ITT Flygt annual report

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ITT Flygt annual report
ITT Flygt annual report
1999
About the photographs: Our own employees are pictured throughout this annual report, in this order:
Per Rehn, Anna Högberg, Jasmin Sabanac, Alexander Hahn, Per Hedmark, Olof Lennartsson, Therese Bergmyren, Lars Sundberg,
Maria Blom, Mats Karlén, Yvonne Marichal, Lars-Olof Mårtensson, Peter Franzén, Lennart Hartman
Contents
3
The submersible advantage – ITT Flygt
4
President’s report
6
ITT Flygt: the year in review
8
On the world scene
10
Research and development
12
Human resources
14
Information technology
16
Manufacturing and logistics
18
Environment,
Safety & Health – ESH
20
Financial report 1999
22
Auditor’s report
33
Group executive management
34
Addresses
36
The submersible advantage
– ITT Flygt
aqua-agriculture, construction and mining, and
the processing and manufacturing industry.
Half a century ago, ITT Flygt invented the world’s
first submersible drainage pump for pumping
contaminated water.
The world is our marketplace. The No. 1 market
in 1999 was Europe, accounting for 63% of sales,
followed by North America (27%), Asia Pacific (7%),
South America (2%) and Africa/Middle East (1%).
Today, the company is the world’s leading manufacturer and supplier of submersible pumps,
mixers and aeration systems.
Headquartered in Sweden, ITT Flygt has sales and
service facilities in more than 130 countries. With
around 4,000 employees, ITT Flygt had a turnover
in 1999 in excess of USD 600 million.
These submersible products offer significant
economic and environmental advantages because
they require neither special housing nor a superstructure. The motor and hydraulics are integrated
into a single, compact unit, making them easier
and less expensive to install than traditional pumps
while ensuring dependability.
ITT Flygt is a wholly-owned subsidiary of
ITT Industries, White Plains, New York. With 37,000
employees across the world, ITT Industries had a
turnover in 1999 of USD 4.6 billion.
Applications include sewage systems and
wastewater treatment plants, irrigation and
ITT Flygt provides a durable and
cost-effective slurry pumping system.Flygt slurry pumps are made
of hardened high-chrome cast
iron providing complete wear
protection.
Our propeller pumps are designed to handle large flows and
are suitable for many applictions
such as storm water stations and
water attractions.
Centrifugal pumps are used in many
applications, such as pumping sewage
in treatment plants as well as irrigation,
industrial effluent, process water, and
aqua-agriculture.
4
Mixed-flow pumps are
designed primarily for
screened wastewater and
storm water applications, as
well as irrigation, industrial
effluent, process water and
raw water.
Submersible mixers
are used in numerous
applications which include solids suspension,
liquid blending and destratification. Customers
often ask for a complete
solution rather than a
specific mixer, which means
that our know-how in fluid
dynamics is as important as
the product itself.
The Bibo drainage pump is ideal
in mines and construction
sites where liquids contain
high percentages of solids
such as clay. The Ready is a
lightweight pump that is
effective in handling abrasive
and corrosive liquids.
We produce monitoring and control systems for a wide
range of pumps and mixers. Our systems offer reliability,
long life, low maintenance costs and reduced
energy consumption.
As well as supplying the
hardware, we also
provide software for
running the systems.
Fine bubble aeration systems play a key role in
sewage treatment in transfering oxygen to the liquid
through porous discs.
5
President’s report
The 20th century closed on a very positive note from an
ITT Flygt perspective.
We are consistently trying to improve the environmental
performance of our products as well as our operations.
Calculation of the environmental load and impact (LCA)
has therefore been made a standard procedure in the
product development process.
The financial results for 1999 were very satisfactory,
with an operating profit of USD 70.4 million representing
12.3% of sales. Sales grew by 3.8% over the previous
year. After corrections for acquisitions, divestitures and
currency effects, sales increased by 0.4%.
In keeping with our strategy to streamline physical distribution and further improve customer service, the
Supply and Distribution Center for Central Europe became operational in 1999.
Even though sales and orders in general developed well
we did see weaker demand from the wastewater sector
than originally anticipated. This segment, representing
over 50% of our total turnover, has for over a decade
grown consistently faster than the pump market ingeneral.
Important and positive marketing developments are the
establishment of Flygt Korea, Flygt Hong Kong and Flygt
Venezuela. Flygt Hong Kong is a fully-owned subsidiary,
Flygt Korea is majority-owned while 55% of Flygt
Venezuela is held by local partners.
The slow recovery in the Far East and difficult business
conditions in Russia were also among the disappointments. On the other hand, North America developed
very favourably, and so did a number of European
markets. These areas account for over 60% of sales
and play an important role in our result, even though
markets elsewhere grew faster.
Looking into the year 2000, we foresee more favourable
overall market development compared with 1999; and
with the investments made and underway in market
coverage, product development and logistics, we are in
a strong position for another good year and for accomplishing the ambitious long term goals we have set for
ourselves.
The slower demand from the municipal wastewater
segment was compensated by a substantial growth
in the construction business, especially in Europe.
I have worked at ITT Flygt for 18 years, including the
past eight years as President. I am now retiring with
considerable confidence in this company and its future,
as well as in Anders Hallberg, my successor as President.
At age 49, Mr. Hallberg has very broad management
experience that ranges from technology and production
to marketing and sales. Before joining ITT Flygt four
years ago, he was president of IMO AB for seven very
successful years.
The single most important event of the year was the
acquisition of Sanitaire Corporation, earlier known as
WPCC. Headquartered in Milwaukee, Wisconsin, USA,
Sanitaire is the world leader in fine bubble aeration –
the fastest growing aeration technology in wastewater
treatment. Apart from being a successful and well
managed operation, Sanitaire brings additional products
and skills into the ITT Flygt organisation in the wastewater treatment area. Sanitaire will be the hub and
nucleus for our future expansion in this core segment.
As Director Business Development and Regional Director
Europe, Mr. Hallberg assumed the presidency January 1,
2000. In Anders Hallberg, we have a highly qualified
leader who knows this company and the pump business
exceptionally well. I am pleased with his appointment,
and know it will benefit ITT Flygt as well as our customers.
Another matter of great strategic importance is the
favourable market and customer reaction to our new
N-pump line. It is very encouraging to see how readily
this new energy-saving impeller design has been
accepted. The design concept will be gradually expanded
into other new products in the Flygt range.
Leif E. Carlsson, President, ITT Flygt
6
7
ITT Flygt: the year in review
is designed for portability, and is an excellent choice for
contractors, industrial plants, utilities, fire brigades and
rental businesses.
The 20th century will surely be remembered
by historians for all the advances made in
technology. At ITT Flygt, it will be remembered
for the birth of the company in 1901, and later
for the invention of the submersible pump and
mixer. In the closing years of the century, the
next revolution in submersible technology got
underway with the introduction of the N-pump.
The Japanese sales company was divested in a management buyout. Flygt Nippon K.K. is now the exclusive
ITT Flygt distributor in Japan.
The Stockholm Water Prize, of which ITT Flygt is a founder,
was awarded in 1999 to Professors Werner Stumm of
Switzerland and James J. Morgan of the United States.
January – June
The start of 1999 saw the purchase of Water Pollution
Control Corporation (WPCC) in Milwaukee, Wisconsin,
USA, a leader in innovative aeration technologies for
the wastewater treatment industry. With the acquisition
of WPCC, since then renamed Sanitaire Corporation,
ITT Flygt can now offer complete systems of submersible
They were cited for outstanding contributions in aquatic
chemistry leading to developments of techniques for
treatment of wastewater and drinking water. The
Stockholm Junior Water prize was awarded to three
female Spanish students for their project involving
echinoderms as biological indicators of water quality
in the Alborán Sea coast. This prize has ITT Industries as
its sole sponsor. ITT Flygt sponsored the national prizes
in France, Sweden and The Netherlands.
pumps, mixers and aeration products, including
service and technical
competence for municipal as well as industrial
customers worldwide.
This opens considerable
opportunities for ITT Flygt
in the world’s USD 250
million aeration market.
The new Supply and Distribution Center in Metz, France,
which was built to improve delivery services as well as
asset and cost performance was officially inaugurated
in May. This center serves our sales companies in Austria,
France, Great Britain and Ireland, and will also soon
serve Belgium, Germany, Italy, Spain and The Netherlands.
A decision was made in June to modernise the motor
winding shop at the Lindås factory in Sweden. When
the project is completed at the end of 2002, average
product lead-time will be reduced by 60%, while
emissions to air will be totally eliminated.
A new drainage pump
from the Ready series
was launched. The Ready
16 is available as 1.7kW
and 2.0kW, replacing
two existing Ready
pumps. The Ready series
8
In South America a joint venture was established in
Venezuela, Flygt de Venezuela S.A., with three former
employees of a previous distributor that represented
ITT Flygt in the country for many years.
July – December
The second half of the year began with the establishment
of a new joint venture in South Korea and the inauguration
of a new sales company in Hong Kong. ITT Flygt holds
75% of the shares in Flygt Korea Ltd. and the managing
director of the former ITT Flygt distributor holds 25%,
whereas the Hong Kong company is a fully-owned
subsidiary.
The revolutionary N-pump was named Pump of the Year
at the Processing Pumps & Systems Awards ceremony,
sponsored by the British Pump Manufacturers Association.
The pump was also the object of the IWEX Innovation
Award in 1999, which is sponsored by the Turret Rai
company. Whilst in Poznan, Poland, at the Poleko
International Environmental Fair, ITT Flygt was cited
for showing the ’’foremost improvement for protecting
the environment,’’ the N-pump.
The 5,500 square metre Supply and Distribution Center
in Lindås, Sweden, which serves all countries outside of
central Europe was inaugurated. Products are shipped
directly to customers in the United States and Scandinavia.
At the year’s end, Anders Hallberg was named to succeed
Leif E. Carlsson as President of ITT Flygt from January 1,
2000. Carlsson is retiring from the company after 18
years of service. Hallberg, 49, joined ITT Flygt in 1996
as Director of Business Development.
A new corporate web site www.flygt.com was launched
in the autumn. It gives easy access from the homepage
to all ITT Flygt sales companies with Internet web sites.
Two new stainless steel mixers were launched. They
combine light design with efficient mixing while expanding
the product range of the Flygt family.
9
On the world scene
Olympian pumping operation
In 1999, ITT Flygt succeeded in securing an order for six
high volume propeller pumps for the artificial canoeing
and kayaking course at the 2000 Summer Olympics in
Sydney, Australia. The course, at Penrith Whitewater
Stadium, is located in the city of Penrith about 22 km
from Sydney.
This contract is the second time in the past eight years
that ITT Flygt was selected to power an artificial olympic
whitewater course. Experience gained as pump provider
at the Barcelona olympic course in 1992 undoubtedly
gave ITT Flygt enhanced credibility.
The U-shaped Sydney course is 300 metres long and
between eight and 14 metres wide, with an elevation
drop of seven metres between start and finish. Water
depth will range between 0.8 and 1.2 metres. The Flygt
propeller pumps, each capable of moving 2.8 cubic
metres of water per second, will pump water from the
end of the course to a pool near the starting line, where
the gravity-fed cascade begins.
The technical challenge was to produce a pumping
function with a very low profile, so that the ride surface
would be visible without an excessively high spectator
area. Since the ride had to be easily transportable, it was
also important that the entire attraction – including
pumps, sumps and waterways – would be as compact as
possible. This was achieved by using Flygt submersible
propeller pumps installed horizontally.
The pumps and pump controls had to operate at both
50 Hz and 60Hz and from both grid power and a generator, as it was going to be used in different environments
around the world. Wave Loch Corporation also wanted
to be able to manipulate the shape of the waves at the
touch of a button. So a variable frequency drive was
incorporated into the system to provide this extra feature.
The project was completed and unveiled in June, 1999,
and was a great success at a four-day event in Munich,
Germany.
Cleanup in St Tropez
The Mediterranean coastal town of St Tropez in southern
France conjures images of beautiful people and a beautiful
sea. However, one of the marinas was rampant with waste,
mostly algae, and was unusable. A decision was therefore
made in 1999 to clean it up.
The course took 12 months to construct and works in
a similar fashion to a pump station. It is the first to be
shaped like a horseshoe, so that all spectators can enjoy
good visibility. It is also the first time a competition
course has been designed that is not associated with
a river.
A dredging company leased a Flygt submersible compact
mixer and propeller pump to recirculate the material
that had settled on the bottom of the marina.
California concept becomes reality
Back in 1998, the Wave Loch Corporation in California,
as inventor and worldwide supplier of artificial surfing
attractions, discussed developing a portable attraction
with ITT Flygt. The idea was to design a ride that could
be erected at a temporary location and put into operation
for a short period of time and then dismantled quickly
and transported to the next destination.
At the same time, it was understood that a permanent
solution had to be found.
In the course of dredging, ITT Flygt and an independent
consultant carried out counter current agitation trials
with Flygt products, to try and avoid the situation
occurring again.
10
In 1999, a solution was provided by ITT Flygt. The
Vietnamese Ministry of Agriculture funded a project
to replace all ten of the Hai Dong pumps with five Flygt
submersible pumps.
Never a gamble with the N-pump
The casino in the Canadian city of Hull in Quebec
welcomes over 4,000 visitors every week. With so
many guests, a pump station had to be built solely for
the casino.
Shortly after its completion, city engineers and operators
began to worry about its capabilities. Serious clogging
problems in 1997 meant that the pumps had to be
cleaned 15 times that year, costing time and money.
Normally, two ordinary pumps would have worked, but
the pump station also had to deal with local industrial
sewage. Plastic bags and twine dumped directly into the
city sewer system found their way to the casino pump
station and got entangled around the pumps’ impellers.
Following the trials, the best solution proved to be a
stainless steel submersible compact mixer, which was
placed on the bottom of the marina. The mixer, which is
controlled by an anemometer and a current meter, was
encased in a protective cage with fixed legs, so that it
could be installed without a superstructure, stay in
place, but still be easily removable.
The installation was completed with two stainless steel
submersible propeller pumps and an algae-free sea
water intake outside the marina.
New pumps for irrigation in Vietnam
The Xuan Phu pump station about 40 km from Hanoi
was built in 1989 along the Red River for irrigating
1800 hectares of rice paddies. A total of ten Hai Duong
horizontal pumps, which could pump 8000 cubic
metres per hour, were used.
During the rainy season the pumps had to be raised
from their normal positions to avoid flooding when
water levels would rise and returned to their original
positions when water levels fell.
ITT Flygt then offered the city of Hull a trial of the
new N-pump.
But in the course of ten years, seven of these pumps
were inoperational, due to the heavy monsoon season.
This left only three pumps operational, which in turn
meant that only one third of the area could be irrigated.
Since the N-pump was installed, the station has only
needed to be cleaned twice. There was a 23% increase
in overall efficiency at the station and a completely
odourless environment for casino clients. A second
N-pump was installed in the pump station in 1999.
A new hotel complex will be built in 2000 with its own
pump station, using three N-pumps.
11
Research and development
A key factor in research and development is being able
to identify customer needs and then provide solutions
that surpass their expectations.
As the world leader in submersible pumping, mixing and
aerating technologies, customers link the ITT Flygt brand
to technical breakthroughs in the field. By employing
QFD (Quality Function Deployment) methodologies,
the translation of customer requirements into product
features becomes much more effective. An important
part of the process is the identification of all individual
procedures needed to ensure that all requirements
are met.
Modular design
ITT Flygt has implemented a modular design approach to
the R&D process. This means that parts and components
can be used in many types of products, allowing more
and deeper research to be carried out for each such part
and component as costs are spread on larger volumes.
Motors
An important element in any submersible pump or mixer
is, of course, the motor. Because ITT Flygt develops them
in-house, the company can guarantee that they are
designed and built to meet the specific requirements.
high viscosity, environmentally adopted resin replaces
the slower dip impregnation method. Emissions into
the atmosphere will be reduced to zero. In coming
years, all motors from 0.75 kW up to 600 kW will be
produced using this technique.
Research in motor designs and the introduction of new
production techniques led to improved production and
product quality. One such technique, introduced in
1999, is trickle stator impregnation. A new solvent-free,
Seals
One of the most critical components of a submersible
pump or mixer is the seal. For almost 50 years, ITT Flygt
patented seals have been designed, tested and manufactured in-house. They are manufactured solely for Flygt
submersible products and are constantly being refined
to achieve better performance.
All new ITT Flygt products will be fitted with Plug-in™
seals. These comprise an inner and outer mechanical
seal pre-assembled in one unit, with seal faces protected
from abuse. The Plug-in™ concept not only protects the
seal face unit, but also makes product service easier,
faster and safer.
From customer requirements
to customer applications
The global launch in 1999 of the new patented N-pump
has provided solutions to many problematic sewage
pumping applications, and treatment plants, at significantly reduced energy costs.
The secret behind the N-pump success story is the selfcleaning impeller, which is complemented by a special
relief groove.
12
It won the award for the best pump of the year at the
1999 Processing Pumps & Systems Awards ceremony in
the UK. At the Poleko International Environmental Fair in
Poland, ITT Flygt was cited for exhibiting the best improvement to environmental protection with its N-pump.
Standards for pump requirements in the process and
wastewater industry are under review in light of the
breakthroughs achieved by the N-pump.
Cost savings for customer and environment
The launch of the N-pump was followed by the launch of
the N-pump upgrade kit, which is a spare parts package
that allows customers to convert existing Flygt pumps
into N-pumps. This means that customers can improve
the efficiency of their pumps by up to 50% at a much
reduced cost, compared to buying a new pump.
Upgrading to the N-pump means prolonged life rather
than disposal of old pumps and, of course, reduced
energy consumption.
New drainage pumps
In 1999, ITT Flygt extended its smaller drainage pump
range with the introduction of the Ready 16 pump. New
technology in the latest composite materials, combined
with stainless steel, means that the Ready 16 is not only
a very light pump, but also very robust and corrosionresistant.
The entire system
A new grinder pump and a new grinder pump controller
– FGC – were released in 1999, which can be integrated
with AquaView, a software program for the monitoring
and control of wastewater treatment plants and entire
pump station systems. The FGC controller works with one
or two grinder pumps and includes new vital functions.
New mixers
ITT Flygt launched two new mixers in 1999 in response
to market demand for more stainless steel mixers. They
combine light design and efficient mixing, thanks to a
new design concept, that reduces the weight by half,
without losing any power output.
Environment
ITT Flygt is consistently trying to improve the
environmental performance of its products and
calculation of the environmental load and impact is a
standard procedure in the product development process.
This calculation, known as the Life Cycle Assessment
(LCA), includes the three phases of a products life
cycle: production, use, and ’’end of life’’.
To calculate the LCA, ITT Flygt uses the Environmental
Priority Strategies (EPS) methodology.
Life Cycle Costs - LCC
One of ITT Flygt’s long term strategies has been the
minimisation of customer costs through an LCC
perspective. Higher efficiency of an application and
much less necessity for service, dramatically reduce
customer’s operation costs. Flygt’s N-pump is a good
example of this as it requires less energy to run than a
standard pump, and existing Flygt wastewater pumps
can be easily updated to an N-pump.
The implementation of LCA has strengthened the LCC
concept at ITT Flygt. Both environmental concerns and
economics are taken into consideration as a product
with higher efficiency benefits the environment and
reduces customers’ operating costs.
13
Human resources
Relations between employees as well as between employees and management play a vital role in the success
of any business. The ITT Flygt human resources vision is
to combine personal commitment, motivation and
continuous learning with business development and
technological leadership.
In 1999, the human resources strategy continued to
focus on three key areas:
• Competence development
• ITT Flygt as an attractive employer
• Information and communication
Competence development
Employee development and commitment to work are
considered as important as any business area.
Investment in employee education is therefore essential,
because it leads to better job performance. In 1999, the
three major training areas at ITT Flygt were information
technology (32% of all training hours), Environment,
Safety and Health (ESH) (25%) and technical (16%). In
addition, English language training was offered to
employees who do not have English as their mother
tongue. English is the corporate language of ITT Flygt.
Management continued to set goals, strategies and related
actions for competence development in strategically
important areas. They included information technology,
finance, marketing and sales, management, technical and
product development.
A management development project was initiated in
Sweden in 1999, identifying and analysing the gap
between a manager’s defined roles and duties and
actual behaviour. Once potential improvements are
identified, an individual development program is
designed for each manager.
The project is to be extended worldwide and will result
in enhanced leadership capabilities, thus yielding increased personnel satisfaction and better results for the
entire company.
14
ITT Flygt as an attractive employer
ITT Flygt continued its information programs towards
schools and universities during 1999, and also supported
various work experience programs, masters theses
and scholarships. ITT Flygt employees also serve as
guest speakers at technical colleges, universities and
high schools.
Another round of employee attitude surveys was carried
out in 1999. This included seven ITT Flygt sales companies
and representative offices around the world.
The survey results were generally favourable, especially
in terms of job satisfaction, pride and commitment to
quality. Areas that merited improvement were identified
as internal communication, employee development,
rewards and recognition.
Weak areas identified in the 1998 surveys were effectively
tackled in 1999 improvement action plans. Among the
changes made were new or modified benefit packages,
sales incentives and bonus systems. These changes have
created a more attractive compensation system while
also encouraging a higher degree of recognition.
Information and communication
One important tool for improving communication is
the Planning and Follow-up Dialogue, a well-prepared
annual discussion between manager and employee.
This gives the employee the opportunity to give and
receive feedback on achievements to set goals and
objectives and to discuss their viewpoints about the
company, the department, or their individual duties.
The dialogue also serves as a tool to analyse individual
needs for competence development.
In 1999, 70 % of ITT Flygt’s employees had such a
dialogue with their manager. The goal is 100%.
15
Information technology
In 1999, the corporate intranet which is in both English
and Swedish, increased dramatically in size and number
of users. In addition, the corporate Internet site and several
software programs were revamped and relaunched.
’’On the web...’’
The ITT Flygt corporate Internet site (http://www.flygt.com)
was revamped in 1999. The site, which contains general
information about the company, worldwide contact
information and a news section, sets a global tone for
the company image. The new corporate site serves as
an ITT Flygt global entry point. Technical product information, meantime, is being incorporated into ITT Flygt
Internet sites around the world. Users can download
technical specifications, dimensional drawings, care
and maintenance brochures and parts lists for almost
any Flygt pump or mixer.
Y2k as a non-event
A smooth transition into the new millennium was
secured without any ’’millennium bug’’ disruptions to
business operations. This was thanks to a three-year
project, involving all functional areas and every unit in
the entire ITT Flygt organisation.
Customer assistance
Several updated software programs were released
in 1999.
CREST (Chemical RESistance Table) is a database with
2,300 liquids, 60 types of material and almost the entire product range, which is used to determine whether
a product is suitable for usage in a specific liquid.
SECAD Lite (Systems Engineering Computer Aided
Design Lite), is a Windows program that helps engineers
find the right dimensional drawing or product view
from a database of Flygt products.
16
FLYPS 2.0, available in ten languages, is a Windowsbased comprehensive tool for helping engineers
analyse and design a pump system. It features pump
selection modules and several pump system tools, such
as pipe system design, variable speed analysis, pump
performance analysis, outline dimensional drawings
and product data sheets. FLYPS 2.0 was provided to over
20,000 users in 1999.
CFD (Computational Fluid Dynamics) is an advanced software that takes the guesswork out of mixing technology
by electronically modelling the flow pattern in a tank,
generated by a submerged jet from a mixer. Visualisation
is combined with an analysis of critical figures relating
to overall performance, so that mixing solutions can be
evaluated and developed. This enables a customer to
see the results a specific mixer would have in a particular
application.
AquaView 1.20 is one of the latest advancements in
monitoring and control from ITT Flygt, used for storing
and managing data from pump stations systems.
An update of AquaView 1.0, this software is networkcompatible, meaning it can be run from several computers
at the same time, over the Internet, intranet, or a dialledup telephone line. The improved communication system
also means that alarms or other data can now be sent
to a laptop or mobile telephone.
17
Manufacturing
and logistics
Manufacturing
1999 was a year of manufacturing reorganisation.
Three projects mark the beginning of a new phase in
manufacturing and distribution.
Lindås plant – Sweden
The Supply and Distribution Center in Lindås was
inaugurated in the autumn. All distribution activities
were moved to this new building, freeing up space to
increase capacity and finalise the product work shop
concept, throughout the entire plant.
The reorganisation of the motor winding shop was
initiated, with the installation of the first trickle impregnation plant. Based on the new modular motor program,
this project will not only improve manufacturing
performance but also constitute a base for future
development in production technology.
Throughout the year, major efforts were made to further
improve environmental conditions as well as safety
and health standards at the Lindås plant. Ventilation
improvements in the foundry and the machine shops,
and a biological cleaning process for handling potential
storm water spills, were among the major projects.
Flygt Werk - Germany
Production levels reached an all time high at the German
factory in 1999. Rapid product development, together
with favourable market conditions, constituted major
contributing factors.
A decision was taken to install a new machine line for
pump housings, which will enable further production
improvements in 2000.
18
Flygt Argentina and Flygt China
The factories in Argentina and China, which mainly
distribute products to domestic customers, continued
to perform strongly. The Argentinean market decreased
slightly during 1999, whilst the Chinese market increased, boosted by infrastructural investments by
the government.
Logistics
Distribution of ITT Flygt products and parts entered a
new phase in 1999. Two new Supply and Distribution
Centers were inaugurated – SDC Metz and SDC Lindås.
These centers were created to improve delivery service,
assets and cost performance.
SDC Metz in northern France is near the Belgian, German
and Luxembourg borders, and was the first center of its
type to be opened. It currently serves customers in
Austria, France, Great Britain and Ireland. The center
will soon also serve Belgium, Germany, Italy, Spain and
The Netherlands.
SDC Lindås currently serves all the countries not handled
by SDC Metz.
19
Environment,
Safety & Health – ESH
Environmental oriented initiatives in 1999 are moving
beyond traditional environmental issues. ITT Flygt’s
participation in the Global Reporting Initiative (GRI)
work with the Sustainability Reporting Guidelines
resulted in an ITT Flygt Sustainability Report. The
sustainability concept embraces environmental, social
and ethical aspects together with economics ITT
Flygt is one of 20 pilot companies selected globally to
participate in this task. This Report will be found on
our corporate Internet site – http://www.flygt.com
The report is based on the definition of sustainability
developed by the Brundtland Commission in 1987.
Sustainability is defined as meeting the needs of the
present, without compromising the ability of future
generations to meet their own needs.
ESH management systems
Between 1997 and 1999, the number of countries and
sites that implemented ESH management systems increased from 20 to 29. Implementation starts with an
introduction and after 12 months of preparation work
an internal audit is taken. The site can then begin to
report ESH related key data.
ISO 14001
In May, 1999, the Grindex plant in Haninge, Sweden,
received a certificate according to ISO 14001 for its
environmental management system, which is integrated
with the ISO 9001 system certified in 1996. Today, there
are ten ITT Flygt sites in Sweden certified for ISO
14001. One of these, the main plant in Lindås, is also
registered for EMAS.
Soil and groundwater investigations
There has been a comprehensive soil and groundwater
investigation program in force for many years within ITT
Industries. The main objective is to identify potential
liabilities and quantify potential exposures. The program
was started within ITT Flygt in 1992 and all facilities
worldwide are scheduled to be investigated by year-end
2001. At the close of 1999, investigations had been
finalised at 25% of the sites and are ongoing at 50%,
leaving 25% to be investigated. Results obtained so far
are encouraging. Very limited contamination has been
found. At sites where contamination exceeded national
standards, remedial measures have been taken.
20
Life Cycle Assessment (LCA) and
Environmental Product Declaration (EPD)
ITT Flygt began working with LCA and EPD in 1997,
and the program has now been expanded to include
not only all new products and parts, but also all existing
products. By year-end 1999, 22 products and associated
parts had gone through LCA. All LCAs are accompanied
with EPD, according to the international standard ISO
14025.
Waste
Reporting practices within ITT Flygt regarding waste
include three categories: hazardous, non-hazardous
and recycled. Some non-hazardous waste is also recycled,
but for many sites in certain countries, the degrees of
recycling are not accessible.
The development of the waste indicator for ITT Flygt
between 1997-1999 is described by the enclosed figures:
Total waste, tons
Cost, USD
Haz. waste, tons
Cost, USD
Non-haz. waste, tons
Cost, USD
Recycled, tons
1997
6,836
364,449
428
150,965
5,571
213,484
837
1998
8,077
384,559
407
138,355
5,841
246,204
1,829
1999
8,589
503,671
290
219,627
6,368
284,044
1,931
Energy
Between 1995 and 1999, the factory in Lindås converted
from fossil oil to biofuel. In 1999, a total of 10.8 GWh of
energy from biofuel was used. Only 0.6 GWh of energy
comes from fossil oil. The Lindås factory accounts for
64% of the total energy use (81.1GWh) within ITT Flygt.
The cost for handling all waste within ITT Flygt has
increased by 38% during the last years, especially the
cost for taking care of hazardous waste. The amount
of hazardous waste has decreased by 32%. However,
the cost increased by 45% due to the contractors’
higher price.
Water
During the three-year period (1997 – 1999) the water
usage within ITT Flygt has decreased by 15%. The factory
in Lindås has decreased usage by 42% by implementing
actions that comprehensively save water, especially in
the cooling system in the foundry.
Total water usage, m3
1997
250,825
1998
235,565
1999
213,610
Chemicals
An important part of the ESH work at all ITT Flygt sites is
to replace hazardous chemicals with more environmentally adopted alternatives. Chemicals have been on the
ITT Flygt agenda for at least the last five years and the
European Chemical Reduction Project has resulted in a
Reduction List, as well as an Approved Chemical List for
ITT Flygt service centres.
Training and information
ITT Industries has set rigorous training requirements
for its employees from introductory environmental,
safety and health training and general environmental
awareness, to more specific training for high risk
operations. ITT Flygt has compiled comprehensive
training programs for local use at the various sites.
21
Financial report 1999
At the end of the year, ITT Flygt had the equivalent of
71.5 days sales in accounts receivable, compared with
69.9 days at the end of 1998. The slightly higher days in
1999 is explained by a larger portion of total sales in
countries with over-average payment terms (Spain, Italy
and France).
ITT Flygt sales and revenues increased by 3.8%
to USD 615.7 million and at comparable currency
rates by 7.0%.
Operating income increased from USD 51.1 million to
USD 70.4 million in 1999. Excluding restructuring and
nonrecurring items of USD 2.7 million in 1999 and
USD 19.8 million in 1998 (see note 17) operating
income increased by USD 2.1 million to 73.0 million.
The main reasons for the improvement are expense
savings and the acquisition of the company Sanitaire
Corporation, USA.
Total inventories, net of reserves for excess and obsolete
goods and progress payments, were equivalent to
14.1% of annual sales (13.2% in 1998). The start up of
the distribution center in Metz, France, caused some
double stocking at the initial stage. This included buffer
inventories in connection with Y2k.
Net income after tax and minority interest was USD
44.4 million compared to 30.1 million in 1998. Excluding
restructuring and nonrecurring items after tax of USD
1.7 million in 1999 and USD 14.8 million in 1998, net
income after tax increased by USD 1.2 million to USD
46.1 million.
The ratio of total interest bearing debt to the total of
interest bearing debt and stockholders equity was 34.7%
at year end in 1999 (29% at the end of 1998). Operating
income exceeded interest income/expenses and financial
costs in 1999 by 47.5% compared with 120% in 1998.
Euro conversion issue
The Company is addressing issues raised by the conversion
to the Euro and adapting its information technology
systems. All operations are today able to accommodate
Euro-denominated invoicing and purchasing transactions.
1999 showed operational cash flow USD 41.0 million
compared to USD 73.9 million in 1998. The lower cash
flow in 1999 was mainly due to acquisitions. Cash at end
of year 1999 was USD 17.5 million (USD 14.4 million).
The Company’s EMU located operations are formulating
plans to accommodate all Euro-denominated transactions
by January 1, 2002. The Company anticipates that its
costs in connection with the Euro conversion will not
be material.
Further, the Company does not anticipate that the
conversion from the local currencies to the Euro would
have a material adverse impact on its consolidated
financial condition, results of operations, or cash flows.
22
2.0%
8.5%
Sales by region 1999
thousands of USD
26.4%
Africa & Middle East
2.8%
2.0%
12,084
North America
26.4%
162,564
South America
2.8%
17,399
60.3%
371,044
8.5%
52,590
Europe
Asia & Pacific
60.3%
Total
615,681
3.0%
8.1%
Sales by region 1998
thousands of USD
21.5%
Africa & Middle East
3.4%
3.0%
17,738
North America
21.5%
127,700
South America
3.4%
20,078
64.0%
379,895
8.1%
48,013
Europe
Asia & Pacific
64.0%
Total
593,424
2.7%
10.3%
Sales by region 1997
thousands of USD
20.9%
Africa & Middle East
4.4%
61.7%
2.7%
16,619
North America
20.9%
127,534
South America
4.4%
26,956
Europe
61.7%
376,404
Asia & Pacific
10.3%
62,849
Total
23
610,362
Combined statements of income
Years ended December 31 (Thousands of USD)
1999
1998
1997
615,681
593,424
610,362
376,100
359,827
380,513
16,607
16,704
15,953
Marketing, general and administrative expenses
149,942
145,948
149,910
Restructuring and other special items (Note 17)
2,679
19,843
–
545,328
542,322
546,376
70,353
51,102
63,986
1,334
1,811
1,389
(2,816)
(2,237)
(3,443)
1,235
376
1,583
Net sales
Costs and expenses
Manufacturing and service costs
Depreciation and amortisation
Operating income
Other income (expense)
Interest income
Interest expense and financial costs
Miscellaneous income (expense), net (Note 8 and 14)
(247)
(50)
(471)
Income before income taxes
70,106
51,052
63,515
Provision for income taxes (Note 9)
(25,167)
(20,225)
(23,322)
(572)
(683)
(602)
44,367
30,144
39,591
1999
1998
1997
44,367
30,144
39,591
Translation of foreign currency financial statements
(10,123)
497
(20,848)
Comprehensive income
34,244
30,641
18,743
Minority interest in net income
Net income
Combined statements
of comprehensive income
Years ended December 31 (Thousands of USD)
Net income
Foreign currency translation:
24
Combined balance sheets
At December 31 (Thousands of USD)
1999
1998
1997
17,516
14,424
16,182
139,225
139,303
132,557
Receivables from affiliated companies
13,625
16,503
26,228
Inventories (Note 3)
86,536
78,209
79,595
Deferred income taxes (Note 9)
6,442
6,426
6,410
Other current assets
8,879
6,450
8,144
272,223
261,315
269,116
Investments (Note 1)
10,147
9,852
6,146
Amortisable goodwill (Note 4)
42,896
12,146
12,770
Other assets
13,023
12,528
9,323
66,066
34,526
28,239
213,569
200,736
187,624
(119,832)
(114,065)
(106,216)
93,737
86,671
81,408
432,026
382,512
378,763
Assets
Current assets
Cash
Accounts and notes receivables (Note 2)
Investments and other non-current assets
Plant, property and equipment at cost (Note 5)
Less accumulated depreciation
Total assets
25
Combined balance sheets
At December 31 (Thousands of USD)
1999
1998
1997
6,478
8,322
7,091
64
32
31
Trade payables
51,546
50,574
50,471
Payables to affiliated companies
79,584
52,406
46,805
Accrued salaries and benefits
31,717
39,430
29,495
Other accrued liabilities
35,273
28,005
17,190
–
254
3,026
204,662
179,023
154,109
Deferred income taxes (Note 9)
21,334
20,232
19,435
Reserves for pension (Note 16)
37,903
38,604
37,198
1,254
8
16
456
1,001
830
60,947
59,845
57,479
2,652
2,601
2,627
23,277
23,277
23,277
187,649
154,804
178,806
(47,161)
(37,038)
(37,535)
163,765
141,043
164,548
432,026
382,512
378,763
1999
1998
1997
154,804
178,806
142,301
44,367
30,144
39,591
Dividends
(11,522)
(54,146)
(3,086)
Balance, end of year
187,649
154,804
178,806
Liabilities and stockholders’ equity
Current liabilities
Short-term debt (Note 6)
Current maturities of long-term debt (Note 7)
Accrued income taxes
Long-term liabilities
Long-term debt (Note 7)
Other long-term liabilities
Minority interest
Stockholders’ equity
Common stock (Note 10)
Retained earnings (Note 11)
Accumulated other comprehensive loss:
Cumulative translation adjustments
Total liabilities and stockholders´ equity
Combined statements
of changes in retained earnings
Years ended December 31 (Thousands of USD)
Balance, beginning of year
Net income
26
Combined statements of cash flow
Year ended December 31 (Thousands of USD)
1999
1998
1997
44,367
30,144
39,591
16,607
16,704
15,953
Increase in non-current deferred income taxes
1,102
797
(449)
Provision to pension reserves
(701)
1,406
(5,064)
(Decrease) increase in other long-term liabilities
(545)
171
597
Changes in accrued and deferred taxes
(2,393)
(2,788)
1,500
Changes in working capital
(7,330)
26,951
26,582
(10,123)
497
(20,848)
40,984
73,882
57,862
Additions to plant, property and equipment
(26,424)
(23,362)
(18,165)
Net book value for fixed assets retired or sold
(1,025)
1,707
(30)
(32,545)
(3,962)
(10,286)
4,781
(2,637)
9,957
(55,213)
(28,254)
(18,524)
27,597
6,768
(30,743)
1,246
(8)
(39)
(11,522)
(54,146)
(3,086)
17,321
(47,386)
(33,868)
Increase (decrease) in cash
3,770
(2,099)
7,791
Exchange rate effects on cash
(678)
341
(2,321)
Cash at beginning of year
14,424
16,182
10,712
Cash at end of year
17,516
14,424
16,182
Operating activities
Net income
Adjustments to net income
Depreciation and amortisation
Translation adjustments
Cash from operating activities
Investing activities
Acquisitions
Other, net
Cash used for investing activities
Financing activities
Increase (decrease) in short-term debt, net
Increase (decrease) in long-term debt
Dividends paid
Cash from (used for) financing activities
27
** Company partly owned subsidiary
Notes to combined financial statements
Investments accounted for using the equity method are as
follows:
1. Accounting policies
A. Combination principles and investments
These combined financial statements include the legal statutory
ITT Flygt Group and other companies/divisions which are an
integral part of ITT Flygt´s activities. Investments in which
ITT Flygt Group has a stock ownership of at least 20% but
not over 50% are accounted for using the equity method.
Investments accounted for using the equity method were
USD 10,147 and 9,852 in 1999 and 1998 respectively.
Anadolu Flygt Pompa Pazarlama ve Ticaret A S, Istanbul, Turkey
Flygt do Brasil S/A, Brazil
Flygt Chile S.A., Santiago, Chile
Flygt Hellas, Athens Greece
Flygt Portugal Tecnologia da Agua e do Ambiente, S.A.,
Lisbon, Portugal
Sam McCoy Engineering Pte, Ltd., Singapore
Sam McCoy Manufacturing Sdn, Bhd, Malaysia
Oy Flygt-Nova AB, Korsnäs, Finland
Transactions between all companies/divisions in the ITT Flygt
Group have been eliminated and reserves have been provided
for profits generated through transfer of inventories.
B. Basis of financial statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Goodwill is amortised on a straight-line basis in the income
statement. The amortisation period for goodwill has been
established since 1996, based on the following criteria for
the acquired company.
20 years - Acquisitions of major distribution activities by country.
40 years - Acquisitions of new product lines with a global
market reach.
An amount of 848 was however acquired prior to the date
when it became mandatory to amortise such goodwill and is
therefore not amortised and is reflexed among other assets.
Changes in accounting policies
In January 1998, ITT Flygt adopted statement of financial
accounting standard (SFAS) No. 130, ’’Reporting Comprehensive
Income’’. SFAS No. 130 requires the disclosure of comprehensive
income, which includes, in addition to net income, other
comprehensive income consisting of unrealised gains and
losses which bypass the traditional income statement and are
recorded directly into a separate section of shareholders´ equity
on the balance sheet. The components of other comprehensive
income for the ITT Flygt Group consist of unrealised gains and
losses relating to the translation of foreign currency financial
statements.
The operating companies/divisions included in the combined
financial statements (all ultimately majority owned by
ITT Industries, USA) are as follows:
ITT Flygt Ltd., Ermington (Sydney), Australia*
ITT Flygt GmbH, Vienna, Austria
ITT Flygt N.V./S.A., Zaventem (Brussels), Belgium
ITT Flygt A Division of ITT Industries of Canada Ltd, Point Claire
(Montreal), Canada*
ITT Flygt Pump Co Ltd., Shenyang, China*
ITT Flygt A/S, Glostrup (Copenhagen), Denmark
ITT Flygt S.A., Nanterre (Paris), France
ITT Flygt Pumpen GmbH, Langenhagen (Hannover), Germany*
ITT Flygt Werk GmbH, Pforzheim, Germany*
ITT Flygt Ltd., Nottingham, Great Britain
ITT Flygt Kft, Budapest, Hungary
ITT Flygt Ltd., Tallaght (Dublin), Ireland
ITT Flygt S.p.A., Milan, Italy
ITT Flygt B.V., Dordrecht, The Netherlands
ITT Flygt AS, Oslo, Norway
ITT Flygt Sp. z.o.o., Warsaw, Poland
ITT Flygt Pty. Ltd, Edenvale (Johannesburg), South Africa*
ITT Flygt AB, Solna/Lindås, Sweden
ITT Flygt Corporation, Trumbull, (CT) USA*
ITT Flygt HK Ltd. Hong Kong
ITT Flygt Korea Ltd. Seoul, Korea**
Flygt Argentina S.A., Buenos Aires, Argentina *, **
TFB, Flygt S.A., Madrid, Spain**
Flygt-Pumps Finland OY, Vantaa, Finland
Grindex AB, Haninge, Sweden
Grindex Pumps, Tintley Park (IL), USA*
Trimate Industries Ltd., Auckland, New Zealand*
JSC ITT Flygt AB, St. Petersburg, Russia (in liquidation)
Sanitaire Corporation, Brown Deer, (WI), USA*
* Companies/Divisions that are not part of the legal statutory
ITT Flygt Group.
C. Sales and revenue recognition
The Company recognises revenue as services are rendered and
recognises sales as products are shipped to customers.
D. Currency translation
Financial statements of individual entities in the ITT Flygt
Group have been translated from local currency (functional
currency) into USD (reporting currency) in accordance with
SFAS No. 52 of the Financial Accounting Standards Board.
Under this accounting standard, all assets and liabilities are
translated at the exchange rate in effect at year-end. Common
stock, denominated in foreign currency, in associated
companies, has been translated at the historic exchange rate.
Income accounts are translated at the average rates of the
exchange prevailing during the year.
Translation adjustments result from the process of translating
an entity´s financial statements into USD, if its functional
currency is different than USD. Translation adjustments are
not included in determining net income but are charged/credited to Cumulative Translation Adjustments (CTA).
Transactions denominated in a currency other than the entity´s
functional currency which result in foreign exchange gains or
losses have been included in net income for the year in which
the exchange rate changed or the transaction is settled.
28
E. Inventories
Inventories are generally valued at the lower of cost (first-in,
first-out) or market. In manufacturing operations, a full
absorption procedure is employed using standard cost
techniques. Expected losses from obsolete or slow-moving
inventories are provided for currently.
3. Inventories
Inventories as of December 31 were as follows:
1999
54,573
2,167
38,987
95,727
1998
56,206
2,639
30,893
89,738
1997
56,000
2,676
31,537
90,213
(6,487)
(2,704)
86,536
(8753)
(2776)
78,209
(8,617)
(2,001)
79,595
1999
13,724
32,250
–
45,974
1998
13,659
319
(254)
13,724
1997
2,402
11,257
–
13,659
1,578
1,500
–
889
709
(20)
206
683
–
3,078
1,578
889
Net value after
accumulated amortisation 42,896
12,146
12,770
Finished goods
Work in process
Raw materials
F. Computer software
The ITT Flygt Group capitalises computer software and certain
software development costs effective from July 1991. This
capitalised computer software is included in other non current
assets. Depreciation is provided on a straight-line basis with the
shorter of estimated useful lifetime of the assets or five years.
Less - reserves
- Progress payments
4. Amortisable goodwill
G. Plant, property, and equipment
Plant, property and equipment are recorded at cost, including
freight, customs, duties and construction or installation costs
(including labor and related overhead). Interest is capitalised
in connection with major project expenditures.
Cost, January 1
Purchases
Sales
Cost, December 31
H. Depreciation
For financial reporting purposes, depreciation is provided on a
straight-line basis over the useful economic lives of the assets
involved as follows:
Building and permanent fixtures
Land improvement
Machinery and equipment
Tools, dies, and fixtures
Assets on operating leases to customers
Furniture and fixtures
Lease hold improvements
Other fixed assets
Accumulated amortisation,
January 1
Amortisation
Sales
Accumulated amortisation,
December 31
40 years
20 years
10 years
5 years
5 years
10 years
25 years
5 years
The following table shows amortisation for 1999 and the net
value after cost depreciation for goodwill distributed over the
amortisation period.
For tax purposes maximum depreciation deduction is normally
claimed, using those accelerated techniques available in each
country in which the Group operates.
Amortisation for 1999
Net value after
amortisation at Dec. 31
Gains or losses on sale or retirement of assets are not significant
and are included in operating income.
Less - accumulated
depreciation
1999
1998
1997
145,413 145,545 138,480
(6,242)
30,882
42,896
1999
1998
1997
Land and improvements
3,000
2,442
2,214
Buildings and improvements
29,919 25,311 27,197
Machinery and equipment
86,355 81,401 81,261
Construction work in progress
2,443
4,941
3,928
Other
91,852 86,641 73,024
Gross plant, property and
equipment
213,569 200,736 187,624
2. Accounts and notes receivables
Accounts and notes receivables as of December 31 were as
follows:
(6,188)
12,014
Total
1,500
5. Plant, property and equipment
Plant, property and equipment consists of the following:
I. Research and development
Significant costs are incurred each year in connection with
research and development programs that are expected to
contribute profits to the operations of future years. Such costs
are charged to operating income as incurred. Research and
development expenditures charged to operations amounted
to 16,012, 14,397 and 15,694 for 1999, 1998 and 1997,
respectively.
Trade receivables
Less - reserves for
doubtful accounts
20 years 40 years
713
787
(5,923)
139,225 139,303 132,557
29
(119,832) (114,065) (106,216)
93,737 86,671 81,408
purposes. The December 31, 1999, 1998, 1997 balance
sheets include net deferred tax assets of 6,442, 6,426, 6,410
respectively and net foreign and other deferred tax liabilities of
21,334, 20,232, 19,435 respectively.
6. Short-term debt
At December 31, 1999, 1998 and 1997, the ITT Flygt Group
had outstanding bank overdrafts and loans payable to various
institutions of 6,478, 8,322 and 7,091, respectively, with an
average interest rate in 1999, 1998 and 1997 of 5.9%, 4.3%
and 3.9%, respectively. Generally, these borrowings are made
under established lines of credit which are renewable annually.
At December 31, 1999, 1998 and 1997, total available unused
lines of credit were 34,761, 49,378 and 62,129, respectively.
The ITT Flygt Group’s average tax rate has been influenced as
below:
Average tax rate
Equity accounting
Restructuring and
non-recurring items
Combined effective
income tax rate
Short-term debt includes a line of credit secured by the assets
of the parent company amounting to 0, 0 and 2,520.
7. Long-term debt
Maturities
1998
1999
2000
2001
2002
2003
Balance December 31
Less - Current maturities of
long-term debt
Average annual interest rate
1999
–
–
64
62
67
1,125
1,318
1998
–
32
8
–
–
–
40
1997
31
16
–
–
–
–
47
(64)
1,254
8.7%
(32)
8
5.5%
(31)
16
4.5 %
1999
1998
1997
–
–
605
542
(166)
376
1,186
(208)
1,583
(187)
1,422
1,235
Common
stock
ITT Flygt AB
(Sweden)
Number
of shares
50,000
Associated entities:
ITT Flygt
Corporation (USA) 200
ITT Flygt Ltd.
(Australia)
60,000
ITT Flygt
Jimbei Pump Co Ltd.
(China)
Current
Deferred
Total income tax expense
25,167
20,225
23,322
3.9%
–
35.9%
39.6%
36.7%
Par
value
SEK
1,000
1999
1998
1997
10,594 10,594 10,594
–
1,500
1,500
1,500
AUD 1
67
67
67
11,116 11,116 11,116
11. Restrictions on retained earnings
Of the 187,649, 154,804 and 178,806 total combined
retained earnings in 1999, 1998 and 1997, respectively,
103,894 in 1999, 96,267 in 1998 and 97,382 in 1997
represents legal reserves or restricted equity. The remaining
undistributed earnings, 83,755, 59,822 and 82,026 in 1999,
1998 and 1997, respectively, should not be understood to be
immediately available for payment of dividends, since some
of such earnings are subject to statutory or other restrictions
imposed in the countries involved.
12. Commitments and contingencies
At December 31, commitments and contingencies were:
Provision for income tax
1997
20,613
2,709
(0.1%)
23,277 23,277 23,277
Taxes payable upon distribution of dividends from companies
in the ITT Flygt Group are provided for. These are based upon
estimated dividends during the coming year out of the
companies current years net income.
1998
22,078
(1,853)
1997
37.5%
(0.8%)
10. Common stock
At December 31, common stock consisted of the following:
9. Income taxes
Provisions to accrued income taxes have been made in
accordance with tax regulations in the various countries in
which the ITT Flygt Group entities have operations. Deferred
tax liabilities and assets, representing the increase or decrease
in taxes payable or refundable in future years as a result of
temporary differences and carry forwards, have been provided
for.
1999
25,167
–
1998
36.1%
(0.4%)
The tax rate in Sweden is 28%. The difference relates to other
effective income tax rates for entities operating in other
countries.
8. Miscellaneous income (expense), net
Gain from foreign
exchange contracts
Equity earnings (losses) of
20-50% owned companies
Other, net
1999
36.0%
–
Trade and note
Receivables discounted
Guarantees to banks
and other
Deferred income taxes are established for all temporary
differences between the amount of assets and liabilities
recognised for financial reporting purposes and for tax
30
1999
1998
1997
2,257
2,151
4,439
1,667
1,725
1,811
3,924
3,876
6,250
changes in the projected benefit obligations and the weighted
average assumptions for the periods ending December 31,
1999 and 1998, respectively. Because all of the ITT Flygt Group
plans are unfunded, there are no plan assets. The second table
contains the components of the periodic benefit costs for the
years ending December 31, 1999, 1998 and 1997, respectively.
Other benefit costs include pension cost in countries not
covered by SFAS No. 87 and also costs for pension plans in
Great Britain and France that do not impact the balance sheet
or the projected benefit obligations.
13. Leases and rentals
At December 31, 1999 minimum rental commitments under
non-cancelable operating leases were as follows:
Year
2000
2001
2002
2003
2004
Remaining years
1999
14,912
11,699
9,088
5,586
4,142
14,703
Total minimum lease payments
60,130
Pension
Change in projected
benefit obligation
Projected benefit obligation
at beginning of year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Effect of currency translation
Projected benefit obligation
at end of year
Total rental expenses for all operating leases amounted to
16,619, 16,715 and 16,277 for 1999, 1998 and 1997,
respectively. Future commitments under capital leases are
not significant.
14. Foreign exchange forward contracts
At December 31, 1999, contracts of SEK 231,338 were outstanding, however no gains or losses were recorded related to
these contracts. For the year ended December 31, 1998,
contracts of SEK 713,881 and EURO 8,568 were outstanding.
However, no gains or losses were recorded related to these
contracts. For the year ended December 31, 1997, a gain of
605 was recorded related to the foreign exchange contracts.
Funded status
Sweden
Europe
North America
Other
Total
66,376
304,668
162,564
82,073
615,681
Operating
income
21,187
21,627
32,668
(2,450)
73,032*
Identifiable
assets
131,067
164,593
85,900
48,343
429,903
1997
39,885
1,631
2,520
3,604
1,565
(2,922)
38,247
1,162
2,481
639
2,583
(61)
42,672
1,189
2,687
(369)
1,995
(5,937)
43,153
39,885
38,247
(43,153) (39,885) (38,247)
Weighted-average assumptions as of December 31
Discount rate
Assumed inflation rate
Rate of future
compensation increase
Net sales for Sweden include sales in Sweden and export sales
to other geographical areas as follows:
Europe
Africa/Middle East
Asia
Other
Total export
Sweden
Total
1998
Unrecognised net
transition asset
(329)
(687) (1,054)
Unrecognised net
actuarial loss
4,962
3,008
2,279
Other pension cost
617
(1,040)
(176)
Accrued benefit obligation
recognised in the
balance sheet
(37,903) (38,604) (37,198)
15. Geographical segment information
Net Sales
1999
21,359
6,599
9,589
7,879
45,426
20,950
66,376
Pension
Components of net
periodic benefit cost
Service cost
Interest cost
Expected return
on plan assets
Amortisation of
transitional obligation (asset)
Net periodic benefit cost
Other benefit cost
Total periodic benefit cost
*excluding restructuring and non-recurring items of USD 2,679.
16. Pensions
The entities in the ITT Flygt Group have individual pension plans
or participate in plans administered outside the ITT Flygt Group.
These pension plans are generally non-contributory for the
employees and cover substantially all of the ITT Flygt Group
employees. Past service costs at the time of inception or
modification of the plans have been fully amortised.
The tables below contain information about ITT Flygt Group
plans. The first table below, contains a reconciliation of the
31
6.08%
1.83%
6.6%
2.05%
7.34%
2.6%
3.08%
2.85%
3.35%
1,631
2,519
1,162
2,481
1,189
2,687
(2,108)
(2,699)
(2,473)
(186)
1,856
9,985
11,841
(351)
593
8,535
9,128
(524)
879
7,575
8,454
Cumulative unrecognised net actuarial loss represents the loss
derived from the difference between the actual and expected
amount in the projected benefit obligation. SFAS No. 87
requires amortisation of unrecognised net gains or losses
based on beginning of year balances. An unrecognised net
gain or loss which exceeds 10% of the projected benefit
obligation is subject to amortisation over the future service
period of active employees.
The individual pension plans are in general administered by
various insurance companies or other financial institutions.
Unrecognised net asset at adoption represents the initial
reduction of pension expenses at time of the initial application
of SFAS No. 87 in 1986. The initial net asset is recognised as
income over the estimated average future service period of
active employees.
17. Restructuring and non-recurring items
At December 31, 1999 and 1998, reserve balances for
restructuring activities were USD 3,226 and USD 19,843,
respectively. The following table displays a rollforward of the
restructuring reserve for 1999:
Beginning balance
Payments made in 1999
New provision in 1999
Ending balance
19,843
(19,296)
2,679
3,226
32
Auditor’s report
To the Board of Directors, ITT Flygt AB
We have audited the combined financial statements of
ITT Flygt Group as defined in Note 1 as of December 31,
1999, 1998 and 1997 and for each of the three years
in the period ended December 31, 1999 as set forth on
pages 24 - 32 in this report. These combined financial
statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion
on these combined financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles
used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements
referred to above present fairly, in all material respects,
the financial position of ITT Flygt Group as of December
31, 1999, 1998 and 1997 and the results of their
operations and cash flows for each of the three years
in the period ended December 31, 1999 in conformity
with generally accepted accounting principles.
Arthur Andersen
Stockholm, Sweden
January 14, 2000
33
Group executive management
Leif E. Carlsson, President
Bertil Mårtensson,
Regional Director Asia Pacific
Anders Rahm,
Controller and
Director Finance
Paul Dietrichson,
Director Operations and ESH
André Tétreault,
Regional Director
North America, Australia
and New Zealand
34
Jan Jonsson,
Director
Information Technology
Anders Hallberg,
Vice President and
Regional Director Europe
Kjell Engström,
Senior Vice President
and Director
Business Development
Richard Björk,
General Manager
ITT Flygt Products
Lars-Ivar Ahlqvist,
Director Human Resources
35
OPERATIONS IN
SWEDEN
ITT Flygt AB – Headquarters
Svetsarvägen 12
Box 1309
SE-171 25 Solna
Tel: +46-84756000
Fax: +46-84756900
http://www.flygt.com
ITT Flygt Products
Svetsarvägen 12
Box 1309
SE-171 25 Solna
Tel: +46-84756000
Fax: +46-84756900
http://www.flygt.com
ITT Flygt Products
(Manufacturing plant)
SE-361 80 Emmaboda
Tel: +46-471247000
Fax: +46-471247401
http://www.flygt.com
ITT Flygt Pumpar
Svetsarvägen 10 B
Box 1335
SE-172 26 Sundbyberg
Tel: +46-84756700
Fax: +46-84756970
http://www.flygt.se
Flygt International
Svetsarvägen 12
Box 1309
SE-171 25 Solna
Tel: +46-84756990
Fax: +46-84756999
http://int.flygt.com
Grindex AB
Box 538
SE-136 25 Haninge
Tel: +46-86066600
Fax: +46-87455328
http://www.grindex.se
EUROPE
Austria
ITT Flygt GmbH
Heinrich von Buol-Gasse 10
AT-1210 Vienna
Postfach 68
AT-1214 Vienna
Tel: +43-1250370
Fax: +43-12503718
http://www.flygt.com
Belarus
ITT Flygt Minsk
2-D Velosipedny per., 24A
BY-220 033 Minsk
Tel: +375-172472035
Fax: +375-172145962
http://www.flygt.com
Germany
ITT Flygt Werk GmbH
Adolf Richter Strasse 4
DE-75179 Pforzheim
Postfach 526
DE-75105 Pforzheim
Tel: +49-723194590
Fax: +49-7231945940
http://www.flygt.com
Belgium
ITT Flygt NV/SA
Vierwinden 5B
B-1930 Zaventem
Tel: +32-27209010
Fax: +32-27205481
http://www.flygt.com
Great Britain
ITT Flygt Limited
No. 1, Roadway
Colwick Industrial Estate
Nottingham GB-NG4 2AN
Tel: +44-1159400111
Fax: +44-1159400444
http://www.flygt.co.uk
Bulgaria
ITT Flygt Representative
office
25, Mizia Street
Apartment 7
BG-1124 Sofia
Tel: +359-29433224
Fax: +359-29434809
http://www.flygt.com
Greece
Flygt Hellas S.A.
Bizantiou Street 2
GR-142 34 N. Ionia-Athens
Athens
Tel: +30-12758354
Fax: +30-12758611
http://www.flygt.com
Denmark
ITT Flygt A/S
Ejby Industrivej 60
DK-2600 Glostrup
Tel: +45-43200900
Fax: +45-43200999
http://www.flygt.com
Hungary
ITT Flygt KFT
Törökbalinti Utca 23
HU-2040 Budaörs
Tel: +36-23416637
Fax: +36-23415640
http://www.flygt.com
Finland
ITT Flygt Pumput OY
Yrittäjäntie 28
SF-01800 Klaukkala
Tel: +358-98494111
Fax: +358-98524910
http://www.flygt.com
Ireland
ITT Flygt Limited
50, Broomhill Close
Airton Road, Tallaght
IE-Dublin 24
Tel: +353-14524444
Fax: +353-14524795
http://www.flygt.com
France
ITT Flygt S.A.
Parc de Vile
29, rue du port
FR-92022 Nanterre Cedex
Tel: +33-146953333
Fax: +33-146953379
http://www.itt-flygt.fr
Italy
ITT Flygt S.p.A.
Viale Europa, 30
IT-20090 Cusago MI
Casella Postale 1758
IT-20101 Milan
Tel: +39-2903581
Fax: +39-29019990
http://www.flygt.it
Germany
ITT Flygt Pumpen GmbH
Bayernstrasse 11
DE-30855 Langenhagen
Postfach 10 13 20
DE-30834 Langenhagen
Tel: +49-51178000
Fax: +49-511782893
http://www.flygt.com
36
Lithuania
ITT Flygt-Lituanica
A. Juozapaviciaus 9-306
LT-2686 Vilnius
Tel: +370-2723642
Fax: +370-2723268
http://www.flygt.com
The Netherlands
ITT Flygt B.V.
Pieter Zeemanweg 240
NL-3316 GZ Dordrecht
Tel: +31-786548400
Fax: +31-786510936
http://www.flygt.com
Norway
ITT Flygt AS
Stålfjaera 14
NO-0975 Oslo
Tel: +47-22259450
Fax: +47-22165504
http://www.flygt.com
Poland
ITT Flygt Sp. z.o.o.
PL-02-800 Warsawa-Dawidy
84
Tel: +48-227204890
Fax: +48-227204900
http://www.flygt.com
Portugal
Flygt Portugal S.A.
Tecnología da Agua e do
Ambiente, S.A.
Parque Industrial Da Cotai
Avenida Salgueiro Maia,1025
2785-502 S. Domingos De Rana,
Abóboda
Tel: +3512-14446636
Fax: +3512-14446639
http://www.flygt.com
Spain
TFB - Flygt, S.A.
Calle Aravaca 24
ES-28040 Madrid
Tel: +34-915333508
Fax: +34-915532774
http://www.flygt.com
Turkey
Anadolu Flygt Pompa
Pazarlama ve Ticaret A.S.
Imes Sanayi Sitesi E Blok 501
Sokak No: 35
Y. Dudullu
TR-81260 Ümraniye, Istanbul
Tel: +90-2164661240
Fax: +90-2164206422
http://www.flygt.com
Ukraine
ITT Flygt Kiev
1, Laboratorny per
office 501
PO Box 373/4
UA-01133 Kiev
Tel: +380-442529344
Fax: +380-442529481
http://www.flygt.com
NORTH AMERICA
Canada
ITT Flygt Canada
300 Labrosse Avenue
Pointe Claire
Quebec CA-H9R 4V5
Tel: +1-5146950100
Fax: +1-5146970602
http://www.ittflygt.ca
Mexico
ITT Flygt Representative
office
Insurgentes Sur 670
Piso 7 Col del Valle
MX-03100 Mexico, DF
Tel: +52-56695002-10
Fax: +52-56695289
http://www.flygt.com
South Africa
ITT Flygt (Pty) Ltd.
28 Mopedi road, Sebenza,
Edenvale
Tel: +27-116095240
Fax: +27-114529100
http://www.flygt.com
SOUTH AMERICA
Argentina
Flygt Argentina S.A.
Donato Alvarez Av. 261
AR-1406 Buenos Aires
Tel: +54-1146340111
Fax: +54-1146340200
http://www.flygtarg.com.ar
ASIA PACIFIC
Brazil
Flygt do Brasil S.A.
Rua Telmo Coelho Filho N° 40
BR-Cep-05543-020
Butantã-São Paulo SP
Tel: +55-1137350655
Fax: +55-1137352275
http://www.flygt.com.br
Australia
ITT Flygt Limited
PO Box 1425
Level 4, The Octagon
99 Phillip Street
Parramatta NSW 2124
Tel: +61-292020600
Fax: +61-29356591
http://www.flygt.com
Chile
Flygt Chile S.A.
Condominio Buenaventura
Panamericana Norte Km.14 1/2
Calle San Ignacio # 500
Modulo 10
CL-Quilicura
Tel: +56-27386935
Fax: +56-27386937
http://www.flygt.com
China
ITT Flygt (Shenyang)
Pump Co. Ltd.
North Hongu Street
Yuhong District, Shenyang
Liaoning Province
CN-110141 Shenyang
Tel: +86-2425834138
Fax: +86-2425833498
http://www.flygt.com.cn
Venezuela
Bombas Flygt de
Venezuela S.A.
La Urbina. Calle 10 con calle 5
Centro Empresarial Orinoco
Piso No. 1 ofc 6
Zona postal: 1073 Caracas
Tel: +582-2418025
Fax: +582-2415297
http://www.flygt.com
China
ITT Flygt Pump Co. Ltd
Shanghai Office
Room 2001-2
Central Plaza
No 227 North Huang Pi Road
CN-200003 Shanghai
Tel: +86-2163758058
Fax: +86-2163758050
http://www.flygt.com.cn
Malaysia
ITT Flygt AB Representative office
Unit A11/2/2
One Ampang Business Avenue
Jalan Ampang Utama 2/2
MY-68000 Ampang, Selangor Darul Ehsan
Tel: +60-34577750
Fax: +60-34526945
http://www.flygt.com
Malaysia
Sam McCoy Engineering
Sdn. Bhd.
Lot 59, Jalan Tanjung Medan
26/12 Hicom Sector B,
Section 26
MY-40000 Shah Alam,
Selangor
Tel: +60-35112525
Fax: +60-35112424
http://www.flygt.com
New Zealand
Trimate Industries Ltd.
Browns Bay, P.O.Box 35618
NZ-Auckland 10
Tel: +64-94158687
Fax: +64-94158679
http://www.flygt.com
Singapore
Sam McCoy Engineering
Pte. Ltd.
6, Wan Lee Road
Singapore SG-627 937
Tel: +65-2666006
Fax: +65-2665005
http://www.flygt.com
AFRICA & MIDDLE EAST
USA
ITT Flygt Corporation
35 Nutmeg Drive
Trumbull, CT 06611
Tel: +1-2033804700
Fax: +1-2033804705
http://www.flygtus.com
Egypt
Flygt international branch
office
#43, Road 13, Flat 502
EG-11431 Old Maadi, Cairo
Tel: +20-23805024
Fax: +20-23805024
http://www.flygt.com
Hong Kong
ITT Flygt AB, Hong Kong
Branch
Units 1903-04, Cre Centre
889 Cheung Sha Wan Road
Kowloon, CN-Hong Kong
Tel: +852-25662802
Fax: +852-25086796
http://www.flygt.com
Wholly-owned subsidiary
Joint venture
Representative office
37
Vietnam
ITT Flygt AB Resident
Representative office
Room 705 7th Floor
Fortuna Building
6 B Lang Ha Street
Ba Dinh District
VN-Hanoi City
Tel: +84-48313171
Fax: +84-48313172
http://www.flygt.com
38
ITT Flygt is the world’s leading manufacturer and supplier of submersible pumping
and mixing solutions. Flygt submersible pumps, mixers and aeration systems are
used in wastewater plants, sewage systems and numerous other applications.
www.flygt.com
893646 © ITT Flygt AB Trosa Tryckeri AB 39366
Our experience is utilised by engineers, planners and consultants to ensure reliable
and cost-effective utilisation of our systems. ITT Flygt has service and sales facilities
in more than 130 countries.

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