SKF - Positive impact of a capital gain on the result for 2005 and a change in accounting for options

SKF - Positive impact of a capital gain on the result for 2005 and a change in accounting for options Capital gain During the fourth quarter, SKF divested their investment in the property company Gemeinnützige Wohnungsbaugesellschaft Schweinfurt GmbH, Germany, resulting in a MSEK 60 profit reflected as a financial income in the income statement. Change in option accounting In order to make the treatment of the transactions involved in the option programs more transparent, SKF has decided to make a change in the accounting. The effect of this change on previously published consolidated income statements for the first three quarters 2005 is: Q1 Q2 Q3 old new old new old new Operating profit 1 188 1 207 1 383 1 388 1 454 1 464 Financial net -64 -28 -64 -69 -45 16 Taxes -345 -363 -414 -415 -435 -455 This effect split per division's operating profit for the first three quarters 2005 is: Q1 Q2 Q3 old new old new old new Industrial 448 453 504 506 507 509 Service 396 398 511 511 581 583 Automotive 154 159 30 31 168 170 Electrical 72 74 122 123 145 145 Aero-Steel 145 146 190 191 74 75 Fully restated consolidated and divisional information for the quarters will be presented as part of the full year report which will be published on 26 January, 2005. Clarification of accounting change The change in accounting relates only to option program 2003 and the contract with the financial institution covering all option programs. The accounting for the option programs 2001 and 2002, which vested prior to 2005 is not affected, since SKF made an election in the first time adoption of IFRS not to restate for these programs. The cost for exercise of option program 2003 was recorded in the operating profit during the first three quarters of 2005. Now, the option program 2003 is considered to be an equity instrument where the exercise is recorded directly against equity under IFRS 2, Share Based Payments. The contract with the financial institution was considered as a financial liability under IAS 32, Financial Instruments, Presentation and Disclosures. It was initially recorded as a change in accounting principle at January 1 2005, in the net amount of MSEK 35, with changes during the first three quarters 2005 recorded as a financial expense. Now, the contract with the financial institution is considered an executory contract, which is not to be recorded under IAS 37, Provisions. Göteborg, January 17, 2006 Aktiebolaget SKF (publ) For further information, please contact: PRESS: Lars G Malmer, SKF Group Communication, tel. +46 (0)31 337 1541, e-mail: Lars.G.Malmer@skf.com IR: Marita Björk, SKF Investor Relations, tel:+46 (0)31 3371994, e-mail: marita.bjork@skf.com