benefits, employment post- other and sions pen for provisions Net benefits post-employment other and pensions for provisions net in changes of Reconciliation 31 Dec 2008 31 Dec benefits, employment post- other and sions pen for provision Net differences rate Exchange Acquisitions by the Company the by directly paid benefits and contributions Employer expenses Pension increases salary Expected rate Discount % a (expressed date actuari Principal assets on return long-term Expected n determining the discount rate, AA-rated corporate bonds bonds corporate AA-rated rate, discount the n determining roup’s financial policy. The actual return on the G the on return actual The policy. financial roup’s Rest of the World World the of Rest America North Europe America North Europe Rest of the World World the of Rest America North Europe World the of Rest The company expects to make contributions of approxi of contributions make to expects company The 62m to the plans during 2009. during plans the to EK 62m f no suitable corporate bonds are available available are bonds corporate suitable f no roup’s current service cost or post-employ or cost service current roup’s al assumptions at the balance sheet sheet balance the at assumptions al s a weighted average) s aweighted - - Pensions, Pensions, defined defined benefit benefit 1,007 plans –142 872 31 Dec 2008 31 Dec 128 149 — 183m. An An EK 183m. employ benefits 3.5 6.0 2.5 4.0 5.7 1.4 6.1 3.1 5.1 Other Other post- ment ment 25 27 –3 — 4 1 -

31 D roup's roup's ec 2007 ec 1,034 –145 Total 897 129 153 5.2 3.5 6.5 3.3 6.3 3.8 4.0 1.6 5.9 — - - NOTE pensions recognize pensions for provision net the in change the of Specification sheet balance the in recognized provision Net obligation the of value present the of access in recognized obligations of Total amount recognized not S obligations pension unfunded of value Present fund pension the of Surplus Of tota Of Opening balance 1Jan balance Opening B statement income the in recognized pensions for Costs F obligations pension funded the of value Present sheet balance the in recognized pensions for provision net the of Specification the assumptions used in the G the in used assumptions the from differing assumptions, provided officially of basis the on calculated are liabilities benefit defined Company, Parent S to According Company Parent pany’s separate financial statements differ from the I the from differ statements financial separate pany’s Com Parent the in used principles accounting The sheet. balance the in aliability as recorded are or fund separate to a contributions policies, insurance by secured are benefits • The Swedish the to according calculated • The liability pension areas: following the regards as primarily principles, the S the Closing balance 31 Dec balance Closing Other fund pension from Reimbursement obligations pension settled for Provision fund pension to Payment fund pension to Provision may, in but asset an as • Any recognized be cannot surplus or cash in settled immediately • Any either be must deficit assump actuarial other and rate • Changes discount the in S air value of plan assets plan of value air urplus of the pension fund, fund, pension the of urplus enefits paid enefits salary increases. salary future account into take not does principles accounting costs. pension offset to company the to refunded be cases, some sheet. balance the in aliability as recognized sheet. balance the and statement income the in immediately recognized are tions S the by lished wedish S wedish

discount l net provisions S provisions l net afe-guarding of Pension Commitments Act. Commitments Pension of afe-guarding

wedish accounting principles adopted by the the by adopted principles accounting wedish rate wedish F wedish

used d in the balance sheet balance the d in 34m (32) is within the scope of of scope the within is (32) EK 34m

inancial S inancial in

the roup under IF under roup

Swedish upervisory Authority. upervisory

calculations 2008 2008 –311 R –18 293 34 34 32 S 34 – 18 — — — . The pension pension . The 0 5 3 0 0

is A

S estab –293 / 2007 2007 –33 260 –24 IF –10 34 32 32 34 33 32 –2 — — — R - 0 S -

73 HUSQVARNA ANNUAL REPORT 2008 74 HUSQVARNA ANNUAL REPORT 2008 I Current service costs pensions Own statement Income the in recognized costs Pension Total net expenses for pensions pensions for expenses net Total I pensions Insured costs Pension B ance stock option programs. programs. option stock ance LT and 2007 ended D ended which period performance athree-year with program share LT 2006, programs in force – the Performance S Performance –the force in programs G the by approval to subject are shares purchase to employees interests. management's and shareholder's G the to employees competent recruit and retain to possibilities ate cre to is programs incentive long-term the of purpose The (LTI) programs incentive Long-term LT (LTI LTI and 2008 2007 2008) and 2007 program incentive Long-term Total Other D Equity % categories these on return the and assets plan total of apercentage as assets plan of categories major The D % date sheet balance at assumptions actuarial Principal S total 2009 for payments pension expected The results. operating the in ognized rec is portion remaining the and net financial the in nized S of expenses net total Of stated. otherwise unless SEKm in Amounts includes approximately 40 senior managers. senior 40 approximately includes program Each respectively. 2008 and 2007 Meeting eral nsurance premiums nsurance expenses nterest enefits paid enefits iscount rate iscount ebt ebt eneral Meeting of shareholders. At present there are three three are there present At shareholders. of Meeting eneral 2007 and LT and I 2007 Long term incentive programs that entitle rights for the the for rights entitle that programs incentive term Long roup, provide competitive remuneration and align align and remuneration competitive provide roup, 2007 and LT and I 2007 ecember 31, 2008. The other two programs, LT programs, two other The 31, 2008. ecember 2008, are matching share awards and perform and awards share matching are I 2008, 2008 were authorized by the Annual G Annual the by authorized were I 2008 2008. The P The I 2008. 31 Dec 31 Dec EK 9m. 58m (79), S (79), EK 58m 2008 100 64 35 1 S 31 Dec 2008 31 Dec Return P is a performance based based aperformance P is –25 hare Program (P Program hare –1 19 — 2m (1)EK 2m recog is 2008

3.7 31 D 58 53 5 0 3 2 2007 100 46 52 ec ec 31 D 2 ec 2007 ec Return S en 2007 I P) P) 4.4 34 79 45 31 — - - - 3 0 5 2 1 NOTE has purchased within the framework of LT of framework the within purchased has B Class of number the on depends shares. underlying the on dividends for compensation to right no carry options The grant. of date the from years three for investment personal the maintained H the by employed be to continues holder the that requires options the exercise to right The grant. of date the from years eight latest, the at and, years four earliest the at exercised be may options The granted. were options the which on date the to prior days 10 trading of aperiod during Stockholm, Exchange Nordic OMX the at H of price closing weighted volume 110% to average the of corresponds which share per 2008) pant that may be exercised is limited to 12 to (LT limited is exercised be may that pant partici per options stock of number total the Consequently, purchased • Stretch: per options /15 12 (LTI LTI 2008) 2007) purchased per • Target: options /10 (LTI 2008) 7(LTI 2007) purchased per options • Entry: /5(LTI 2008) 3(LTI 2007) options: stock of numbers following the to correspond levels The options. stock the exercise enable to order in exceeded be must which level aminimum stitutes con Entry level. performance each between progression ear alin “stretch”, with and “entry”, are; “target” levels mined B the by determined levels (LT 2009 2007– during share, per earnings company’s the as well as a stock option amounts to S to amounts option a stock B Class H one purchase to holder the entitles option stock each and charge of free granted are options The options. employee. the to shares ing match the allocate will company the grant, of date the after G the within employment her or his tains were required to purchase H purchase to required were itional 8,000 options. 8,000 itional B Class purchased per options 2008) by the company free of charge through allocation of shares. of allocation through charge of free company the by (1:1.5 date alater at LT in matched H in invested have participants The level). target on salary variable plus salary (fixed income target annual their of 10% of amaximum and 5% of aminimum of avalue to ponding S usqvarna Class B Class usqvarna Class B Class B Class B Class The number of stock options that may be exercised exercised be may that options stock of number The The employee could also receive performance stock stock performance receive also could employee The I I f the employee holds the purchased shares and main and shares purchased the holds employee f the n order to participate in the programs, the employees employees the programs, the in participate to n order -share. The purchase price for shares when exercising exercising when shares for price purchase The -share. 2007) / 2008–2010 (LT /2008–2010 I 2007) -share plus 8,000 options. 8,000 plus -share options. 5,000 plus -share options. 2,000 plus -share -shares, at market price, which will be be will which price, market at -shares, oard of D of oard EK 112 (LT usqvarna Class B Class usqvarna 2008), reaching specific specific reaching I 2008), 2007 and 1:1 and LT in I 2007 -shares that the employee employee the that -shares usqvarna G usqvarna usqvarna Class B Class usqvarna irectors. These deter These irectors. -share plus an add an plus -share 2007) /S I 2007) roup three years years three roup 2007 /LT I 2007 2007) /15 (LT I 2007) -shares corres -shares roup and has has and roup EK 72 (LT usqvarna usqvarna 2008, I 2008, -share -share 2008) I 2008) I - - - - - I - below. table the in shown are allocated shares of number the and value stretch The shares. of anumber into set is value target F employees. key and managers senior other of categories two and ment, G of members other President, former the ies; level. stretch at 41,1% shares of equals number the of delivered be to in the beginning of 2009. The number of H of number The 2009. of beginning the in 2006–2008, period, performance three-year the after charge ”stretch”. and ”entry”, ”target” creation, value of levels three of basis the on determined B the by H for targets creation value on based is 1) A category managers, senior Other Management of members Other CEO and President Position/Category PSP) Program, Share (Performance 2006 program incentive Long-term 2) 1) F Participants I stated. otherwise unless SEKm in Amounts the various categories of participants if the target level is reached: is level target the if participants of categories various the all participants all for shares of Total number B category managers, senior Other G of members Other class B class of number Maximum Total participants Other n accordance with the above, LT above, the with n accordance ormer President ormer 41.1% of the number of shares at stretch level. stretch at shares of 41.1% number the of The number of shares and stock options may be recalculated following the decision regarding the rights issue. issue. rights the regarding decision the following recalculated be may options stock and shares of number The roup Management roup The target value of the program is calculated on the fair value on grant date. The value of the share at grant date was S S was date option the grant of at value share the fair of the value and The date. grant on value fair the on calculated is program the of value target The options. The values have been adjusted for the discounted value of future dividends. future of value discounted the for adjusted been have values The options. Participants in the program are divided into four categor four into divided are program the in Participants The shares will be allocated to the participants free of of free participants the to allocated be will shares The The P The -shares oard. Allocation of shares under the program is is program the under shares of Allocation oard. S P includes approximately 40 senior managers and and managers senior 40 approximately P includes or each of the four categories of employees a employees of categories four the of each or G roup roup Matching shares, shares, Matching number of Class Class of number 23.59 (LT 23.59 EK Class B Class 2007 and LT and I 2007 B 81,960 33,864 43,044 Number of of Number -shares 5,052 2007) /S I 2007) at stretch at 478,400 23,400 15,600 42,900 -shares -shares

11,700 usqvarna established established usqvarna usqvarna B usqvarna 15.40 (LT 15.40 EK 945,000 (LT 945,000 stock options stock 2008 comprise the following number of Class B Class of number following the comprise I 2008 roup Manage roup Class B Class Number of of Number LT 511,786 198,032 8,56 287,95 Number of of Number allocated 25,798 I 2007 2008). The binomial options pricing model has been used to calculate the fair value of the the of value fair the calculate to used been has model pricing options binomial The I 2008). 188,766 -shares -shares 17,646 -shares -shares 9,625 4,813 6,417 I 2007) 1)

1) - NOTE Target Value Target to S to amounted compensation share-based for provision total The S whereof S to amounted 2008 for statement income the to charged cost total The date. sheet balance each at price market share the of basis the on revalued periodically is contributions security social for provision The exercised. are options the when and distributed are shares the when paid be to expected are that contributions security social the for ance with IF with ance accord in for accounted are above described programs The principles Accounting ity contributions. contributions. ity secur social of payment cover to order in shares of tribution dis the or options of exercise the with conjunction in market H programs. the of participants the to sold or distributed be will shares These programs. mentioned above the within obligation B Class D LTI the for programs shares Repurchased S 19,847 uring 2008 and 2007 H 2007 and 2008 uring 10,876 1,088 , 4 8 7,8 EK 1m (4). S EKt 2) -shares to meet the company’s long term incentive incentive term long company’s the meet to -shares , –1m (2) refers to social security contribution. contribution. security social to EK –1m refers (2) Matching shares, shares, Matching R number of Class Class of number usqvarna intend to sell additional shares on the the on shares additional sell to intend usqvarna S 2 hare-based Payment. The G The Payment. hare-based B 96,525 34,295 -shares 71 4 57,15 5,076 usqvarna repurchased H repurchased usqvarna 94.85 (LT 94.85 EK -shares and stock options for for options stock and -shares 1,745,000 (LT 1,745,000 stock options stock 1,130,250 Number of of Number LTI 2008 2007) /S I 2007) 691,540 382,950 55,760 1) I 2008) 58.55 (LT 58.55 EK

roup provides provides roup EK 1m (12) Target Value Target usqvarna usqvarna 2008) I 2008) 23,057 13,996 , 5 0 7,9 1,156 S EKt 2) , -

75 HUSQVARNA ANNUAL REPORT 2008 76 HUSQVARNA ANNUAL REPORT 2008 expenses expenses accrued Other Closing balance, 31 Dec 2007 2007 31 Dec balance, Closing differences Exchange-rate Value added tax added Value expenses payroll accrued Other pay holiday Accrued reversed amounts Unused 2007 1Jan balance, Opening stated. otherwise unless SEKm in Amounts Provisions used used Provisions companies Acquired made Provisions liabilities operating Other taxes other and taxes Personnel provisions Current Total Opening balance, 1 Jan 2008 1Jan balance, Opening Non-current provisions provisions Non-current Provisions used Provisions nized as a consequence of H of aconsequence as nized recog are commitments warranty for Provisions known. are estimates to these changes when adjusted are and estimates H the on based are amounts H of aconsequence as year coming the in incurred be to ments pay expected the represent restructuring for Provisions Provisions made Provisions Non-current provisions Non-current provisions Current reversed amounts Unused Closing balance, 31 Dec 2008 31 Dec balance, Closing differences rate Exchange companies Acquired NOTE 20 NOTE 21 usqvarna operations’ decision to reduce personnel. The The personnel. reduce to decision operations’ usqvarna OT OT H H ER PROV ER L I A BI 1,474 2008 usqvarna management’s best best management’s usqvarna L usqvarna’s policy of covering covering of policy usqvarna’s 383 716 175 ISI 113 I 20 67 T S ON I G E roup S 1,520 sions for for sions restruc 2007 turing 620 481 Provi 141 176 88 264 14 – 264 316 54 –2 — — — — — — — — 2 2 4 2 0 - - Warranty Warranty Parent Company Parent commit 2008 378 ments 168 114 –184 – 232 23 73 190 134 190 — — 164 182 120 155 218 –6 30 77 –2 70 31 – — 7 - 2007 - G 411 150 158 Claims roup 84 19 — — - 307 389 326 326 389 326 –18 NOTE 60 39 –2 — — — — — — — 3 bought back in connection with floor planning activities. activities. planning floor with connection in back bought D pany. com finance external an with planning floor their financing H repossessed back buy to bankruptcy, dealer’s of event the in obligation, an is F guarantees. contractual any with nection con in required be will payment any that year-end at cation H of part as provided are undertakings contractual of fulfillment I Total counterparties external of behalf On counterparties internal of behalf On other commitments G provisions. related payroll mainly include provisions Other reserves. ance claims as well as IB as well as claims ance insur specific for reserves of consist and companies ance mally granted for 1 to 2 years after the sale. sale. the after 2years 1to for granted mally nor is Awarranty products. defective repairing of cost the S n addition to the above contingent liabilities, guarantees for for guarantees liabilities, contingent above the to n addition NOTE 22 uarantees and and uarantees Other – –118 Provisions for claims refer to the G the to refer claims for Provisions 230 260 260 140 156 136 182 142 124 118 –11 usqvarna’s normal course of business. There was no indi no was There business. of course normal usqvarna’s 92 88 – 37 — 1 3 uring 2008 goods for a value of S of avalue for goods 2008 uring 1,115 – –306 Total 533 778 778 CONT 400 208 686 429 570 128 170 – 417 –19 –17 619 10 — usqvarna products from certain dealers dealers certain from products usqvarna I N sions for for sions restruc G turing Provi NR ( NR ENT L ENT 56 56 56 56 56 56 — — — — — — — — — — — — — — — 2008 I - - ncurred B ncurred 24 24 — Warranty Warranty commit I G A ments roup BI –11 – 2007 10 11 11 11 L 10 10 — — — — — — — — 11 11 11 roup’s captive insur captive roup’s Parent Company Parent I 20 20 — - ut Not Reported) Reported) Not ut T I EK 13m (15) were E S urthermore, there there urthermore, Other Parent Company Parent –15 – 2008 18 19 19 160 – 16 16 — — — — — — 13 153 8 3 5 3 8 7 Total 2007 –26 – - - 30 30 71 29 74 65 27 27 –3 24 71 — — — — — — 74 - - 6 3 - - Total 2007 Total 1 F 28 F 28 vant insurance policies. vant insurance H claims, 20 March 2007 March 20 2007 2 April 2007 1 June 2008 Total acquisitions minor Other 24 D inary procedural investigations were concluded by 2009. early were concluded investigations procedural inary prelim the as instance, first of court local the before 2009 ing H and is now concluded The legal investigation involved parties. other against forclaims also initiated damages and has itself others, among have against, forclaims initiated damages parties to of tions the accident. having potentially contributed notifica received persons, and private authorities companies, S business. of course ordinary the in disputes other 3) I2) 1) 30 April 2008 April 30 2008 April 30 D 2007. and 2008 during made acquisitions the summarizes table below The stated. otherwise unless SEKm in Amounts surface industrial gas pipe. pipe. gas industrial surface of bya sub- the bursting caused was damage. The accident property and substantial injuries more than 100 personal G on in 2004 occurred A gas explosion Belgium in explosion Gas result. or position financial consolidated on the involved, will haveeffect currently a material adverse Hknowledge, present its on based but dispute, each of I risks. the minimize to help activities these that believes company The necessary. deemed when and take action and claims disputes, pending H losses. ity liabil excessive against insured also is it extent, acertain to is the company self-insured Although damages. also punitive occasionally and compensation injury personal or damage property damages, compensatory for claims involve putes NOTE 23 ate of acquisition of ate All acquisitions above were made either through purchasing 100% of the shares and voting rights or by acquiring the assets and liabilities in the companies. companies. the in liabilities and assets the acquiring by or rights voting and shares the of 100% purchasing through either made were above acquisitions All The latest Annual Net sales at the time of acquisition. of time the at sales Net Annual latest The usqvarna due to the accident willdue to be largely covered bythe accident rele usqvarna usqvarna expects the legal proceedings to commence dur commence to proceedings legal the expects usqvarna usqvarna estimates that none of the disputes, in it that none is which of the disputes, estimates usqvarna hislenghien, hislenghien, ncluding acquisition costs. acquisition ncluding ebruary 2007 ebruary B H unresolved. still are matters significant following The H ebruary 2007 ebruary ased on the facts available and the substance of the and available the substance on ased the facts ecember 2008 ecember usqvarna usqvarna and liability is involved in product commercial, usqvarna H H usqvarna estimates that any liabilities arising for that anyarising liabilities estimates usqvarna usqvarna. usqvarna. usqvarna continuously monitors and evaluates evaluates and monitors continuously usqvarna B B B U elgium, and resulted inelgium, of and resulted the loss 24 lives, elgium has, together with at least 10at with least elgium has, together other SI H NE usqvarna has denied all responsibility all has denied responsibility usqvarna t is difficult to predict the outcome outcome the predict to difficult t is COM SS Klippo A Klippo King Concepts King G Zenoah S F Jenn Company AB S Meco andvik Nora Nora andvik off-Cut ardena A ardena BI eng NAT 1) B H G usqvarna’s property in property usqvarna’s I ON Professional Products Professional Professional Products Professional Consumer Products Consumer Products Professional Products fessional Products/Pro Consumer Products Consumer Professional Products Professional Products Professional Professional Products Professional B usiness Area usiness uch dis uch S everal everal - - - NOTE - - F H mowers lawn in capacity engine of specification inaccurate Alleged ment. enrich unjust and conspiracy civil fraud, consumer for claims results for a particular period. aparticular for results company's the to material be might outcome unfavorable an outcome of these lawsuits, although it cannot be ruled out that the assess to time this at unable is Management issue. the of all cases could be grouped together for Multidistrict Litigation eral Multidistrict Judicial Panel for a determination of whether F the petitioned have and allegations these of certification Company, S H trolux Elec including, engines, lawnmower and/or lawnmowers of ers sell or manufacturers numerous against brought were lawsuits These importance. nation-wide assumed have lawsuits these lawsuits in various states, implying that the issues raised in named as a defendant in approximately 40 similar or parallel I al. et &Company, Roebuck engines. their own and each others’ lawnmowers and lawnmower sent and conceal material concerningfacts the horsepower of misrepre to themselves among conspired defendants other H U Corp. horsepower. The lawsuits further allege that lower true products’ the disclose to failed or concealed they falsely advertised the horsepower of their products and that sold by one of the defendants) contend that the defendants chased a lawn mower containing an engine manufactured or pur who (consumers Plaintiffs manufactured. and/or sold they power produced by the lawnmowers and lawnmower engines horse the overstated and misrepresented defendants other num Equity, LLC. The lawsuits allege that S ederal ears, Roebuck & Co., usqvarna was named as a defendant in a lawsuit pending in onda Motor Company, I Company, Motor onda - Consideration Consideration H paid S ome Products, I Products, ome usqvarna and other defendants oppose class action D A, MT A, B istrict istrict Court in ased upon these allegations, the plaintiffs assert 2) B , S 4,625 riggs & 1,026 2,949 EKm 845 684 222 302 126 Products, I D Products, 48 26 87 S tratton Corporation, Kawasaki Motors D nc., H nc., Net D Net Acquired Acquired eere & Company, Tecumseh Products I llinois, U nc., The Kohler Company, and Plati and Company, Kohler The nc., 4,252 3,938 nc., The Toro Company, American American Toro Company, The nc., n addition, H n addition, 234 usqvarna Outdoor Products, I Products, Outdoor usqvarna ebt 73 0 5 2 0 0 0 0

S A, entitled Phillips v. value Enterprise 2) , S usqvarna has been been has usqvarna 8,877 H 6,887 1,099 usqvarna and the EKm 845 684 536 227 128 H 48 26 87 usqvarna and the sales Annual Net Net Annual 3) S , S 5,420 3,800 1,200 ears, EKm 949 800 ed 240 150 nc., nc., - - 30 30 54 54 65 ------

77 HUSQVARNA ANNUAL REPORT 2008 78 HUSQVARNA ANNUAL REPORT 2008 America. The purchase price allocation is preliminary. is allocation price purchase The America. North in brand the use to right the and brand McCulloch S of assets intangible nized I market. H F Jenn that fact the from arising S of amount the S of amount an in sition S to amounted liabilities and assets operating acquired 31 D consolidated were operations Chinese the and 2008 May 30 of as consolidated were Australia and America North in operations The steps. several in completed was acquisition The generators. and washers high-pressure mowers, lawn comprises also offering product The market. consumer the for trimmers and chainsaws of producer aleading pany, is F Jenn products. outdoor in F I Feng Jenn offering. product national H complement machines grinding H production and distribution. I distribution. and production H within achieved S to amounted S to amounted paid sideration the G the reinforces and industry construction the for range product F taa, S Nora, in based is operation The grinding. and drilling sawing, for machines related and tools diamond of sale and production the comprise operations acquired S within S within industry construction the for products to relating I AB Nora Sandvik G the reinforces and industry construction the for range product I tion. distribu and production of terms in operation existing with S S to amounted paid ation consider The repair. and construction highway for primarily asphalt, and concrete cutting for saws floor of producer ing U Arizona, Prescott, in based Company, I Meco 2008 in made Acquisitions stated. otherwise unless SEKm in Amounts n March 2008 H 2008 n March n April 2008 H 2008 n April n April H n April EK 684m (including costs directly attributable to the acqui the to attributable directly costs (including EK 684m eng Co., Ltd. for the acquisition of the company's operation operation company's the of acquisition the for Co., Ltd. eng andvik Nora A Nora andvik usqvarna’s range of handheld products for the consumer consumer the for products handheld of range usqvarna’s usqvarna's global sales organization. H organization. sales global usqvarna's

34m. 34m. The goodwill refers to synergies that will be achieved ecember 2008. The total consideration paid for the the for paid consideration total The 2008. ecember inland. The acquisition complements H complements acquisition The inland. roup's leading position in the Nordic region. The con The region. Nordic the in position leading roup's roup's leading position in floor saws. saws. floor in position leading roup's n addition the acquisition complements H complements acquisition the n addition andvik's Mining and Construction business area. The The area. business Construction and Mining andvik's n addition Jenn F Jenn n addition usqvarna acquired Meco, Masterpiece Engineering Engineering Masterpiece Meco, acquired usqvarna 8m. The goodwill refers to synergies synergies to refers goodwill The EK 8m. usqvarna acquired the assets and operation operation and assets the acquired usqvarna (previously H B (previously 304m. The goodwill refers to synergies synergies to refers goodwill The EK 304m. usqvarna signed an agreement with Jenn Jenn with agreement an signed usqvarna usqvarna’s existing operation in terms of of terms in operation existing usqvarna’s 8m). H EK 8m). 48m and goodwill amounted to to amounted goodwill and EK 48m eng products will be sold through through sold be will products eng 64m, mainly referring to the the to referring mainly EK 64m, eng, a listed Taiwanese com Taiwanese alisted eng, n addition, H n addition, 26m and goodwill goodwill and EK 26m agby Asahi A Asahi agby eng’s products complement complement products eng’s usqvarna has goodwill in in goodwill has usqvarna usqvarna’s existing inter existing usqvarna’s S usqvarna has recog has usqvarna A. Meco is alead is Meco A. agby’s floor- agby’s weden and Van and weden ), a company B), acompany usqvarna's usqvarna's usqvarna's usqvarna's ------NOTE - Fair value of the acquired assets and liabilities and assets acquired the of value Fair costs directly attributed to the acquisition of S of acquisition the to attributed directly costs products. garden electric as well as pumps, and ponds garden tools, garden in position aleading has and products, irrigation for market consumer European the in 2007. G March of end the at completed G the of acquisition The Gardena AG 2007 in made Acquisitions ating income of S of income ating G the to total in contributed have 2008 for Acquisitions paid cash Net acquired equivalents cash and Cash paid Consideration G assets identifiable Net equipment and plant Property, S I assets intangible Other G S Net debt Net I equipment and plant Property, assets intangible Other G tions made in 2008 in made tions acquisi all for liabilities and assets of value fair Total paid cash Net acquired equivalents cash and Cash paid Consideration G assets identifiable Net Other non-current assets non-current Other payables Trade receivables Trade liabilities operating Other payables Trade receivables Trade Net debt Net liabilities operating Other S nventories nventories EKm EKm roup’s net sales in an amount of S of amount an in sales net roup’s oodwill oodwill oodwill oodwill The consideration paid totalled S totalled paid consideration The EK – 17m. erman company G company erman Carrying Carrying Carrying amount amount 370 165 165 162 316 – 113 –11 – 50 52 – 10 0 0 0 0 6 0 0 2 4 140m and with oper with and EK 140m 2,949m (including EK 2,949m (including adjustment adjustment F F ardena is the leader leader the is ardena air value value air value air ardena A ardena 128 128 64 64 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 22m) and and EK 22m) acquisition acquisition F F was G was air value value air value air balance balance 845 684 304 380 684 - 845 347 498 165 165 162 128 – 113 –11 – 64 50 52 – 10 - 0 0 0 6 0 0 0 4 2 recognized as an intangible asset with indefinite useful life. life. useful indefinite with asset as an intangible recognized Trade receivables Trade I assets non-current Other The future. in foreseeable the H and customers among recognition high a has very trademark within F within offering product expanded an from synergies expected to mainly refers goodwill The blowers. and trimmers chainsaws, cutters, brush mainly comprises range product The Japan. in leader market the is and products, power outdoor able port of producer aleading is Zenoah 2007. Komatsu April of beginning the at completed was Co Zenoah Komatsu within operation products outdoor the of acquisition The operation products outdoor Zenoah’s Komatsu paid cash Net acquired equivalents cash and Cash paid Consideration G assets identifiable Net payables Trade assets operating Other equipment and plant Property, assets intangible Other G S to trademark the referring nized G and H combining from derive to expected also are gies S products. electrical and irrigation within offering uct prod expanded an from synergies anticipated the to refers S to amounted goodwill stated. otherwise unless SEKm in Amounts tribution. tribution. dis and production technology, in synergies from as well as debt Net liabilities operating Other nventories EKm usqvarna intends to maintain and further develop the brand brand the develop and further to maintain intends usqvarna oodwill oodwill I n addition, intangible assets of assets intangible n addition, ardena’s sales, marketing, distribution and technology. technology. and distribution marketing, sales, ardena’s orestry and Commercial Lawn and G and Lawn Commercial and orestry 2,951m. The goodwill primarily primarily EK 2,951m. goodwill The Carrying Carrying amount –3,938 –1,255 1,774 1,188 –338 G –311 888 845 159 151 161 ardena trademark has been been has trademark ardena G ardena. The The ardena. S 3,009m were recog were EK 3,009m adjustment F air value value air –1,774 3,009 –937 336 –15 arden products products arden 53 0 0 0 0 0 G ardena ardena acquisition usqvarna usqvarna F air value value air balance –3,938 –2,192 2,847 yner 2,949 3,168 2,951 1,188 –102 –311 888 898 146 151 –2 - 0 - - - NOTE Other intangible assets intangible Other G S S the for mowers lawn walk-behind petrol-driven of producer I AB Klippo distribution. in as well as business construction the within offering product expanded an from G patents. S totaling S to amounting goodwill to ition S totalled paid consideration The market. F the for sumables con and equipment manufactures Concepts 2007. King ary F of end the at acquired was Australia in Concepts King Concepts King tribution. dis and technology within as well as business Construction the within offering product expanded an from synergies G relations. customer S S to amounting goodwill S totalled paid consideration The ing. saw concrete entry early for saws concrete of producer ing S company can Ameri the of acquisition 2007, the June of beginning the At Soff-Cut paid cash Net acquired equivalents cash and Cash paid Consideration G assets identifiable Net debt Net liabilities operating Other payables Trade equipment and plant Property, Other operating assets operating Other receivables Trade I assets non-current Other Lawn and G and Lawn Commercial the within offering product expanded an from S of amount the in recognized been have trademarks, mainly G S n F nventories EKm 166m have been recognized consisting of patents and and patents of consisting recognized been have EK 166m EK 41m. G wedish market. The consideration paid totalled S totalled paid consideration The market. wedish oodwill oodwill oodwill amounts to S to amounts oodwill ebruary 2007, H ebruary 66m have been recognized consisting mainly of of mainly consisting recognized been have EK 66m oodwill refers mainly to anticipated synergies synergies anticipated to mainly refers oodwill oodwill refers mainly to anticipated synergies synergies anticipated to mainly refers oodwill arden business and within distribution. within and business arden off-Cut was completed. S completed. was off-Cut loor Preparation and Concrete Polishing Polishing Concrete and Preparation loor usqvarna acquired Klippo A Klippo acquired usqvarna oodwill refers mainly to anticipated anticipated to mainly refers oodwill 160m and other intangible assets, assets, intangible other and EK 160m 338m, other intangibles totaling totaling intangibles other EK 338m, Carrying amount –235 –122 540 503 –73 212 111 34 20 71m, other intangibles EK intangibles 71m, other 16 0 adjustment 302m. I EK 302m. F air value air off-Cut is the lead the is off-Cut EK I 126m. –35 178 211 59 0 0 0 0 0 0 9 B n addition to to n addition , the largest largest , the acquisition 222m. EK 222m. F n add air value value air balance 1,026 –235 –157 ebru 987 540 –39 221 –73 194 312 714 111 34 79 - 0 - - - - -

79 HUSQVARNA ANNUAL REPORT 2008 80 HUSQVARNA ANNUAL REPORT 2008 Total B Malin Ögren Annika B F Robert Ulf Lundahl Ulf Tom Johnstone B Peggy B assets identifiable Net debt Net liabilities operating Other payables Trade S S S with 2007 sales G the to total in contributed acquisitions 2007 The 1) I G Moberg Anders Westerberg Lars 2008 Meeting General Annual by the authorized Directors of Board the to Fees I assets non-current Other equipment and plant Property, assets intangible Other G S acquisitions for liabilities and assets of value fair Total stated. otherwise unless SEKm in Amounts Consideration paid Consideration G assets operating Other receivables Trade B** * B Net cash paid cash Net acquired equivalents cash and Cash S S by impacted been G the 1January, of as nventories (24 to 30 April): S April): 30 to (24 EKt EKt EKm 328m. I EK 328m. EK 515m. örje Ekholm örje engt Andersson engt un Nilsson un oodwill oodwill ased on volume weighted average of the quoted price of the H the of price quoted the of average weighted volume on ased ncludes costs directly attributed to the acquisitions of S of acquisitions the to attributed directly costs ncludes ased on the quoted closing rate of the H the of rate closing quoted the on ased jörnberg ruzelius . Connolly f all acquisitions had been included in the G the in included been had acquisitions f all 62.18EK 4,075m and to operating income with with income operating to and EK 4,075m 1) by income EK 5,742m operating and roup Net S Net roup Cash payment Cash Carrying amount – –1,408 F 4,252 1,787 1,957 1,012 ees excluding fees for committee work committee for fees excluding ees 1,152 – 2,985 598 188 197 216 181 ales in 2007 would have have would 2007 in ales 800 460 230 230 230 345 345 345 share in 2008 (30 D (30 2008 in Bshare usqvarna — — — adjustment F Value of synthetic synthetic of Value shares at date of of date at shares air value air –1,069 –1,957 3,341 577 196 42m. EK 62 0 4 0 0 0 1,835 grant share during five bank days immediately following the first quarterly report 2008 2008 report quarterly first the following immediately days bank five during Bshare usqvarna acquisition roup’s net net roup’s 800 230 230 230 115 115 115 F — — — — air value value air balance –4,252 –2,477 4,477 3,522 3,832 4,625 1,214 1,787 1,016 –598 –148 roup roup 384 793 197 ecember): S ecember): Number of syn of Number 0 thetic shares at at shares thetic NOTE date of grant* of date 29,510 12,866 There is no requirement that ais There no requirement the pay to B to pay at shares 12 the end of the after assignment. months the S cash and syntethic shares, plus an additional total of bers not employed by the Company S Chairman members, totalling ends. ends. B B due to The Annual to receive an amount in cash per synthetic share. to per synthetic anin receive amount cash 2008. report quarterly first the following immediately days bank five the during share H the of price quoted the of average weighted avolume on based is received shares synthetic of number The cash. in fees the of 100% receive to option the poses, non- being B shares. synthetic of form the in work, mittee B for fees excl tax, before fees the of 50% or 25% work. S 41.30. EK 3,699 3,699 3,699 NOTE 24 EK 1,849 1,849 1,849 oard member is entitled to is beoardentitled paidmember even if the assignment a and thus shares oard synthetic to to be accrued entitled There are no agreements in place governing severance severance governing place in agreements no are There After five years, i After ein 2013, giveshares right a thesynthetic B The B B — — — — 525,000 to525,000 be paid in cash as fees for oard member in the form of additional synthetic shares. shares. in synthetic oard the ofform member additional oard assignment, request payment for the synthetic for the payment synthetic request oard assignment, - F H urthermore a urthermore oard members. oard usqvarna usqvarna oard members have the option to choose to receive receive to choose to option the have members oard F ees for commit for ees S 1,600,000 and to each of the seven board mem board seven the of each to and EK 1,600,000 G wedish tax subjects have, for administrative pur administrative for have, subjects tax wedish eneral Meeting authorized 2008 fees to MEM REMUNERAT DI S RECTOR tee work tee B S B shares until payment willto until be payment shares granted EK 525 B 100 ERS O 175 50 50 75 75 — — — — — oard member may,oard member of at termination

5,345,000, of5,345,000, which (to4,820,000 the - Total value of fees fees of value Total , T shares at date of of date at shares F G I ON TO T H incl. S incl. B E PRE ROUP MANA ROUP oard member remains onremains the oard member ynthetic ynthetic S 5,345 EK 1,650 SID grant H 460 460 560 635 535 535 510

460,000) to 460,000) be paid in — — — E B ENT AN ENT oard Committee B OAR Total value of fees fees of value Total G oard members members oard shares at end of of end at shares usqvarna B usqvarna EMENT incl. S incl. D D oard com oard D OT ividends ividends O B ynthetic ynthetic F oard 4,729 year** 1,381 H 483 383 558 496 496 421 510 ER ER — — — - - - employer. I employer. the from termination of notice of event the in income, other any for deduction with salaries, 12 to ing monthly correspond pay severance for eligible is President The dent. Presi the of part the on 6months and Company the of part employer. former the with programs incentive long-term from cation S of payment acash received President the 2008 ber bene fringe to entitled not is President The salaries. monthly 24 to corresponding pay severance receive and period notice of consideration without effect immediate with employment the cease to right the has President pany, the H with ment of S amount fixed F level. stretch at at 100% capped is and level target at salary fixed the G the within created value for target annual an on based is 2009 for salary variable The G B the that programs incentive long-term any in participate to entitled is President The 1January. per annually reviewed is neration remu The benefits. pension and targets annual on based salary variable salary, fixed comprises President the for age pack remuneration The 2008. October 1 Officer Executive Y Magnus President the for employment of Terms G the on based is if the maximum level “stretch” is attained. is “stretch” level maximum the if capped or achieved not is “entry” level target the if zero be also could but remuneration, total of proportion significant a constitute may remuneration Variable remuneration. based fits such as pension and insurance benefits. insurance and pension as such fits bene and incentives long-term targets, performance annual on based incentives short-term of form the in salary variable salary, fixed comprises managers senior for package ation remuner overall The employment. of country the in basis acompetitive on and performance team and individual on held, position the on based be should remuneration that are managers senior to remuneration for principles overall The Management Group to remuneration for principles General Westerberg. and Lars Moberg (Chairman), Anders Johnstone B the provide to is Committee Remuneration the of task The Committee Remuneration stated. otherwise unless SEKm in Amounts term incentives, pension terms and other benefits. other and terms pension incentives, term long- salary, variable or fixed in changes salary, variable and fixed between relationship the remuneration, variable for G of bers 2,000,000 as compensation for the loss of right to allo to right of loss the for compensation as EK 2,000,000 oard of D of oard eneral Meeting authorizes. Meeting eneral The notice period for termination is 12 months on the the on 12 is months termination for period notice The The fixed annual salary to the President is S President the to salary annual fixed The Variable salary to the President and G and President the to salary Variable H The Committee consists of three B three of consists Committee The usqvarna aims to offer competitive and performance- and competitive offer to aims usqvarna fits such as a company car or housing. or car company as a such fits roup Management regarding targets and criteria criteria and targets regarding Management roup ngen took up the position as President and Chief Chief and President as position the up took ngen oard decides to introduce in 2009 and the Annual Annual the and 2009 in introduce to decides oard irectors with proposals for remuneration to mem to remuneration for proposals with irectors n the event of a change of control of the Com the of control of achange of event n the usqvarna (October 1 to D 1to (October usqvarna or 2008 the variable salary is replaced by a by replaced is salary variable the 2008 or 718,750 based on the period of employ of period the on EK 718,750 based roup’s value creation. creation. value roup’s roup. The variable salary is 50% of of 50% is salary variable The roup. ecember 31). I ecember oard members: Tom members: oard roup Management Management roup 5,750,000. EK 5,750,000. n Octo ------NOTE - - - The retirement age is 62 for those members of G of members those for 62 is age retirement The salary. variable year’s last plus salary fixed current of basis the on calculated is salary pensionable The pension. vivor’s native revised annually per 1January. per annually revised is Remuneration benefits. pension and programs incentive long-term targets, annual on based salary variable salary, fixed of comprised package aremuneration receive ment G of members other President, the with As Management Group of members other for employment of Terms level. target at fixed salary variable plus salary fixed current of basis on the is calculated salary pensionable The pension. The members of G of members The Management Group of members other for terms Pension pay. severance covering agreement no is There employee. the of part the on 6months and Company the of 19. Note see programs, these on (LT 2008 and 2007 for programs option stock based performance and share S Performance G level. stretch at 80–100% at capped is and level target at salary fixed the of 40–50% is salary variable The sector. appropriate the for creation value on based is salary variable G the for creation value ment ( ment employ of country respective the in plans pension company S in employed not are G of members The age. retirement G of member the that event the in salaries monthly 22.68 to corresponding benefits pension for age retirement at premium asingle pay to acommitment is there above, described terms pension S in employed are who agement I alternative I the for cost includes also which salary pensionable of 35% to equivalent is plan the to contribution employer The plan. contribution adefined is which Plan, Pension tive H the by covered also are individuals These G of members other the to applied is I the of rule cipal ofthe benefits for the cost the includes also which salary of pensionable the to 40% is equivalent dent Presi for the to plan the contribution employer The plan. tion The the and of plan, the rule agreed by collectively the covered is President The is 60. President for the age retirement The President the for terms Pension One member of G of member One I agreed collectively the by covered are 9) of out (7 S roup’s long-term incentive programs which consist of the the of consist which programs incentive long-term roup’s F The notice period for termination is 12 months on behalf behalf on 12 is months termination for period notice The G of Members H or the G the or usqvarna Executive Pension Plan is a defined contribu is Plan a defined Pension Executive usqvarna G I TP and any supplementary disability and survivor’s survivor’s and disability TP any supplementary and ermany and the U the and ermany TP and any supplementary disability and sur and disability supplementary any and TP roup’s staff heads, variable salary is based on on based is salary variable heads, staff roup’s roup Management remains in service until the the until service in remains Management roup hare Program for 2006 and the restricted restricted the and 2006 for Program hare TP plan and the alternative rule of the plan plan the of rule alternative the and plan TP roup Management participate in the the in participate Management roup 2007 and LT and I 2007 roup Management is covered by the prin the by covered is Management roup roup Management employed in S in employed Management roup weden are covered by the G the by covered are weden roup and for the sector heads the the heads sector the for and roup H S usqvarna Executive Pension Plan. Plan. Pension Executive usqvarna ). Retirement age is 63 or 65. 65. or 63 is age ). Retirement 2008). F I 2008). weden. I weden. I roup Management that that Management roup TP plan, the alternative alternative the TP plan, roup management. management. roup or more information information more or n addition to the the to n addition roup Manage roup usqvarna Execu usqvarna I TP-plan, alter TP-plan, roup Man roup roup’s roup’s TP plan. plan. TP TP plan, plan, TP weden weden ------

81 HUSQVARNA ANNUAL REPORT 2008 82 HUSQVARNA ANNUAL REPORT 2008 3) 2) Audit fees Audit PwC PwC to Fees G Annual 2010 the until period the for auditor appointed been has (PwC) PricewaterhouseCoopers G of members Other 3) indicated. amounts the from deviate level. slightly target at may and year per 2008 Award 2) paid are compensation incentive and 2007 for salary variable actual 1) The President S 2007 Management Group to Remuneration 1) F President S 2008 Management Group to Remuneration G the in participates ident Pres former The level. stretch at 100% at capped is and level G the within created value for target annual an on based S benefits. insurance and pension programs, incentive long-term targets, annual on based salary variable ary, sal fixed comprises President former the for remuneration The 65. age retirement regular the attains he when 2009 June 30 until remains employment his but 2008, 1 October CEO, B and President former The President former the for employment of Terms stated. otherwise unless SEKm in Amounts S Total F Other fees Other other Auditors other to fees Audit PwC to fees Total Other members of G of members Other option programs for 2007 and 2008 (LT 2008 and 2007 for programs option stock based performance and share restricted the and 2006 S Performance the of consist which grams Total Other members of G of members Other EKt EKt EKm NOTE 25 5,253,125 as of 1 January 2008. The variable salary is is salary variable The 2008. 1January of EK 5,253,125 as ormer President ormer the loss of right to allocation from long-term incentive programs with the former employer ( employer former the with programs incentive long-term from allocation to right of loss the for his remuneration during 2009 has been taken in 2008. in taken been has 2009 during remuneration his for B President former The neration shown above refers to the part of the year during which the individual in question was part of G of part was question in individual the which during year the of part the to refers above shown neration G of members Other roup. The variable salary is 50% of the fixed salary at target target at salary fixed the of 50% is salary variable The roup. ixed salary includes fixed salary for the period October to D October period the for salary fixed includes salary ixed The fixed annual salary to the former President is President former the to salary annual fixed The 1) 1) 2) F 3) EE roup Management comprise nine individuals. One individual has been added and one has left G left has one and added been has individual One individuals. nine comprise Management roup 2) roup Management comprise nine persons. nine comprise Management roup S TO AU engt Andersson retired 1 October 2008, but his employment remains until 30 June 2009 when he attains the retirement age 65. The cost cost The 65. age retirement the attains he when 2009 June 30 until remains employment his but 2008, 1October retired Andersson engt roup Management roup roup Management roup roup's long-term incentive pro incentive long-term roup's 2008 DI 23 21 TORS 1 2 G engt Andersson, retired retired Andersson, engt roup 2007 eneral Meeting. Meeting. eneral 23 17 2007 and LT and I 2007 7 6 3) 3) hare Program for for Program hare F Parent Company Parent ixed salary ixed 2008 30,302 ecember ( ecember 25,177 6 5 0 1 5,125 I 2008). 2008). 2007 S 1,437,500), fixed amount instead of variable salary ( salary variable of instead amount fixed 1,437,500), EK - - 8 4 0 4 F ixed salary ixed NOTE - Variable Variable 10,801 38,541 26,505 salary 2,563 8,238 , 0 8 7,8 4,156 3) Refers mainly to G to mainly Refers 3) 2) 1) into a pension benefit. apension into end year at contribution the transform to used are culation cal for bases Actuarial salary. fixed of 105% of contribution employer's annual an on based is benefit pension mentary supple The plan. pension individual asupplementary and I agreed collectively the by covered is President mer for The 65. is President former the for age retirement The President former the for terms Pension housing. or car company 2008. 1 October retired President former the until accrued have been programs incentive long-term the and salary able F S or more information on these programs, see Note 19. Note see Vari programs, these on information more or letters and consents. and letters comfort and audits statutory audit; Company the include and provide, can that which areonly theaudit those auditor services services, reasonably external other and engagement audit annual the for billed fees of consist fees Audit Other fees consist of fees billed for assurance and related services, for due due for services. tax for billed fees as well as acquisitions services, with in connection related and diligence assurance for billed fees of consist fees Other 1) The President is not entitled to fringe benefits such as a such benefits fringe to entitled not is President The

S 2,000,000). EK Pension- 22,343 Variable Variable 16,355 5,988 salary cost roup Management. roup ardena companies audited by Ernst &Y Ernst by audited companies ardena 0 0 0 0

Long-term incentive Pension- 21,503 roup Management during 2008. The remu The 2008. during Management roup 11,534 4,990 3,979 1,011 9,109 cost 860 2)

S 718,750) and compensation for for compensation and 718,750) EK Long-term Compen- I incentive ncentive sation 4,852 3,932 441 920 441 0 0 1) oung in 2007. in oung

73,288 TP plan plan TP 60,485 38,480 15,607 7 81 6 57, 16,989 5,016 Total Total - - - - - request from H from request of G specification A detailed US US US Kingdom United Sweden Japan G G G France Finland Total Canada S Companies Group Major F companies Other 1) D 2007 companies Associated 1) D 2008 companies Associated G Consolidation difference Exchange D result Operating balance Opening companies associated in Participation stated. otherwise unless SEKm in Amounts G D Russia Khimki, A/O Total D Russia Khimki, A/O balance Closing Other S S EKm EKm ubsidiaries NOTE 26 irefly Energy I Energy irefly Viewed from H from Viewed H from Viewed iamant B iamant B iamant ividend iamant B iamant B iamant ardena, Turkey ardena, ermany ermany ermany oart, Argentina oart, Argentina oart, oart, Philippines oart, Philippines oart, usqvarna’s perspective. usqvarna’s perspective. usqvarna’s SH nc., U nc., usqvarna A usqvarna Products NA I NA Products H Products NA I NA Products H Products I Products H H H H G G H H H Oy H ardena Turkey ardena ARE usqvarna Consumer Outdoor Outdoor Consumer usqvarna usqvarna F usqvarna Professional Professional usqvarna usqvarna UK Ltd. UK usqvarna usqvarna H usqvarna usqvarna Zenoah Co, Ltd. Co, Zenoah usqvarna usqvarna D usqvarna F usqvarna usqvarna Canada Corp. Canada usqvarna ardena Manufacturing G Manufacturing ardena ardena G ardena S usqvarna Ab usqvarna S AN A B nc. D PART mb , I roup companies is available on on available is companies roup orestry orestry rance S rance olding A olding eutschland G eutschland nvestor Relations. nvestor nc. nc. H pation, % pation, % H Partici Partici olding, % olding, I A C 46.7 46.7 50.0 50.0 20.0 20.0 51.0 B S I PAT - - 2008 7.0 mb mb I –4 –2 — 12 S ON 7 1 0 value value B B H H ook ook ook ook 12 value, S value, 7 4 6 6 1 1 1 0 H Book/ olding, % olding, Receiv Receiv ables ables 2007 EKm 100 100 100 100 100 100 100 100 100 100 100 100 F 12 — air 9 1 8 3 6 0 0 0 1 1 3 0 0 0 0 - -

NOTE Relation to H to Relation Relation to H to Relation Liabil Liabil ities ities follows: as was unlisted, are all which companies, associated the of A. I 2008, goodwill is included in the amount of S of amount the in included is goodwill 2008, S n participations in associated companies at 31 D at companies associated in n participations — — — 1 0 0 1 0 0 S G .) has been consolidated during 2008. The G The 2008. during consolidated been .) has ardena Turkey ( ardena usqvarna G usqvarna usqvarna G usqvarna Sales Sales — — — 4 1 3 1 1 0 chases chases roup roup Pur Pur — — — — G 5 0 0 5 0 - - 1) 1) ardena D ardena I I I ncome S ncome ncome ncome 22 53 20 20 25 — 3 5 2 ost D ost P&L tatement net Total result result is Ticaret Mümmesilik Mümmesilik Ticaret is Net Net –1 4 0 2 1 1 0 1 0 assets assets 2m (4).EK 2m B B Total Total Total Total alance sheet alance alance sheet alance 45 19 roup’s share share roup’s 24 12 12 ecember ecember 7 2 7 0 li li abilities abilities Total Total Total Total 28 20 7 4 4 4 0 3 0

83 HUSQVARNA ANNUAL REPORT 2008 84 HUSQVARNA ANNUAL REPORT 2008 1995:1554), 4:14a. S the with accordance in value fair at valued been not had liabilities and assets the S been have would equity pany’s Com The position. overall and liquidity strength, financial G the and Company’s the to regard with and business G and Company the on demands the to regard with dividend forward. carried be to sum above the and paid be will dividend no that resolves 2009 Meeting b g b B The Total 2008 for income Net earnings Retained P

roup equity imposed by the type, scope and risks of the the of risks and scope type, the by imposed equity roup ropo The B The Peggy B Peggy oard of D of oard member oard member oard un Nilsson Nilsson un oard’s opinion is that it is justifiable not to pay any any pay to not justifiable is it that is opinion oard’s Accountant Public Authorized

ruzelius ruzelius irectors proposes that the Annual G Annual the that proposes irectors Auditor in charge in Auditor Lundin Anders s e wedish Annual Accounts Act ( Act Accounts Annual wedish d d Robert F Robert D B B b Lundahl Ulf member oard member oard EK 7,052 thousand higher if if higher EK 7,052 thousand is b . Connolly 19 F stockholm

Our audit report was issued on 19 on F issued was report audit Our tr P ropo Thousands of S of Thousands ib 12,041,490 PricewaterhouseCoopers A PricewaterhouseCoopers s 5,958,080 6,083,410 e ut eneral eneral d D SFS Chairman of the B the of Chairman roup’s roup’s President and CEO and President Lars Westerberg Lars is Magnus Y Magnus Andersson engt B B EK ion tr member oard member oard örje Ekholm Ekholm örje ib ut

ebruary 2009 ebruary i ngen and the companies included in the G the in included companies the and Company Parent the facing uncertainties and risks material describes and operations of results and position financial G the of ment develop the of review afair provides Company Parent the operations. of results and position financial Company’s Parent the of view fair and S in principles accounting accepted generally with accordance in prepared been have Company Parent the of statements financial The operations. of results G the of view fair and atrue give IF with accordance in prepared been have statements financial consolidated the that declare o on

The statutory Administration Report of the G the of Report Administration statutory The B The

oard o f E f E f ebruary 2009 ebruary oard of D of oard arn B representative Employee roup’s and the Parent Company’s operations, operations, Company’s Parent the and roup’s i n Malin B Malin Tom Johnstone Tom Johnstone arn gs B B member oard member oard irectors and the President and CEO CEO and President the and irectors jörnberg Authorized Public Accountant Public Authorized Christine Rankin Johansson Rankin Christine i n R as adopted by the EU, and EU, and the by adopted S as roup’s financial position and and position financial roup’s gs weden and give a true atrue give and weden roup. Employee representative Employee Anders Moberg Moberg Anders Annika Ögren Ögren Annika B B member oard oard member oard roup and and roup -

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ebruary 2009 ebruary charged from liability for the financial year. financial the for liability from charged D Managing the and directors of board the of members the that and report administration the in posal pro the with accordance in with dealt be Company Parent the of profit the that adopted, be group the and Company Parent the of sheets balance and statements income the that accounts. consolidated the and accounts annual the of parts other the with consistent is report administration statutory The operations. of results and position financial group’s the of view fair and atrue give and IF standards reporting financial international with accordance S in principles accounting accepted generally with accordance in operations of results and position financial company’s the of view fair and atrue give and Act Accounts Annual the with below. out set opinion our for basis areasonable vides pro audit our that We believe Association. of Articles the or Act Accounts Annual the Act, Companies the of vention contra in way, acted other any in has, director managing the D Managing the or member board any of company the to any, if liability, the determine to able be to order in company the of circumstances and taken actions decisions, significant examined we liability, from discharge concerning opinion our for abasis As accounts. consolidated the and accounts annual the in information of presentation overall the ating evalu as well as accounts consolidated and accounts annual eport weden. The consolidated accounts have been prepared in in prepared been have accounts consolidated The weden. irector. We also examined whether any B any whether examined We also irector. R We recommend to the annual meeting of shareholders shareholders of meeting annual the to We recommend The annual accounts have been prepared in accordance accordance in prepared been have accounts annual The S s as adopted by the EU and the Annual Accounts Act Act Accounts Annual the EU and the by adopted s as B Christine Rankin Johansson Rankin Christine Authorized Public Accountant Public Authorized oard member or or member oard irectors be dis be irectors - - - - -

85 HUSQVARNA ANNUAL REPORT 2008 86 HUSQVARNA ANNUAL REPORT 2008 Net debt Net S borrowings Long-term Operating income* Operating F I I

Marketing and Administration costs Administration and Marketing income operating Gross sold goods of Cost

Total equity capital Working payables Trade receivables Trade

Net assets Net Taxes Total cash flow from operations and investments and operations from flow cash Total Cash flow from operating assets and liabilities and assets operating from flow Cash Income after financial items financial after Income * sales Net Income Financial Position Financial Total assets Cash flow Cash assets and liabilities and assets operating in change excluding operations, from flow Cash Acquisitions of operations of Acquisitions flow cash Operating investments from flow Cash operations from flow Cash Income for the period the for Income FI nterest-bearing liabilities nterest-bearing nventories of which depreciation and amortization and depreciation which of inancial items, net items, inancial hort-term borrowings hort-term Professional Products Professional Professional products Professional Consumer Products Consumer Consumer Products Consumer Professional Products Professional Products Consumer VE- , S EKm , S Y EKm EAR REV EAR , S EKm I EW EW –22,965 32,342 34,337 22,367 16,287 13,552 10,694 12,493 19,849 15,778 –7,016 1,288 2,361 2,013 –1,131 9,377 3,144 1,767 1,168 3,280 8,556 6,462 2,703 8,815 1,587 4,184 3,159 7,875 –845 2008 2008 2008 –479 –594 1,163 441 963 –23,509 33,284 –7 033 28,803 13,640 6,211 – 20,621 –8 876 –8 12,663 13,318 19,401 12,012 10,130 2,656 3,564 2,889 2,036 1,843 9,775 3,232 6,790 1,638 2,731 , 89 7,3 6,146 3,912 7,758 2,911 2,123 –853 –675 –576 –813 1,081 2007 2007 2007 –21,477 29,402 –4,804 18,335 16,355 10,514 11,067 2,692 1,432 –1,194 1,862 7,925 3,121 2,626 5,090 2,209 6,264 4,683 4,250 4,335 6,034 2006 3,106 5,165 1,875 4,714 –830 1,415 –429 –897 –558 2006 535 –23 303 2006 836 2) 3) 3) 3) 3) 3) 3) 3) 2) –21,109 28,768 10,408 18,360 –4,732 18,248 –1,342 10,017 2,448 2,291 2,927 1,641 7,659 6,366 6,220 6,264 2,468 4,222 3,562 3,325 5,262 4,626 2005 1,332 4,755 1,739 5,719 –807 –479 –177 2005 2005 949 949 827 — 0 2) 2) 2) –19,886 27,202 –4,333 14,298 2004 2004 2004 –1,042 2,323 2,878 2,073 2,073 7 579 17, 2,983 7,316 3,115 3,380 5,506 3,003 3,365 8,007 2,858 4,646 3,905 4,736 3,271 3,371 1,607 9,623 1,521 3,170 –555 –105 112 718 15 — 1) 2) 1) 2) 1) 2) FIVE-YEAR REVIEW

Key data, SEKm 2008 2007 20062) 20052) 20041) 2) Net sales 32,342 33,284 29,402 28,768 27, 202 Net sales growth, % –3 13 2 6 1 Gross margin, % 29.0 29.4 27.0 26.6 26.9 EBITDA 3,524 4,645 3,957 3,754 3,701 EBITDA margin, % 10.9 14.0 13.5 13.0 13.6 Operating income 2,361 3,564 3,121 2,927 2,983 Operating margin, % 7.3 10.7 10.6 10.2 11.0 Consumer Products 4.9 7.9 7.7 7.3 9.1 Professional Products 12.7 16.8 16.9 16.7 15.8 Income after financial items 1,767 2,889 2,6923) 2,448 2,878 Income for the period 1,288 2,036 1,862 3) 1,641 2,323

Capital expenditure 1,163 857 890 1,259 1,040 Consumer Products 686 514 524 859 587 Professional Products 475 343 366 400 453 Operating cash flow 2,013 1,843 5353) 949 2,073 Cash flow per share 5.25 4.79 1.393) 2.46 6.95

Earnings per share, diluted, SEK 3.34 5.29 4.833) 4.26 7.78 Equity per share, SEK 22.9 21.1 16.1 12.3 15.9 Average number of shares, millions 383.2 384.6 385.14) 385.14) 298.6 Dividend per share, SEK 0 2.25 2.256) — — Dividend pay-out ratio, % — 42 353) — — ANNUAL REPORT 2008

Capital employed 25,102 20,707 11,354 11,121 8,116 Return on capital employed, % 10.7 17.6 23.83) 24.1 31.1 Return on equity, % 15.8 28.6 32.53) 40.1 41.9 Capital turn-over rate, times 1.5 1.8 2.4 2.6 2.9 HUSQVARNA Net debt/equity ratio 1.54 1.63 0.68 1.11 0.69

Interest coverage ratio, times 3.5 5.3 7.6 — — 87 Equity/assets ratio, % 25.7 25.7 38.3 26.1 33.1

Salaries and remunerations 4,037 3,973 3,033 3,047 3,053 Average number of employees 15,720 16,093 11,412 11,681 11,657 Consumer Products 8,655 8,851 5,751 6,054 6,041 Professional Products 7,04 0 7, 242 5,661 5,627 5,616 1) Restated to comply with IFRS, except for IAS 39. If IAS 39 had been applied in 2004, the volatility in net income, net debt and equity would most probably have been higher. 2) The Husqvarna Group was established as of 31 May 2006, and listed on the NASDAQ OMX Stockholm as of 13 June 2006. The Husqvarna operations previously comprised the Outdoor Product segment within Electrolux Group. Figures presented above for 2004 is based on Husqvarna’s combined financial statements. The information in these statements is based on the actual reporting for the operations within the Outdoor Product segment within Electrolux. The results and net assets, as well as equity and provisions are aggregated. To better reflect the Husqvarna Group and its operations pro forma financial information was prepared for 2005 and 2006. Figures for 2005 and 2006 presented above is based on the pro forma figures. As the establishment of the Group was finalized by 31 May 2006 the Income statement, Balance sheet, Equity and Cash flow statements represent the consolidated values of the Group. For information about the differences beween combined financial statements and pro forma financial information please see Husqvarna’s Annual Reports for 2006 and 2007. 3) Pro forma. 4) Number of shares have been adjusted for the for the bonus issue of 88,9 million shares made in May 2007. 5) According to combined financial statements. 6) Before bonus issue. 88 HUSQVARNA ANNUAL REPORT 2008 Equity Working capital Working I Net debt Net Margin, % Margin, sales Net Income Quarterl I S share, per Earnings I 2) 1) Financial position Operating income Operating E E I % margin, Operating nventories period the for ncome nterest-bearing liabilities nterest-bearing ncome after financial items financial after ncome BI BI Pro forma. Pro Number of shares have been adjusted for the for the bonus issue of 88.9 million shares made in May 2007. May in made shares million 88.9 of issue bonus the for the for adjusted been have shares of Number T T D DA A margin, % A margin, , S EKm , S EK EKm y y D ATA 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 10,043 15,645 14,535 16,245 14,734 10,983 8,664 6,240 8,558 1,060 6,578 1,488 6,986 5,264 1,202 9,338 9,784 9,214 , 03 7,9 1,211 7,723 1,166 1.42 9,926 10.6 10.7 12.5 14.8 1.59 12.0 1.97 13.1 984 929 753 792 546 876 613 8.5 9.5 9.9 Q1 Q1 1)2) 1) 1) 1) 1) 1) 1) 1) 10,343 12,048 15,239 13,387 13,377 14,901 10,133 6,408 6,642 5,892 2.07 2,049 6,772 1,528 1,321 1 070 1,595 ,34 7,33 1,275 4,762 1,491 1,758 8,101 8,155 6,157 7,939 1,154 1,141 7,159 2.09 2.77 14.6 12.6 15.4 12.8 14.4 12.7 11.0 17.0 11.4 810 797 Q2 Q2 1) 2) 1) 1) 1) 13,262 11,540 12,014 13,168 6,830 5,392 6,381 6,826 5,592 6,279 5,452 4,428 6,361 4,679 4,494 5,965 ,2 4 28 7, 8,614 0.84 0.37 10.6 0.70 12.2 14.9 836 802 322 553 391 467 593 273 571 143 310 178 2.6 4.5 8.7 8.7 5.7 8.1 Q3 Q3 16,287 13,552 13,318 12,012 5,090 5,090 6,264 8,556 6,462 4,250 4,335 4,539 8,815 , 89 7,3 6,146 –1.09 5,165 5,126 5,196 7,758 –11.9 –472 –418 612 – –152 0.21 –3.0 10.6 0.51 –9.2 11.0 346 549 498 279 269 197 5.2 1.8 6.1 7.6 Q4 Q4 80 94 F F 33,284 32,342 29,402 16,287 13,552 ull year ull ull year ull 13,318 12,012 3,564 4.83 5,090 6,264 8,556 6,462 4,645 4,250 2,889 4,335 2,036 3,524 2,692 1,288 2,361 1,862 3,957 8,815 , 89 7,3 6,146 5,165 7,758 3,121 1,767 5.29 3.34 10.6 10.7 13.5 14.0 10.9 5.5 8.7 9.2 7.3 1) 2) 1) 1) 1) Total Total Professional Products Professional G Total Professional Products Professional Professional Products Professional Consumer Products Consumer area by business sales Net Consumer Products Consumer area by business income Operating Consumer Products Consumer area by business margin Operating roup common costs etc. costs common roup , S EKm , % , S EKm QUARTERL 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 Y

D 10,043 ATA 6,540 6,830 3,007 6,207 1,202 2,798 9,338 3,213 9,214 16.2 10.6 16.3 10.7 12.0 17.0 984 929 503 522 –47 –47 455 –29 521 727 510 8.4 9.9 7.7 Q1 Q1 Q1 10,343 12,048 10,133 3,630 3,570 6,993 6,773 1,321 1,275 1,758 8,418 3,140 1,164 10.5 18.3 14.6 13.8 12.6 12.8 11.0 17.5 17.7 –48 642 –47 –35 734 623 576 745 Q2 Q2 Q2 3,668 3,066 6,830 5,392 6,826 3,764 2,774 2,618 3,158 10.6 16.8 14.2 –1.9 –40 436 –42 –55 529 553 17.1 447 164 571 310 –71 4.5 1.8 5.9 8.1 Q3 Q3 Q3 66 2,644 2,868 4,539 2,482 2,328 2,028 2,511 5,126 5,196 –438 –17.7 –472 –113 –4.9 15.8 –9.2 15.4 –60 –40 –65 346 442 397 269 5.2 0.2 0.7 7.6 Q4 Q4 Q4 14 6 F F F

33,284 32,342 20,621 12,663 18,335 29,402 12,493 ull year ull ull year ull ull year ull 19,849 11,067 3,564 1,638 1,587 2,361 1,875 2,123 3,121 1,415 –189 –197 –169 10.6 16.8 10.7 12.7 16.9 963 4.9 7.3 7.7 7.9

89 HUSQVARNA ANNUAL REPORT 2008 90 HUSQVARNA ANNUAL REPORT 2008 2008 presence at the meeting, either in person or through a proxy. a proxy. through or in person either meeting, the at presence of shareholders. meetings general at exercised by owned was capital 61,904 of which in 64,555, The decision-making rights of shareholders in of shareholders rights decision-making The Shareholders of Meeting General by the Report of B S in capital share The rights voting and capital Share S 13% by private about and investors, 12% by foreign about of 31as of shareholders number The Ownership structure The countries. 40 than more in 118 entities and a of total 152 comprises companies operative on NA listed H appropr effect stakeholders. other and lon ate H Governance C issue of issue dividends. of in terms rights equal carry and earnings, and assets pany’s com of the in terms rights equal entitle shares of a All vote. the on quarterly updated 2008. of year-end as rights, voting of 28.7% the and 15.4% capital of the holding 2006, NA of Association of Articles the include that regulations and external internal codes, policies and guidelines. and guidelines. policies codes, S S 2008. 2008. G mana i for systems EK 770m, comprising 98,380,020 A-shares and 286,756,875 286,756,875 and A-shares 98,380,020 comprising EK 770m, wedish investors. wedish wedish and foreign laws and regulations as well as internal as as well internal and regulations laws and foreign wedish of Corporate Code wedish -shares. Each A-share carries one vote, and each each and vote, one carries A-share Each -shares. usqvarna is a usqvarna overnance. No deviations from the code were reported in reported were code the from No deviations overnance. usqvarna’s overall object overall usqvarna’s S Participation in decision-making requires the shareholder’s shareholder’s the requires in decision-making Participation The The I I H This report has not been reviewed by the by the reviewed been not has report This SD nformation on shareholders and the ownership structure is is structure ownership the and shareholders on nformation A nvestor hareholders. hareholders. usqvarna applies the the applies usqvarna AQ OMX B orporate g S oard of oard EK 3 billion, subject to approval by a to approval subject EK 3 billion, i ement, and transparency. ve corporate g- i SD ate or has been the largest single shareholder since since shareholder single largest the been B has B term value for for value term H S AQ OMX oard of oard tockholm’s Rule book for issuers, including the the including for issuers, Rule book Stockholm’s wedish public limited liability company that was was that company liability limited public wedish usqvarna A usqvarna D F or more information see page 33 in the in the 33 page see information more or irectors has decided to implement a rights a rights to implement decided has irectors nternal control and r and control nternal H usqvarna at year-end 2008 amounted to amounted 2008 year-end at usqvarna S gan wedish institutions and mutual funds, funds, mutual and institutions wedish D tockholm in June 2006. The The in 2006. June Stockholm irectors. S G S weden. About 75% of the total share share 75%total of the About weden. wedish Code of Corporate of Corporate Code wedish B roup’s web site. web roup’s i G G , the , the zati overnance, and other relevant relevant and other overnance, roup is governed on the basis of on basis the is roup governed g overnance wi S onal onal structure, wedish Com wedish D i ts shareholders shareholders ts T ecember 2008 was was 2008 ecember h i i s requ s ve i ve G G H roup’s auditors. roup’s pa eneral Meeting Meeting eneral usqvarna are are usqvarna s to cre to s nies Act, the the Act, nies B -share 1/10 -share i res res G th an i sk roup roup

majority. majority. adoption of the annual accounts, dividends, election of election dividends, accounts, annual of the adoption • were as present, were All votes. the 61.9% and shares 52.9% of the of represented They by or proxy. personally either shareholders, 400 by approximately attended portion of the shares and votes represented at the meeting. meeting. the at represented votes and shares of the portion pro by a higher approved be must a proposal that stipulates meeting. of the notice the with in accordance of participation notice provide must and meeting, the to prior days i.e. date, five record of the as register I ing an e-mail to board e-mail an ing by send meeting general to the pertain that matters regarding to fees required, when of auditors and members year.A The accounting of the G the at posted also is address This discretion of the of the discretion D G the of aspects main the on CEO reported and President The charge. I 2008 Meeting General Annual B in cluded the ofagenda the ameeting can request shareholders’ ditors or by shareholders owning at least 10% of the shares. 10% of the least at owning by or shareholders ditors matters. important other and to management, remuneration for principles auditors, and bers • • • n addition, the shareholder must be registered in the share share in the registered be must shareholder the n addition, n 2008 the A the n 2008 oard to do so by sending an e-mail to board e-mail an by so sending to do oard The B and and at Committee Rumeneration A 2007.for of liability discharged were President the and man and and man at set was Committee Ulf Moberg, Anders Re-elected employed by the by the employed S of which ized, Fees Lars ecisions by the A by the ecisions eneral Meeting must be held within six months after the end end the after months six within held be must Meeting eneral EK ruzelius, Robert Robert ruzelius, I D According to the to the According S Extraordinary An dividend ndividual shareholders who wish to have a specific issue in issue a to have specific wish who shareholders ndividual hareholders may communicate in writing with the the with in writing communicate may hareholders ecisions at the meeting are normally made by simple by simple made normally are meeting the at ecisions Lundahl was elected as new new as elected was Lundahl S annual 460,000 for each of the other members who are not not are who members other of the each for 460,000 Westerberg was re-elected as Chairman of the of the Chairman as re-elected was Westerberg for EK 50,000 for each of the other members. members. other of the each for EK 50,000 R roup’s operations during the preceding accounting year. accounting preceding the during operations roup’s H Board S owever, for some issues the the issues some owever, for EK 75,000 for the members, and for the the for and members, the for EK 75,000 G of accounts Board B M was held on 23 April in Jönköping. in Jönköping. 23 April on held M was oard members elected by the previous A previous by the elected members oard SEK S members B eport EK 1,600,000 for the Chairman and and Chairman the for EK 1,600,000 oard of oard G G G F members: 2.25 M included the following: the M included . Connolly, . Connolly, un Nilsson and Lars Westerberg. Westerberg. Lars and Nilsson un S G roup. roup. wedish Companies Act, the Annual Annual the Act, Companies wedish @ G eneral Meeting may be convened at the the at convened be may Meeting eneral for husqvarna.se. husqvarna.se. S roup management, and the auditor in auditor the and management, roup per EK 175,000 for the committee chair committee the for EK 175,000 D 2007 F totalling irectors or if requested by the au by the requested if or irectors ees for members of the Audit Audit of the members for ees share G Bengt S M decides on such issues as as issues such on M decides was B EK 100,000 for the chairman chairman the for EK 100,000 örje Ekholm, Tom Johnstone, Tom Johnstone, Ekholm, örje B G for oard member. member. oard roup’s web site. web roup’s adopted, SEK Andersson, 2007. S wedish Companies Act Act Companies wedish 5,345,000 @ and husqvarna.se. husqvarna.se. B Peggy I n addition, n addition, the oard mem oard were I t was t was B Board B oard. oard oard G B author oard oard M - - - - CORPORATE Governance Report 2008

Governance structure Shareholders

Annual General Meeting Nomination Committee

External Audit Board of Directors Audit Remuneration Internal Audit Committee Committee

President and CEO Internal Boards Group Management, others • Global Purchasing Council • Group Staff Council Group Staffs • Finance Board

Consumer Products Professional Products Sector Management Sector Management North America Rest of the World Rest of the World Forestry Lawn and garden Construction Massmarket Dealers ANNUAL REPORT 2008 Major regulations affecting the governance of Husqvarna

External regulations Internal regulations • Swedish Companies act (2005:559) • Articles of Association • NASDAQ OMX Stockholm’s Rule of book for issuers • Board of Director’s rules of procedure, incl. instruc- HUSQVARNA • Swedish Code of Corporate Governance tion for the President and CEO • Swedish Accounting Act • Policies for Communication, Finance and Credit etc. 91 • International Financial Reporting Standards, IFRS • Processes for internal control and risk management • Legislation of other relevant countries • Husqvarna’s Code of Conduct • Manuals incl. accounting

Share of Share of Ownership structure The 10 largest shareholders capital, % votes, %

% Investor AB 15.4 28.7 100 Alecta Mutual Pension Insurance 8.4 6.2 Swedbank Robur Investment Funds 6.8 2.1 80 AFA Insurance 4.6 3.4 SEB Investment Funds & SEB Trygg Liv 4.6 2.1 60 LE Lundbergföretagen 4.3 13.1 AMF Insurance & Pension Investment Funds 4.1 3.2 40 Fourth Swedish National Pension Fund 2.2 1.3 Second Swedish National Pension Fund 2.0 0.6 20 SHB Investment Funds & Life Insurance 1.7 1.3

The largest Total, 10 largest shareholders 54.1 62.0 0 owners Total, Board of Directors and 10 25 100 200 Group Management <0,2 <0,1

Capital, % Votes, % Source: SIS Ägarservice as of 31 December 2008. Most of the shares owned by foreign investors are registered through trustees, which mean that owner identity is not obtainable from Euroclear Sweden AB ( formerly VPC). Accordingly, the major Source: SIS Ägarservice as of 31 December 2008. foreign owners are not shown in the table above. 92 HUSQVARNA ANNUAL REPORT 2008 committee to nomination by so e-mail do may Committee Nomination Committee of the results of the evaluation of the audit work. audit of the evaluation of the results of the Committee Nomination the informs things, other among which, Committee Audit by the assisted then is Committee Nomination The • • the election of auditors when this is to be decided by the A by the to decided is be this when of auditors election the for proposals submit also should Committee Nomination The • • • • posal for the A the for posal a pro preparing include tasks Committee’s Nomination The accordingly. changed be may Committee Nomination of the composition the process, nomination of the course in the shareholders major www.husqvarna.com. ings of voting rights as of 31 August 2008. 2008. of 31as August rights of voting ings A to the prior months six least at publicly announced be shall represent they that shareholders the and of the Chairman the with together rights of voting holders largest four of the each of representative of one consists that Committee a Nomination • The minutes of the A of the minutes The • • • • I Nomination Committee S in Jönköping, Centre Congress Elmia the at 2009 23 April on The 2009 AGM • the A the of notice to the prior or with in connection publicly announced board A the n accordance with a decision by the A by the a decision with n accordance weden. weden. Composition Fees of committees bers the coming year. coming the Fees Chairman Board Chairman A or A- million of 38.5 Rules adopted. was managers Buy-back approved. were A approved. were ment manage of senior members CEO, other and and President The submitted. posal The in mitments Fees Committee. Nomination by the proposal the with in accordance authorized was shares of synthetic form in the fee of the of a portion payment S S G performance-based H hareholders wishing to submit proposals to the to the proposals to submit wishing hareholders election of the four shareholders is based on known hold known on based is shareholders four of the election M 2009, in order to facilitate acquisitions. to facilitate in order M 2009, G G usqvarna Annual Annual usqvarna principles Board @ to to to M. M should submit a proposal by e-mail to by e-mail a proposal submit M should for husqvarna.se. members S auditors the auditors hareholders wishing to have an issue dealt with by with dealt issue an to have wishing hareholders the @ and of of husqvarna.se. The committee’s proposal shall be be shall proposal committee’s The husqvarna.se. was Board, H the the G Nomination of usqvarna’s incentive programs. incentive usqvarna’s transfer M regarding the following: following: the M regarding for authorized the Board AGM were remuneration B including G B Nomination oard. The names of these representatives representatives of these names The oard. M 2008 are available at at available are M 2008 -shares during the period prior to the to the prior period the during -shares G authorized of incentive eneral Meeting for 2009 will be held held be will 2009 for Meeting eneral own Committee’s to the issue shares and program Committee Chairman, in new accordance employment G in M 2008, M 2008, composition accordance G shares I M. n case of changes in of changes n case (LTI CORPORATE and

and 2008) to H fees with usqvarna has has usqvarna its a of maximum with for tasks and the for the senior mem com work pro Governance G for - - - M. M. - - - - date of notification of the A the of notification of date the than later no announced publicly be will work its conducted has Committee the how on a as report well as proposal full The • • • • • • • • • • following: the includes A to the proposal Committee’s Nomination The 2008. 8 on October release in a press announced were representatives shareholders’ of the names The • age the the age • following members: regulations including the the including regulations The extent. possible greatest to the capital on return long-term of a good terms of the duty overall The Directors of Board The of the of the Chairman The indepedence. B the with dealt meetings The meetings. between contact tained main members the and meetings three held committee The year the during work Committee’s Nomination The The Nomination Committee for the A the for Committee Nomination The AGM for the 2009 Committee Nomination of Association, the the of Association, committee. the on work their for remuneration receive not did bers and divestments. The The divestments. and acquisitions investments, to financing, related issues important other on and policies, major and orientation strategic goals, by the established of procedure rules the and oard’s activities as well as its competence, composition and and composition competence, its as well as activities oard’s Committee for A for Committee Unchanged members. and Committee Audit in the members. other of the each for and Committee Remuneration in the Chairman Unchanged S Portion by employed not members Unchanged and proposed Chairman of the A of the Chairman proposed and Re-election H of Magnus Election re-election. Robert and Nilsson Ekholm, Tom Johnstone, Ulf Lundahl, Anders Moberg, Moberg, Anders Lundahl, Ulf Tom Johnstone, Ekholm, Re-election A Ramsay Anders Claes Committee Unchanged Lars Petra EK The The G usqvarna, as new new as usqvarna, M (9 members). M (9 members). Report 1,600,000 for the Chairman and and Chairman the for 1,600,000 Westerberg, B Hedengran, B Boustedt, oard’s evaluation of its own work. The committee mem committee The work. own of its evaluation oard’s G oard decides on issues related to the to the related issues on decides oard Elsell, of J. roup’s affairs so as to satisfy the owners’ interests in interests owners’ the to as satisfy so affairs roup’s Brufer, fees of of principles Committee Board number 2008 Investment Lars Lars to LE G Alecta S be Chairman Investor M 2010. fees wedish Code of Corporate of Corporate Code wedish B B Westerberg Westerberg, Lundbergföretagen F B of oard member. oard oard’s work is governed by rules and and by rules governed is work oard’s . Connolly. . Connolly. paid H oard monitors and deals with, inter alia, alia, inter with, deals and monitors oard for usqvarna usqvarna Board totalling S fees, G Mutual wedish Companies Act, the Articles Articles the Act, Companies wedish AB appointment in M, as well as at H at as well as M, AB, H of synthetic S usqvarna. Öresund with members EK the Chairman S as B Y Pension SEK Peggy B EK G 75,000 each for the other other the for each 75,000 ngen, President and CEO of and President ngen, engt Andersson declines declines Andersson engt B oard of oard SEK Husqvarna Chairman M. oard presented the results results the presented oard G 175,000 for the Chairman Chairman the for 175,000 S 5,345,000, M 2009 consists of the of the consists M 2009 EK shares. 100,000 Bruzelius, of to AB Insurance 460,000 for other other for 460,000 of D Nomination be usqvarna’s web site. web usqvarna’s irectors is to is man irectors the B of G elected board oard. oard. G G roup’s main main roup’s for the S Nomination of M in 2009 M in 2009 overnance overnance EK Börje which the Board, 50,000 50,000 by G un un the - - - F Total Name Board of Directors of Board responsibility for the committees appointed by the by the appointed committees the for responsibility of areas the identify also of procedure rules The performance. B B the delegate and organize shall Chairman The Chairman. to of tasks allocation include procedures These necessary. when and annually reviewed The meetings and of procedure Rules of control and follow-up Lars Westerberg Lars D6) 5) 4) 3) I2) 1) Ulf Lundahl Ulf B Peggy Carita Carita Ögren Annika Moberg Anders with publication of the of the publication with year. the during The Company. the for to sign authorization include meeting this at of the ing outlays. other and investments limits, the within functions decision-making various that amounts maximum the to the submitted isbeto that information other and reports financial the require that issues ing regard functions corporate various and President to the tions and risk management risk and control internal for system effective an establishing for sibility The management. operative of the evaluation including organization, and nication B Robert Robert Malin Malin G sidiaries. At one of the meetings the the meetings of the At one sidiaries. to sub visits with in connection held are meetings two or One Tom Johnstone including telephone conferences, are held when necessary. when held are conferences, telephone including of member any of presence the CEO without and President of the formance redrik Währborg redrik oard’s decisions as well as annual evaluation of the of the evaluation annual as well as decisions oard’s of the implementation effective ensure also and work, oard’s örje Ekholm örje engt Andersson engt Refers to independence in relation to the the company and management, and independence in relation to major shareholders. shareholders. major to relation in independence and management, and company the the to relation in independence to Refers Elected to the Remuneration Committee at the A the at Committee Remuneration the to Elected B President and CEO until 1 October 2008. 2008. 1 October until CEO and President Elected at the A the at Elected un Nilsson un n accordance with the resolution by the A by the resolution the with n accordance oard members on page 94. The composition of authorized fees in terms of cash payment and synthetic shares, see Note 24. Note see shares, synthetic and payment cash of terms in fees authorized of composition 94. The on page members oard eputy. I The rules of procedure stipulate that the constituant meet constituant the that stipulate of procedure rules The H n addition, the rules of procedure include detailed instruc detailed include of procedure rules the n addition, B B usqvarna’s usqvarna’s oard has determined rules of procedure that are are that of procedure rules determined has oard oard normally convenes on five to six other occasions occasions other tosix five on convenes normally oard B B S B jörnberg F oard. Among other things, these instructions specify specify instructions these things, other Among oard. pångberg ruzelius . Connolly B G 5) oard shall be held directly after the A the after directly held be shall oard roup are authorized to approve regarding credit credit regarding to approve authorized are roup G M 2008. 4) G G F roup Management. Additional meetings, meetings, Additional Management. roup our of these meetings are held in connection in connection held are meetings of these our 3) eneral Counsel is the secretary at the the at secretary the is Counsel eneral 6) 6) Employee representative Employee Employee representative Employee Employee representative Employee Employee representative Employee G Committee Chairman Committee Committee Chairman Committee G roup’s annual and interim reports. reports. interim and annual roup’s Committee member Committee Committee member Committee Committee member Committee Committee member Committee roup operations, and and operations, roup B oard’s approval, as well as the the as well as approval, oard’s B B B oard also has the overall respon overall the has also oard oard members, including the the including members, oard oard Chairman oard G M 2008, 25% or 50% of the of the or 50% 25% M 2008, B oard evaluates the per the evaluates oard G M 2008. CORPORATE a N US G G n o i t roup commu roup l a / M. M. UK US SE SE SE SE SE SE SE SE SE SE SE i B y t B - oard. oard. D

G oard’s oard’s B ecisions ecisions B roup’s roup’s I oard fee shall be received in synthetic shares, see further under the heading heading the under further see shares, in synthetic received be shall fee oard Yes/ Yes/ Yes/ Yes/ Yes/ Yes/ n No/ Yes/No Yes/No oard. oard. Governance e d dence n e p Yes Yes Yes Yes Yes Yes Yes - - - - — — — — - - - 1) meetings Committee. Remuneration of the Chairman of the management the under ates the composition of the of the composition the ates evalu Committee Nomination the in which procedure, ination nom the for input comprise and Committee Nomination to the reported are evaluation of the results The Chairman. the with meetings feedback by personal up followed then is evaluation on is evaluation of the focus The B of the alignment the climate, working the of procedure, rules The performance Board’s the of Evaluation to the reports other and of financial type the regarding instructions detailed include of procedure rules The reporting financial in quality Ensuring financial information. information. financial the accounts, reviewing reports regarding the the regarding reports reviewing include also Committee Audit of the tasks The principles. these by the applied principles accounting important most the Committee, I the by submitted reports audit as well as reporting, financial other member of member other CEO any or and President of the presence the without held is meetings of these one a year. once At least least at but sary, B 10/11 10/11 10/11 10/11 nternal Audit function. Audit nternal 11/11 11/11 11/11 11/11 11/11 11/11 11/11 oard’s work, and access to and need for special competence. competence. special for need to and access and work, oard’s oard oard 9/11 8/8 The work of the of the work The The The The The

11 Report B Attendance 2008 Attendance oard evaluates its activities annually with regard to the to the regard with annually activities its evaluates oard B G B G oard. oard. roup in financial reporting, as well as major changes to changes asmajor well as reporting, in financial roup Com oard also reviews, primarily through the the through primarily reviews, also oard roup’s external auditors report to the to the report auditors external roup’s Audit mit 2008 5/5 5/5 5/5 I tee B n addition to interim reports and the annual annual the and reports to interim n addition oard reviews and evaluates comprehensive comprehensive evaluates and reviews oard 5

G e R B roup Management. roup Com oard Chairman is also evaluated separately separately evaluated also is Chairman oard u m a e n mit tion 3/3 3/3 1/1 tee r 3 B oard and the fees to members. fees the and oard Authorized Authorized 5,345,000 1,650,000 fees, total total fees, 460,000 460,000 560,000 635,000 535,000 535,000 G 510,000 H in in roup’s internal control over over control internal roup’s usqvarna-specific items. The The items. usqvarna-specific S EK — — — — — that shall be submitted submitted be shall that 2)

number of number H A-shares oldings, oldings, 12,000 28,410 F 8,400 1,560 2,760 ees to ees 1,950 B 300 660 750 oard as neces as oard 30 — — — — G roup’s Audit Audit roup’s

number of number H 156,000 B 311,084 oldings, oldings, 28,000 16,200 91,484 -shares 6,500 5,800 3,200 2,500 1,000 300 100 — — - - -

93 HUSQVARNA ANNUAL REPORT 2008 CORPORATE Governance Report 2008

Composition of the Board Synthetic shares The Husqvarna Board of Directors shall consist of not less than Synthetic shares are not financial instruments in the legal sense. five and not more than ten members with not more than three They are a cash payment based on the trend for the trading deputies, all of whom are elected by the AGM for a period of price of the Husqvarna B-share. Fees to the Board are thus one year. The Husqvarna Board currently comprises nine mem- linked to the long-term development of the company. bers elected by the AGM. Two additional members, with dep Board members may opt to be paid in synthetic shares cor- uties, are appointed by the Swedish employee organizations, in responding to either 25% or 50% of the Board fee before taxes, accordance with Swedish labor laws. excluding fee for committee work. For administrative reasons, The members of the Board of Husqvarna have a mix of com- Board members who are resident outside Sweden and not sub- petence and experience in terms of e.g. management of inter- ject to Sweden and not subject to Swedish tax may opt to national industrial companies, financial expertise, sale and receive the entire fee as a cash payment. marketing of consumer goods, and knowledge of retailing After five years, i.e. in 2013, a holder of synthetic shares is business. entitled to receive a cash payment per share that corresponds With the exception of Bengt Andersson, who was President to the average trading price of the B-share at the time of and CEO until 1 October 2008, none of the Board members is payment. part of Group management. Two of the members elected by the General Meeting of The Board’s activities in 2008 shareholders are not Swedish citizens, and two are women. In the course of the year the Board held seven scheduled meet- For additional information regarding Board members, see ings and four extraordinary meetings. Three of the scheduled page 100. meetings were held in Stockholm, two in Huskvarna, one in Jonsered, in connection with a visit to the Husqvarna Independence of Board members Construction operation, and one by telephone. All the extraor- The composition of the Board is considered to be in compli- dinary meetings were held by telephone. ance with the requirements for independence stipulated by The Board deals on a continuous basis with strategic ques- NASDAQ OMX Stockholm. None of the Board members is tions that include Husqvarna’s operations and orientation, employed by the Group, with the exception of Bengt acquisitions and monitoring of them, all investments greater Andersson. than SEK 50m, and changes in the credit limits for major cus- The Nomination Committee’s assessment of whether each tomers. The financial statements and the annual report are of the proposed Board members is in compliance with these dealt with at the beginning of the year, as are the matters to be independence requirements shall be published together with presented at the AGM. The budget for the following year and the Nomination Committee’s proposal. the Group’s long-term plan are dealt with at the end of the

ANNUAL REPORT 2008 year. A report on committee activities between meetings is Fees to Board members presented at each scheduled meeting. Current litigation if any Fees to the Board members are determined by the AGM. In is reviewed quarterly. accordance with the proposal by the Nomination Committee, In addition to the standard activities, in 2008 the Board also the AGM 2008 approved total fees to the Board in the amount dealt with the following issues: of SEK 5,345,000. The AGM also authorized payment of a por- • Appointment of Magnus Yngen as new President and CEO, HUSQVARNA tion of the fees in the form of synthetic shares. succeeding Bengt Andersson. Following determination of cri- Authorized fees to individual Board members are reported teria and a comprehensive recruiting process, Magnus Yngen 94 in the table below. was appointed President as of 1 October 2008. Magnus Yngen was chosen on the basis of his previous experience of Fees to the Board 2006–20081) managing a global operation that included responsibility for SEK 2008 2007 2006 product development, production, marketing, brand-build- Chairman 1,600,000 1,500,000 1,500,000 ing and sales. Board member 460,000 437,5 0 0 437,5 0 0 • Adjustment of operations in view of the decline in market Chairman conditions resulting from the financial crisis and the global Audit Committee 175,000 175,000 175,000 downturn in the business cycle. In September the Board Member authorized personnel cutbacks totalling approximately 900. Audit Committee 75,000 75,000 75,000 • Acquisition of the outdoor operation of the Taiwanese com- Chairman pany Jenn Feng and two smaller companies that supply prod- Remuneration ucts to the construction industry. Committee 100,000 100,000 100,000 Member All Board meetings followed an agenda, which together with Remuneration documentation for each item was sent to all Board members Committee 50,000 50,000 50,000 approximately one week prior to each meeting. Authorized fees, total 5,345,000 5,0 87,5 0 0 5,0 87,5 0 0 Each scheduled Board meeting begins with a review by the President of the Group’s results and the current business situ 1) Refers to fees prior to the AGMs in 2009, 2008 and 2007 respect ively. For information about the composition of the 2008 fees in ation, including important external factors that could affect the terms of cash payment and synthetic shares, see Note 24. Group’s development. Husqvarna’s CFO then reports on the CORPORATE Governance Report 2008

Group’s financial position, including cash flow and capital Committees structure, and when appropriate presents economic analysis The Board has appointed a Remuneration Committee and an and overviews. Members of Group management and Board Audit Committee, whose activities are mainly preparatory and committees report on open issues from previous meetings, if advisory. The Board may also delegate decision-making necessary. authority to a committee for specific issues. In addition to the information provided during the meetings, the President and CEO sends a monthly report to all Remuneration Committee Board members and maintains continuous contact with the The overall duty of the Remuneration Committee is to propose Chairman of the Board. principles for remuneration to members of Group Manage- ment. The Remuneration Committee presents proposals to the Overview of issues dealt with at Board meetings in 2008: Board of Directors regarding targets and criteria for variable 14 February, ordinary meeting in Stockholm remuneration, the relationship between fixed and variable sal- • Financial statements and Consolidated Report for 2007 ary, changes in fixed or variable salary, long-term incentives, • Information and report from auditors pension terms and other benefits. • Proposals for the AGM The Committee comprised three Board members: Peder • Acquisition of Jenn Feng’s operation in outdoor products Ramel, Chairman until the AGM 2008, and Anders Moberg and • Resolution of acquisition of the US company Meco’s oper Lars Westerberg as members. Peder Ramel was succeeded by ation in concrete saws Tom Johnstone as Chairman as of the AGM 2008. The Director 6 March extraordinary meeting, by telephone of Human Resources, serves as the committee’s secretary. At • Approval of Annual Report for 2007 least two meetings shall be held annually. In 2008, the commit- 23 April, ordinary meeting in Huskvarna and constituent tee held three meetings that included discussions of the issues meeting of Board following AGM below: • Interim report for January–March 2008 • Approval of revised Code of Conduct 17 January in Stockholm • Resolution of acquisition of Sandvik Nora AB’s operation in • Remuneration to the President and CEO, and other mem- diamond tools bers of Group Management. 23 May, extraordinary meeting, by telephone 8 February in Stockholm • Appointment of new President and CEO Magnus Yngen • Long-term incentive program for 2008. 3 June, ordinary meeting in Jonsered 2 December in Stockholm • Board’s rules of procedure • Remuneration to the President and CEO, and other mem- • Approval of strategic business plans for Group and sectors bers of Group Management. ANNUAL REPORT 2008 17 July, ordinary meeting, by telephone • Long-term incentive program for 2009. • Interim report for first half of 2008 Audit Committee 16 September, extraordinary meeting, by telephone The overall duty of the Audit Committee is to support the • Decision on profit-warning for Q3 and announcement of Board in monitoring the accounting and financial reporting cost-reduction measures

processes, including the adequacy and the effectiveness of HUSQVARNA 22 October, ordinary meeting in Stockholm internal controls, as well as the effectiveness of disclosure con- • Interim report for first nine months 2008 trols and procedures for external reporting. 95 • Board’s evaluation of own performance, repurchase of The Audit Committee also assists the Board of Directors in shares monitoring the audit of the financial statements, including 3 December, ordinary meeting in Stockholm related disclosures. This includes reviewing the objectivity and • Renewal and update of Board’s rules of procedure and independence of the external auditors, monitoring their work, guidelines evaluating their performance, and if necessary recommending • Approval of credit limits for major customers their replacement. In addition, the Audit Committee is tasked 22 December, extraordinary meeting, by telephone with supporting the Nomination Committee in preparing pro- • Approval of budget and long-term plan posals for election of external auditors and for auditor’s fees. • Decision on profit-warning for Q4 The Audit Committee also reviews the Group’s Internal Audit function regarding organization, staffing, budget, plans, The Annual Report for 2008 was approved at the ordinary results and reports. Board meeting on 19 February 2009. 96 HUSQVARNA ANNUAL REPORT 2008 • • • Company’s external auditor, with Anders Lundin (auditor-in- Lundin Anders with auditor, external Company’s A PricewaterhouseCoopers At Extraordinary an auditors External • Stockholm in 26 November • • • Stockholm in October 20 • 15 by telephone July • • • 16 Stockholm in April • • Stockholm in 7 February available to available B annually. held be shall meetings three I Chief by the attended are meetings committee’s The members. B sions of the issues below: issues of the sions • • • • I nternal audit, who is also the committee’s secretary. At least At least secretary. committee’s the also is who audit, nternal n 2008 the committee held five meetings that included discus included that meetings five held committee the n 2008 North America oard as a whole. Minutes are taken of all meetings and are are and of meetings all taken are Minutes a as whole. oard Peggy (Chairman), Ekholm örje Communications &InvestorRelations Report Republic, financial reporting, updating of financial policy. offinancial updating reporting, financial Timetable The B The Reports Loan report interim of the review the on report auditors Draft Draft Monitoring PwC’s Draft Internal Auditors The Long-term Reports procedures. Draft Consolidated Report for 2007.for Report Consolidated Roger Leon razil and and razil After each meeting the Audit Committee reports to the to the reports Committee Audit the meeting each After three comprises Committee Audit The F Board’s external draft facilities, inancial Officer, the the Officer, inancial of of of of audit on auditors interim the the revised on on reported of F Bernt Ingman H B audit and Åsa Stenqvist Consumer Products financing rance and Japan. Japan. and rance internal risk Martin Bertinchamp of oard members and auditors. and members oard uskvarna, uskvarna, interim interim plan the dividend Rest oftheWorld auditors CFO the evaluation audit Massmarket analysis report Code Annual of reported for acquisitions G results IT report report audits eneral Meeting on 27 January 2006 2006 27 January on Meeting eneral 2008 process activities. reported proposal S of for weden Report Conduct. G of of (PwC) was appointed as the the as appointed was B (PwC) first in on for for eneral Counsel and the head of head the and Counsel eneral financial audit Rest oftheWorld China, for Hans Linnarson internal January–June January–March nine of B for to on 2008, ruzelius and and ruzelius Dealers Klippo the of 2007, results months, Canada, President andCEO accounts activities audits AGM Magnus Yngen effect and and B of oard members: members: oard CORPORATE and the 2008 in the the Jikai of G 2008 for Bo Andreasson un Nilsson as as Nilsson un the IFRS hard-close the Czech Forestry 2007 US, external 2009

Governance Professional Products on - Hans Linnarson Lars Worsøe-Petersen Lawn and Human Resources garden G for of employment terms other and remuneration for proposal Total auditors other fees, Audit PwC fees, Non-audit the the on based S the with H has been reviewed by the external auditors. auditors. external by the reviewed been has January- for report interim The Committee. with discussed been have review of their results The of accounts. closing the to prior time in good issues auditing possible to identify order S annually. once least to the report and required. when entities legal various the for opinions with in accordance and countries, respective in the regulations applicable other or of outside ties of tion sheets and income statements of major of major statements income and sheets balance in the items selected reviewed auditors the 2008 Audit fees, PwC fees, Audit S auditors to Fees audit assignments, see page 101. page see assignments, audit 82. page on 25 F and tax consultancy. acquisitions, with connection in diligence due services, similar and F financial statements for the the for statements financial for report annual the and A the until period the for Johansson, Rankin Christine and charge) Legal Affairs Olle Wallén EKm ees to PwC for non-audit assignments refers to fees for confirmatory confirmatory for fees to refers assignments non-audit for PwC to ees or further information on fees paid to the auditors, see Note Note see auditors, to the paid fees on information further or wedish auditing standards issued by issued standards auditing wedish eptember 2008, known as hard-close audit procedures, in procedures, audit hard-close as known 2008, eptember usqvarna’s subsidiaries. The audit is conducted in accordance in accordance conducted is audit The subsidiaries. usqvarna’s roup Management in Management roup Audits of local statutory financial statements for legal enti legal for statements financial statutory of local Audits Prior to the A to the Prior I Committee Audit of the meetings the attend auditors The PwC provides an audit opinion on the financial statements statements financial the on opinion audit an provides PwC n addition to the annual audit of the financial statements, in statements, financial of the audit annual to the n addition I nternational nternational G Report H M in 2010. M in 2010. S usqvarna A usqvarna Anders Ströby Construction wedish Companies Act and generally accepted accepted generally and Act Companies wedish G enerally Accounting Auditing Auditing Accounting enerally S 2008 F G weden are performed in accordance with laws laws with in accordance performed are weden G or information on the auditors and their other other their and auditors the on information or roup management and reported to the Audit Audit to the reported and management roup F B M 2008 the auditors reviewed the the reviewed auditors the M 2008 ederation of Accountants ( of Accountants ederation oard of oard IF B AC , and the financial statements of statements financial the , and H G usqvarna. usqvarna. H Group Management, see page 102. page see Management, Group of members on information For E. Cook. Robert succeeding America, North Products of Consumer Head appointed was Leon Roger 1 On July Andersson. Bengt succeeded He 2008. CEO 1 on and October President as position the on took Yngen Magnus AA D usqvarna A usqvarna H irectors when appropriate, but at at but appropriate, when irectors usqvarna usqvarna S 2008 , including issuance of audit of audit issuance , including 24 21 1 2 F B G AR AR , the consolidated consolidated , the G roup, the administra the roup, tandards issued by issued Standards roup units as of 30 of 30 as units roup S S R 2007 eptember 2008 2008 eptember IF S 30 17 , which are are , which AC 7 6 G B AA oard’s oard’s S ). 2006 16 15 - 0 1 - G President and CEO, and former President includes five sector heads and four four and heads sector five includes I Management Group and President The principles. ethical and in general, society environment, the customers. and products on focus as a well as cost-efficiency features and decision-making, rapid sectors. within reviews operational quarterly through largely conducted is of operations agement sectors. ness busi six and Products, Professional and Products Consumer H structure corporate and Management F Chief the and Committee Audit to the directly H Internal auditors For more information on remuneration to senior management, see Note 24. 2) 1) CEO and President SEKt Management Group to Remuneration Total Total other Management, Group with with conflict not do documents legal other and agreements ments, commit that ensuring and decisions, for input and information of preparation reporting, financial for responsibility include the with in accordance company of the management ongoing for ing of these when necessary. necessary. when of these ing updat as well as plans, strategic and policies goals, with ance compli ensure also shall President The to competition. related and are attended by the heads of the sectors. sectors. of the heads by the attended are and President, by the chaired are meetings These quarterly. held are which meetings, operative through implemented is sectors of the management Overall sectors. respective of their sheets these to support the business sectors. The The sectors. business the to support these using and guidelines, and policies developing issues, wide the media, and the capital market. market. capital the and media, the and employees including stakeholders, various with contacts as well as issues, legal and management risk financing, results, financial on reporting and consolidation for responsible also n addition to the President and CEO, and President to the n addition or more information on internal audit activities, see page 99. page see activities, audit internal on information more or usqvarna’s operations comprise two business areas, areas, business two comprise operations usqvarna’s reports that audit internal for a function maintains usqvarna roup staffs. roup Fixed salary includes fixed salary for the period October to December (SEK 1,437,500), fixed amount instead of variable salary (SEK 718,750) and (SEK 718,750) salary variable of instead amount fixed 1,437,500), (SEK compensationDecember to for the loss ofOctober right toperiod allocationthe for from long-term incentivesalary programs withfixed the former employer includes (SEK 2,000,000). salary Fixed age of 65. The cost of his remuneration in 2009 has been taken in 2008. in taken retirement been the has 2009 attains he in when 2009, June 30 until remuneration his of continues cost The employment 65. his of but age 2008, 1 October retired Andersson Bengt President former The for responsibility due with conducted be shall Operations to enable in order non-bureaucratic is culture corporate The of the structure The The President is appointed by the by the appointed is President The The President appoints all members of members all appoints President The The The balance and results the for responsible are heads sector The B S oard’s guidelines and instructions. These instructions instructions These instructions. and guidelines oard’s wedish or foreign laws and regulations, including those those including regulations, and laws foreign or wedish G roup staffs are responsible for coordinating coordinating for responsible are staffs roup I n addition, the organization comprises four four comprises organization the n addition, 1) G roup is decentralized. Overall man Overall decentralized. is roup 2) G roup staff heads. heads. staff roup B G 38,541 oard and is responsible responsible is and oard 26,505 roup Management Management roup salary salary 7,880 4,156 Fixed Fixed G CORPORATE G roup Management. Management. roup roup staffs are are staffs roup F inancial Officer. Officer. inancial Variable Variable G salary roup- Governance — — — — - - - - - Pension Pension 21,503 11,534 on value created for the the for created value on Principles for remuneration to senior managers to senior for remuneration Principles and President the for support As boards Internal are based on the position held, individual performance, performance, individual held, position the on based are to remuneration for principles general The each sector. sector. each in created value on based is remuneration variable heads, tor neration, see Note 24. Note see neration, the within created value for target remuneration. total of proportion a significant represents remuneration variable that means This “payon performance”. for a focus with ation the coordinates that forum areas: H incentives, pensions and other benefits. benefits. other and pensions incentives, long-term targets, performance annual on based incentives short-term of form the in salary variable salary, fixed comprises of employment. country in the ation remuner competitive maintaining and period, the for income and personel issues as well as pensions. as well as issues personel and policy administrative on primarily decide and regularly meet organization. the out through processes and contracts tools, purchasing methods, of working in terms uniformity as well as process purchasing The sectors. business across the the of management and organization for guidelines includes icy the throughout with complied and municated the by authorized policy financial the levels of risk, and how they are to be reported. The The to reported. be are they how and of risk, levels vious month’s results, update forecasts and plans, and discuss stra tegic issues. discuss and plans, and forecasts update results, month’s vious the the B 9,109 costs oard comprises the President, the Chief Chief the President, the comprises oard usqvarna has established internal boards in the following following in the boards internal established has usqvarna 860 The variable salary for the President is based on an annual annual an on based is President the for salary variable The The H managers senior for package remuneration overall The The The The G G H Report usqvarna aims at offering a competitive total remuner total a competitive offering at aims usqvarna roup Management holds monthly meetings to review the pre the review to meetings monthly holds Management roup ead of ead roup’s financial operations, permissible risk exposure, exposure, risk permissible operations, financial roup’s G F G inance inance lobal Purchasing Council ( Council Purchasing lobal roup roup Long-term Long-term incentive incentive I G n addition, weekly meetings are held by telephone. F 2008 or or roup Treasury. Treasury. roup taff Council comprises the staff heads who who heads staff the comprises Council Staff B 441 G 441 oard is an internal board which ensures that that ensures which board internal an is oard — — roup staff heads, the variable salary is based based is salary variable the heads, staff roup G roup. roup. 60,485 38,480 G 16,989 5,016 G roup’s purchasing globally and and globally purchasing roup’s 2008 Total PC ensures transparency in the in the transparency PC ensures F or more information on remu on information more or G G roup management, management, roup G roup. roup. PC) is a decision-making a is decision-making PC) B oard of oard 73,288 15,607 57,681 F F inancial Officer and and Officer inancial G or the the or Total 2007 roup Management Management roup — G

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97 HUSQVARNA ANNUAL REPORT 2008 98 HUSQVARNA ANNUAL REPORT 2008 REPORT • B Committees. Remuneration and Audit of the activities the include also which work, its for instructions • H B the by performance Efficient reporting. financial over control regulations. external and laws includes also environment control The codes. and manuals guidelines, policies, as such documents control of internal form in the communicated are which authority, and paths decision-making structure, tional organiza of definitions clear involves This environment. control I Control environment reporting. financial over control to internal limited is description monitoring. and communication, and information activities, control assessment, risk environment, control the (COS Commission of Committee by the developed framework the on based is activities reporting. in financial of inaccuracy risk the minimize and H I • F information. oral and the OMX basis. going of the development H Financial reporting and disclosure by total measured is created Value assets. net average on (WACC) of capital cost average weighted the less income operating as measured is and in operations, employed capital the of cost the with efficiency asset and income ing and President to the remuneration variable for basis the is creation Value Value creation • with the requirements for an information policy in the NA in the policy information an for requirements the with region. and category product sector, area, • simultaneously at http://corporate.husqvarna.com at simultaneously published are releases press and presentations reports, All nternal control over financial reporting is based on the overall overall the on isbased reporting financial over control nternal NTERNAL inancial information is issued regularly in the form of: form in the regularly issued is information inancial oard’s supervision of the auditing and reporting processes, processes, reporting and auditing of the supervision oard’s oard is thus the basis for satisfactory internal control. The The control. internal satisfactory for basis the thus is oard usqvarna usqvarna to manage designed is control internal for process usqvarna’s the about information with market the provides usqvarna The Press Interim Presentations Presentations news. of important release with in connection and results, full-year and quarterly of the of publication day the on representatives media and vestors tion with Capital Market days, Road Road days, Market Capital with tion The overall duty of the Audit Committee is to support the the to is support Committee Audit of the duty overall The The The The below. described is control of internal organization The D The B escription and evaluation of the of the evaluation and escription oard and and oard tockholm’s Rule book for issuers. The policy applies to applies policy The issuers. for book Rule Stockholm’s Husqvarna releases B B oard of oard an adopted has oard reports, I N B oard has established rules of procedure and clear clear and of procedure rules established has oard

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S NANC roup’s internal control control internal roup’s hows, etc. hows, issues. investors for CORPORATE I G AL analysts, roup, business business roup, in connec in SD - Governance AQ - - - financial reporting: financial I in integrated controls automatic of duties, segregation results, of analysis accounts, and balances of bank pany, reconciliation com the for signing and authorization for routines include and H the within reporting financial over control of internal level a uniform maintain and to ensure in order process business in each included be must that activities control the of i.e. specifications standards, Committee and to the to the and Committee H company. the in levels various at areas specific their within to managers delegated in turn is responsibility This President. the to delegated is reporting financial over control internal and management risk on work ongoing the as well as ment 95. page on detail in greater described are year the during Committee Audit of the activities The processes. and reports of such quality the to ensure and companies and allocations to pension funds. The The funds. to pension allocations and companies insurance in captive provisions as well as assets immaterial other and goodwill include respect in this items Major items. other are than of error risk to the exposed more relatively are processes by complex generated or estimates on based I assessment Risk G with comply controls internal unit’s the that ensuring include responsibilities whose a controller has unit operative Each Controlling deviations. and errors correct and identify to prevent, designed are activities Control Control activities ponding responsibilities. ponding and sector at controllers addition, The The codes. and routines policies, various manuals, company, the for to sign right the regarding instructions President, to the tions quently taken into account in the annual internal audit plans. audit internal annual in the account into taken quently subse are and Committee Audit to the reported are evaluation and analysis of risk results The risks. quantify and items such to identify analysis risk annual an performs function audit ternal and principles as stated in stated as principles and information is correct and complete and is delivered on time. time. on delivered is and complete and correct is information financial that ensuring for responsible also is controller The and the relevant relevant the and of Conduct. 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G H roup operates subsidiaries. The officer’s duties duties officer’s The subsidiaries. operates roup usqvarna has a system for confirmation of the final final the of confirmation for a system has usqvarna B G oard. roup’s operation in the U in the operation roup’s G roup management include a review a review include management roup G G roup’s intranet by all relevant per by relevant all intranet roup’s roup and for operative units, as as units, operative for and roup G roup’s financial position and and position financial roup’s H usqvarna in each country country in each usqvarna I n the autumn of 2008 a of 2008 autumn n the G G roup’s owners as as owners roup’s CORPORATE G roup’s accounting accounting roup’s B roup accounting accounting roup lower line, that that line, lower has main S has I n add S Governance elf- - - - ------sector level. level. sector at continuously monitored is Manual Accounting the with Compliance quarterly. updated and reviewed is manual The reporting. for instructions as well as companies, were received from all subsidiaries. all from received were instructions and policies other and manual the with pliance all for mandatory are that principles evaluation and accounting for rules includes which Manual, Accounting accounting manual. These reports are the basis for the the for basis the are reports These manual. accounting in stipulated are that reporting for routines ized standard the with in accordance units, 150 reporting mately of possible deviations in financial reporting at an early stage. anatearly reporting in financial deviations of possible identification enables which of operations, monitoring for tem monitoring at at monitoring and analysis for retrieved are data which from database central in a stored are reports financial All centralized. is solidation con All reports. operative monthly and reports legal quarterly generates which perspectives, operative and legal both from performed is Consolidation reporting. financial consolidated D Financial reporting H Monitoring G the and Committee Audit to the reports function The audits. unscheduled and scheduled both includes which Committee, Audit by the plan annual the with conforms auditors of the work The reporting. financial over controls internal improving and developing with tasked is function audit internal The audit Internal reports are posted on the the on posted are reports reporting. financial over control of internal improvement for dations recommen and observations their regarding Committee Audit to the report auditors internal The in 2008. assignments special completed also function This controls. ofinternal efficiency the enhance and to evaluate in order reviews objective and dent usqvarna maintains a comprehensive financial reporting sys reporting financial a comprehensive maintains usqvarna etailed financial data are reported every month by approxi by month every reported are data financial etailed roup’s Chief Chief roup’s Information available at www.husqvarna.com includes www.husqvarna.com at available Information H The The • • • • • • Report usqvarna applies applies usqvarna Presentations Annual Corporate The Information The G company’s Husqvarna roup’s function for internal audit performs indepen performs audit internal for function roup’s I reports, n 2008, letters of representation confirming com confirming of representation letters n 2008, 2008 G F inancial Officer. Officer. inancial roup, business-area and sector level. level. sector and business-area roup, Governance from Articles Code Interim IF previous R S H . This is defined in the the in defined is . This of usqvarna web site. site. web usqvarna reports reports of Conduct Association AGMs, from e.g. previous notices, H H usqvarna usqvarna H G usqvarna’s usqvarna’s usqvarna usqvarna roup and and roup years minutes I nterim nterim G roup’s roup’s ------

99 HUSQVARNA ANNUAL REPORT 2008 100 HUSQVARNA ANNUAL REPORT 2008 Tom Johnstone, Carita Carita Tom Johnstone, Lars Westerberg, Peggy Peggy Westerberg, Lars

G un Nilsson, Nilsson, un and Robert Robert and and and and Malin Malin and and Annika Ögren. Ögren. Annika and B F engt Andersson. engt redrik Währborg Währborg redrik and Ulf Lundahl. Ulf and Anders Moberg Moberg Anders left: Top, from B örje Ekholm Ekholm örje F S B . Connolly. pångberg pångberg jörnberg. jörnberg. B ruzelius

B OAR D O F DI RECTOR S AN D AU DI TOR S 1,000 F of S of Previous positions: S A Johnson Axel Committee, I member of Akzo Nobel n.v., Axfood A D H Previous positions: Holdings in Husqvarna: 1987–1989. and 1994–1995 I Company & Ward Montgomery ing, merchandis in positions as well as President S Wal-Mart 1989–1993, and 1996–2006 marketing and I S Wal-Mart Officer Marketing Chief and Previous positions: Other major assignments: F A of CEO and President 1997–1998. KA Other major assignments: B Bengt Andersson S National Agency for Lancelot Asset Management A Other major assignments: Committee. Elected Member2006. of the Audit S 91,484 Husqvarna: in Holdings 1987. America North Products Outdoor F F for Manager 1997. Product-line President Vice- Executive and Products Outdoor H 2002–2006. President S and Products H AB Electrolux; within positions management B B F. Connolly Robert 6,500 Holdings in Husqvarna: Holdings in Husqvarna: A Esab of CEO and President G of CEO and President B Previous positions: B Peggy Bruzelius of A of Technology, B Chairman Lars Westerberg Boar an Autoliv I Autoliv Other major assignments: Member of the Remuneration Committee. S ndustry and Commerce S Commerce and ndustry nc. Positions2001–2006. in merchandising tockholm S tockholm A yngenta tockholm S tockholm tockholm University, oundation, orestry and G and orestry lymo 1996. Product-line Manager for for Manager Product-line 1996. lymo inancial S inancial orn 1944. Mech. Eng., Elected 1991. Elected Eng., Mech. 1944. orn usiness, New Y New usiness, B 1943. orn I Autoliv of Member oard orn 1949.orn Econ., M. orn 1948. M. S M. 1948. orn usqvarna A usqvarna ead of Consumer and Professional Outdoor Outdoor Professional and Consumer of ead eputy Chairman of A of Chairman eputy B E B E A E B Volvo and SS and Volvo B B-shares. , S , B -shares. B nc. and Vattenfall A Vattenfall and nc. -shares. kandinaviska Enskilda B Enskilda kandinaviska . Chairman of Jönköping University University Jönköping of Chairman . ervices A ervices tores I tores G .A., Rochester I Rochester .A., chool of Economics. of chool chool of Economics, S Economics, of chool S S 2006 –1 October 2008. 2008. –1 October B 2006 and the Association of the the of Association the and weden. tockholm, arden Products 1991, and and 1991, Products arden enior Executive Vice- Executive enior c. Eng., Royal I Royal Eng., c. ork, U ork, nc. Executive Vice- Executive nc. d A Executive Vice-President of CEO and President Executive Vice-President President and CEO and and CEO and President A B B H H 1991–1997. . . S S on. on. igher Education. B 300 A-shares, 300 1,950 A-shares, A-shares, 1,950 B 156,000 A. Elected 2006. Elected A. weden. Elected 2006. 12,000 A-shares, 12,000 A-shares, ead of Professional Professional of ead Electrolux. B Electrolux. ränges A ränges S - B B weden, M D tock Exchange Exchange tock B nc. 1999–2007. 1999–2007. nc.

nstitute of of nstitute oc. in in oc. B oard member of oard Chairman of of Chairman oard oard Chairman of of Chairman oard B . B . B , S , nstitute of of nstitute 1991–1994. B oard member member oard cania A cania d and anken A anken B -shares. B 1994–1999. 1994–1999. weden. weden. .A., .A., BB B nc., nc., oard oard A., S

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o di 5,800 5,800 Husqvarna: in Holdings 1987–1993. D 2002. President and CEO of I of CEO and President 2002. I Royal Ahold 2002–2007. G Previous positions: D Economics, B Gun Nilsson 16,200 Holdings in Husqvarna: 1986–1999. Communications 1999–2001. C Committee. Audit the of C H and CEO deputy President, Vice Executive agement positions within D within positions agement H Previous positions: H Other major assignments: Clas Ohlson A Ohlson Clas assignments: major Other Remuneration Committee. B Anders Moberg 3,200 Holdings in Husqvarna: President Automotive Vice-President of A of Vice-President A within itions the Association of assignments: major Other B and CEO and President Committee. neration Previous positions: I D A assignments: major Other B and CEO and President Committee. Audit the of S I Royal Eng., H U B Tom Johnstone 28,000 Holdings in Husqvarna: A I of Vice-President Executive and 1999 I New for Responsible 1998–2005. B Börje Ekholm President of I of President I the in itions Previous positions: B University and Telefonaktiebolaget LM Ericsson nternational of H of nternational ndustries. tockholm, orn 1955. M. Econ., S Econ., M. 1955. orn orn 1950. Elected 2006. Member of the the of Member 2006. Elected 1950. orn oard member of A of member oard orn 1955. M.A., University of G of University M.A., 1955. orn M 1963. orn S B B F ead of Corporate D Corporate of ead A olding exagon AB olding A olding irector of enmark and B and enmark oc. in B in oc. roup, 2007–2008. President and CEO of of CEO and President 2007–2008. roup, A. Elected 2006. Chairman of the Remu the of Chairman 2006. Elected A. O 1993 and responsible for Corporate Corporate for responsible and 1993 O Chalmersinvest, EQT Partners A Partners EQT Chalmersinvest, 1 97. 19 f oard member of I of member oard B B B-shares. B tor -shares. -shares. -shares. .A., University of S of University .A., B B B 2007–August 2008. S 2008. 2007–August , Lindorff G Lindorff , S oard of KT of oard S nstitute of Technology, Technology, of nstitute . onnier Affärsinformation nvestor G nvestor weden. Elected Chairman2006. B nvestor G nvestor weden. Elected Member2006. D B B A, I A, yggmax A yggmax S . B . K ome D ome N oard member of DFDS of member oard CEO of Majid Al F Al Majid of CEO President of G of President

S F S S B S B wedish Engineering since 1987. Executive 1987. Executive since enior management pos enior management pos S EA S evelopment 2002–2007. 2002–2007. evelopment tockholm S tockholm H D K roup since 1995. 1995. since roup i rowth Capital I Capital rowth K roup A roup 2,760 A-shares, A-shares, 2,760 660 A-shares, A-shares, 660 8,400 A-shares, A-shares, 8,400 nvestor A nvestor 1,560 A-shares, 1,560 A-shares, D F . ivision 1995–2003. epot, U epot, ivision Division President F 1999–2003. 1999–2003. , F , . . B

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c. c. - S , , 2,500 Husqvarna: in Holdings S H G Enskilda Other major assignments: 1992–2001, President of Nokia D Nokia of President 1992–2001, B Enskilda Östgöta B Ulf Lundahl G of President Vice Executive 1989–1992, Lundbergföretagen A E L of President deputy and President Vice University, of D of Lundbergföretagen A Previous positions: Stockholm. H and Office S Oy, Ramirent Holdings in Husqvarna: Confederation of Trade Unions. B Annika Ögren B 100 Holdings in Husqvarna: Holdings in Husqvarna: S S of Members representatives Employee H G Other audit assignments include: B PricewaterhouseCoopers A Christine Rankin Johansson Holdings in Husqvarna: S Melker AarhusKarlshamn, Other audit assignments include: charge in Auditor B PricewaterhouseCoopers A Anders Lundin Annual the until period four-year a for auditors PricewaterhouseCoopers A Auditors Holdings in Husqvarna: S B Fredrik Währborg Holdings in Husqvarna: Confederation of Trade Unions. B C Deputy members B Malin Björnberg trategy consultant alaried Employees in I in Employees alaried ervices. ervices. orn 1974. Representative of the F the of Representative 1974. orn orn 1952. M. of Laws and M and Laws of M. 1952. orn orn 1965. Representative of the S the of Representative 1965. orn orn orn 1964. Authorized Public Accountant. orn 1956. Authorized Public Accountant, S the of Representative 1968. orn orn 1959. Representative of the oldings as of 31 D 31 of as oldings arita Spångberg arita olmen A olmen ötabanken / G / ötabanken roup, D roup, alaried Employees in I in Employees alaried anske S anske -shares. B-shares. G chörling A chörling eputy auditor H auditor eputy eneral Meeting 2010. B ymnasiet. B ymnasiet. S , Cardo A Cardo , ecurities 2001–2003, President of of President 2001–2003, ecurities weden. Elected Executive2008. andelsbanken, Regional B Regional andelsbanken, tockholm City F City tockholm OTA B S I ecember 2008. ecember B ank / D / ank ndustrivärlden, Loomis, SIAR 1976–1983. enior adviser of L E E L of adviser enior and S and B s B B oard member of of member oard , I , ndustry and S and ndustry ank 1983–1989, 1983–1989, ank 0 shares. 0 0 shares. 0 30 A-shares, A-shares, 30 0 shares. 0 B 300 shares. 0 2003–2004, President 2003–2004, . 750 A-shares, ndutrade A ndutrade aldex A aldex B ndustry and and ndustry anske B anske CA. B B B oard Chairman of of Chairman oard B is appointed -shares. A, Lund Lund A, ire I ire ata S ata B F Aditro Aditro of ederation

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101 HUSQVARNA ANNUAL REPORT 2008 102 HUSQVARNA ANNUAL REPORT 2008 Holdings in Husqvarna: W and Co. A Rothenberger and and of H of Other major assignments: S Controlling, 1986. G of Administration S S Entrelec A Metabo G Previous positions: G G B World, Massmarket. H Martin Bertinchamp 9,614 9,614 Holdings in Husqvarna: 1982. Products Outdoor Professional Electrolux 1984–2001. Combustion Engine Engineer in planning, Outdoor Electrolux Products, product and development research, in itions Operations 2001. Various management pos H 2002. Electrolux, Previous positions: Management since 2006. Employed 1982. Member of of Technology, B H Bo Andreasson Holdings in Husqvarna: of D of Other major assignments: 1995. LUX, operation sales D Technical Care H 2001, operation European H 2002. sector business F Electrolux H 2002–2008. Management President and member of Electrolux 2006– Appliances Europe, Electrolux, Previous positions: Employed 1 October 2008. of Technology, B CEO. and President Magnus Group M chiele I chiele orn 1958. M 1958. orn orn 1951. M. S 1951. M. orn orn 1958. M. Eng. Lic.Tech., Royal I Royal Lic.Tech., Eng. M. 1958. orn ead of Consumer Products Rest of the the of Rest Products Consumer of ead ead of F of ead ardena A ardena mb roup Management since 2007. ermany. Employed 2004. Member of Products North America, succeeding Robert E. Cook who retired with a pension. a pension. with retired who E. Cook Robert succeeding America, North Products A Magnus Management Group in Changes ceeded ceeded until the A the B until U uni A uni B H I B B EURER EURER nternational operations, 1999. S 1988. D 1988. -shares. ER Packaging G Packaging ER eptember Executive2008, Vice- ndustriewerke G ndustriewerke Y B orestry. orestry. G A 1995. Managing D Managing 1995. A IH ngen . . B G Y irector in the Electrolux direct direct Electrolux the in irector 1996. Managing D Managing 1996. loor-care and S and loor-care engt Andersson. Andersson. engt ngen took on the position as President and CEO on 1 October 2008. 2008. 1 on CEO October and President as position the on took ngen 2004. President and CEO of of CEO and President 2004. A Werkzeuge G Werkzeuge A B G A, University of S of University A, irector Controlling of EA of Controlling irector mb c. Eng., Chalmers University University Chalmers Eng., c. G S G G tockholm, othenburg, , PAUL B PAUL , S H M 2009. On 1 July 2008 Roger Leon was appointed appointed was Leon Roger 2008 1 On July M 2009. President and CEO of of CEO and President H H ead of Accessory Accessory of ead chiele chiele üdzucker A üdzucker . ead of F of ead ead of Major Major of ead B oard Member of of Member oard roup G roup 0 shares. 0 591 A-shares, A-shares, 591 25,000 B 25,000 ead of this sectors sectors this of ead mb

I AU B B ndustriewerke ndustriewerke S mall Appliances Appliances mall ead of the the of ead oard Chairman oard member G ead of F of ead H weden. mb orestry, orestry, S D roup 1992. D 1992. mb B weden. irector of of irector irector of of irector G ER G ER aarbrücken, aarbrücken, engt Andersson continues as as continues Andersson engt H -shares. 1983. H . + Co. K Co. + nstitute nstitute mb loor loor G

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B H Ströby Anders Holdings in Husqvarna: 16,400 16,400 H 1996–2002. Electrolux Equipment and Products, Construction Previous positions: 2006. Technology, Marketing for the H the for Marketing B Other major assignments: H Related parties: 27,025 Holdings in Husqvarna: 1985. Electrolux Professional 1987. H Products H 1993. Products Outdoor Electrolux brands, 1980. Member of 1996–2003. 1996–2003. Europe Appliances, Major Electrolux within development, marketing and production Various management positions 2004. in product Electrolux world, the of Rest Products Previous positions: Member of 1994.Employed Electr.Eng., Teknikum, Växjö, Law, U Law, of College Chicago-Kent Technology, of B Lawn and garden. World, H Hans Linnarson Holdings in Husqvarna: 2007. America North Officer of ElectroluxConsumer Products Chief1989–2006. Electrolux Operating America, North Products Outdoor and supply-chain management in White positions within finance,and manufacturing Previous positions: G B H Roger Leon orn 1953. M. S M. 1953. orn eijer Electronics A Electronics eijer orn 1952. B 1952. orn G 1954. orn andling product line 1994. 1994. line product andling ead of Construction. ead of Jonsered and Partner I Partner and Jonsered of ead ead of Consumer Products Rest of the the of Rest Products Consumer of ead America. North Products Consumer of ead roup Management since 2008. ana S B B Dealer channel and Commercial A. Employed 1989. Member of of Member 1989. Employed A. -shares. -shares. G H B .A, Lund University, S University, Lund .A, S raduate of law, I law, of raduate roup Management since 2006. ead of Electrolux Materials oard member of member oard tockholm, c. Eng., Royal I Royal Eng., c. 2,520 A-shares, 2,520 A-shares, ead of Product Planning in in Planning Product of ead G Various management H H roup Management since usqvarna and Jonsered Jonsered and usqvarna B ead of G of ead ead of Consumer Consumer of ead and Nibe A Nibe and H ead of Consumer of Consumer ead 14,913 B 5,232 A-shares, A-shares, 5,232 8,292 G ead of S of ead S arden Equipment

weden. Employed B oard member of llinois I llinois arden arden S B-shares. nstitute of of nstitute g weden. H ndustrial ndustrial -shares.

ales and and ales B usqvarna usqvarna weden, weden, H . e suc nstitute nstitute G oods ement - H H 2002–2005. America North in Appliances Major Electrolux for positions: Previous G D B H Lars Worsøe-Petersen 17,235 Holdings in Husqvarna: 2000–2001. America North Electrolux of Counsel Electrolux Europe 2002–2005. positions: Previous Management since 2006. Europe 1999. H 1999. Europe in Appliances Major Electrolux for Resources B H H Olle Wallén S I H 1999–2005. Electrolux S 14,027 Holdings in Husqvarna: D in operations Electrolux Related parties: 8,737 Holdings in Husqvarna: 1988.Electrolux G in I Relations and positions: Previous Management since 2006. S Communications, Administrative D Administrative G Metric of Vice-President G I of Vice-President Executive C and Previous positions: Management since 2006. C C 1988. G Other major assignments: B I H Åsa Stenqvist 25,348 Holdings in Husqvarna: S B Chief Bernt Ingman H nvestor Relations, Electrolux 1993. H 1993. Electrolux Relations, nvestor nvestor Relations and nvestor Relations. taff taff Communications and weden. Employed 1993. Member of weden. Employed 1982. Member of weden. Employed and member of orn 1958. M. Econ., Aalborg University, University, Aalborg Econ., M. 1958. orn orn 1953. M. of Law., S Law., of M. 1953. orn orn 1947. B orn orn 1954. M. Econ., Uppsala University, University, Uppsala Econ., M. 1954. orn F olding A/ olding oldings as of 31 D 31 of as oldings ead of G of ead usqvarna usqvarna G of ead ead of enmark. Employed 1994. Member of & L B L & roup Management since 2006. roup 1994. F 1994. roup O of National Elektro S Elektro National of O roup S roup B F F B-shares. B inancial inancial Officer. B O of Munters A Munters of O -shares. -shares. F eijer A eijer -shares. G -shares. O of Celpap I Celpap of O roup S roup roup S roup roup taff Mergers & Acquisitions, Acquisitions, & Mergers taff S B , D , .A., and D and .A., oard B inance D inance F enmark 2000. H 2000. enmark ead of H of ead . inancial S 288 A-shares, 966 B 966 A-shares, 288 taff H taff taff Legal Affairs, Affairs, Legal taff taff taff Communications and irector of Calor Vanadis A Vanadis Calor of irector S S H Executive Vice-President ecember 2008. ecember G H ecretary. tockholm University, ead of H of ead ead of I of ead eneral Counsel of ead of Electrolux Electrolux of ead egree in in egree nternational 1986. 1986. nternational uman Resources. uman B F irector and Executive Executive and irector uman Resources for for Resources uman 3,228 A-shares, A-shares, 3,228 1,878 A-shares, A-shares, 1,878 A-shares, 1,404 25,400 A-shares, A-shares, 25,400 tockholm University, University, tockholm I 1997–2005. 1997–2005. inancial nformation in ead of G of ead enmark 1994. 1994. enmark

venska A venska B roup 1990. 1990. roup B oard member of nvestor nvestor uman Resources Resources uman randing, nter S nter ead of H of ead G I eneral nformation roup S roup can can B -shares. G 1985. 1985. ead of of ead G G roup G uman uman roup roup taff taff roup B

Magnus Magnus left: Top, from Olle Wallén, Åsa Åsa Wallén, Olle Lars Worsøe-Petersen, Roger Leon and and Leon Roger Worsøe-Petersen, Lars B o Andreasson. ROUP GROUP MANA Y ngen, Anders Anders ngen, S tenqvist and Martin Martin and tenqvist GEMENT S tröby and and tröby H ans Linnarson. ans B B ertinchamp. ernt ernt I ngman.

103 HUSQVARNA ANNUAL REPORT 2008 104 HUSQVARNA ANNUAL REPORT 2008 stakeholders who affect or are affected affected are or affect by who other and stakeholders employees shareholders, a Group’s act Group’s T soc development that loaded from www.husqvarna.com. from loaded a respons a pliers, retailers and other business partners. business other and retailers pliers, sup to external supplied is code The of 2008. end the at began municipality and State Employees stakeholders to Distributed Suppliers Customers Stakeholder Value added objectivity employee’s the to influence considered be could which or influence may which of remuneration, forms other or services gifts, accept not may Employees permissible. not are corruption and bribes that clear it makes of conduct code The corruption and Bribes the by which principles and B H Conduct of Code Revised H Development Su D UN Universal the and companies, multinational for lines F institutions Credit code. the with to comply partners try. coun or of position irrespective to employees all applies code The stakeholders. other and partners business employees, Shareholders Total undamental Principles and Rights at Work, the OEC the Work, at Rights and Principles undamental oard of oard h usqvarna’s revised Code of Conduct was adopted by the by the adopted was of Conduct Code revised usqvarna’s eclaration on on eclaration i usqvarna usqvarna med at creat at med The code is available in several languages and can be down be can and languages in several available is code The I The Code of Conduct is based on the the on based is of Conduct Code The i H mplementation of the revised code in the organization organization in the code revised of the mplementation Husqvarna’s operat s respons s usqvarna also encourages suppliers and other business business other and suppliers encourages also usqvarna i ally and ecologi D irectors in 2008. The code underscores the values values the underscores code The in 2008. irectors s i H ble manner manner ble uman Rights. uman i i SEKm Value added Value Taxes contributions Employer Salaries services and materials of Cost sales Group Interest Dividends s comm v i tai b i t i i l n i i es and processes, and and processes, and es t y y t g lon G i i s econom i ncludes all of the the of all ncludes roup conducts its relations with with relations its conducts roup tted to operattted cally sustai g- i i n order to ach to order n nab ons. term value for for value term I LO’s i cally, –23,660 32,342 7,094 8,682 4,037 D 1,122 2008 eclaration on on eclaration 862 594 479 nable. i D n –23,637 ’s guide 33,284 g 1,029 3,973 7,197 9,647 i le 2007 i eve eve i 853 667 675 s n - - - - is focused on reducing these effects. these reducing on focused is of part a central Accordingly, used. are products the when emissions exhaust and tion by the generated impact environmental total the that indicate analyses These services. and of products impact environmental potential S by the added value total The purposes. other and marketing development, product in the remains value of this Part holders. G growth. profitable sustainable, achieve taneously regu legislation, regional and national of international, form the take and thresholds, of specified consist often criteria These recycling. and use from arising effects other and impact tal contravene any law or customary business practice. business customary or law any contravene to considered be could which or contravene which stakeholder, or partner business anyto benefits other or remuneration offer ENV H ECONOM are powered by electricity and/or batteries. and/or by electricity powered are others the while petrol-powered, are of them majority The ucts. of products. recyclability to the packaging, and levels noise emissions, exhaust as such features product and energy and of materials consumption processes, production from everything covers and operations H and commercial judgement. judgement. commercial and

EK usqvarna’s goal is to create value for stakeholders and simul and stakeholders for value to is create goal usqvarna’s usqvarna’s environmental responsibility is anchored in all in all anchored is responsibility environmental usqvarna’s roup products and services is divided among various stake various among divided is services and products roup Most of the economic value that is generated by sales of by sales generated is that value economic of the Most H H prod by engine-powered dominated is range product The Taxes, 1%Taxes, 2% Interest, 3% contributions, Employer 3% Dividends, Distribution of Group sales 8,682m (9,647). 8,682m lations and directives. and lations usqvarna performs analyses in order to evaluate the the to evaluate in order analyses performs usqvarna usqvarna products are subject to criteria for environmen for to criteria subject are products usqvarna IRONMENTAL I C

RESPONS G roup derives mainly from energy consump energy from mainly derives roup

IB RESPONS G roup in 2008 amounted to amounted in 2008 roup I B F H urthermore, urthermore, I usqvarna’s environmental work work environmental usqvarna’s L I TY

IL choice of materials, of materials, choice G I marketing, etc., 5% etc., marketing, TY roup for investment, investment, for roup and services, 73% services, and Investment, R&D, Investment, H Cost of materials materials of Cost usqvarna shall not not shall usqvarna Salaries, 13% Salaries,

- - - - - international standards. international with compliance product on information include also They recyclability. and packaging levels, noise vibrations, emissions, lubricants, of fuel, type consumption, fuel specify larations based on a life-cycle approach. a on life-cycle based be will policy The area. environmental in the requirements other and legal with to comply and pollution environmental to prevent impact, environmental minimize to continuously experts. experts. by qualified performed are inspections necessary, When ment. manage with interviews and contamination of soil risk ations, oper for permits includes audit The audit. environmental-risk launch products with catalysts. with products launch to first the of one was and engines, two-stroke efficient more ations for several products. products. several for ations S used. methods production the as well as comprises product a that materials of the declarations require customers Many Environmental declarations describes policy The in 2009. completed be a common producing on Work Environmental policy service and recyclability. and service of simplicity user-friendliness, ergonomics, levels, noise safety, emissions, exhaust consumption, in energy improvements with performance high combine that products creating on H Product development facilities, production with operations I Environmental aspects regarding acquisitions H n connection with agreements for acquisition of companies or or of companies acquisition for agreements with n connection ince 2000, 2000, ince usqvarna’s investments in product development are focused focused are development in product investments usqvarna’s usqvarna will launch the world’s first battery first world’s the launch will usqvarna H usqvarna has been a leader in terms of development of of development in terms a leader been has usqvarna H usqvarna has prepared environmental declar environmental prepared has usqvarna I n addition to materials, these dec these to materials, n addition G roup environmental policy will will policy environmental roup H usqvarna performs an an performs usqvarna - driven cultivator in 2009. in cultivator driven H usqvarna´s efforts efforts usqvarna´s S U S TAI NAB - LE D EVELOPMENT standards. minimum legislated surpass which products and technology developing involves strategy The surpassed. or met be always the regarding ations discussions with authorities regarding these standards. these regarding authorities with discussions standards. emission future meet to well-prepared is and field in this patents important The 2001. since average on 40% mately by approxi reduced been have hydrocarbons, particularly enhances product safety. and life-span product the increases This technologies. catalyst to other compared temperatures exhaust lower ates E-TEC the where catalysts, with equipped U in the criteria emission E-TEC performance. mal opti to achieve in order emissions exhaust to reduce catalysts, fuel than two-stroke engines. two-stroke than fuel less consume normally which engines, four-stroke with fitted are mowers lawn as such Products in 2004–2008. achieved was 15% of approximately consumption in fuel a reduction mers, trim and blowers leaf saws, clearing chainsaws, for used being increasingly are which engines, two-stroke developed newly technologies. engine of new basis the on sumption con fuel to reduce efforts intensive making is and engines, H Fuel consumption stricter thresholds for ambient noise. thresholds The stricter G four Within tomore five ofproducts. the considerably years, H Noise levels products. of its use correct the G The safety. product and ergonomics both improving at aimed H Ergonomics and Safety performance. enhanced offer eously simultan and regulations these with comply fully that ucts prod petrol-powered handheld for engines new developed The to continue. expected is trend this and ous, rigor more become successively have equipment rol-powered S emissions Exhaust tions that these thresholds will become more restrictive. will tions more become that thresholds restrictive. these area continuously, and product development includes assump ince the mid-1990s, regulations regarding emissions from pet from emissions regarding regulations mid-1990s, the ince usqvarna works actively to by reduce the actively noise works emitted its usqvarna usqvarna has long experience of development of two-stroke of two-stroke of development experience long has usqvarna usqvarna’s investments in product development are also also are development in product investments usqvarna’s roup’s product categories are expected to to are be roup’sexpected subject categories product roup works continuously to improve information regarding regarding information to improve continuously works roup Exhaust emissions from the the from emissions Exhaust of the Many According to According H usqvarna uses a mix of technological solutions, including including solutions, of technological a mix uses usqvarna and X-TORQ engines that meet the strictest exhaust exhaust strictest the meet that X-TORQH and engines G H roup’s handheld products are fitted with with fitted are products handheld roup’s usqvarna’s quality policy, customer expect customer policy, quality usqvarna’s G roup’s products and services shall shall services and products roup’s and Europe. Europe. S and H usqvarna participates actively in actively participates usqvarna G roup’s handheld products, products, handheld roup’s S G everal models are also also are models everal G roup has a number of a number has roup technology gener H technology roup monitors roup this monitors G roup has has roup F or the the or - - - ------

105 HUSQVARNA ANNUAL REPORT 2008 106 HUSQVARNA ANNUAL REPORT 2008 Index meet stricter criteria than the prescribed minimum standards. minimum prescribed the than criteria stricter meet They compatibility. environmental and technology engine on robotic lawn mower. Automower lawn robotic the spring of 2009. of 2009. spring the in launched be will use professional for mower lawn robotic the of model Alarger level. to a predefined drops power battery when station docking to the returns and automatically lawn the consumption. energy low features and emissions no Husqvarna’s new two-stroke engines environment. working a better and emissions dioxide carbon omy, lower econ fuel better means which levels, exhaust-emission lower performance. and quality high maintaining simultaneously tion, consump fuel and emissions exhaust reduce to order in engines H X-TORQ the in 2008 Early Hybrid technology H Automower by developed products and technologies illustrate below examples The Technologies and products EU. in the The 2007 1 on June effect substances. prohibited out to phase in order suppliers with in cooperation products powered electrically its date, of that Well in advance 2006. July 1 suppliers. to secondary and to suppliers externally as well as internally communicated is and continuously H available. become latter the as alternatives adapted environmentally new, more with materials used previously The impact. environmental H Composition of materials battery life. life. battery in longer results and consumption energy reduces panel solar H H at processes internal that to ensure in order group working 100 usqvarna has created X-TORQusqvarna for two-stroke technology usqvarna has developed Automower developed has usqvarna updated is (RML) List Materials Restricted usqvarna’s possible least the with materials to select aims usqvarna usqvarna comply with the REAC the with comply usqvarna ybrid, which is driven by both solar cells and a battery. The The a battery. and cells solar by both driven is which ybrid, 20 40 60 80 X-TORQ offers up to 20% lower fuel consumption and 60% 60% and consumption fuel lower to up 20% X-TORQ offers REAC Ro Union’s European The 0 1994 ® is the new chemicals legislation which went into into went which legislation chemicals new H the is Emissions ofhydrocarbonsandnitrogen oxids Fuel consumption S ® ee also page 9. page also ee S H 1996 ee also page 9. page also ee usqvarna in recent years with particular focus focus particular with years in recent usqvarna G E-TECH I Husqvarna's roup launched the new Automower new the launched roup S ee also page 9. page also ee 1998 G roup continuously replaces replaces continuously roup HS 2000 directive went into effect on on effect into went directive ® H requirements. is silent, efficient, generates generates efficient, silent, is E-TECH II Husqvarna's G roup has appointed a appointed has roup ® , the market’s first first market’s , the 2002 H usqvarna modified modified usqvarna 2004 S X-TORQ Husqvarna's U I t mows t mows S ® TAI

S olar olar 2006 NAB - - LE 2008 D EVELOPMENT marily as a result of acquisions in Asia. in Asia. of acquisions a as result marily pri somewhat, decreased has standards both under area fied cants at an early stage. The The stage. early an at cants forestry machinery that went into effect in the spring of 2008. spring in the effect into went that machinery forestry management systems. systems. management to fied certi was (92) of 84% equivalent the and systems, management impact. environmental reduced and life chain longer provides which oil, vegetable on based G The ethers. and in benzene reductions substantial enables rol pet conventional with in comparison which alkylate, on based in Europe, six in the U in the six in Europe, H Production of the ment requirements. relevant with in accordance authorities regulatory The Producer responsibility and recycling H lubricants and fuels Environmental tion inputs. tion produc as used of materials cost the and cost production total between difference the as defined is which value, to added tion inrela calculated are indicators key specific volume, duction page. next the on graphs units. G by the measurements periodic includes work Environmental for production indicators Key environmental was certified to certified was Japan. countries. in specific legislation national as well as Equipment) Electronic and Electrical (Waste WEEE EU’s directive the with ance usqvarna operates 22 major plants, of which ten are located located are ten of which plants, major 22 operates usqvarna lubri and fuels adapted environmentally launched usqvarna roup has also developed Vegoil, an optimal chain lubricant lubricant chain optimal an Vegoil, developed also has roup roup of several key environmental indicators at production production at indicators key environmental of several roup H S All B G ince the extent of environmental impact depends on pro on depends impact of environmental extent the ince y year-end 2008, 61% of the (63) 2008, y year-end usqvarna has been participating actively in the develop in the actively participating been has usqvarna roup manages recycling of electrical products in accord products of electrical recycling manages roup G IS approximately 15% was achieved in 2004–2008. in achieved was 15% of approximately consumption fuel in a reduction trimmers, and blowers leaf saws, clearing chainsaws, for used being increasingly are which engines, two-stroke developed newly the For 2001. since average on 40% approximately by reduced been have hydrocarbons, of form in particulary products, handheld Group´s the from emissions Exhaust roup plants are included in the data shown in the in the shown data in the included are plants roup O 14001, the international standard for environmental environmental for standard international O 14001, the H IS usqvarna also maintains a system for reporting to reporting for a system maintains also usqvarna O standard for recycling of manually portable portable of manually recycling for O standard IS O 9001, the international standard for quality- for standard international the O 9001, S , one in , one I n comparison with 2007 the total certi total the 2007 with n comparison G roup currently sells engine fuels fuels engine sells currently roup B razil, four in China and one in one and in China four razil, G roup’s production area area production roup’s ------ - - kg/SEKt CO and across business sectors. The The sectors. business across and F % Direct material balance ( Council of the 55% to approximately ponds corres components and materials raw of purchasing cost The cooperation – supplier purchasing Responsible Emissions to air to Emissions H (non-hazardous) landfill of Waste energy) and (material recycling External The table shows utilization of material in the the in material of utilization shows table The knowledgeable local buyers. The The buyers. local knowledgeable overall bines com which purchasing for organization an and a process has The decisive. therefore is activities of purchasing ciency Emissions to water to Emissions Total direct material direct Total compability magnetic Electro products of composition Material Producer responsibility Producer Noise levels Noise Safety minimum levels of undesirable effects, and are included in international, national and regional laws, regulations and directives. directives. and regulations laws, regional and national international, in included are and effects, undesirable of levels minimum H interference. Radio 2) 1) emissions Exhaust products issue Group’s the Environmental impacting legislation and directives Major inished products, incl. packaging incl. products, inished usqvarna’s products are covered by regulations concerning environmental impact and other effects arising from use and recycling. recycling. and use from arising effects other and impact environmental concerning regulations by covered are products usqvarna’s azardous waste azardous 2 portable engines. Most of the requirements were scheduled for full implementation in 2007, but in certain cases transitional provisions apply until 2010. Application of of Application 2010. EU. until the in apply EPA as progress in is provisions values threshold transitional same the cases with certain in but 2007, in controlled requirements similar non-exhaust for implementation full for criteria scheduled previous to were compared as requirements the of category, Most engine on engines. depending portable hydrocarbons, of emissions in reductions 55–80% require EPA regulations (U the American the on based are emissions exhaust to relating above table the in regulations All in relation to added value added to relation in 16 24 32 40 difference between total production cost and the cost of materials used as production inputs. the inputs. as defined is production as which used value, added to materials of cost relation the in and cost calculated are production total indicators key between specific volume, difference production on depends impact environmental of extent the Since 0 8 02 G 03 PC) enables purchasing to be coordinated globally globally to coordinated be purchasing enables PC) 2) G 04 roup requirements and opportunities with with opportunities and requirements roup 05 1) 06 07 08 m relation to added value added to relation in treated water of Volume G H G

3 /SEKt PC ensures transparency in transparency PC ensures roup’s manufacturing units. manufacturing roup’s usqvarna usqvarna G 0.00 0.06 0.12 0.18 0.24 0.30 roup’s net sales. The effi The sales. net roup’s California Code of Regulations, Proposition 65 Proposition of Regulations, Code California 02 Rest of U Rest EU- California: California Code of Regulations Code California California: EU- 03 G D lobal Purchasing Purchasing lobal D 04 irective 2003/10/EC (physical agents) (physical 2003/10/EC irective EU- irective 2000/14/EC (ambient noise) (ambient 2000/14/EC irective S and Canada: EPA C 40 Canada: S and U 05 EU- D S EU- EU- TAI irective 1907/2006/EC (REAC 1907/2006/EC irective 06 D D D G NAB irective 2002/96/EC (WEEE) 2002/96/EC irective irective 2001/95/EC ( 2001/95/EC irective irective 2002/95/EC (Ro 2002/95/EC irective 07 roup roup EU- - EU- 08 LE - D D D irective 89/336/EEC irective irective 202/88/EC irective EVELOPMENT D Kwh/SEKt relation to added value added to relation Energy consumption in 85.45 12.94 irective/legislation 2008 by the World World by the components. of share largest the for account engines Petrol-powered by purchased materials raw important most the organization. the throughout processes and contracts tools, purchasing methods, working uniform as well as process purchasing the 0.00 0.03 100 1.41 0.17 The share of purchases from low-cost countries as defined defined as countries low-cost from of purchases share The are magnesium and aluminum powder, metal plastics, Steel, 100 20 40 60 80 F 0 R Part 90 R Part Environmental Protection Agency) regulations stage 2. 2. stage regulations Agency) Protection S Environmental 02 G P 03 SD HS B 86.74 11.67 H ank is currently approximately 20%. approximately currently is ank 2007 0.00 0.03 1.43 100 0.14 04 ) ) ) 05 06 List of chemicals, use either limited or or limited either use of chemicals, List 07 I All All mport and production of chemicals production and mport Electrical and electronic products electronic and Electrical Electrical and electronic products electronic and Electrical 10.88 86.96 08 2006 0.00 2.00 H 0.03 100 0.14 powered products under 19 kW under products powered usqvarna products, in principle products, usqvarna kWh/SEKt T relation relation to area production Energy consumption in I hese regulations often define define often regulations hese nternal combustion engine engine combustion nternal All products and services and products All Products at workplaces at Products 150 300 450 600 750 0 84.82 14.29 02 2005 0.00 0.03 0.70 100 0.16 03 H usqvarna. usqvarna. All All products 04 Product area area Product I prohibited n general, n general, 05 06 85.87 13.32

2004 0.00 0.65 0.03 100 0.12 07 08

107 HUSQVARNA ANNUAL REPORT 2008 108 HUSQVARNA ANNUAL REPORT 2008 the the in levels all at commitment and motivation creating for central also are to develop opportunities and workplace a safe tions, condi working fair employees offering and workplace in the the achieving A G with relationships regarding of skills of the in development investment conscious and A long-term The workplace commitment. social tive a construc and rights human for respect fundamental as well as of work conditions and environment working the employees, H SOC conducted at short notice. notice. short at conducted • • include: fulfill must they which criteria The approved. manufacturing at Group plants throughout the world. the throughout plants at Group manufacturing mation is available to all employees on the the on to employees all available is mation infor The work. this for basis the form guidelines and policies H The fairly. treated are company the contact who people that ensuring at aimed also is process The remuneration. and ment, develop career of work, evaluation selection, and recruitment to regard with managers supports process The Process. People adopt and comply with its principles. its with comply and adopt to expected are who suppliers, with contracts to new all dix RML. the with compliance confirmed have suppliers of 70% the Approximately list. the with accordance in modifications for a request with suppliers all outdoor products operation. products outdoor Jenn of the acquisition the with in connection conducted were of which half in China, primarily in Asia, out carried were • pproximately two pproximately usqvarna’s social responsibility includes development of development includes responsibility social usqvarna’s usqvarna’s People Process, the Code of Conduct and various various and of Conduct Code the Process, People usqvarna’s accordance with the the with accordance A Compliance Compliance H All suppliers are carefully evaluated before they are are they before evaluated carefully are suppliers All I The The documented n 2008, fifteen Active Active fifteen n 2008, G usqvarna has established fundamental roup. I AL H G H usqvarna Code of Conduct is attached as an appen an as attached is of Conduct Code usqvarna roup’s Restricted Materials List (RML) has been sent to sent been has (RML) List Materials Restricted roup’s

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G roup-wide prin roup’s intranet. intranet. roup’s for us qvar materials S U na’s na’s S TAI ciples F NAB eng eng in - - - - - LE D EVELOPMENT To strengthen the leadership work, the the work, leadership the To strengthen period. next the for set are goals and evaluated are formance per and fulfilment goal in which appraisal-talk annual the with starts process The planning. mobility and succession through leaders to future access secure and develop to assess, in order H management Talent of tem share 18%. A large approximately was 2008 for ure fig The of employees. all 20% than more for account normally employees Temporary manufactured. are products garden of majority the in which quarter, second of the start the and quarter first the during peaks normally employees temporary in variations of seasonal result a as year the during varies employees of temporary number The to in 2008. 15,720 (16,093) amounted of employees ber outside work of whom 85% mately H Employees employees as well as the trade unions they belong to. belong they unions trade the as well as employees H season. of the start the at training on-the-job given are personnel some that requires also and turnover employee high to comparatively leads employees ary immediate manager. immediate their and colleagues employees, from leadership their on back feed with key specialists and managers to provide selectively used is tool The evaluation. a for 360-degrees in 2008 tool managers who are actively involved in the work. in the involved actively are who managers line and managers personnel local with cooperation in close the within positions to new promotion and job-rotation feedback, and coaching programs, training different as such activities various through also but on-the-job-training through primarily conducted is of employees development appraisal, individual and evaluation below). surveys employee (see conducted is team of the appraisal annual an in teams, work and function usqvarna usqvarna has a process well-developed for Talent Management, usqvarna has employees in more than 40 countries, approxi countries, 40 than in more employees has usqvarna usqvarna considers that it has a good relationship with its its with relationship a good has it that considers usqvarna All employees have the right to free association and and association to free right the have employees All S The process is managed by managed is process The ince ince Number of employees and sales by employee Number 10,000 15,000 20,000 5,000 H attches usqvarna 0 04 Sales byemployee, SEKm Avarage numberofemployees G 05 roup. 06 great importance to the ability to ability to the importance great G G 07 roup sales. The number of number The sales. roup roup roup S weden. The average num average The weden. 08 taff Staff G SEKm 0 1 2 3 4 roup introduced a introduced roup B H ased on both team team both on ased uman Resources Resources uman por - - - - - the end of 2007, 82 people have participated in the program. in the participated have of 2007, end people 82 the skills. leadership project and management project to develop aims which program, training tomized the under directly level a at managerial aimed is program training on individual targets. individual on feedback and information tointernal referred identified, were customer-focused. and ated motiv felt and climate business open an perceived employees year. past the during manager immediate their with talks appraisal had 73% had that showed survey of the year.result The previous in the than higher was which 70% than more slightly was rate response The survey. team in the pate to partici invited were people 2,900 totaling teams 450 mately www.husqvarna.com. at and intranet the on posted are positions specialist and roles managerial Vacant tion. managers. senior most 700 the for started H market labor OLM – open I Conduct of Code new the in Training in 2006. began it since gram pro in the participated have 129 and managers organization H The of 24 a employees. for total a year once held been The training. management within H Training program training in terms of security and the working environment. working the and of security in terms training and information necessary the receive shall and vironment, en working healthy and a safe offered be shall employees All Health and safety conditions. working individual’s the as well as team’s effectiveness the developing and enhancing at primarily H surveys Employee n usqvarna favors increasing internal recruitment and job rota job and recruitment internal increasing favors usqvarna in the levels lower for intended is Program Leader usqvarna annual different three offers usqvarna usqvarna conducts annual employee and team surveys aimed aimed surveys team and employee annual conducts usqvarna D Employees by geographical area geographical by Employees Use of drugs and alcohol at work is not tolerated. not is work at alcohol and of drugs Use G ecember 2008, training in the new Code of Conduct was was of Conduct Code new in the training 2008, ecember roup Management. Management. roup G roup’s internal open labor market, OLM, on the the on OLM, market, labor open internal roup’s Rest of the World, 15% World, the of Rest North America, 40% America, North S ince it was started in 2007 it has has it in 2007 started was it ince H S ome areas for improvement that that improvement for areas ome Europe, 45% Europe, usqvarna Project Leader is a is cus Leader Project usqvarna H usqvarna Next Level Leader Leader Level Next usqvarna G roup-wide programs programs roup-wide S ince it started at at started it ince I n 2008, approxi n 2008, F urthermore, urthermore, S U S TAI NAB - - - LE - - - D EVELOPMENT improved hygiene for thousands of people. thousands for hygiene improved for opportunities generates and water drinking to clean access to ensure helps which EUR 191,700 was (175,000), donation total and F www.ftse.com. visit UN equipment. other or machines from injuries were of accidents causes mon H Skog Säker S S FTSE4Good H UNICEF of Support Europe America North employees of number Average recycling. and maintenance use, facturing, manu including product, to a finished idea product the from processes, and of products development in the considered always are aspects These safety. and quality high with services H Product safety www.sakerskog.se. visit project, the on information operations. forestry within environment working ter F standards. responsibility corporate nized recog globally meet that in companies investment facilitate in the water clean G of whom blue-collar, % blue-collar, whom of % white-collar, whom of % women, whom of Total World of the Rest of whom men, % men, whom of orests) project, which is led by LR led is which project, orests) armers). The goal is to contribute to greater safety and a bet and safety to greater to is contribute goal The armers). ince 2007 2007 ince eries. eries. usqvarna plays an active role in the an plays active usqvarna usqvarna, through its subsidiary subsidiary its through usqvarna, usqvarna attaches great importance to offering products and and products to offering importance great attaches usqvarna ardena pump sold in sold pump ardena I No work-related deaths occurred in 2008. The most com most The in 2008. occurred deaths No work-related I n 2008 one euro was donated to the project for every every for project to the donated was euro one n 2008 CE H

ungary in order to create new sources of water. sources new to create in order ungary (United Nations’ Children’s Children’s Nations’ F (United F T S E4 H usqvarna has been listed in the in the listed been has usqvarna G ood is an equity index series that is designed to designed is that series index equity an is ood S udan, one of the poorest countries in Africa. countries poorest of the one udan, G ermany, Austria, Austria, ermany, G F ( ardena, supports the the supports ardena, F S F und) project for supplying supplying for project und) wedish wedish ederation of ederation 15,720 2,284 6,285 7,151 F 2008 F rance, rance, or more information, information, more or 36 36 64 64 F S T äker äker S E4 I taly, taly, G S S F wedish wedish kog ( ood ood or more more or G S 16,093 ardena’s ardena’s pain pain 2,088 2,088 6,948 6,948 7,057 I S 2007 ndex ndex afe afe - 34 - 66 63 37 - -

109 HUSQVARNA ANNUAL REPORT 2008 110 HUSQVARNA ANNUAL REPORT 2008 S tion, visit visit tion, A in 2008. Stockholm NA on traded of shares volume total 0.6% of the in volume trading The an average daily trading volume of 1.9 million S shares of or value total a with million, 484 Share price development 2008 development price Share by owned was 74.6%(67,945). capital (69.5) share of the Approximately to 64,555 amounted year-end at of shareholders number The Ownership structure New The (OTC) market. over-the-counter American the on H A An ADR Program the for was price closing end in which index, OMX by and 42% fell B D Share-price trend in 2008 13on 2006. June Stockholm The Listing and trading volume share T 13.4% (14.2) by private 13.4% (14.2) by private approximately and 12.0% investors (16.4) mately by foreign SEK EK 15.6 billion. 30 40 50 60 70 80 -share by 46%. NA 46%. by -share D usqvarna shares for American investors. The A The investors. American for shares usqvarna uring 2008 2008 uring The total volume of volume total The R is equivalent to two ordinary ordinary to two R equivalent is H D Y Jan usqvarna shares were listed on NA on listed were shares usqvarna ork Mellon is is Mellon ork H R program for for R program SX25 ConsumerDiscretionary_PI OMX Stockholm_PI Husqvarna B-share B -share. The market capitalization at year-end was was at year-end capitalization market The -share. www.adrbnymellon.com. S Feb wedish institutions and mutual funds, approxi funds, mutual and institutions wedish H E E usqvarna’s A-share declined by 51% declined the and A-share usqvarna’s Mar H usqvarna is included, fell by 35%. The year- The by 35%. fell included, is usqvarna H SD Apr H usqvarna’s A usqvarna’s S H S usqvarna usqvarna H S AQ OMX S OMX AQ wedish investors. wedish H tockholm Consumer Consumer tockholm usqvarna’s shares corresponded to corresponded shares usqvarna’s EK 37.9 and A-share the for usqvarna shares traded in 2008 was was in 2008 traded shares usqvarna May June EK 27.8 billion, corresponding to to corresponding 27.8EK billion, U B -shares facilitates trading in trading facilitates -shares D B tockholm’s All- tockholm’s July -shares. -shares. R D S epositary epositary Aug SD AQ OMX AQ OMX F QVARNA or more informa more or Sep D D iscretionary iscretionary SD B Rs are traded traded are Rs S ank. One One ank. AQ OMX AQ OMX Oct hare index index hare S B S EK 110m. EK 41.3 ank of ank Nov - Dec - on page 33. page on of shares repurchase for proposal 31the and page see shares of outstanding shares. shares. of outstanding 2,919,000 to amounted shares of repurchased number total the end, programs. incentive long-term to ensure of outstanding D more information about the incentive programs, see Note 19. Note see programs, incentive the about information more The Annual Annual The shares of Repurchase year. the for income of net to 25–50% to correspond dividend the for is goal 2007.long-term The income of to net 42% ponding 2.25 was 2007 for dividend The 2008. for The Dividend and dividend policy 286,756,875 and A-shares 98,380,020 between of 31as capital share The rights voting and capital Share A The 2008. and 2007 2006, H Incentive program until year-end 2008 year-end until 2006, June IPO, since development price Share S to amounted capital share The shares. 385,136,895 ling tenth of a vote. tenth SEK 100 110 EK 30 40 50 60 70 80 90 G usqvarna has share-related long-term incentive programs for for programs incentive long-term share-related has usqvarna irectors to repurchase not more than 3% of the total number number total of 3% the than more not to repurchase irectors 950,000 950,000 M 2009 adopt a long-term incentive program for 2009. 2009. for program incentive a long-term adopt M 2009 2006 B 770,273,790. A-shares carry one vote and and vote one carry A-shares 770,273,790. oard of oard SX25 ConsumerDiscretionary_PI OMX Stockholm_PI Husqvarna B-share B H -shares, corresponding to 0.76% of the total number to 0.76% number total of the corresponding -shares, B usqvarna’s commitment with regard to existing to existing regard with commitment usqvarna’s G -shares were repurchased during the year. the At year- during repurchased were -shares D eneral Meeting 2008 authorized the the authorized 2008 Meeting eneral 2007 irectors has proposed that no dividend be paid paid be dividend no that proposed has irectors B F or more information, see Note 17. Note see information, more or -shares. The repurchase of shares is intended intended is of shares repurchase The -shares. F or more information about repurchased repurchased about or information more D B ecember 2008 was distributed distributed was 2008 ecember oard of oard D irectors proposes that the the that proposes irectors 2008 S EK per share, corres share, EK per B B -shares one- -shares -shares, total -shares, B oard of oard F or or - Sweden, 86.1 Sweden, D EV/sales EV/E Pension Mutual Alecta 2008: no transactions no 2008: H Y D Earnings per share, share, per Earnings data Share S I AB Husqvarna in shareholders Largest H shares of number and capital Share Enterprise value (EV), (EV), value Enterprise P/E-ratio dilution, after operating, share, per flow Cash S operating, share, per flow Cash dilution, after share per Earnings A S issue bonus and stock-split 2006: 2007: bonus issue bonus 2007: 2) 2) by the 1) as proposed 2008 Y Y A-share, price, Lowest 2 S H H Total for the 10 largest shareholders 10 the Total for largest AM Lundbergföretagen LE Market capitalization, capitalization, Market price, Lowest 4 Number of shareholders Number share, per Equity nvestor A nvestor ource: ource: ear-end price, A-share, A-share, price, ear-end ear-end price, price, ear-end nd EK E wedbank Robur Robur wedbank th ield F ighest price, A-share, A-share, price, ighest andelsbanken/ ighest price, price, ighest usqvarna before listing 2006 listing before usqvarna ividend per share, share, per ividend ividend payout ratio, % ratio, payout ividend D

A S S F ividend/year-end share price. share ividend/year-end wedish National Pension Pension National wedish I wedish National Pension Pension National wedish I BI Shareholders by country Shareholders 2) nvestment nvestment I nsurance nsurance & Pension & Pension nsurance Ägarsservice as of 31 SIS Ägarsservice , % T S % (81.7) EK B B S B -share, -share, EK B -share, -share, F S -share, -share, S unds & unds I PP nvestment nvestment EK S S I EK B EK nvestment nvestment S S oard. 2006 adjusted for bonus issue. for bonus adjusted 2006 oard. S S I EKm S EKm S nsurance EK EK S S EK EK D S EK EK I ecember 2008. ecember E nvestment nvestment Trygg B Liv Trygg F F F unds und und F unds 64,555 15,572 Other countries, 6.3% (7.8) 6.3% countries, Other 29,124 22.91 2008 3.34 5.22 5.22 3.34 0.00 0.90 12.3 F 2.8 Britain, Great unds 38 38 39 77 77 — — 41 12 1) Norway, 1.8 Norway, 29,559 41,571 67,945 USA, 3.0 USA, 19.11 2007 5.29 5.29 2.25 1.25 4.79 4.79 11.7 110 119 2.9 65 65 77 77 42 15 T H 495,000,000 E S 592,518,306 770,273,790 770,273 790 770,273 66,289 36,352 % (3.5) 31,701 % (5.3) % (1.7) hare capital, capital, hare 16.23 H 2006 4.83 4.83 1.39 1.39 1.24 1.73 11.6 U 2.1 22 92 58 35 89 62 82 82 S QVARNA 1) S EK Total 20,101– 10,001–20,000 1,001–10000 1–1000 S AB Husqvarna in by size Shareholding, F Sachs Goldman Reason Nicola Execution Ltd Andersson Michael Bank Evli S Deutsche Bank Carl Bank Danske Natalia Mamaeva Citi Eliason Johan Cheuvreu B Carnegie Christer ABG Husqvarna covering analysts Sell-side Quotient value, value, Quotient ize of holding ize tefan Lycke tefan itzhugh Peters itzhugh jörn Enarson jörn Read more on www.husqvarna.com/ir on more Read SE0001662230 B-share SE0001662222, A-share code: ISIN B HUSQ A, HUSQ Stockholm OMX NASDAQ HUSQb.ST, HUSQa.ST, Reuters SS, HUSQB SS, HUSQA Bloomberg codes: Ticker 15.6SEK billion year-end: at capitalization Market 385,136,895 of shares: Number Stockholm OMX NASDAQ Listing: Key facts Key SHARE

H Capital, % Capital, olmquist F

x redriksson 54.1 15.4 100 S 2.2 6.8 4.6 4.6 4.3 2.0 8.4 1.7 4.1 EK

2 2 2

98,380,020 98,380,020 Number of Number 9,502,275 A-shares Votes, % Votes, 62.0 28.7 13.1 6.2 3.2 0.6 3.4 1.3 1.3 2.1 2.1 % votes Johan Johan Swedbank S and Trapp Anders SEB Enskilda Jawahar Research S & P Equity Ann- and Trocmé Johan Nordea Toll Johansson Kenneth Penser Erik Willi Andreas Morgan JP Patric Lindqvist Bank HQ Engberg Rasmus Handelsbanken F Öhman tefan Cederberg tefan redrik Nilhov redrik 286,756,878 286,756,875 286,756,875 89.3 100 6.0 3.4 1.3 Number of Number S B ofie Nordh ofie D -shares

ahl Change during the year the during Change H

–0.6 –0.5 ingorani 64,555

7.5 0.2 0.5 3.0 0.3 0.8 0.7 1.3 1.8

holders 52,494 10,962 share- No. of No.

622 477

Total number of Total number 385,136,895 385,136,895 296,259,153 4,950,000 % of no. % of of no. holders shares share- –0.2 0.1 – 0.1 – 81.3 100 17.0 3.5 0.2 0.6 0.0 0.0 0.7 1.3 1.0 1.7 0.1

111 HUSQVARNA ANNUAL REPORT 2008 112 HUSQVARNA ANNUAL REPORT 2008 the the Centre, Congress Elmia the at 2009, 23 April 4 Thursday on pm ical areas and lines of business in which which in of business lines and areas ical geograph- the in conditions market and demand consumer things: other among include, aspects These aspects. to several due result of the deviations to major rise give may that uncertainties and to risks subject are and expectations present on based are ments state These plans. financial and business of future goals goals, of 1995. Private American to the in referred sense the in statements forward-looking contains report This Factors statements forward-looking affecting • given be can to participate of intent Notice participation of Notice • must Meeting S Participation Annual The M Annual • • • hareholders who intend to participate in the Annual Annual in the to participate intend who hareholders tockholm, Stockholm, by be at weekdays pm 1–4 F to attending, of assistants ber by give A riday 17 April 2009. 17riday April on B on H www.husqvarna.com/agm mail telephone registered ammarskjöld ammarskjöld notice S F uch statements comprice, among other things, financial financial things, other among comprice, statements uch to riday 17 April 2009. 17riday April eet H Production: Partner, McCulloch, Poulan, WeedEater, S WeedEater, Poulan, McCulloch, Partner, Copyright © 2009 H 2009 © Copyright usqvarna G usqvarna Husqvarna G of S eneral Meeting of Meeting eneral weden at in intent +46 the H H all, Elmiavägen, Jönköping, Jönköping, Elmiavägen, all, roup. usqvarna usqvarna A share to 8 AB, 738 participate, usqvarna A usqvarna EM-LA, register 70 i 10 B n H H and S usqvarna no later than on on than later no usqvarna usqvarna A usqvarna between ecurities Litigation Reform Act Act Reform Litigation ecurities Box B kept (publ). All rights reserved. H reserved. rights All (publ). Solberg. Print: thereby H usqvarna operates, the the operates, usqvarna 30224, g 2009 g by 9–12 Euroclear off-Cut, B off-Cut, at held be B will

stating SE-104 General am S G weden. weden. öteborgstryckeriet. and luebird, Y luebird, the G 25 Sweden eneral eneral num - azoo/Kees, Automower azoo/Kees, usqvarna, Jonsered, Klippo, Zenoah, RedMax, D RedMax, Zenoah, Klippo, Jonsered, usqvarna, - for 2008. for The Dividend Annual in the on name own their in registered temporarily shares their have must nominees, S Shares registered by nominees number. telephone and any,if address number, registration name, shareholder’s the include should Notice more efficient. more chain supply the to make of goals achievement successful and ness busi existing the into these to integrate and objects, acquistion and opportunities growth of identification successful capital, of use efficient and productivity for set goals the to reach comes it when progress litigation, responsibility product of any outcome marketing, in and products new developing in success any tors, distribu by important of sales reduction a material to competition, due prices on pressure downward fluctuations, of currency effects the Annual Annual the to submitted be should of attorney power 2009. Meeting Annual the for solely used be will and processing to data subject made be will notice the with together provided hareholders, whose shares are registered in the names of names in the registered are shares whose hareholders, B oard of oard ® G and other product and feature marks are trademarks of the the of trademarks are marks feature and product other and eneral Meeting. Meeting. eneral D G S irectors has proposed that no dividend be paid paid be dividend no that proposed has irectors eneral Meeting. eneral hareholders may vote by proxy, in which case a case in which by proxy, vote may hareholders F riday 17 April 2009, in order to participate to participate in order 2009, 17riday April iamant B iamant oart, D oart, H usqvarna prior to prior usqvarna ixon, G ixon, I nformation nformation G ardena, F ardena, eneral eneral lymo, lymo, - - husqvarna in brief

Husqvarna Europe history 10 6 iN BRIEF North America 300 years 9 4 of INNOVATION

Consumer products product offering market position brands Husqvarna once again becomes an independent 2006 stock listed company.

Lawn mowers, garden tractors, trimmers, chain-

t h e saws, leaf blowers, hedge trimmers and snow 32%* throwers. Products for irrigation and ponds as well

o f Electrolux acquires Husqvarna, start of the expansion within as garden tools. 1978 w o r l d outdoor products. r e s t

Husqvarna starts production of chainsaws and engine-driven 1959 lawn mowers. professional products

l a w n Husqvarna is founded as a weapons foundry for 1689 the Swedish armed forces.

* The graphs show share of total Group sales. 42 45 43 85 83 86 84 90 46 44 88 113 112 110 102 104 100 – 46 husqvarna.se, +46 8 738 83 35 @

Annual General Meeting Interim report January–March Interim report January–June Interim report January–September

Report by the Board of Directors