AURORA, ON,
March 1, 2013 /PRNewswire/ - Magna
International Inc. (TSX: MG) (NYSE: MGA) today reported
financial results for the fourth quarter and year ended
December 31, 2012.
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THREE MONTHS ENDED
DECEMBER 31, |
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YEAR ENDED
DECEMBER 31, |
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2012 |
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2011 |
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2012 |
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2011 |
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Sales |
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$ |
8,033 |
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$ |
7,251 |
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$ |
30,837 |
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$ |
28,748 |
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Adjusted EBIT(1) |
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$ |
387 |
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$ |
321 |
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$ |
1,658 |
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$ |
1,367 |
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Income from operations before income
taxes |
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$ |
341 |
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$ |
291 |
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$ |
1,750 |
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$ |
1,217 |
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Net income attributable to Magna
International Inc. |
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$ |
351 |
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$ |
312 |
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$ |
1,433 |
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$ |
1,018 |
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Diluted earnings per share |
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$ |
1.49 |
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$ |
1.32 |
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$ |
6.09 |
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$ |
4.20 |
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All results are
reported in millions of U.S. dollars, except per share figures,
which are in U.S. dollars. |
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(1)
Adjusted EBIT is the measure of segment profit or loss as reported
in the Company's attached unaudited interim consolidated financial
statements. |
Adjusted EBIT
represents income from operations before income taxes; interest
expense (income), net; and other expense (income), net |
THREE MONTHS ENDED DECEMBER 31, 2012
We posted sales of $8.03
billion for the fourth quarter ended December 31, 2012, an increase of 11% over the
fourth quarter of 2011. We achieved this sales increase in a period
when vehicle production increased 12% in North America and declined 8% in Western Europe, both relative to the fourth
quarter of 2011. In the fourth quarter of 2012, our North American,
Europe, and Rest of World
production sales, as well as tooling, engineering and other sales
and complete vehicle assembly sales all increased relative to the
comparable quarter in 2011.
Complete vehicle assembly sales increased 12% to
$697 million for the fourth quarter
of 2012 compared to $625 million
for the fourth quarter of 2011, while complete vehicle assembly
volumes increased 5% to approximately 31,500 units.
For the fourth quarter of 2012, adjusted EBIT
increased 21% to $387 million
compared to $321 million for the
fourth quarter of 2011.
For the fourth quarter of 2012, income from
operations before income taxes was $341
million, net income attributable to Magna International Inc.
was $351 million and diluted earnings
per share were $1.49, increases of
$50 million, $39 million and $0.17, respectively, each compared to the fourth
quarter of 2011.
Excluding other expense (income), net, and the
income tax valuation allowance releases recorded in the fourth
quarters of 2012 and 2011, income from operations before income
taxes, net income attributable to Magna International Inc. and
diluted earnings per share increased $62
million, $37 million and
$0.16, respectively, each compared to
the fourth quarter of 2011.
For the fourth quarter ended December 31, 2012, we generated cash from
operations of $514 million before
changes in non‑cash operating assets and liabilities, and
$559 million in non‑cash operating
assets and liabilities. Total investment activities for the fourth
quarter of 2012 were $949 million,
including $478 million in fixed
asset additions, $446 million to
purchase subsidiaries and $25 million
in investments and other assets.
YEAR ENDED DECEMBER
31, 2012
We posted sales of $30.84
billion for the year ended December
31, 2012, an increase of 7% over the year ended December 31, 2011. This higher sales level
reflected increases in our North American, European, and Rest of
World production sales as well as higher tooling, engineering and
other sales, partially offset by lower complete vehicle assembly
sales.
For the year ended December 31, 2012, vehicle production increased
18% to 15.5 million units in North
America and decreased 7% to 12.7 million units in
Western Europe, each compared to
2011.
Complete vehicle assembly sales decreased 5% to
$2.56 billion for the year ended
December 31, 2012 compared to
$2.69 billion for the year ended
December 31, 2011, while complete
vehicle assembly volumes decreased 5% to approximately 124,000
units.
For the year ended December 31, 2012, adjusted EBIT increased 21% to
$1.66 billion compared to
$1.37 billion for the year ended
December 31, 2011.
For the year ended December 31, 2012, income from operations before
income taxes was $1.75 billion, net
income attributable to Magna International Inc. was $1.43 billion and diluted earnings per share were
$6.09, increases of $533 million, $415
million and $1.89,
respectively, each compared to 2011.
Excluding other expense (income), net, and the
income tax valuation allowance releases recorded in 2012 and 2011,
income from operations before income taxes, net income attributable
to Magna International Inc. and diluted earnings per share
increased $269 million, $165 million and $0.83, respectively, each compared to 2011.
For the year ended December 31, 2012, we generated cash from
operations before changes in non‑cash operating assets and
liabilities of $2.13 billion, and
$72 million in non‑cash operating
assets and liabilities. Total investment activities for the year of
2012 were $1.92 billion, including
$1.27 billion in fixed asset
additions, $525 million to purchase
subsidiaries and a $122 million
increase in investments and other assets.
Don Walker,
Magna's Chief Executive Officer commented: "Overall, we are
satisfied with our operating results for 2012. We continued
our strong performance in North
America. In Europe, we saw better operating results
and a return to profitability. In the rest of the world,
Asia remains profitable, despite
the significant new facility activity, and we are taking steps to
improve results in South
America."
A more detailed discussion of our consolidated
financial results for the fourth quarter and year ended
December 31, 2012 is contained in the
Management's Discussion and Analysis of Results of Operations and
Financial Position and the unaudited interim consolidated financial
statements and notes thereto, which are attached to this Press
Release.
DIVIDENDS
Yesterday, our Board of Directors declared a
quarterly dividend of $0.32 with
respect to our outstanding Common Shares for the quarter ended
December 31, 2012. This dividend is
payable on March 27, 2013 to
shareholders of record on March 13,
2013.
Vince Galifi,
Magna's Chief Financial Officer, stated: "The 16% increase in
our quarterly dividend per share to $0.32, which is a new record for us, reflects our
continued strong performance and the confidence our Board has in
Magna's future."
UPDATED 2013 OUTLOOK
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Light Vehicle Production (Units) |
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North America |
15.8 million |
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Western Europe |
11.9 million |
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Production Sales |
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North America |
$15.4 billion - $15.8 billion |
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Europe |
$9.4 billion - $9.7 billion |
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Rest of World |
$2.2 billion - $2.5
billion |
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Total Production Sales |
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$27.0 billion - $28.0 billion |
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Complete Vehicle Assembly Sales |
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$2.6 billion - $2.9 billion |
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Total Sales |
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$32.0 billion - $33.4 billion |
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Operating Margin*┼ |
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Mid 5% range |
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Tax Rate* |
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Approximately 24.5% |
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Capital Spending |
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Approximately $1.4 billion |
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* Excluding other expense (income), net |
┼ Excluding $158 million
amortization of intangibles related to acquisition of
E-Car |
In this 2013 outlook, in addition to 2013 light
vehicle production, we have assumed no material acquisitions or
divestitures. In addition, we have assumed that foreign exchange
rates for the most common currencies in which we conduct business
relative to our U.S. dollar reporting currency will approximate
current rates.
ABOUT MAGNA
We are a leading global automotive supplier with
313 manufacturing operations and 88 product development,
engineering and sales centres in 29 countries. Our 119,000
employees are focused on delivering superior value to our customers
through innovative processes and World Class Manufacturing. Our
product capabilities include producing body, chassis, interiors,
exteriors, seating, powertrain, electronics, mirrors, closures and
roof systems and modules, as well as complete vehicle engineering
and contract manufacturing. Our common shares trade on the Toronto
Stock Exchange (MG) and the New York Stock Exchange (MGA). For
further information about Magna, visit our website at
www.magna.com.
We will hold a conference call for interested
analysts and shareholders to discuss our fourth quarter and year
end 2012 results on Friday, March 1,
2013 at 8:00 a.m. EST. The
conference call will be chaired by Donald
J. Walker, Chief Executive Officer. The number to use for
this call is 1-800-699-3428. The number for overseas callers is
1-416-641-6715. Please call in at least 10 minutes prior to the
call. We will also webcast the conference call at www.magna.com.
The slide presentation accompanying the conference call will be
available on our website Friday morning prior to the
call.
FORWARD‑LOOKING STATEMENTS
The previous discussion contains statements that
constitute "forward-looking statements" or "forward-looking
information" within the meaning of applicable securities
legislation, including, but not limited to, statements relating to
Magna's expected production sales, based on expected light vehicle
production in North America and
Western Europe; Magna's expected
production sales in the North
America, Europe and Rest of
World segments; total sales; complete vehicle assembly sales;
consolidated operating margin; effective income tax rate; fixed
asset expenditures; implementation of improvement plans in our
underperforming operations, including South America; and future purchases of our
Common Shares under the Normal Course Issuer Bid. The
forward-looking information in this document is presented for the
purpose of providing information about management's current
expectations and plans and such information may not be appropriate
for other purposes. Forward-looking statements may include
financial and other projections, as well as statements regarding
our future plans, objectives or economic performance, or the
assumptions underlying any of the foregoing, and other statements
that are not recitations of historical fact. We use words such as
"may", "would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "forecast", "outlook",
"project", "estimate" and similar expressions suggesting future
outcomes or events to identify forward-looking statements. Any such
forward-looking statements are based on information currently
available to us, and are based on assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments, as
well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a
number of risks, assumptions and uncertainties, many of which are
beyond our control, and the effects of which can be difficult to
predict, including, without limitation: the potential for a
deterioration of economic conditions or an extended period of
economic uncertainty; declines in consumer confidence and the
impact on production volume levels; risks arising from the
recession in Europe, including the
potential for a deterioration of sales of our three largest
German-based OEM customers; inability to sustain or grow our
business with OEMs; restructuring actions by OEMs, including plant
closures; restructuring, downsizing and/or other significant
non-recurring costs; continued underperformance of one or more of
our operating divisions; our ability to successfully launch
material new or takeover business; liquidity risks; bankruptcy or
insolvency of a major customer or supplier; a prolonged disruption
in the supply of components to us from our suppliers; scheduled
shutdowns of our customers' production facilities (typically in the
third and fourth quarters of each calendar year); shutdown of our
or our customers' or sub-suppliers' production facilities due to a
labour disruption; our ability to successfully compete with other
automotive suppliers; a reduction in outsourcing by our customers
or the loss of a material production or assembly program; the
termination or non-renewal by our customers of any material
production purchase order; a shift away from technologies in which
we are investing; risks arising due to the failure of a major
financial institution; impairment charges related to goodwill,
long-lived assets and deferred tax assets; shifts in market share
away from our top customers; shifts in market shares among vehicles
or vehicle segments, or shifts away from vehicles on which we have
significant content; risks of conducting business in foreign
markets, including China,
India, South America and other non-traditional
markets for us; exposure to, and ability to offset, volatile
commodities prices; fluctuations in relative currency values; our
ability to successfully identify, complete and integrate
acquisitions or achieve anticipated synergies; our ability to
conduct appropriate due diligence on acquisition targets; ongoing
pricing pressures, including our ability to offset price
concessions demanded by our customers; warranty and recall costs;
risks related to natural disasters and potential production
disruptions; factors that could cause an increase in our pension
funding obligations; legal claims and/or regulatory actions against
us; our ability to understand and compete successfully in
non-automotive businesses in which we pursue opportunities; changes
in our mix of earnings between jurisdictions with lower tax rates
and those with higher tax rates, as well as our ability to fully
benefit tax losses; other potential tax exposures; inability to
achieve future investment returns that equal or exceed past
returns; the unpredictability of, and fluctuation in, the trading
price of our Common Shares; work stoppages and labour relations
disputes; changes in credit ratings assigned to us; changes in laws
and governmental regulations; costs associated with compliance with
environmental laws and regulations; and other factors set out in
our Annual Information Form filed with securities commissions in
Canada and our annual report on
Form 40-F filed with the United States Securities and Exchange
Commission, and subsequent filings. In evaluating forward-looking
statements, we caution readers not to place undue reliance on any
forward-looking statements and readers should specifically consider
the various factors which could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. Unless otherwise required by applicable securities
laws, we do not intend, nor do we undertake any obligation, to
update or revise any forward-looking statements to reflect
subsequent information, events, results or circumstances or
otherwise.
For further information about Magna, please see our website
at www.magna.com. Copies of financial data and other publicly filed
documents are available through the internet on the Canadian
Securities Administrators' System for Electronic Document Analysis
and Retrieval (SEDAR) which can be accessed at www.sedar.com and on
the United States Securities and Exchange Commission's Electronic
Data Gathering, Analysis and Retrieval System (EDGAR) which can be
accessed at www.sec.gov
MAGNA INTERNATIONAL INC.
Management's Discussion and Analysis of Results of Operations
and Financial Position
Unless otherwise noted, all amounts in this
Management's Discussion and Analysis of Results of Operations and
Financial Position ("MD&A") are in U.S. dollars and all tabular
amounts are in millions of U.S. dollars, except per share figures,
which are in U.S. dollars. When we use the terms "we", "us", "our"
or "Magna", we are referring to Magna International Inc. and its
subsidiaries and jointly controlled entities, unless the context
otherwise requires.
This MD&A should be read in conjunction with
the unaudited interim consolidated financial statements for the
three months and year ended December
31, 2012 included in this press release, and the
audited consolidated financial statements and MD&A for the year
ended December 31, 2011
included in our 2011 Annual Report to Shareholders.
This MD&A has been prepared as at
February 28, 2013.
OVERVIEW
We are a leading global automotive supplier with
313 manufacturing operations and 88 product development,
engineering and sales centres in 29 countries. Our 119,000
employees are focused on delivering superior value to our customers
through innovative processes and World Class Manufacturing. Our
product capabilities include body, chassis, interiors, exteriors,
seating, powertrain, electronics, mirrors, closures and roof
systems and modules, as well as complete vehicle engineering and
contract manufacturing. Our common shares trade on the Toronto
Stock Exchange (MG) and the New York Stock Exchange (MGA). We
follow a corporate policy of functional and operational
decentralization, pursuant to which we conduct our operations
through divisions, each of which is an autonomous business unit
operating within pre-determined guidelines.
HIGHLIGHTS
Operations
Global light vehicle production increased in
2012, representing the third straight year of production growth. In
our two primary markets, North American light vehicle production
increased 18% to 15.5 million units, while Western European light
vehicle production declined 7% to 12.7 million units.
Our 2012 total sales were a record $30.84 billion, an increase of 7% over 2011.
North American, European and Rest of World production sales, as
well as tooling and other sales all increased to record levels in
2012, while complete vehicle assembly sales declined 5% in 2012,
compared to 2011.
Income from operations before income taxes for
2012 was a record $1.75 billion for
2012, compared to $1.22 billion for
2011. Excluding other expense (income), net, ("Other Expense" or
"Other Income") income from operations before income taxes
increased $269 million. Operating
margin earned on the higher sales as well as a higher operating
margin percentage of sales were the primary reasons for the
$269 million increase over 2011.
In our North
America segment, our strong performance across operating
units continued in 2012. Total sales increased 10% over 2011 to
$16.34 billion, driven by the higher
North American light vehicle production, and Adjusted
EBIT(1) increased 11% as compared to 2011 to
$1.52 billion.
In our Europe
segment, we increased total sales by $153
million to $12.71 billion, despite the 7% decline in Western
European vehicle production. This reflects the continued resilient
sales and production performance of our largest OEM customers in
Europe. We reported Adjusted EBIT
in our Europe segment of
$165 million for 2012, compared to a
loss of $22 million for 2011. Better
results at certain underperforming operations were the primary
driver of improved earnings in Europe.
Over the past number of years, we have
experienced significant growth in our Rest of World segment. Our
operations in this segment that are established and have reached an
appropriate level of capacity utilization, for the most part,
generate positive EBIT. However, there are a number of factors that
are currently more than offsetting the aggregate results from our
established operations. In our Rest of World segment, we reported
an Adjusted EBIT loss of $28 million
for 2012, compared to Adjusted EBIT of $56
million for 2011. Costs related to the large number of
facilities under construction or launching in Asia and South
America, operating inefficiencies and other costs in certain
operations in South America, and
the integration of acquisitions in South
America were the primary reasons for the decline in Adjusted
EBIT during 2012 compared to 2011.
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1 Adjusted EBIT represents income from operations before
income taxes; interest expense (income), net; and other expense
(income), net
Investments
In 2012, we once again made significant
investments in our business, totalling $1.92
billion, including fixed assets, investments, other assets
and acquisitions.
Our fixed asset spending in 2012 was an all-time
high $1.27 billion, as we continued
to invest both in our traditional markets and to further expand our
footprint in growing regions such as Asia, Eastern
Europe and South America.
Furthermore, we spent $122 million
for investments and other assets.
Lastly, in 2012 we invested $525 million in acquisitions to enhance our
capabilities.
In January 2012 we
acquired BDW technologies group ("BDW"), a structural casting
supplier of aluminium components, which has operations in
Germany, Poland and Hungary. BDW provides us with high-pressure
casting capabilities that can provide meaningful weight savings to
our customers.
We strengthened our position in automotive pumps
through two acquisitions. In November, we acquired ixetic
Verwaltungs GmbH ("ixetic"), a manufacturer of automotive vacuum,
engine and transmission pumps with two manufacturing facilities in
Germany and one in each of
Bulgaria and China. In addition, we acquired the remaining
50% interest in STT Technologies ("STT") from our joint venture
partner. STT is a leading supplier of transmission and engine
related oil pumps serving the North American market. We believe the
automotive pump market will continue to grow, partly as a result of
the global trend towards improved fuel efficiency. The combined
cost of these acquisitions was $437
million.
We also acquired the controlling 27% interest in
Magna E-Car Systems partnership ("E-Car"), and integrated the
former E-Car operations into our existing operating units. E-Car's
component business was integrated into our Magna Powertrain
operation, in order to take advantage of opportunities for the
electrification of vehicle powertrains and E-Car's battery pack
business and vehicle integration operations were integrated into
our Magna Steyr operating unit.
Dividends
In 2012, aggregate dividends paid to
shareholders amounted to $252
million.
On February 28,
2013 our Board of Directors declared a dividend of U.S.
$0.32 per share, representing an
increase of 16% over the third quarter of 2012 dividend.
Normal Course Issuer Bid
In November 2012
our Board of Directors approved a normal course issuer bid to
purchase up to 12 million of our issued and outstanding Common
Shares, representing 5.2% of our public float of Common Shares. The
normal course issuer bid will terminate in November 2013.
Going Forward
We expect another year of strong light vehicle
production in North America,
driven by the ongoing strengthening of North American auto sales.
In addition, we expect continued solid operating performance in our
North America segment.
We remain cautious about the macroeconomic
environment in Europe, and expect
Western Europe light vehicle
production in 2013 to decline relative to 2012, representing the
second straight year of decline. In addition, certain of our OEM
customers have announced plant closures in Europe, and similar announcements by other
customers and their European operations are possible. We have been
taking, and will continue to take, restructuring actions in
Europe, reflecting both our
ongoing strategic assessment of our business and in response to OEM
facility actions. During 2013, we expect to record additional
restructuring charges of approximately $150
million. We do expect our restructuring and other
operational improvement plans to yield improved operating results
in Europe over time.
We expect to generate improved results in our
Rest of World segment, driven by lower new facility costs, as we
launch new facilities, as well as by actions we are taking to
increase operational efficiencies and integrate previous
acquisitions in South America.
FINANCIAL RESULTS SUMMARY
During 2012, we posted sales of $30.84 billion, an increase of 7% from 2011. This
higher sales level was a result of increases in our North American,
Rest of World and European production sales and tooling,
engineering and other sales partially offset by a decrease in our
complete vehicle assembly sales. Comparing 2012 to 2011:
- North American vehicle production increased 18% and our North
American production sales increased 10% to $15.34 billion;
- Western European vehicle production decreased 7% while our
European production sales increased 2% to 8.79 billion;
- Rest of World production sales increased 31% to $1.84 billion;
- Complete vehicle assembly sales declined 5% to $2.56 billion, as complete vehicle assembly
volumes decreased 5%; and
- Tooling, engineering and other sales increased by 12% to
$2.32 billion.
During 2012, we earned income from operations
before income taxes of $1.75 billion
compared to $1.22 billion for 2011.
Excluding Other Income and Expense recorded in 2012 and 2011, as
discussed in the "Other Income" section, the $269 million increase in income from operations
before income taxes was primarily as a result of:
- margins earned on higher production sales;
- incremental margin earned on new programs that launched during
or subsequent to 2011;
- productivity and efficiency improvements at certain
facilities;
- lower costs incurred in preparation for upcoming launches;
- higher equity income;
- a $15 million revaluation gain in
respect of asset-backed commercial paper ("ABCP");
- the recovery of due diligence costs;
- favourable settlement of certain commercial items;
- lower warranty costs of $3
million; and
- lower stock-based compensation.
These factors were partially offset by:
- increased pre-operating costs incurred at new facilities;
- intangible asset amortization of $52
million related to the acquisition and re-measurement of
E-Car;
- programs that ended production during or subsequent to
2011;
- a larger amount of employee profit sharing;
- higher incentive compensation;
- rising commodity costs;
- the loss on disposal of an investment;
- operational inefficiencies and other costs at certain
facilities; and
- net customer price concessions subsequent to 2011.
During 2012, net income of $1.43 billion increased $411 million compared to 2011. Net income was
impacted by Other Income and Expense, as discussed in the "Other
Income" section and by the valuation allowances as discussed in the
"Income Taxes" section. Other Income positively impacted net income
in 2012 by $84 million and Other
Expense negatively impacted net income in 2011 by $155 million, while the valuation allowances as
discussed in the "Income Taxes" section positively impacted net
income in 2012 by $89 million and in
2011 by $78 million. Excluding Other
Income and Expense, after tax, and the valuation allowances as
discussed in the "Income Taxes" section, net income for 2012
increased $161 million.
During 2012, our diluted earnings per share
increased $1.89 to $6.09 for 2012 compared to $4.20 for 2011. Other Income, after tax,
positively impacted diluted earnings per share in 2012 by
$0.35 and Other Expense, after tax,
negatively impacted diluted earnings per share in 2011 by
$0.65, both as discussed in the
"Other Income" section, while the valuation allowances as discussed
in the "Income Taxes" section positively impacted diluted earnings
per share in 2012 and 2011 by $0.38
and $0.32, respectively. Excluding
Other Income and Expense, after tax, and the valuation allowances
as discussed in the "Income Taxes" section, the $0.83 increase in diluted earnings per share is a
result of the increase in net income attributable to Magna
International Inc. and a decrease in the weighted average number of
diluted shares outstanding during 2012. The decrease in the
weighted average number of diluted shares outstanding was primarily
due to the repurchase and cancellation of Common Shares, during or
subsequent to 2011, pursuant to our normal course issuer bids and
the cashless exercise of options.
INDUSTRY TRENDS AND RISKS
A number of general trends which have been
impacting the automotive industry and our business in recent years
are expected to continue, including the following:
- the consolidation of vehicle platforms and proliferation of
high-volume platforms supporting multiple vehicles and produced in
multiple locations;
- the long-term growth of the automotive industry in China, India
and other high-growth/low cost markets, including accelerated
movement of component and vehicle design, development, engineering
and manufacturing to certain of these markets;
- the growth of the A to C vehicle segments (micro to compact
cars), particularly in developing markets;
- the extent to which innovation in the automotive industry is
being driven by governmental regulation of fuel economy and
emissions, vehicle recyclability and vehicle safety;
- the growth of cooperative alliances and arrangements among
competing automotive OEMs, including shared purchasing of
components; joint engine, powertrain and/or platform development;
engine, powertrain and platform sharing; and joint vehicle
hybridization and electrification initiatives and other forms of
cooperation;
- the consolidation of automotive suppliers; and
- the ongoing exertion of pricing pressure by OEMs.
The following are some of the more significant
risks that could affect our ability to achieve our desired
results:
- The global automotive industry is cyclical. A worsening of
economic and political conditions, including through rising
interest rates or inflation, high unemployment, increasing energy
prices, declining real estate values, increased volatility in
global capital markets, international conflicts, sovereign debt
concerns, the potential for a "currency war", an increase in
protectionist measures and/or other factors, may result in lower
consumer confidence, which has a significant impact on consumer
demand for vehicles. Vehicle production is closely related to
consumer demand and thus vehicle production. A significant decline
in production volumes from current levels could have a material
adverse effect on our profitability.
- The European automotive industry continues to experience
significant overcapacity, elevated levels of vehicle inventory,
reduced consumer demand for vehicles and depressed production
volumes and sales levels. In response to these conditions, some
OEMs have announced plans to restructure their European operations,
including through plant closures, while other OEMs may take similar
actions. In light of the prevailing conditions in Europe, in addition to planned actions, we may
take additional restructuring or downsizing actions. In such an
event, we may incur restructuring, downsizing and/or other
significant non-recurring costs in our European operations, which
could have a material adverse effect on our profitability.
- A majority of our European sales are to three German-based OEMs
- BMW, Volkswagen Group and Daimler. In recent quarters, these
three customers have outperformed the Western European automotive
market despite the recession in Europe, due in part to strong demand for their
vehicles in Asia and North America. A deterioration of the sales of
one or more of our three largest German-based customers could have
a material adverse effect on our sales and profitability.
- In light of the amount of business we currently have with our
largest customers in certain regions, our opportunities for
incremental growth with these customers may be limited. The amount
of business we have with Asian-based OEMs, including Toyota, Honda,
Nissan and Hyundai/Kia, generally lags that of our largest
customers, due in part to the existing relationships between such
Asian-based OEMs and their preferred suppliers. There is no
certainty that we can achieve growth with Asian-based OEMs, nor
that any such growth will offset slower growth we may experience
with our largest customers. Our inability to sustain or grow our
business with OEMs could have a material adverse effect on our
profitability.
- Although we are working to turn around financially
underperforming operating divisions, there is no guarantee that we
will be successful in doing so in the short to medium term. The
continued underperformance of one or more operating divisions could
have a material adverse effect on our profitability and
operations.
- It is likely that we may downsize, close or sell some of our
operating divisions. By taking such actions, we may incur
restructuring, downsizing and/or other significant non-recurring
costs. These costs may be higher in some countries than others and
could have a material adverse effect on our short-term
profitability.
- The launch of new business is a complex process, the success of
which depends on a wide range of factors, including the production
readiness of our and our suppliers' manufacturing facilities and
manufacturing processes, as well as factors related to tooling,
equipment, employees, initial product quality and other factors.
Our failure to successfully launch material new or takeover
business could have an adverse effect on our profitability.
- We believe we will have sufficient available cash to
successfully execute our business plan, even in the event of
another global recession similar to that of 2008-2009. However,
uncertain economic conditions create significant planning risks for
us. The occurrence of an economic shock not contemplated in our
business plan, a rapid deterioration of economic conditions or a
more prolonged recession than that experienced in 2008-2009 could
result in the depletion of our cash resources, which could have a
material adverse effect on our operations and financial
condition.
- While the North American automotive industry appears to have
stabilized following the 2008-2009 recession, there is no certainty
regarding the long-term financial health of our customers and
suppliers. The bankruptcy or insolvency of a major customer or
supplier to us could have a material adverse effect on our
profitability.
- A disruption in the supply of components to us from our
suppliers could cause the temporary shut-down of our or our
customers' production lines. Any prolonged supply disruption,
including due to the inability to re-source or in-source
production, could have a material adverse effect on our
profitability.
- Some of our manufacturing facilities are unionized, as are many
manufacturing facilities of our customers and suppliers. Unionized
facilities are subject to the risk of labour disruptions from time
to time. A significant labour disruption could lead to a lengthy
shutdown of our or our customers' and/or our suppliers' production
lines, which could have a material adverse effect on our operations
and profitability.
- The automotive supply industry is highly competitive. As a
result of our diversified automotive business, some competitors in
each of our product capabilities have greater market share than we
do. Failure to successfully compete with existing or new
competitors could have an adverse effect on our operations and
profitability.
- We depend on the outsourcing of components, modules and
assemblies, as well as complete vehicles, by OEMs. The extent of
OEM outsourcing is influenced by a number of factors, including:
relative cost, quality and timeliness of production by suppliers as
compared to OEMs; capacity utilization; OEMs' perceptions regarding
the strategic importance of certain components/modules to them;
labour relations among OEMs, their employees and unions; and other
considerations. A reduction in outsourcing by OEMs, or the loss of
any material production or assembly programs combined with the
failure to secure alternative programs with sufficient volumes and
margins, could have a material adverse effect on our
profitability.
- Contracts from our customers consist of blanket purchase orders
which generally provide for the supply of components for a
customer's annual requirements for a particular vehicle, instead of
a specific quantity of products. These blanket purchase orders can
be terminated by a customer at any time and, if terminated, could
result in our incurring various pre-production, engineering and
other costs which we may not recover from our customer and which
could have an adverse effect on our profitability.
- We continue to invest in technology and innovation which we
believe will be critical to our long-term growth. Our ability to
anticipate changes in technology and to successfully develop and
introduce new and enhanced products and/or manufacturing processes
on a timely basis will be a significant factor in our ability to
remain competitive. If there is a shift away from the use of
technologies in which we are investing, our costs may not be fully
recovered. We may be placed at a competitive disadvantage if other
technologies emerge as industry-leading technologies, which could
have a material adverse effect on our profitability and financial
condition.
- The failure of any major financial institutions in the future
could adversely affect our ability, as well as our customers' and
suppliers' ability, to access liquidity needed to support our
operating activities. Additionally, the failure of a financial
institution in which we invest our cash reserves or that is a
counterparty in a derivatives transaction (primarily currency and
commodities hedges) with us, could increase the risk that our cash
reserves and amounts owing to us pursuant to derivative
transactions may not be fully recoverable. Any of these risks could
have an adverse effect on our financial condition.
- We recorded significant impairment charges related to goodwill,
long-lived assets and future tax assets in recent years and may
continue to do so in the future. The early termination, loss,
renegotiation of the terms of, or delay in the implementation of,
any significant production contract could be indicators of
impairment. In addition, to the extent that forward-looking
assumptions regarding: the impact of turnaround plans on
underperforming operations; new business opportunities; program
price and cost assumptions on current and future business; the
timing and success of new program launches; and forecast production
volumes; are not met, any resulting impairment loss could have a
material adverse effect on our profitability.
- Although we supply parts to all of the leading OEMs, a
significant majority of our sales are to six such customers. While
we have diversified our customer base somewhat in recent years and
continue to attempt to further diversify, there is no assurance we
will be successful. Shifts in market share away from our top
customers could have a material adverse effect on our
profitability.
- While we supply parts for a wide variety of vehicles produced
globally, we do not supply parts for all vehicles produced, nor is
the number or value of parts evenly distributed among the vehicles
for which we do supply parts. Shifts in market shares among
vehicles or vehicle segments, particularly shifts away from
vehicles on which we have significant content and shifts away from
vehicle segments in which our sales may be more heavily
concentrated, could have a material adverse effect on our
profitability.
- While we continue to expand our manufacturing footprint with a
view to taking advantage of manufacturing opportunities in markets
such as China, India, South
America and other non-traditional markets for us, we cannot
guarantee that we will be able to fully realize such opportunities.
Additionally, the establishment of manufacturing operations in new
markets carries its own risks, including those relating to
political and economic instability; high inflation and our ability
to recover inflation-related cost increases; trade, customs and tax
risks; expropriation risks; currency exchange rates; currency
controls; limitations on the repatriation of funds; insufficient
infrastructure; and other risks associated with conducting business
internationally. Expansion of our business in non-traditional
markets is an important element of our strategy and, as a result,
our exposure to the risks described above may be greater in the
future. The likelihood of such occurrences and their potential
effect on us vary from country to country and are unpredictable,
however, the occurrence of any such risks could have an adverse
effect on our operations, financial condition and
profitability.
- Prices for certain key raw materials and commodities used in
our parts, including steel and resin, continue to be volatile. To
the extent we are unable to offset commodity price increases by
passing commodity price increases to our customers, by engineering
products with reduced commodity content, through hedging
strategies, or otherwise, such additional commodity costs could
have an adverse effect on our profitability.
- Although our financial results are reported in U.S. dollars, a
significant portion of our sales and operating costs are realized
in Canadian dollars, euros, British pounds and other currencies.
Our profitability is affected by movements of the U.S. dollar
against the Canadian dollar, the euro, the British pound and other
currencies in which we generate revenues and incur expenses.
Significant long-term fluctuations in relative currency values, in
particular a significant change in the relative values of the U.S.
dollar, Canadian dollar, euro or British pound, could have an
adverse effect on our profitability and financial condition and any
sustained change in such relative currency values could adversely
impact our competitiveness in certain geographic regions.
- We have completed a number of acquisitions and may continue to
do so in the future. In those product areas in which we have
identified acquisitions as a key aspect of our business strategy,
we may not be able to identify suitable acquisition targets or
successfully acquire any suitable targets which we identify.
Additionally, we may not be able to successfully integrate or
achieve anticipated synergies from those acquisitions which we do
complete, which could have a material adverse effect on our
profitability.
- Although we seek to conduct appropriate levels of due diligence
of our acquisition targets, these efforts may not always prove to
be sufficient in identifying all risks and liabilities related to
the acquisition, including as a result of limited access to
information, time constraints for conducting due diligence,
inability to access target company plants and/or personnel or other
limitations on the due diligence process. As a result, we may
become subject to liabilities or risks not discovered through our
due diligence efforts, which could have a material adverse effect
on our profitability.
- We face ongoing pricing pressure, as well as pressure to absorb
costs related to product design, engineering and tooling, as well
as other items previously paid for directly by OEMs. Our inability
to fully offset price concessions or costs previously paid for by
OEMs could have an adverse effect on our profitability.
- Our customers continue to demand that we bear the cost of the
repair and replacement of defective products which are either
covered under their warranty or are the subject of a recall by
them. Warranty provisions are established based on our best
estimate of the amounts necessary to settle existing or probable
claims on product defect issues. Recall costs are costs incurred
when government regulators and/or our customers decide to recall a
product due to a known or suspected performance issue and we are
required to participate either voluntarily or involuntarily.
Currently, under most customer agreements, we only account for
existing or probable warranty claims. Under certain complete
vehicle engineering and assembly contracts, we record an estimate
of future warranty-related costs based on the terms of the specific
customer agreements and the specific customer's warranty
experience. While we possess considerable historical warranty and
recall data and experience with respect to the products we
currently produce, we have little or no warranty and recall data
which allows us to establish accurate estimates of, or provisions
for, future warranty or recall costs relating to new products,
assembly programs or technologies being brought into production.
The obligation to repair or replace such products could have a
material adverse effect on our profitability and financial
condition.
- Our manufacturing facilities are subject to risks associated
with natural disasters, including fires, floods, hurricanes and
earthquakes. The occurrence of any of these disasters could cause
the total or partial destruction of a manufacturing facility, thus
preventing us from supplying products to our customers and
disrupting production at their facilities for an indeterminate
period of time. The inability to promptly resume the supply of
products following a natural disaster at a manufacturing facility
could have a material adverse effect on our operations and
profitability.
- Some of our current and former employees in Canada and the
United States participate in defined benefit pension plans.
Although these plans have been closed to new participants, existing
participants in Canada continue to
accrue benefits. Our defined benefit pension plans are not fully
funded and our pension funding obligations could increase
significantly due to a reduction in the funding status caused by a
variety of factors, including: weak performance of capital markets;
declining interest rates; failure to achieve sufficient investment
returns; investment risks inherent in the investment portfolios of
the plans; and other factors. A significant increase in our pension
funding obligations could have an adverse effect on our
profitability and financial condition.
- From time to time, we may become involved in regulatory
proceedings, or become liable for legal, contractual and other
claims by various parties, including customers, suppliers, former
employees, class action plaintiffs and others. On an ongoing basis,
we attempt to assess the likelihood of any adverse judgments or
outcomes to these proceedings or claims, although it is difficult
to predict final outcomes with any degree of certainty. Except as
disclosed from time to time in our consolidated financial
statements, we do not believe that any of the proceedings or claims
to which we are party will have a material adverse effect on our
financial position; however, we cannot provide any assurance to
this effect.
- We continue to pursue opportunities in areas that are
complementary to our existing automotive design, engineering and
manufacturing capabilities all in order to more efficiently use our
capital assets, technological know-how and manufacturing capacity.
Many "non-automotive" industries are subject to some of the same
types of risks as our automotive business, including: sensitivity
to economic conditions, cyclicality and technology risks. We also
face a diverse number of competitors possessing varying degrees of
financial and operational strength and experience in their
industry. Failure to adequately understand the non-automotive
businesses in which we pursue opportunities, including with respect
to warranty issues, pricing and other factors, could have an
adverse effect on our operations and profitability.
- In recent years, we have invested significant amounts of money
in our business through capital expenditures to support new
facilities, expansion of existing facilities, purchases of
production equipment and acquisitions. Returns achieved on such
investments in the past are not necessarily indicative of the
returns we may achieve on future investments and our inability to
achieve returns on future investments which equal or exceed returns
on past investments could have a material adverse effect on our
profitability.
- Trading prices of our Common Shares cannot be predicted and may
fluctuate significantly due to a variety of factors, many of which
are outside our control, including: general economic and stock
market conditions; variations in our operating results and
financial condition; differences between our actual operating and
financial results and those expected by investors and stock
analysts; changes in recommendations made by stock analysts,
whether due to factors relating to us, our customers, the
automotive industry or otherwise; significant news or events
relating to our primary customers, including the release of vehicle
production and sales data; investor and stock analyst perceptions
about the prospects for our or our primary customers' respective
businesses or the automotive industry; and other factors.
RESULTS OF OPERATIONS
Average Foreign Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months |
|
|
|
For the
year |
|
|
|
|
ended December 31, |
|
|
|
ended December 31, |
|
|
|
|
2012 |
|
|
2011 |
|
|
Change |
|
|
|
2012 |
|
|
2011 |
|
|
Change |
1 Canadian dollar equals U.S.
dollars |
|
|
|
1.010 |
|
|
0.978 |
|
|
+ 3% |
|
|
|
1.001 |
|
|
1.012 |
|
|
- 1% |
1 euro equals U.S.
dollars |
|
|
|
1.298 |
|
|
1.349 |
|
|
- 4% |
|
|
|
1.286 |
|
|
1.392 |
|
|
- 8% |
1 British pound equals U.S.
dollars |
|
|
|
1.607 |
|
|
1.572 |
|
|
+ 2% |
|
|
|
1.585 |
|
|
1.604 |
|
|
- 1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preceding table reflects the average foreign
exchange rates between the most common currencies in which we
conduct business and our U.S. dollar reporting currency. The
significant changes in these foreign exchange rates for the three
months and year ended December 31,
2012 impacted the reported U.S. dollar amounts of our sales,
expenses and income.
The results of operations whose functional
currency is not the U.S. dollar are translated into U.S. dollars
using the average exchange rates in the table above for the
relevant period. Throughout this MD&A, reference is made to the
impact of translation of foreign operations on reported U.S. dollar
amounts where relevant.
Our results can also be affected by the impact
of movements in exchange rates on foreign currency transactions
(such as raw material purchases or sales denominated in foreign
currencies). However, as a result of hedging programs employed by
us, foreign currency transactions in the current period have not
been fully impacted by movements in exchange rates. We record
foreign currency transactions at the hedged rate where
applicable.
Finally, holding gains and losses on
transactions occurring in a currency other than an operation's
functional currency, which are recorded in selling, general and
administrative expenses, impact reported results.
RESULTS OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2012
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year |
|
|
|
|
|
|
|
ended December 31, |
|
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
Change |
Vehicle Production
Volumes (millions of units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
15.471 |
|
|
|
13.137 |
|
|
+ 18% |
|
Western Europe |
|
|
|
|
12.689 |
|
|
|
13.671 |
|
|
- 7% |
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
External Production |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
$ |
15,336 |
|
|
$ |
13,940 |
|
|
+ 10% |
|
|
Europe |
|
|
|
|
8,786 |
|
|
|
8,651 |
|
|
+ 2% |
|
|
Rest of World |
|
|
|
|
1,837 |
|
|
|
1,402 |
|
|
+ 31% |
|
Complete Vehicle
Assembly |
|
|
|
|
2,561 |
|
|
|
2,690 |
|
|
- 5% |
|
Tooling, Engineering and
Other |
|
|
|
|
2,317 |
|
|
|
2,065 |
|
|
+ 12% |
Total Sales |
|
|
|
$ |
30,837 |
|
|
$ |
28,748 |
|
|
+ 7% |
|
|
|
|
|
|
|
|
|
|
|
External Production Sales - North America
External production sales in North America increased 10% or $1.40 billion to $15.34
billion for 2012 compared to $13.94
billion for 2011. The increase in external production sales
is primarily as a result of:
- higher production volumes on certain existing programs;
- the launch of new programs during or subsequent to 2011,
including the:
-
- Volkswagen Passat;
- Mercedes-Benz M-Class and GL-Class;
- Chevrolet Sonic; and
- Dodge Dart;
- acquisitions completed during or subsequent to 2011, which
positively impacted sales by $69
million; and
- an increase in content on certain programs.
These factors were partially offset by:
- a decrease in content on certain programs, including the:
-
- Ford Escape; and
- Ram Pickup;
- programs that ended production during or subsequent to 2011,
including the:
-
- Ford Crown Victoria and Mercury Grand
Marquis;
- Chevrolet HHR;
- Ford Ranger; and
- Dodge Caliber;
- a decrease in reported U.S. dollar sales due to the weakening
of the Canadian dollar against the U.S. dollar; and
- net customer price concessions subsequent to 2011.
External Production Sales - Europe
External production sales in Europe increased $135
million to $8.79 billion for
2012 compared to $8.65 billion for
2011. The increase in external production sales is primarily as a
result of:
- the launch of new programs during or subsequent to 2011,
including the:
-
- Range Rover Evoque;
- Kia Rio;
- Volkswagen up!, SEAT Mii and Skoda Citigo;
- Hyundai Solaris;
- Audi Q3; and
- Mercedes-Benz B-Class;
- acquisitions completed during or subsequent to 2011, which
positively impacted sales by $245
million, including BDW and ixetic; and
- an increase in content on certain programs.
These factors were partially offset by:
- a decrease in reported U.S. dollar sales primarily as a result
of the weakening of the euro against the U.S. dollar;
- lower production volumes on certain existing programs;
- a decrease in content on certain programs;
- programs that ended production during or subsequent to 2011;
and
- net customer price concessions subsequent to 2011.
External Production Sales - Rest of
World
External production sales in Rest of World
increased 31% or $435 million to
$1.84 billion for 2012 compared to
$1.40 billion for 2011, primarily as
a result of:
- acquisitions completed during or subsequent to 2011, which
positively impacted sales by $251
million, including ThyssenKrupp Automotive Systems
Industrial do Brasil Ltda; ("TKASB");
- the launch of new programs during or subsequent to 2011,
primarily in Brazil and
China; and
- an increase in content on certain programs.
These factors were partially offset by a
$108 million decrease in reported
U.S. dollar sales as a result of the weakening of foreign
currencies against the U.S. dollar, including the Brazilian
real.
Complete Vehicle Assembly
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year |
|
|
|
|
|
|
|
ended
December 31, |
|
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
Change |
Complete Vehicle Assembly
Sales |
|
|
|
$ |
2,561 |
|
|
$ |
2,690 |
|
|
- 5% |
Complete Vehicle Assembly Volumes
(Units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
MINI Countryman, Mercedes-Benz
G-Class, Peugeot RCZ |
|
|
|
|
|
|
|
|
|
|
|
|
|
MINI Paceman and Aston Martin Rapide |
|
|
|
|
123,602 |
|
|
|
130,343 |
|
|
- 5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Complete vehicle assembly sales decreased 5% or
$129 million to $2.56 billion for 2012 compared to $2.69 billion for 2011 while assembly
volumes decreased 5% or 6,741 units.
The decrease in complete vehicle assembly sales
is primarily as a result of:
- a $202 million decrease in
reported U.S. dollar sales as a result of the weakening of the euro
against the U.S. dollar;
- a decrease in assembly volumes for the Peugeot RCZ; and
- the end of production of the Aston Martin Rapide at our
Magna Steyr facility during the
second quarter of 2012.
These factors were partially offset by:
- an increase in assembly volumes for the:
-
- Mercedes-Benz G-Class; and
- MINI Countryman; and
- the launch of the MINI Paceman during the fourth quarter of
2012.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales increased
12% or $252 million to $2.32 billion for 2012 compared to $2.07 billion for 2011.
In 2012, the major programs for which we
recorded tooling, engineering and other sales were the:
- Ford Fusion;
- MINI Countryman;
- Mercedes-Benz M-Class;
- Chevrolet Trax;
- QOROS C/Sedan/Hatch;
- Opel Cascada Convertible;
- Chevrolet Spin;
- Ford Escape;
- Infiniti hatchback program;
- Dodge Dart; and
- Ford Transit.
In 2011, the major programs for which we recorded
tooling, engineering and other sales were the:
- MINI Countryman;
- Mercedes-Benz M-Class;
- Opel Calibra;
- Chery A6 Coupe;
- Chrysler 300C, Dodge Charger and Challenger;
- BMW X3;
- Peugeot RCZ;
- Ford Fusion;
- Dodge Journey;
- Skoda Fabia; and
- Chevrolet Camaro.
In addition, tooling, engineering and other
sales were negatively impacted by the weakening of the euro against
the U.S. dollar.
Cost of Goods
Sold and Gross Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year |
|
|
|
|
|
|
ended
December 31, |
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
Sales |
|
|
|
|
|
$ |
30,837 |
|
|
$ |
28,748 |
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
Material |
|
|
|
|
|
|
19,706 |
|
|
|
18,533 |
|
Direct labour |
|
|
|
|
|
|
2,044 |
|
|
|
1,912 |
|
Overhead |
|
|
|
|
|
|
5,260 |
|
|
|
4,989 |
|
|
|
|
|
|
|
27,010 |
|
|
|
25,434 |
Gross margin |
|
|
|
|
|
$ |
3,827 |
|
|
$ |
3,314 |
Gross margin as a
percentage of sales |
|
|
|
|
|
|
12.4% |
|
|
|
11.5% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold increased $1.58 billion to $27.01
billion for 2012 compared to $25.43
billion for 2011 primarily as a result of:
- higher material, overhead and labour costs associated with the
increase in sales, including wage increases at certain
operations;
- $552 million related to
acquisitions completed during or subsequent to 2011, including
TKASB and BDW;
- a larger amount of employee profit sharing; and
- rising commodity costs.
These factors were partially offset by:
- a decrease in reported U.S. dollar cost of goods sold primarily
due to the weakening of the euro, Brazilian real, Canadian dollar
and Czech koruna, each against the U.S. dollar; and
- lower warranty costs of $3
million.
Gross margin increased $513
million to $3.83 billion for
2012 compared to $3.31 billion for
2011 and gross margin as a percentage of sales increased to 12.4%
for 2012 compared to 11.5% for 2011. The increase in gross margin
as a percentage of sales was substantially due to:
- lower costs incurred in preparation for upcoming launches;
- favourable settlement of certain commercial items;
- lower warranty costs; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- increased pre-operating costs incurred at new facilities;
- an increase in tooling, engineering and other sales that have
low or no margins;
- rising commodity costs;
- a larger amount of employee profit sharing;
- operational inefficiencies and other costs at certain
facilities; and
- net customer price concessions subsequent to 2011.
Depreciation and Amortization
Depreciation and amortization costs increased
$115 million to $801 million for 2012 compared to
$686 million for 2011. The
higher depreciation and amortization was primarily as a result
of:
- intangible asset amortization of $52
million related to the acquisition and re-measurement of
E-Car;
- $48 million related to
acquisitions completed during or subsequent to 2011, including BDW,
TKASB and E-Car;
- capital spending during or subsequent to 2011; and
- depreciation related to new facilities.
These factors were partially offset by a
decrease in reported U.S. dollar depreciation and amortization due
to the weakening of the euro, Brazilian real and Canadian dollar,
each against the U.S. dollar.
Selling, General and Administrative
("SG&A")
SG&A expense as a percentage of sales was
4.9% for 2012 compared to 4.8% for 2011. SG&A expense increased
$137 million to $1.52 billion for 2012 compared to $1.38 billion for 2011 primarily as a result
of:
- $78 million related to
acquisitions completed during or subsequent to 2011, including
TKASB, BDW, E-Car and ixetic;
- higher labour, including wage increases at certain operations,
and other costs to support the growth in sales;
- higher incentive compensation;
- increased costs incurred at new facilities;
- a loss on disposal of an investment; and
- higher employee profit sharing.
These factors were partially offset by:
- a decrease in reported U.S. dollar SG&A due to the
weakening of the euro, Brazilian real, Czech koruna and Polish
zloty, each against the U.S. dollar;
- a $15 million revaluation gain in
respect of ABCP; and
- the recovery of due diligence costs.
Equity Income
Equity income increased $30 million to $151
million for 2012 compared to $121
million for 2011. Excluding the $31
million reduction in the equity loss related to E-Car, the
$1 million decrease in equity income
is primarily as a result of the disposal of an equity accounted
investment during 2011 partially offset by higher income from most
of our equity accounted investments.
Other (Income) Expense, net
During 2012 and 2011, we recorded Other Income
and Expense items as follows:
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
Operating
Income |
|
|
|
Net
Income |
|
|
|
Diluted
Earnings
per Share |
|
|
|
Operating
Income |
|
|
|
Net
Income |
|
|
|
Diluted
Earnings
per Share |
Fourth Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-measurement gain of STT
(1) |
|
|
|
$ |
(35) |
|
|
$ |
(35) |
|
|
$ |
(0.15) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Impairment charges (2) |
|
|
|
|
25 |
|
|
|
23 |
|
|
|
0.10 |
|
|
|
21 |
|
|
|
20 |
|
|
|
0.08 |
|
Restructuring charges
(2) |
|
|
|
|
55 |
|
|
|
53 |
|
|
|
0.23 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss on disposal of facility
(3) |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
|
16 |
|
|
|
0.07 |
|
Customer bankruptcy
(4) |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
11 |
|
|
|
0.05 |
|
Insurance proceeds
(5) |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15) |
|
|
|
(15) |
|
|
|
(0.06) |
|
|
|
|
|
45 |
|
|
|
41 |
|
|
|
0.18 |
|
|
|
33 |
|
|
|
32 |
|
|
|
0.14 |
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-measurement gain of E-Car
(1) |
|
|
|
|
(153) |
|
|
|
(125) |
|
|
|
(0.53) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss on disposal of facility
(3) |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
113 |
|
|
|
113 |
|
|
|
0.47 |
|
Settlement agreement
(6) |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
11 |
|
|
|
0.05 |
|
|
|
|
|
(153) |
|
|
|
(125) |
|
|
|
(0.53) |
|
|
|
124 |
|
|
|
124 |
|
|
|
0.52 |
Second Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal
(7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10) |
|
|
|
(10) |
|
|
|
(0.04) |
First Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write down of real estate
(8) |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9 |
|
|
|
9 |
|
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total full year other
(income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expense,
net |
|
|
|
$ |
(108) |
|
|
$ |
(84) |
|
|
$ |
(0.35) |
|
|
$ |
156 |
|
|
$ |
155 |
|
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Re-measurement gains
(i) STT
Technologies Inc.
On October 26,
2012, we acquired the remaining 50% interest in STT for cash
consideration of $55 million net of
$13 million cash acquired. STT is a
manufacturer of automotive pumps with operations in Canada and Mexico. Prior to the acquisition, we accounted
for this investment using the equity method of accounting.
The incremental investment in STT was accounted
for under the business acquisition method of accounting as a step
acquisition which requires that we re-measure our pre-existing
investment in STT at a fair value and recognize any gains or losses
in income. The estimated fair value of our investment immediately
before the closing date was $55
million, which resulted in the recognition of a non-cash
gain of $35 million.
(ii) Magna E-Car Systems LP
On August 31,
2012, we acquired the controlling 27% interest in E-Car from
a company affiliated with the Stronach Group for cash consideration
of $75 million. The purchase was
reviewed, negotiated and approved by our independent directors with
the benefit of independent legal advice from Fasken Martineau
DuMoulin LLP, independent financial advice from TD Securities Inc.
("TD") and an independent valuation prepared by
PricewaterhouseCoopers LLP ("PwC"). The purchase price represents
the midpoint of the valuation range determined by PwC and TD
delivered a fairness opinion to the independent directors to the
effect that the transaction is fair, from a financial point of
view, to the Company.
Prior to the acquisition, we held the remaining
73% non-controlling interest in E-Car and accounted for this
investment using the equity method of accounting.
The incremental investment in E-Car was accounted
for under the business acquisition method of accounting as a step
acquisition. The estimated fair value of our partnership interest
immediately before the closing date was $205
million, which resulted in the recognition of a non-cash
gain of $153 million ($125 million after tax).
In addition, the preliminary purchase equation
of the incremental investment in E-Car allocated $210 million to intangible assets. The intangible
assets are primarily customer relationships and technology based
intangibles. Given the continuing uncertainties regarding the
timing and magnitude of a viable electric vehicle industry,
competing electric vehicle technologies, significantly larger
competitors, and other factors, we have determined that the
intangible assets should be amortized on a straight-line basis over
the period ending December 31,
2013.
(2) Restructuring and Impairment Charges
During 2012 and 2011, we recorded long-lived
asset impairment charges as follows:
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
|
|
Operating
Income |
|
|
|
|
Net
Income |
|
|
|
Operating
Income |
|
|
|
|
Net
Income |
Fourth Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
$ |
2 |
|
|
$ |
|
1 |
|
|
$ |
7 |
|
|
$ |
|
7 |
|
Europe |
|
|
|
|
|
|
23 |
|
|
|
|
22 |
|
|
|
14 |
|
|
|
|
13 |
Total full year
impairment charges |
|
|
|
|
|
$ |
25 |
|
|
$ |
|
23 |
|
|
$ |
21 |
|
|
$ |
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[a] For the year ended December 31, 2012
(i) Impairments of
Long-lived Assets
In conjunction with our annual business planning
cycle, during the fourth quarter of 2012, we completed our annual
goodwill impairment and long-lived asset analysis and recorded
long-lived asset impairment charges of $25
million.
In Europe, the
impairment charges related primarily to fixed assets at our
exteriors and interior systems operations.
(ii) Restructuring
Costs
As a result of continuing economic uncertainty
in Europe, recent customer
announcements related to plant closures, the profitability of
certain facilities and the level of future booked business, we
determined that restructuring would have to be completed in certain
European markets in order to remain cost competitive over the
long-term. As a result, during the fourth quarter of 2012, we
recorded restructuring charges of $55
million ($53 million after
tax) in Europe primarily at our
exterior and interior systems and complete vehicle and engineering
services operations.
Furthermore, based on our review above and
subject to commercial settlements with stakeholders, during 2013 we
expect to record additional restructuring charges of approximately
$150 million.
Substantially all of these restructuring costs
remain to be paid subsequent to 2012.
[b] For the year ended December 31, 2011
(i) Impairments of
Long-lived Assets
In North
America, we recorded impairment charges of $7 million related to a roof systems facility in
the United States. In Europe, we recorded long-lived asset
impairment charges of $7 million
related to exteriors and interiors systems facilities, one in each
of Spain and Belgium, and in Germany we recorded long-lived asset
impairment charges of $7 million
related to an electronics facility and a roof systems
operation.
(3) Loss on disposal of facility
During the third quarter of 2011, we sold an
interior systems operation located in Germany and recorded a loss on disposal of
$113 million. This operation, whose
long-lived assets were substantially impaired in 2010, had a
history of losses which were projected to continue throughout the
business planning period. Under the terms of the 2011 sale
arrangements (the "SPA"), we agreed to fund the buyer $67 million, to be satisfied with certain working
capital items, cash and the assumption of certain liabilities. The
remaining net assets of the operation of $26
million were assigned no value by the buyer and accordingly,
were expensed as part of the total loss on disposal.
Simultaneously, we reached a commercial settlement with one of the
facility's customers regarding the cancellation of certain
production orders whereby we reimbursed the customer costs of
$20 million.
Final settlement of the SPA did not occur during
2011 and in the fourth quarter of 2011 an additional $16 million was accrued in relation to the
ongoing disputes with the purchaser bringing the total loss on
disposal to $129 million.
As more fully described in Note 5 of our
unaudited interim consolidated financial statements, on
June 4, 2012, we re-acquired the
above operation.
(4) Customer bankruptcy
During 2011, we recorded an $11 million charge related to the insolvency of
Saab.
(5) Insurance proceeds
During 2011, we received proceeds pursuant to an
insurance claim for fire damages related to an interior systems
facility in the United States. The
proceeds received were $15 million in
excess of the damaged assets net book value and the losses
previously recognized and was recorded in income.
(6) Settlement agreement
During 2011, a settlement agreement was
finalized in connection with the settlement of certain patent
infringement and other claims. We recorded an $11 million expense in the third quarter of 2011
in relation to these arrangements.
(7) Gain on disposal
During 2011, we sold our 40% non-controlling
interest in an equity accounted investment for $151 million and realized a $10 million gain on the disposition.
(8) Write down of real estate
During 2011, five excess corporate real estate
assets were sold to entities associated with our Founder and
Honorary Chairman, Mr. Stronach and/or our former Co-Chief
Executive Officer, Siegfried Wolf.
Based on the appraisals obtained by the former Corporate Governance
and Compensation Committee, the appraised fair value range for the
properties was less than their carrying value and, accordingly, we
recorded a $9 million impairment
charge in the second quarter of 2011. The sales were approved by
the independent members of our Board of Directors based on the
recommendation of the former Corporate Governance and Compensation
Committee and were completed during 2011.
Segment Analysis
Given the differences between the regions in
which we operate, our operations are segmented on a geographic
basis between North America,
Europe and Rest of World.
Consistent with the above, our internal financial reporting
segments key internal operating performance measures between
North America, Europe and Rest of World for purposes of
presentation to the chief operating decision maker to assist in the
assessment of operating performance, the allocation of resources,
and our long-term strategic direction and future global growth.
Our chief operating decision maker uses Adjusted
EBIT as the measure of segment profit or loss, since we believe
Adjusted EBIT is the most appropriate measure of operational
profitability or loss for our reporting segments. Adjusted EBIT
represents income from operations before income taxes; interest
expense (income), net; and other (income) expense, net.
As more fully described in Notes 2 and 5 of our
unaudited interim consolidated financial statements for the three
months and year ended December 31,
2012, on August 31, 2012 we
acquired the controlling 27% interest in the E-Car partnership.
Prior to the acquisition, we held the remaining 73% non-controlling
interest in E-Car and accounted for this investment using the
equity method of accounting. For segment reporting purposes, prior
to the closing date we recorded our proportionate share of the
losses of E-Car in the Corporate and Other segment. Beginning on
August 31, 2012, the consolidated
results of E-Car are recorded in our North America and Europe segments as follows:
|
|
|
|
|
For the three
months ended |
|
|
|
For the four
months ended |
|
|
|
|
|
December 31, 2012 |
|
|
|
December 31, 2012 |
|
|
|
|
|
North
America |
|
|
|
Europe |
|
|
|
Total |
|
|
|
North
America |
|
|
|
Europe |
|
|
|
Total |
Total Sales |
|
|
|
$ |
9 |
|
|
$ |
9 |
|
|
$ |
18 |
|
|
$ |
12 |
|
|
$ |
12 |
|
|
$ |
24 |
Adjusted EBIT |
|
|
|
$ |
(59) |
|
|
$ |
(4) |
|
|
$ |
(63) |
|
|
$ |
(76) |
|
|
$ |
(6) |
|
|
$ |
(82) |
Amortization of E-car
Intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
included in Adjusted
EBIT |
|
|
|
$ |
(39) |
|
|
$ |
— |
|
|
$ |
(39) |
|
|
$ |
(52) |
|
|
$ |
— |
|
|
$ |
(52) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the year ended December 31, |
|
|
|
|
|
External Sales |
|
|
|
Adjusted EBIT |
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
Change |
|
|
|
2012 |
|
|
|
2011 |
|
|
|
Change |
North America |
|
|
|
$ |
16,241 |
|
|
$ |
14,764 |
|
|
$ |
1,477 |
|
|
$ |
1,521 |
|
|
$ |
1,373 |
|
|
$ |
148 |
Europe |
|
|
|
|
12,563 |
|
|
|
12,429 |
|
|
|
134 |
|
|
|
165 |
|
|
|
(22) |
|
|
|
187 |
Rest of World |
|
|
|
|
2,010 |
|
|
|
1,506 |
|
|
|
504 |
|
|
|
(28) |
|
|
|
56 |
|
|
|
(84) |
Corporate and
Other |
|
|
|
|
23 |
|
|
|
49 |
|
|
|
(26) |
|
|
|
— |
|
|
|
(40) |
|
|
|
40 |
Total reportable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
segments |
|
|
|
$ |
30,837 |
|
|
$ |
28,748 |
|
|
$ |
2,089 |
|
|
$ |
1,658 |
|
|
$ |
1,367 |
|
|
$ |
291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluded from Adjusted EBIT for 2012 and 2011
were the following Other Income and Expense items, which have been
discussed in the "Other Income" section.
|
|
|
|
|
|
|
|
|
|
|
For the year
ended December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
|
|
2011 |
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-measurement gain of STT |
|
|
|
|
|
|
|
|
|
|
$ |
|
(35) |
|
|
$ |
|
— |
|
Impairment charges |
|
|
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
7 |
|
Settlement agreement |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
11 |
|
Insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
(15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(33) |
|
|
|
|
3 |
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment charges |
|
|
|
|
|
|
|
|
|
|
|
|
23 |
|
|
|
|
14 |
|
Restructuring charges |
|
|
|
|
|
|
|
|
|
|
|
|
55 |
|
|
|
|
— |
|
Loss on disposal of
facility |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
129 |
|
Customer bankruptcy |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
78 |
|
|
|
|
154 |
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-measurement gain of E-Car |
|
|
|
|
|
|
|
|
|
|
|
|
(153) |
|
|
|
|
— |
|
Gain on disposal of
investment |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
(10) |
|
Write down of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(153) |
|
|
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
(108) |
|
|
$ |
|
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
Adjusted EBIT in North
America increased $148 million
to $1.52 billion for 2012 compared to
$1.37 billion for 2011 primarily
as a result of:
- margins earned on higher production sales, including margins
earned on the launch of new facilities and new programs;
- lower costs incurred in preparation for upcoming launches;
and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- intangible asset amortization of $52
million related to the acquisition and re-measurement of
E-Car;
- programs that ended production during or subsequent to
2011;
- increased pre-operating costs incurred at new facilities;
- operational inefficiencies and other costs at certain
facilities;
- higher affiliation fees paid to corporate;
- higher warranty costs of $13
million;
- a larger amount of employee profit sharing;
- higher incentive compensation; and
- net customer price concessions subsequent to 2011.
Europe
Adjusted EBIT in Europe increased $187
million to $165 million for
2012 compared to a loss of $22 million for 2011 primarily as a result
of:
- lower warranty costs of $16
million;
- productivity and efficiency improvements at certain
facilities;
- favourable settlement of certain commercial items;
- higher equity income; and
- lower costs incurred in preparation for upcoming launches.
These factors were partially offset by:
- a larger amount of employee profit sharing;
- rising commodity costs;
- higher affiliation fees paid to corporate;
- programs that ended production during or subsequent to the
fourth quarter of 2011;
- higher pre-operating costs incurred at new facilities;
- higher incentive compensation; and
- operational inefficiencies and other costs at certain
facilities.
Rest of World
Rest of World Adjusted EBIT decreased
$84 million to a loss of $28 million for 2012 compared to income of
$56 million for 2011 primarily as a
result of:
- higher costs related to new facilities;
- operational inefficiencies and other costs at certain
facilities, substantially at certain facilities in South America, including the inability to
recover inflationary related cost increases from our
customers;
- higher affiliation fees paid to Corporate; and
- net customer price concessions subsequent to the fourth quarter
of 2011.
These factors were partially offset by:
- higher equity income; and
- lower launch costs.
Corporate and Other
Corporate and Other Adjusted EBIT increased
$40 million to $nil for 2012 compared
to a loss of $40 million for 2011.
The loss related to our equity accounted investment in E-Car
included in Corporate and Other was $35
million for 2012 and $66
million for 2011. Excluding E-Car, Corporate and Other
Adjusted EBIT increased $9 million to
$35 million for 2012 compared to
$26 million for 2011 primarily as a
result of:
- an increase in affiliation fees earned from our divisions;
- a $15 million revaluation gain in
respect of ABCP;
- the recovery of due diligence costs; and
- lower stock-based compensation.
These factors were partially offset by:
- higher incentive compensation;
- lower equity income;
- a loss on disposal of an investment; and
- a larger amount of employee profit sharing.
Interest Expense (Income), net
During 2012, we recorded net interest expense of
$16 million compared to net interest
income of $6 million for 2011. The
increase in interest expense is primarily as a result of:
- an increase in interest expense as a result of higher debt in
Asia Pacific and South America;
- lower interest income; and
- interest expense on debt assumed as part of the BDW
acquisition.
Income from Operations before Income
Taxes
Income from operations before income taxes
increased $533 million to
$1.75 billion for 2012 compared to
$1.22 billion for 2011. Excluding
Other Income and Expense, discussed in the "Other Income" section,
income from operations before income taxes for 2012 increased
$269 million. The increase in income
from operations before income taxes is the result of the increase
in EBIT partially offset by the increase in net interest expense,
as discussed above.
Income Taxes
For the year ended December 31, 2012, we had valuation allowances
against our deferred tax assets in the United Kingdom and Germany. These valuation allowances were
required based on historical losses and uncertainty as to the
timing of when we would be able to generate the necessary level of
earnings to recover these deferred tax assets. Over the past few
years, certain divisions in the United
Kingdom have delivered sustained profits. Based on financial
forecasts and continued anticipated growth, we released a portion
of the valuation allowance set up against our deferred tax assets
in the United Kingdom. The BDW and
ixetic acquisitions in 2012 allowed us to release a portion of the
valuation allowance set up against our German deferred tax assets.
Additionally, during 2012, we released a portion of our valuation
allowances in Mexico and
China, which were partially offset
by a new valuation allowance against all of our deferred tax assets
in Brazil. The net effect of all
these valuation allowance releases in 2012 is $89 million.
For the year ended December 31, 2011, we had valuation allowances
against all of our deferred tax assets in the United States. The U.S. valuation
allowances were required based on historical losses and uncertainty
as to the timing of when we would be able to generate the necessary
level of earnings to recover these deferred tax assets. During 2010
and 2011, our United States
operations delivered sustained profits. Based on financial
forecasts and the continued anticipated growth for the U.S. market,
we released $78 million of the U.S.
valuation allowances in the fourth quarter of 2011. As at
December 31, 2012, we have remaining
U.S. valuation allowances of $94
million, relating to deferred tax assets with restrictions
on their usability.
The effective income tax rate on income from
operations before income taxes was 18.5% for 2012 compared to 16.6%
for 2011. In 2012 and 2011, income tax rates were impacted by the
items discussed in the "Other Income" section and the valuation
allowances described above. Excluding Other Income and Expense,
after tax, and the valuation allowances, the effective income tax
rate increased to 23.7% for 2012 compared to 20.5% for 2011
primarily as result of a reduction in the utilization of
unbenefited losses in the United
States partially offset by a decrease in losses not
benefited in Europe and permanent
items.
Net Income
Net income of $1.43
billion for 2012 increased $411
million compared to 2011. Excluding Other Income and
Expense, after tax, discussed in the "Other Income" section, net
income increased $161 million. The
increase in net income is the result of the increase in income from
operations before income taxes partially offset by higher income
taxes, both as discussed above.
Net Loss Attributable to Non-controlling
Interests
The net loss attributable to non-controlling
interests of $7 million for 2012
increased $4 million compared to
2011.
Net Income attributable to Magna
International Inc.
Net income attributable to Magna International
Inc. of $1.43 billion for 2012
increased $415 million compared to
2011. Excluding Other Income and Expense, after tax, discussed in
the "Other Income" section, net income attributable to Magna
International Inc. increased $165
million as a result of the increases in net income and net
loss attributable to non-controlling interests, both as discussed
above.
Earnings per Share
|
|
|
|
|
For the year |
|
|
|
|
|
|
|
|
|
|
ended December 31, |
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
Change |
Earnings per Common
Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
6.17 |
$ |
|
|
4.26 |
|
|
|
+ |
45% |
|
Diluted |
|
|
|
$ |
6.09 |
$ |
|
|
4.20 |
|
|
|
+ |
45% |
Average number of Common Shares
outstanding (millions) |
|
Basic |
|
|
|
|
232.4 |
|
|
|
239.3 |
|
|
|
- |
3% |
|
Diluted |
|
|
|
|
235.2 |
|
|
|
242.8 |
|
|
|
- |
3% |
Diluted earnings per share increased
$1.89 to $6.09 for 2012 compared to $4.20 for 2011. Other Income, after tax,
positively impacted diluted earnings per share in 2012 by
$0.35 and Other Expense negatively
impacted diluted earnings per share in 2011 by $0.65, both as discussed in the "Other Income"
section, while the valuation allowances as discussed in the "Income
Taxes" section positively impacted diluted earnings per share in
2012 and 2011 by $0.38 and
$0.32, respectively. Excluding Other
Income and Expense, after tax, and the valuation allowances as
discussed in the "Income Taxes" section, the $0.83 increase in diluted earnings per share is a
result of the increase in net income attributable to Magna
International Inc. and a decrease in the weighted average number of
diluted shares outstanding during 2012.
The decrease in the weighted average number of
diluted shares outstanding was primarily due to the repurchase and
cancellation of Common Shares, during or subsequent to 2011,
pursuant to our normal course issuer bids and the cashless exercise
of options.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flow from Operations
|
|
|
|
|
For the year |
|
|
|
|
|
|
|
|
|
|
ended December 31, |
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
Change |
Net income |
|
|
|
$ |
1,426 |
|
|
$ |
1,015 |
|
|
|
|
|
Items not involving current cash
flows |
|
|
|
|
708 |
|
|
|
826 |
|
|
|
|
|
|
|
|
|
|
2,134 |
|
|
|
1,841 |
|
|
|
$ |
293 |
Changes in non-cash operating assets and
liabilities |
|
|
|
|
72 |
|
|
|
(631) |
|
|
|
|
|
Cash provided from operating activities |
|
|
|
$ |
2,206 |
|
|
$ |
1,210 |
|
|
|
$ |
996 |
Cash flow from operations before changes in
non-cash operating assets and liabilities increased $293 million to $2.13
billion for 2012 compared to $1.84
billion for 2011. The increase in cash flow from operations
was due to a $411 million increase in
net income, as discussed above, partially offset by a $118 million decrease in items not involving
current cash flows. Items not involving current cash flows are
comprised of the following:
|
|
|
|
|
For the year |
|
|
|
|
|
ended December 31, |
|
|
|
|
|
2012 |
|
|
2011 |
Depreciation and
amortization |
|
|
|
$ |
801 |
|
$ |
686 |
Other non-cash
charges |
|
|
|
|
154 |
|
|
110 |
Amortization of other assets included in cost of
goods sold |
|
|
|
|
113 |
|
|
80 |
Deferred income
taxes |
|
|
|
|
(46) |
|
|
(76) |
Equity income |
|
|
|
|
(151) |
|
|
(121) |
Non-cash portion of Other expense (income),
net |
|
|
|
|
(163) |
|
|
147 |
Items not involving current cash
flows |
|
|
|
$ |
708 |
|
$ |
826 |
Cash provided from non-cash operating assets and
liabilities amounted to $72 million
for 2012 compared to cash invested of $631
million for 2011. The change in non-cash operating assets
and liabilities is comprised of the following sources (and uses) of
cash:
|
|
|
|
|
For the year |
|
|
|
|
|
ended December 31, |
|
|
|
|
|
2012 |
|
|
2011 |
Accounts receivable |
|
|
|
$ |
(46) |
|
$ |
(909) |
Inventories |
|
|
|
|
(315) |
|
|
(282) |
Prepaid expenses and
other |
|
|
|
|
36 |
|
|
(49) |
Accounts
payable |
|
|
|
|
249 |
|
|
475 |
Accrued salaries and
wages |
|
|
|
|
37 |
|
|
80 |
Other accrued liabilities |
|
|
|
|
97 |
|
|
87 |
Income taxes
payable |
|
|
|
|
16 |
|
|
(29) |
Deferred
revenue |
|
|
|
|
(2) |
|
|
(4) |
Changes in non-cash operating assets and
liabilities |
|
|
|
$ |
72 |
|
$ |
(631) |
The increase in inventories in 2012 was
primarily due to higher tooling inventory and increased production
inventory to support launch activities. The increase in accounts
payable in 2012 was primarily due to increased production
activities at the end of 2012 and the timing of payments.
Capital and Investment
Spending
|
|
|
|
|
For the year |
|
|
|
|
|
|
|
|
|
|
ended December 31, |
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
Change |
Fixed asset additions |
|
|
|
$ |
(1,274) |
|
|
$ |
(1,236) |
|
|
|
|
|
Investments and other assets |
|
|
|
|
(122) |
|
|
|
(196) |
|
|
|
|
|
Fixed assets, investments and other assets
additions |
|
|
|
|
(1,396) |
|
|
|
(1,432) |
|
|
|
|
|
Purchase of subsidiaries |
|
|
|
|
(525) |
|
|
|
(120) |
|
|
|
|
|
Disposal of facility |
|
|
|
|
― |
|
|
|
112 |
|
|
|
|
|
Proceeds from disposition |
|
|
|
|
106 |
|
|
|
168 |
|
|
|
|
|
Cash used for investment activities |
|
|
|
$ |
(1,815) |
|
|
$ |
(1,272) |
|
|
|
$ |
(543) |
Fixed assets, investments and other assets additions
In 2012, we invested $1.27 billion in fixed assets. While
investments were made to refurbish or replace assets consumed in
the normal course of business and for productivity improvements, a
large portion of the investment in 2012 was for facilities and
manufacturing equipment for programs that will be launching
subsequent to 2012. Consistent with our strategy to expand in
developing markets, approximately 24% (2011 - 23%) of this
investment was in China,
India, Brazil and Russia.
In 2012, we invested $113
million in other assets related primarily to fully
reimbursable engineering costs and tooling for programs that
launched during 2012 or will be launching subsequent to 2012, as
well as $9 million in equity
accounted investments.
Purchase of subsidiaries
During 2012, we invested $525 million to purchase subsidiaries, including
the acquisition of:
- ixetic, a manufacturer of automotive vacuum, engine and
transmission pumps, which has operations in Germany, Bulgaria and China as well as representation in
Brazil, India, Japan
and the United States. The
acquired business has sales primarily to BMW, Daimler, Volkswagen,
Schaeffler, ZF, Ford, Chrysler, Renault-Nissan and Toyota;
- the controlling 27% interest in the E-Car partnership;
- the remaining 50% interest in STT; and
- BDW, a structural casting supplier of aluminium components,
which has operations in Germany,
Poland and Hungary. The acquired business has sales
primarily to Volkswagen, Audi, Porsche, Mercedes-Benz, Ferrari and
ZF.
During 2011, we invested $120 million to purchase subsidiaries, including
the acquisition of TKASB, which consists of four manufacturing
facilities in Brazil that assemble
chassis structural components and modules. The acquired business
has sales to Ford, Fiat, Renault Nissan, Honda and PSA.
Proceeds from disposition
The $106 million
of proceeds include:
- normal course fixed and other asset disposals;
- $18 million cash proceeds
received with respect to the sale of non-core real estate; and
- $9 million cash proceeds received
with respect to the disposal of ABCP.
Financing
|
|
|
|
|
For the year |
|
|
|
|
|
|
|
|
|
ended December 31, |
|
|
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
Change |
Increase in bank indebtedness |
|
|
|
$ |
42 |
|
|
$ |
38 |
|
|
|
|
Repayments of debt |
|
|
|
|
(309) |
|
|
|
(47) |
|
|
|
|
Issues of debt |
|
|
|
|
348 |
|
|
|
146 |
|
|
|
|
Settlement of stock
options |
|
|
|
|
(19) |
|
|
|
(30) |
|
|
|
|
Issue of Common Shares |
|
|
|
|
14 |
|
|
|
59 |
|
|
|
|
Contribution to subsidiaries by non-controlling
interest |
|
|
|
|
― |
|
|
|
20 |
|
|
|
|
Repurchase of Common
Shares |
|
|
|
|
(40) |
|
|
|
(407) |
|
|
|
|
Dividends paid |
|
|
|
|
(252) |
|
|
|
(236) |
|
|
|
|
Cash used for financing activities |
|
|
|
$ |
(216) |
|
|
$ |
(457) |
|
|
$ |
241 |
Repayments of debt for 2012 relate primarily to
BDW and Pabsa S.A. debt payments subsequent to acquisition and
repayments of our term lines of credit in our Rest of World
segment, while issues of debt relates primarily to higher debt
levels in our Rest of World segment.
During 2012, our Honorary Chairman and Founder,
Mr. Stronach, exercised 900,001 options on a cashless basis in
accordance with the applicable stock option plans. On exercise,
cash payments totalling $15 million
were made to Mr. Stronach which represented the difference between
the aggregate fair market value of the Option Shares based on the
closing price of our Common Shares on the Toronto Stock Exchange
("TSX") on the date of exercise and the aggregate Exercise Price of
all such options surrendered.
During 2012, we repurchased 0.8 million Common
Shares for an aggregate purchase price of $40 million under our normal course issuer
bid.
Cash dividends paid per Common Share were
$1.10 for 2012, for a total of
$252 million.
Financing Resources
|
|
|
|
|
As at |
|
|
As at |
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
|
|
|
|
2012 |
|
|
2011 |
|
|
|
Change |
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
|
$ |
71 |
|
|
$ 36 |
|
|
|
|
|
Long-term debt due within one
year |
|
|
|
|
249 |
|
|
151 |
|
|
|
|
|
Long-term debt |
|
|
|
|
112 |
|
|
46 |
|
|
|
|
|
|
|
|
|
432 |
|
|
233 |
|
|
|
|
Non-controlling
interest |
|
|
|
|
29 |
|
|
27 |
|
|
|
|
Shareholders'
equity |
|
|
|
|
9,429 |
|
|
8,175 |
|
|
|
|
Total capitalization |
|
|
|
$ |
9,890 |
|
|
$ 8,435 |
|
|
$ |
1,455 |
Total capitalization increased by $1.45 billion to $9.89
billion at December 31, 2012
compared to $8.44 billion at
December 31, 2011,
primarily as a result of a $1.25
billion increase in shareholders' equity and a $199 million increase in liabilities.
The increase in shareholders' equity was
primarily as a result of net income earned in 2012 partially offset
by dividends paid.
The increase in liabilities relates primarily to
an increase in debt in our Rest of World segment and debt assumed
in connection with the BDW acquisition.
Cash Resources
During 2012, our cash resources increased by
$197 million to $1.52 billion as a result of the cash provided
from operating activities and the favourable effect of foreign
exchange partially offset by cash used for investing and financing
activities, as discussed above. In addition to our cash resources
at December 31, 2012, we had term and
operating lines of credit totalling $2.48
billion of which $2.05 billion
was unused and available.
Maximum Number of Shares Issuable
The following table presents the maximum number
of shares that would be outstanding if all of the outstanding
options at February 28, 2013 were
exercised:
Common Shares |
233,363,125 |
Stock options
(i) |
6,355,900 |
|
239,719,025 |
(i) |
Options to purchase Common Shares
are exercisable by the holder in accordance with the vesting
provisions and upon payment of the exercise price as may be
determined from time to time pursuant to our stock option
plans. |
Contractual Obligations and Off-Balance Sheet
Financing
A purchase obligation is defined as an agreement
to purchase goods or services that is enforceable and legally
binding on us and that specifies all significant terms, including:
fixed or minimum quantities to be purchased; fixed, minimum or
variable price provisions; and the approximate timing of the
transaction. Consistent with our customer obligations,
substantially all of our purchases are made under purchase orders
with our suppliers which are requirements based and accordingly do
not specify minimum quantities. Other long-term liabilities are
defined as long-term liabilities that are recorded on our
consolidated balance sheet. Based on this definition, the following
table includes only those contracts which include fixed or minimum
obligations.
At December 31, 2012,
we had contractual obligations requiring annual payments as
follows:
|
|
|
|
|
|
|
|
|
2014- |
|
|
|
2016- |
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
|
2015 |
|
|
|
2017 |
|
|
|
Thereafter |
|
|
|
Total |
Operating leases |
|
|
|
$ |
318 |
|
|
$ |
543 |
|
|
$ |
437 |
|
|
$ |
336 |
|
|
$ |
1,634 |
Long-term debt |
|
|
|
|
249 |
|
|
|
55 |
|
|
|
32 |
|
|
|
24 |
|
|
|
360 |
Unconditional Purchase
Obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials and Services |
|
|
|
|
1,498 |
|
|
|
118 |
|
|
|
8 |
|
|
|
7 |
|
|
|
1,631 |
|
Capital |
|
|
|
|
192 |
|
|
|
37 |
|
|
|
9 |
|
|
|
1 |
|
|
|
239 |
Total contractual
obligations |
|
|
|
$ |
2,257 |
|
|
$ |
753 |
|
|
$ |
486 |
|
|
$ |
368 |
|
|
$ |
3,864 |
Our unfunded obligations with respect to
employee future benefit plans, which have been actuarially
determined, were $569 million at
December 31, 2012. These obligations
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination and |
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
Retirement |
|
|
|
Long Service |
|
|
|
|
|
|
|
|
|
Liability |
|
|
|
Liability |
|
|
|
Arrangements |
|
|
|
Total |
Projected benefit obligation |
|
|
|
$ |
521 |
|
|
$ |
41 |
|
|
$ |
296 |
|
|
$ |
858 |
Less plan assets |
|
|
|
|
(289) |
|
|
|
— |
|
|
|
— |
|
|
|
(289) |
Unfunded amount |
|
|
|
$ |
232 |
|
|
$ |
41 |
|
|
$ |
296 |
|
|
$ |
569 |
Our off-balance sheet financing arrangements are
limited to operating lease contracts.
The majority of our facilities are subject to
operating leases. Operating lease payments in 2012 for facilities
were $277 million. Operating lease
commitments in 2013 for facilities are expected to be $274 million. A majority of our existing
lease agreements generally provide for periodic rent escalations
based either on fixed-rate step increases, or on the basis of a
consumer price index adjustment (subject to certain caps).
We also have operating lease commitments for
equipment. These leases are generally of shorter duration.
Operating lease payments for equipment were $48 million for 2012, and are expected to be
$44 million in 2013.
Although our consolidated contractual annual
lease commitments decline year by year, we expect that existing
leases will either be renewed or replaced, or alternatively, we
will incur capital expenditures to acquire equivalent capacity.
Foreign Currency Activities
Our North American operations negotiate sales
contracts with OEMs for payment in both U.S. and Canadian dollars.
Materials and equipment are purchased in various currencies
depending upon competitive factors, including relative currency
values. Our North American operations use labour and materials
which are paid for in both U.S. and Canadian dollars. Our Mexican
operations generally use the U.S. dollar as the functional
currency.
Our European operations negotiate sales
contracts with OEMs for payment principally in euros and British
pounds. The European operations' material, equipment and labour are
paid for principally in euros and British pounds.
We employ hedging programs, primarily through
the use of foreign exchange forward contracts, in an effort to
manage our foreign exchange exposure, which arises when
manufacturing facilities have committed to the delivery of products
for which the selling price has been quoted in foreign currencies.
These commitments represent our contractual obligations to deliver
products over the duration of the product programs, which can last
a number of years. The amount and timing of the forward contracts
will be dependent upon a number of factors, including anticipated
production delivery schedules and anticipated production costs,
which may be paid in the foreign currency. In addition, we enter
into foreign exchange contracts to manage foreign exchange exposure
with respect to internal funding arrangements. Despite these
measures, significant long-term fluctuations in relative currency
values, in particular a significant change in the relative values
of the U.S. dollar, Canadian dollar, euro or British pound, could
have an adverse effect on our profitability and financial condition
(as discussed throughout this MD&A).
RESULTS OF
OPERATIONS - FOR THE THREE MONTHS ENDED DECEMBER 31, 2012 |
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
|
|
ended December 31, |
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
Change |
Vehicle Production
Volumes (millions of units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
3.846 |
|
|
|
3.438 |
|
|
|
+ |
12% |
|
Western Europe |
|
|
|
|
3.120 |
|
|
|
3.391 |
|
|
|
- |
8% |
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External Production |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
$ |
3,878 |
|
|
$ |
3,462 |
|
|
|
+ |
12% |
|
|
Europe |
|
|
|
|
2,209 |
|
|
|
2,167 |
|
|
|
+ |
2% |
|
|
Rest of World |
|
|
|
|
521 |
|
|
|
386 |
|
|
|
+ |
35% |
|
Complete Vehicle
Assembly |
|
|
|
|
697 |
|
|
|
625 |
|
|
|
+ |
12% |
|
Tooling, Engineering and
Other |
|
|
|
|
728 |
|
|
|
611 |
|
|
|
+ |
19% |
Total Sales |
|
|
|
$ |
8,033 |
|
|
$ |
7,251 |
|
|
|
+ |
11% |
External Production Sales - North America
External production sales in North America increased 12% or $416 million to $3.88
billion for the fourth quarter of 2012 compared to
$3.46 billion for the fourth quarter
of 2011. The increase in external production sales is primarily as
a result of:
- higher production volumes on certain existing programs;
- the launch of new programs during or subsequent to the fourth
quarter of 2011, including the:
-
- Ford Fusion and Lincoln MKZ;
- Cadillac ATS; and
- Dodge Dart;
- an increase in reported U.S. dollar sales due to the
strengthening of the Canadian dollar against the U.S. dollar;
- growth in sales for non-traditional markets; and
- acquisitions completed during or subsequent to the fourth
quarter of 2011, which positively impacted sales by $24 million.
These factors were partially offset by:
- programs that ended production during or subsequent to the
fourth quarter of 2011, including the:
-
- Jeep Liberty; and
- Mazda 6;
- a decrease in content on certain programs, including the Ford
Escape; and
- net customer price concessions subsequent to the fourth quarter
of 2011.
External Production Sales - Europe
External production sales in Europe increased 2% or $42 million to $2.21
billion for the fourth quarter of 2012 compared to
$2.17 billion for the fourth quarter
of 2011. The increase in external production sales is primarily as
a result of:
- the launch of new programs during or subsequent to the fourth
quarter of 2011, including the:
-
- Ford Transit Custom;
- Kia Rio;
- Mercedes-Benz B-Class;
- Volkswagen up!, SEAT Mii and Skoda Citigo; and
- Ford Kuga; and
- acquisitions completed during or subsequent to the fourth
quarter of 2011, which positively impacted sales by $120 million, including BDW, the re-acquisition
of an interiors systems operation and ixetic.
These factors were partially offset by:
- lower production volumes on certain existing programs;
- a decrease in reported U.S. dollar sales primarily as a result
of the weakening of the euro against the U.S. dollar; and
- net customer price concessions subsequent to the fourth quarter
of 2011.
External Production Sales - Rest of
World
External production sales in Rest of World
increased 35% or $135 million to
$521 million for the fourth quarter
of 2012 compared to $386 million for
the fourth quarter of 2011, primarily as a result of:
- the launch of new programs during or subsequent to the fourth
quarter of 2011, primarily in China and Brazil;
- acquisitions completed during or subsequent to the fourth
quarter of 2011, which positively impacted sales by $47 million, including TKASB; and
- an increase in content on certain programs.
These factors were partially offset by a
$20 million decrease in reported U.S.
dollar sales as a result of the net weakening of foreign currencies
against the U.S. dollar, including the Brazilian real.
Complete Vehicle Assembly Sales
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
|
|
ended December 31, |
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
Change |
Complete Vehicle Assembly Sales |
|
|
|
$ |
697 |
|
|
$ |
625 |
|
|
|
+ |
12% |
Complete Vehicle Assembly Volumes
(Units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MINI Countryman, Peugeot RCZ, Mercedes-Benz
G-Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MINI Paceman and Aston Martin Rapide |
|
|
|
|
31,450 |
|
|
|
29,878 |
|
|
|
+ |
5% |
Complete vehicle assembly sales increased 12% or
$72 million to $697 million for the fourth quarter of 2012
compared to $625 million for the
fourth quarter of 2011 while assembly volumes increased 5% or 1,572
units.
The increase in complete vehicle assembly sales
is primarily as a result of:
- an increase in assembly volumes and favourable content for the
Mercedes-Benz G-Class;
- an increase in assembly volumes for the MINI Countryman;
and
- the launch of the MINI Paceman during the fourth quarter of
2012.
These factors were partially offset by:
- the end of production of the Aston Martin Rapide at our
Magna Steyr facility during the
second quarter of 2012;
- a $28 million decrease in
reported U.S. dollar sales as a result of the weakening of the euro
against the U.S. dollar; and
- a decrease in assembly volumes for the Peugeot RCZ.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales increased
19% or $117 million to $728 million for the fourth quarter of 2012
compared to $611 million for the
fourth quarter of 2011.
In the fourth quarter of 2012, the major
programs for which we recorded tooling, engineering and other sales
were the:
- Fiat Viaggio;
- MINI Countryman;
- Mercedes-Benz M-Class;
- BMW 6-Series;
- Opel Cascada Convertible;
- Ford Transit;
- Volkswagen up!; and
- Ford Escape.
In the fourth quarter of 2011, the major
programs for which we recorded tooling, engineering and other sales
were the:
- Ford Fusion;
- MINI Countryman;
- Chery A6 Coupe;
- Peugeot RCZ;
- Audi A1;
- Mercedes-Benz SLS;
- BMW 6-Series; and
- Opel Calibra.
In addition, tooling, engineering and other
sales were negatively impacted by the weakening of the euro against
the U.S. dollar.
Segment Analysis
|
|
For the three months ended December 31, |
|
|
External Sales |
|
|
|
Adjusted EBIT |
|
|
2012 |
|
|
2011 |
|
|
Change |
|
|
|
|
2012 |
|
|
2011 |
|
Change |
North America |
$ |
4,098 |
|
$ |
3,650 |
|
$ |
448 |
|
|
|
$ |
373 |
|
$ |
335 |
$ |
38 |
Europe |
|
3,333 |
|
|
3,165 |
|
|
168 |
|
|
|
|
24 |
|
|
(3) |
|
27 |
Rest of World |
|
596 |
|
|
425 |
|
|
171 |
|
|
|
|
(8) |
|
|
14 |
|
(22) |
Corporate and
Other |
|
6 |
|
|
11 |
|
|
(5) |
|
|
|
|
(2) |
|
|
(25) |
|
23 |
Total reportable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
segments |
$ |
8,033 |
|
$ |
7,251 |
|
$ |
782 |
|
|
|
$ |
387 |
|
$ |
321 |
$ |
66 |
Excluded from Adjusted EBIT for the fourth quarters of 2012 and
2011 were the following Other Income and Expense items, which have
been discussed in the "Other Income" section.
|
|
|
|
|
For the three
months |
|
|
|
|
|
ended December 31, |
|
|
|
|
|
2012 |
|
|
|
2011 |
North America |
|
|
|
|
|
|
|
|
|
|
Re-measurement gain of STT |
|
|
|
$ |
(35) |
|
|
$ |
— |
|
Impairment charges |
|
|
|
|
2 |
|
|
|
7 |
|
Insurance proceeds |
|
|
|
|
— |
|
|
|
(15) |
|
|
|
|
|
(33) |
|
|
|
(8) |
Europe |
|
|
|
|
|
|
|
|
|
|
Impairment charges |
|
|
|
|
23 |
|
|
|
14 |
|
Restructuring charges |
|
|
|
|
55 |
|
|
|
— |
|
Loss on disposal of facility |
|
|
|
|
— |
|
|
|
16 |
|
Customer bankruptcy |
|
|
|
|
— |
|
|
|
11 |
|
|
|
|
|
78 |
|
|
|
41 |
|
|
|
|
$ |
45 |
|
|
$ |
33 |
North
America
Adjusted EBIT in North
America increased $38 million
to $373 million for the fourth
quarter of 2012 compared to $335 million for the fourth quarter of 2011
primarily as a result of:
- margins earned on higher production sales, including margins
earned on the launch of new facilities and new programs;
- lower costs incurred in preparation for upcoming launches;
and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- intangible asset amortization of $39
million related to the acquisition and re-measurement of
E-Car;
- programs that ended production during or subsequent to the
fourth quarter of 2011;
- higher warranty costs of $6
million;
- increased pre-operating costs incurred at new facilities;
- higher restructuring and downsizing costs;
- higher affiliation fees paid to corporate;
- a larger amount of employee profit sharing;
- operational inefficiencies and other costs at certain
facilities; and
- net customer price concessions subsequent to the fourth quarter
of 2011.
Europe
Adjusted EBIT in Europe increased $27
million to $24 million for the
fourth quarter of 2012 compared to a loss of $3 million for the fourth quarter of 2011
primarily as a result of:
- productivity and efficiency improvements at certain
facilities;
- a smaller amount of employee profit sharing;
- lower restructuring and downsizing costs; and
- higher equity income.
These factors were partially offset by:
- higher warranty costs of $6
million;
- increased pre-operating costs incurred at new facilities;
- the net effect of the disposition during the third quarter of
2011 and subsequent acquisition in the third quarter of 2012 of an
interior systems operation;
- rising commodity costs;
- higher affiliation fees paid to corporate;
- higher costs incurred in preparation for upcoming
launches;
- operational inefficiencies and other costs at certain
facilities; and
- programs that ended production during or subsequent to the
fourth quarter of 2011.
Rest of World
Rest of World Adjusted EBIT decreased
$22 million to a loss of $8 million for the fourth quarter of 2012
compared to income of $14 million for
the fourth quarter of 2011 primarily as a result of:
- higher costs related to new facilities;
- operational inefficiencies and other costs at certain
facilities, in particular at certain facilities in South America;
- higher affiliation fees paid to Corporate; and
- net customer price concessions subsequent to the fourth quarter
of 2011.
These factors were partially offset by:
- lower warranty costs of $3
million; and
- higher equity income.
Corporate and Other
Corporate and Other Adjusted EBIT increased
$23 million to a loss of $2 million for the fourth quarter of 2012
compared to a loss of $25 million for
the fourth quarter of 2011. The loss related to our equity
accounted investment in E-Car included in Corporate and Other was
$13 million for the fourth quarter of
2011. Excluding E-Car, Corporate and Other Adjusted EBIT increased
$10 million to a loss of $2 million for the fourth quarter of 2012
compared to a loss of $12 million for
the fourth quarter of 2011 primarily as a result of:
- an increase in affiliation fees earned from our divisions;
and
- a $2 million revaluation gain in
respect of ABCP.
These factors were partially offset by:
- higher stock-based compensation; and
- higher incentive compensation.
FUTURE CHANGES IN ACCOUNTING POLICIES
Intangibles
In July 2012, the
FASB issued ASU 2012-02, "Intangibles - Goodwill and Other (Topic
350): Testing Indefinite-Lived Intangible Assets for Impairment".
ASU 2012-02 provides an option to first perform a qualitative
assessment to determine whether it is more-likely-than-not that an
indefinite-lived intangible asset is impaired. This new standard
will be effective for us in the first quarter of 2013. The adoption
of this ASU is not expected to have a material impact on our
consolidated financial statements.
COMMITMENTS AND CONTINGENCIES
From time to time, we may be contingently liable
for litigation, legal and/or regulatory actions and proceedings and
other claims.
Refer to note 17 of our unaudited interim
consolidated financial statements for the three months and year
ended December 31, 2012, which
describes these claims.
For a discussion of risk factors relating to
legal and other claims/actions against us, refer to "Item 3.
Description of the Business - Risk Factors" in our Annual
Information Form and Annual Report on Form 40-F, each in respect of
the year ended December 31, 2011.
CONTROLS AND PROCEDURES
Changes in Internal Controls over Financial
Reporting
There have been no changes in our internal
controls over financial reporting that occurred during 2012 that
have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
FORWARD-LOOKING STATEMENTS
The previous discussion contains statements that
constitute "forward-looking information" or "forward-looking
statements" within the meaning of applicable securities
legislation, including, but not limited to, statements relating to
expected light vehicle production and operating performance in
North America and Europe; implementation of improvement plans in
our underperforming operations, and/or restructuring actions,
particularly in Europe; improved
future results in ROW and Europe;
the impact to Adjusted EBIT of new facilities launches and
acquisitions in Rest of World, particularly Asia and South
America; the future growth of the automotive pump market and
the potential benefits expected to be achieved from our
acquisitions of ixetic Verwaltungs GmbH and the remaining 50%
interest in STT Technologies Inc.; the integration of and potential
benefits expected to be achieved from our completed acquisition of
the outstanding 27% interest in Magna E-Car Systems; and future
purchases of our Common Shares under the Normal Course Issuer Bid.
The forward-looking information in this MD&A is presented for
the purpose of providing information about management's current
expectations and plans and such information may not be appropriate
for other purposes. Forward-looking statements may include
financial and other projections, as well as statements regarding
our future plans, objectives or economic performance, or the
assumptions underlying any of the foregoing, and other statements
that are not recitations of historical fact. We use words such as
"may", "would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "forecast", "outlook",
"project", "estimate" and similar expressions suggesting future
outcomes or events to identify forward-looking statements. Any such
forward-looking statements are based on information currently
available to us, and are based on assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments, as
well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a
number of risks, assumptions and uncertainties, many of which are
beyond our control, and the effects of which can be difficult to
predict, including, without limitation: the potential for a
deterioration of economic conditions or an extended period of
economic uncertainty; declines in consumer confidence and the
impact on production volume levels; risks arising from the
recession in Europe, including the
potential for a deterioration of sales of our three largest
German-based OEM customers; inability to sustain or grow our
business with OEMs; restructuring actions by OEMs, including plant
closures; restructuring, downsizing and/or other significant
non-recurring costs; continued underperformance of one or more of
our operating divisions; our ability to successfully launch
material new or takeover business; liquidity risks; bankruptcy or
insolvency of a major customer or supplier; a prolonged disruption
in the supply of components to us from our suppliers; scheduled
shutdowns of our customers' production facilities (typically in the
third and fourth quarters of each calendar year); shutdown of our
or our customers' or sub-suppliers' production facilities due to a
labour disruption; our ability to successfully compete with other
automotive suppliers; a reduction in outsourcing by our customers
or the loss of a material production or assembly program; the
termination or non-renewal by our customers of any material
production purchase order; a shift away from technologies in which
we are investing; risks arising due to the failure of a major
financial institution; impairment charges related to goodwill,
long-lived assets and deferred tax assets; shifts in market share
away from our top customers; shifts in market shares among vehicles
or vehicle segments, or shifts away from vehicles on which we have
significant content; risks of conducting business in foreign
markets, including China,
India, South America and other non-traditional
markets for us; exposure to, and ability to offset, volatile
commodities prices; fluctuations in relative currency values; our
ability to successfully identify, complete and integrate
acquisitions or achieve anticipated synergies; our ability to
conduct appropriate due diligence on acquisition targets; ongoing
pricing pressures, including our ability to offset price
concessions demanded by our customers; warranty and recall costs;
risks related to natural disasters and potential production
disruptions; factors that could cause an increase in our pension
funding obligations; legal claims and/or regulatory actions against
us; our ability to understand and compete successfully in
non-automotive businesses in which we pursue opportunities; changes
in our mix of earnings between jurisdictions with lower tax rates
and those with higher tax rates, as well as our ability to fully
benefit tax losses; other potential tax exposures; inability to
achieve future investment returns that equal or exceed past
returns; the unpredictability of, and fluctuation in, the trading
price of our Common Shares; work stoppages and labour relations
disputes; changes in credit ratings assigned to us; changes in laws
and governmental regulations; costs associated with compliance with
environmental laws and regulations; and other factors set out in
our Annual Information Form filed with securities commissions in
Canada and our annual report on
Form 40-F filed with the United States Securities and Exchange
Commission, and subsequent filings. In evaluating forward-looking
statements, we caution readers not to place undue reliance on any
forward-looking statements and readers should specifically consider
the various factors which could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. Unless otherwise required by applicable securities
laws, we do not intend, nor do we undertake any obligation, to
update or revise any forward-looking statements to reflect
subsequent information, events, results or circumstances or
otherwise.
MAGNA INTERNATIONAL INC. |
CONSOLIDATED STATEMENTS OF INCOME |
[Unaudited] |
[U.S. dollars in millions, except per share
figures] |
|
|
|
Three months
ended |
|
Year ended |
|
|
|
December 31, |
|
December 31, |
|
Note |
|
2012 |
|
|
|
2011 |
|
|
2012 |
|
|
|
2011 |
Sales |
|
$ |
8,033 |
|
|
$ |
7,251 |
|
$ |
30,837 |
|
|
$ |
28,748 |
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
7,038 |
|
|
|
6,419 |
|
|
27,010 |
|
|
|
25,434 |
|
Depreciation and amortization |
|
|
243 |
|
|
|
179 |
|
|
801 |
|
|
|
686 |
|
Selling, general and administrative |
13 |
|
409 |
|
|
|
360 |
|
|
1,519 |
|
|
|
1,382 |
|
Interest expense (income), net |
|
|
1 |
|
|
|
(3) |
|
|
16 |
|
|
|
(6) |
|
Equity income |
|
|
(44) |
|
|
|
(28) |
|
|
(151) |
|
|
|
(121) |
|
Other expense (income), net |
2 |
|
45 |
|
|
|
33 |
|
|
(108) |
|
|
|
156 |
Income from operations before income
taxes |
|
|
341 |
|
|
|
291 |
|
|
1,750 |
|
|
|
1,217 |
Income taxes |
12 |
|
(9) |
|
|
|
(20) |
|
|
324 |
|
|
|
202 |
Net income |
|
|
350 |
|
|
|
311 |
|
|
1,426 |
|
|
|
1,015 |
Net loss attributable to
non-controlling interests |
|
|
1 |
|
|
|
1 |
|
|
7 |
|
|
|
3 |
Net income
attributable to Magna International Inc. |
|
$ |
351 |
|
|
$ |
312 |
|
$ |
1,433 |
|
|
$ |
1,018 |
Earnings per Common Share: |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.51 |
|
|
$ |
1.33 |
|
$ |
6.17 |
|
|
$ |
4.26 |
|
Diluted |
|
$ |
1.49 |
|
|
$ |
1.32 |
|
$ |
6.09 |
|
|
$ |
4.20 |
Cash dividends paid per Common
Share |
|
$ |
0.275 |
|
|
$ |
0.250 |
|
$ |
1.100 |
|
|
$ |
1.000 |
Average number of Common Shares
outstanding during
the period [in millions]: |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
232.0 |
|
|
|
234.5 |
|
|
232.4 |
|
|
|
239.3 |
|
Diluted |
|
|
234.8 |
|
|
|
236.9 |
|
|
235.2 |
|
|
|
242.8 |
See accompanying notes |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME |
[Unaudited] |
[U.S. dollars in millions] |
|
|
|
Three months ended |
|
Year
ended |
|
|
|
December 31, |
|
December 31, |
|
Note |
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
Net income |
|
$ |
350 |
|
$ |
311 |
|
$ |
1,426 |
|
$ |
1,015 |
Other comprehensive income (loss), net of
tax: |
15 |
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain (loss) on translation of net investment
in foreign operations |
|
|
56 |
|
|
(61) |
|
|
88 |
|
|
(171) |
|
Net unrealized (loss) gain on available-for-sale
investments |
|
|
(2) |
|
|
3 |
|
|
(4) |
|
|
(6) |
|
Net unrealized (loss) gain on cash flow hedges |
|
|
(1) |
|
|
(2) |
|
|
75 |
|
|
(41) |
|
Reclassification of net (gain) loss on cash flow hedges
to net income |
|
|
(11) |
|
|
6 |
|
|
(18) |
|
|
(22) |
|
Reclassification of net gain on pensions to net
income |
|
|
(42) |
|
|
— |
|
|
(42) |
|
|
— |
|
Pension and post retirement benefits |
|
|
(19) |
|
|
(50) |
|
|
(19) |
|
|
(49) |
Other comprehensive (loss) income |
|
|
(19) |
|
|
(104) |
|
|
80 |
|
|
(289) |
Comprehensive income |
|
|
331 |
|
|
207 |
|
|
1,506 |
|
|
726 |
Comprehensive (income) loss attributable to
non-controlling
interests |
|
|
(1) |
|
|
- |
|
|
5 |
|
|
3 |
Comprehensive income attributable to
Magna International Inc. |
|
$ |
330 |
|
$ |
207 |
|
$ |
1,511 |
|
$ |
729 |
See accompanying notes |
MAGNA INTERNATIONAL INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
[Unaudited] |
[U.S. dollars in millions] |
|
|
|
Three months
ended |
|
|
Year ended |
|
|
|
December 31, |
|
|
December 31, |
|
Note |
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
Cash provided from (used for): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
350 |
|
$ |
311 |
|
$ |
1,426 |
|
$ |
1,015 |
Items not involving current cash flows |
4 |
|
164 |
|
|
156 |
|
|
708 |
|
|
826 |
|
|
|
514 |
|
|
467 |
|
|
2,134 |
|
|
1,841 |
Changes in non-cash operating assets and
liabilities |
4 |
|
559 |
|
|
295 |
|
|
72 |
|
|
(631) |
Cash provided from operating
activities |
|
|
1,073 |
|
|
762 |
|
|
2,206 |
|
|
1,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed asset additions |
|
|
(478) |
|
|
(528) |
|
|
(1,274) |
|
|
(1,236) |
Purchase of subsidiaries |
5 |
|
(446) |
|
|
(101) |
|
|
(525) |
|
|
(120) |
Increase in investments and other
assets |
|
|
(25) |
|
|
(56) |
|
|
(122) |
|
|
(196) |
Disposals of facilities |
|
|
— |
|
|
— |
|
|
— |
|
|
112 |
Proceeds from disposition |
2 |
|
13 |
|
|
58 |
|
|
106 |
|
|
168 |
Cash used for investing
activities |
|
|
(936) |
|
|
(627) |
|
|
(1,815) |
|
|
(1,272) |
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Increase in bank indebtedness |
|
|
22 |
|
|
18 |
|
|
42 |
|
|
38 |
Repayments of debt |
|
|
(28) |
|
|
(5) |
|
|
(309) |
|
|
(47) |
Settlement of stock options |
|
|
— |
|
|
— |
|
|
(19) |
|
|
(30) |
Issues of debt |
|
|
19 |
|
|
30 |
|
|
348 |
|
|
146 |
Issue of Common Shares |
|
|
9 |
|
|
1 |
|
|
14 |
|
|
59 |
Repurchase of Common Shares |
|
|
(19) |
|
|
(122) |
|
|
(40) |
|
|
(407) |
Contribution to subsidiaries by non-controlling
interests |
|
|
— |
|
|
11 |
|
|
— |
|
|
20 |
Dividends paid |
|
|
(63) |
|
|
(59) |
|
|
(252) |
|
|
(236) |
Cash used for financing
activities |
|
|
(60) |
|
|
(126) |
|
|
(216) |
|
|
(457) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
|
(2) |
|
|
(11) |
|
|
22 |
|
|
(37) |
Net increase (decrease) in cash
and cash equivalents
during the period |
|
|
75 |
|
|
(2) |
|
|
197 |
|
|
(556) |
Cash and cash equivalents, beginning of
period |
|
|
1,447 |
|
|
1,327 |
|
|
1,325 |
|
|
1,881 |
Cash and cash equivalents, end of
period |
|
$ |
1,522 |
|
$ |
1,325 |
|
$ |
1,522 |
|
$ |
1,325 |
See accompanying notes |
MAGNA INTERNATIONAL INC. |
CONSOLIDATED BALANCE SHEETS |
[Unaudited] |
[U.S. dollars in millions] |
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, |
Note |
|
|
|
|
2012 |
|
|
|
|
2011 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
4 |
|
|
|
$ |
1,522 |
|
|
|
$ |
1,325 |
Accounts
receivable |
|
|
|
|
|
4,774 |
|
|
|
|
4,398 |
Inventories |
6 |
|
|
|
|
2,512 |
|
|
|
|
2,045 |
Deferred tax assets |
12 |
|
|
|
|
170 |
|
|
|
|
206 |
Prepaid expenses and
other |
|
|
|
|
|
157 |
|
|
|
|
172 |
|
|
|
|
|
|
9,135 |
|
|
|
|
8,146 |
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
16 |
|
|
|
|
385 |
|
|
|
|
438 |
Fixed assets, net |
|
|
|
|
|
5,273 |
|
|
|
|
4,236 |
Goodwill |
7 |
|
|
|
|
1,473 |
|
|
|
|
1,196 |
Deferred tax assets |
|
|
|
|
|
90 |
|
|
|
|
69 |
Other assets |
8 |
|
|
|
|
753 |
|
|
|
|
594 |
|
|
|
|
|
$ |
17,109 |
|
|
|
$ |
14,679 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
|
|
$ |
71 |
|
|
|
$ |
36 |
Accounts payable |
|
|
|
|
|
4,450 |
|
|
|
|
3,961 |
Accrued salaries and
wages |
|
|
|
|
|
617 |
|
|
|
|
525 |
Other accrued liabilities |
9 |
|
|
|
|
1,185 |
|
|
|
|
1,002 |
Income taxes payable |
|
|
|
|
|
93 |
|
|
|
|
5 |
Deferred tax
liabilities |
|
|
|
|
|
19 |
|
|
|
|
44 |
Long-term debt due within one year
|
|
|
|
|
|
249 |
|
|
|
|
151 |
|
|
|
|
|
|
6,684 |
|
|
|
|
5,724 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term employee benefit
liabilities |
10 |
|
|
|
|
560 |
|
|
|
|
419 |
Long-term debt |
|
|
|
|
|
112 |
|
|
|
|
46 |
Other long-term liabilities |
11 |
|
|
|
|
154 |
|
|
|
|
207 |
Deferred tax
liabilities |
|
|
|
|
|
141 |
|
|
|
|
81 |
|
|
|
|
|
|
7,651 |
|
|
|
|
6,477 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
Capital stock |
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
[issued: 233,115,783; 2011 -
233,317,792] |
|
|
|
|
|
4,391 |
|
|
|
|
4,373 |
Contributed surplus |
|
|
|
|
|
80 |
|
|
|
|
63 |
Retained earnings |
|
|
|
|
|
4,462 |
|
|
|
|
3,317 |
Accumulated other comprehensive
income |
15 |
|
|
|
|
496 |
|
|
|
|
422 |
|
|
|
|
|
|
9,429 |
|
|
|
|
8,175 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests |
|
|
|
|
|
29 |
|
|
|
|
27 |
|
|
|
|
|
|
9,458 |
|
|
|
|
8,202 |
|
|
|
|
|
$ |
17,109 |
|
|
|
$ |
14,679 |
See accompanying notes |
MAGNA INTERNATIONAL INC. |
CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY |
[Unaudited] |
[U.S. dollars in millions] |
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stated |
|
|
Contributed |
|
|
Retained |
|
|
|
|
|
Non-
controlling |
|
|
Total |
|
Note |
Number |
|
|
Value |
|
|
Surplus |
|
|
Earnings |
|
|
AOCI
(i) |
|
|
Interest |
|
|
Equity |
|
|
[in millions] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010 |
|
242.6 |
|
$ |
4,500 |
|
$ |
56 |
|
$ |
2,715 |
|
$ |
752 |
|
$ |
3 |
|
$ |
8,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
1,018 |
|
|
|
|
|
(3) |
|
|
1,015 |
Other comprehensive
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
(289) |
|
|
|
|
|
(289) |
Contributions to subsidiaries by
non-controlling
interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20 |
|
|
20 |
Acquisition of
subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 |
|
|
7 |
Shares issued on exercise of stock
options |
|
1.4 |
|
|
69 |
|
|
(10) |
|
|
|
|
|
|
|
|
|
|
|
59 |
Release of restricted stock |
|
|
|
|
6 |
|
|
(6) |
|
|
|
|
|
|
|
|
|
|
|
— |
Repurchase and cancellation under
normal course issuer bid |
|
(10.7) |
|
|
(204) |
|
|
|
|
|
(162) |
|
|
(41) |
|
|
|
|
|
(407) |
Stock-based compensation expense |
13 |
|
|
|
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
31 |
Settlement of stock options |
13 |
|
|
|
|
|
|
(8) |
|
|
(16) |
|
|
|
|
|
|
|
|
(24) |
Dividends paid |
|
|
|
|
2 |
|
|
|
|
|
(238) |
|
|
|
|
|
|
|
|
(236) |
Balance, December 31, 2011 |
|
233.3 |
|
|
4,373 |
|
|
63 |
|
|
3,317 |
|
|
422 |
|
|
27 |
|
|
8,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
1,433 |
|
|
|
|
|
(7) |
|
|
1,426 |
Other comprehensive
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
78 |
|
|
2 |
|
|
80 |
Acquisitions of
subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 |
|
|
7 |
Shares issued on exercise of stock
options |
|
0.4 |
|
|
19 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
14 |
Repurchase and cancellation under
normal course issuer bid |
|
(0.8) |
|
|
(18) |
|
|
|
|
|
(20) |
|
|
(4) |
|
|
|
|
|
(42) |
Release of restricted stock |
|
|
|
|
5 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
— |
Release of restricted stock units |
|
|
|
|
5 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
— |
Stock-based compensation expense |
13 |
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
39 |
Settlement of stock options |
13 |
|
|
|
|
|
|
(7) |
|
|
(9) |
|
|
|
|
|
|
|
|
(16) |
Dividends paid |
|
0.2 |
|
|
7 |
|
|
|
|
|
(259) |
|
|
|
|
|
|
|
|
(252) |
Balance, December 31, 2012 |
|
233.1 |
|
$ |
4,391 |
|
$ |
80 |
|
$ |
4,462 |
|
$ |
496 |
|
$ |
29 |
|
$ |
9,458 |
(i) AOCI is
Accumulated Other Comprehensive Income.
|
See accompanying notes |
MAGNA INTERNATIONAL INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
[Unaudited]
[All amounts in U.S. dollars and all tabular amounts in millions
unless otherwise noted]
1. SIGNIFICANT ACCOUNTING POLICIES
[a] Basis of Presentation
The unaudited interim consolidated financial
statements of Magna International Inc. and its subsidiaries
[collectively "Magna" or the "Company"] have been prepared in
United States dollars following
United States generally accepted
accounting principles ["GAAP"] as further discussed in note 1[b]
and the accounting policies as set out in note 1 to the annual
consolidated financial statements for the year ended December 31, 2011.
The unaudited interim consolidated financial
statements do not conform in all respects to the requirements of
GAAP for annual financial statements. Accordingly, these unaudited
interim consolidated financial statements should be read in
conjunction with the December 31,
2011 audited consolidated financial statements and notes
included in the Company's 2011 Annual Report.
In the opinion of management, the unaudited
interim consolidated financial statements reflect all adjustments,
which consist only of normal and recurring adjustments, necessary
to present fairly the financial position at December 31, 2012 and the results of operations,
changes in equity and cash flows for the three-month periods and
years ended December 31, 2012 and
2011.
[b] Accounting Changes
Comprehensive Income
During 2011, the Financial Accounting Standards
Board ["FASB"] issued Accounting Standards Update ["ASU"] 2011-05
and ASU 2011-12, "Comprehensive Income (Topic 220)", requiring
entities to present net income and other comprehensive income in
either a single continuous statement or in two consecutive
statements of net income and other comprehensive income. The
adoption of this ASU did not have a material impact on the
unaudited interim consolidated financial statements.
Fair Value Measurement
During 2011, the FASB issued ASU 2011-04, "Fair
Value Measurement (Topic 820)", clarifying the existing measurement
and disclosure requirements and expanding the disclosure
requirements for certain fair value measurements. The adoption of
this ASU did not have a material impact on the unaudited interim
consolidated financial statements.
Goodwill
In September 2011,
the FASB issued ASU 2011-08, "Intangibles - Goodwill and Other
(Topic 350): Testing Goodwill for Impairment". ASU 2011-08 provides
an option to perform a qualitative assessment to determine whether
further goodwill impairment testing is necessary. If, as a result
of the qualitative assessment, it is determined that it is
more-likely-than-not that a reporting unit's fair value is less
than its carrying amount, the two-step quantitative impairment test
is required. Otherwise, no further testing is required. ASU 2011-08
is effective for the Company for the year ending December 31, 2012. The adoption of this ASU did
not have a material impact on the unaudited interim consolidated
financial statements.
[c] Future Accounting Standards
Intangibles
In July 2012, the
FASB issued ASU 2012-02, "Intangibles - Goodwill and Other (Topic
350): Testing Indefinite-Lived Intangible Assets for Impairment".
ASU 2012-02 provides an option to first perform a qualitative
assessment to determine whether it is more-likely-than-not that an
indefinite-lived intangible asset is impaired. This new standard
will be effective for the Company in the first quarter of 2013. The
adoption of this ASU is not expected to have a material impact on
the Company's consolidated financial statements.
[d] Seasonality
The Company's businesses are generally not
seasonal. However, the Company's sales and profits are closely
related to its automotive customers' vehicle production schedules.
The Company's largest North American customers typically halt
production for approximately two weeks in July and one week in
December. Additionally, many of the Company's customers in
Europe typically shutdown vehicle
production during portions of August and one week in December.
2. OTHER EXPENSE (INCOME), NET
|
|
|
|
|
|
|
Year ended |
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
2012 |
|
|
2011 |
Fourth Quarter |
|
|
|
|
|
|
|
|
|
|
|
Re-measurement gain of STT |
|
[a] |
|
|
|
$ |
(35) |
|
$ |
— |
|
Impairment of long-lived assets |
|
[b, d] |
|
|
|
|
25 |
|
|
21 |
|
Restructuring |
|
[c] |
|
|
|
|
55 |
|
|
— |
|
Loss on disposal of facility |
|
[e] |
|
|
|
|
— |
|
|
16 |
|
Insurance proceeds |
|
[f] |
|
|
|
|
— |
|
|
(15) |
|
Customer bankruptcy |
|
[g] |
|
|
|
|
— |
|
|
11 |
|
|
|
|
|
|
|
45 |
|
|
33 |
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
Re-measurement gain of E-Car |
|
[a] |
|
|
|
|
(153) |
|
|
— |
|
Loss on disposal of facility |
|
[e] |
|
|
|
|
— |
|
|
113 |
|
Settlement agreement |
|
[h] |
|
|
|
|
— |
|
|
11 |
|
|
|
|
|
|
|
(153) |
|
|
124 |
Second Quarter |
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of investment |
|
[i] |
|
|
|
|
— |
|
|
(10) |
|
|
|
|
|
|
|
— |
|
|
(10) |
First Quarter |
|
|
|
|
|
|
|
|
|
|
|
Write down of real estate |
|
[j] |
|
|
|
|
— |
|
|
9 |
|
|
|
|
|
|
|
— |
|
|
9 |
|
|
|
|
|
|
$ |
(108) |
|
$ |
156 |
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
2012:
[a] Re-measurement gains
[i] STT Technologies Inc.
On October 26,
2012, the Company acquired the remaining 50% interest in STT
Technologies Inc. ["STT"] for cash consideration of $55 million. STT is a manufacturer of
automotive pumps with operations in Canada and Mexico. Prior to the acquisition, the Company
accounted for this investment using the equity method of
accounting.
The incremental investment in STT was accounted
for under the business acquisition method of accounting as a step
acquisition which requires that Magna re-measures its pre-existing
investment in STT at a fair value and recognize any gains or losses
in income. The estimated fair value of Magna's investment
immediately before the closing date was $55
million, which resulted in the recognition of a non-cash
gain of $35 million [$35 million after tax].
[ii] Magna E-Car Systems LP
On August 31,
2012, the Company acquired the controlling 27% interest in
the Magna E-Car Systems L.P. ["E-Car"] partnership from a company
affiliated with the Stronach Group for cash consideration of
$75 million. The purchase was
reviewed, negotiated and approved by the Company's independent
directors with the benefit of independent legal advice from Fasken
Martineau DuMoulin LLP, independent financial advice from TD
Securities Inc. ["TD"] and an independent valuation prepared by
PricewaterhouseCoopers LLP ["PwC"]. The purchase price represents
the midpoint of the valuation range determined by PwC and TD
delivered a fairness opinion to the independent directors to the
effect that the transaction is fair, from a financial point of
view, to the Company.
Prior to the acquisition, the Company held the
remaining 73% non-controlling interest in E-Car and accounted for
this investment using the equity method of accounting.
The incremental investment in E-Car was
accounted for under the business acquisition method of accounting
as a step acquisition. The estimated fair value of Magna's
partnership interest immediately before the closing date was
$205 million, which resulted in the
recognition of a non-cash gain of $153
million [$125 million after
tax].
[b] Impairment of long-lived assets
In conjunction with its annual business planning
cycle, during the fourth quarter of 2012 the Company recorded
long-lived asset impairment charges of $23
million [$22 million after
tax] in Europe and $2 million [$1
million after tax] in North
America. In Europe, the impairment charges related
primarily to fixed assets at the Company's exteriors and interior
systems operations.
[c] Restructuring
As a result of continuing economic uncertainty
in Europe, recent customer
announcements related to plant closures, the profitability of
certain facilities and the level of future booked business,
management determined that restructuring would have to be completed
in its traditional European markets in order to remain cost
competitive over the long-term. As a result, during the
fourth quarter of 2012, the Company recorded restructuring charges
of $55 million [$53 million after tax] in Europe primarily at its exterior and interior
systems and complete vehicle and engineering services
operations.
Substantially all of these restructuring costs
will be paid subsequent to 2012.
For the year ended December 31,
2011:
[d] Impairment of long-lived assets
During the fourth quarter of 2011, the Company
recorded long-lived asset impairment charges of $21 million; $14
million related to Europe
and $7 million related to
North America.
[e] Loss on disposal of facility
During the third quarter of 2011, the Company
sold an interior systems operation located in Germany and recorded a loss on disposal of
$113 million. This operation, whose
long-lived assets were substantially impaired in 2010, had a
history of losses which were projected to continue throughout the
business planning period. Under the terms of the 2011 sale
arrangements [the "SPA"], the Company agreed to fund the buyer
$67 million, to be satisfied with
certain working capital items, cash and the assumption of certain
liabilities. The remaining net assets of the operation of
$26 million were assigned no value by
the buyer and accordingly, were expensed as part of the total loss
on disposal. Simultaneously, the Company reached a commercial
settlement with one of the facility's customers regarding the
cancellation of certain production orders whereby the Company
reimbursed the customer costs of $20
million.
Final settlement of the SPA did not occur during
2011 and in the fourth quarter of 2011 an additional $16 million was accrued in relation to the
ongoing disputes with the purchaser bringing the total loss on
disposal to $129 million.
As more fully described in note 5, on
June 4, 2012, the Company re-acquired
the above operation.
[f] Insurance proceeds
During the fourth quarter of 2011, the Company
received proceeds pursuant to an insurance claim for fire damages
related to an interior systems facility in the United States. The proceeds received were
$15 million in excess of the damaged
assets net book value and the losses previously recognized and was
recorded in income.
[g] Customer bankruptcy
During the fourth quarter of 2011, the Company
recorded an $11 million charge
related to the insolvency of SAAB.
[h] Settlement agreement
During the third quarter of 2011, a settlement
agreement was finalized in connection with the settlement of
certain patent infringement and other claims. The Company recorded
an $11 million expense in the third
quarter of 2011 in relation to these arrangements.
[i] Gain on disposal of investment
During the second quarter of 2011, the Company
sold its 40% non-controlling interest in an equity accounted
investment for proceeds of $151
million [Cdn$147 million] and
recognized a $10 million gain on
disposal.
[j] Write down of real estate
During 2011, five excess corporate real estate
assets were sold to entities associated with the Company's Founder
and Honorary Chairman, Mr. Stronach and/or the Company's former
Co-Chief Executive Officer, Siegfried
Wolf. Based on the appraisals obtained by the Corporate
Governance and Compensation Committee, the appraised fair value
range for the properties was less than their carrying value and,
accordingly, the Company recorded a $9
million impairment charge in the first quarter of 2011. The
sales were approved by the independent members of Magna's Board of
Directors based on the recommendation of the Corporate Governance
and Compensation Committee and were completed during 2011.
3. EARNINGS PER SHARE
|
|
|
|
Three months
ended |
|
|
Year ended |
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
Basic earnings per Common
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Magna International Inc. |
|
|
$ |
351 |
|
$ |
312 |
|
$ |
1,433 |
|
$ |
1,018 |
Average number of Common Shares
outstanding |
|
|
|
232.0 |
|
|
234.5 |
|
|
232.4 |
|
|
239.3 |
Basic earnings per Common
Share |
|
|
$ |
1.51 |
|
$ |
1.33 |
|
$ |
6.17 |
|
$ |
4.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per Common
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Magna
International Inc. |
|
|
$ |
351 |
|
$ |
312 |
|
$ |
1,433 |
|
$ |
1,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of Common Shares
outstanding |
|
|
|
232.0 |
|
|
234.5 |
|
|
232.4 |
|
|
239.3 |
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and restricted stock
[a] |
|
|
|
2.8 |
|
|
2.4 |
|
|
2.8 |
|
|
3.5 |
|
|
|
|
234.8 |
|
|
236.9 |
|
|
235.2 |
|
|
242.8 |
Diluted earnings per Common
Share |
|
|
$ |
1.49 |
|
$ |
1.32 |
|
$ |
6.09 |
|
$ |
4.20 |
[a] |
For the three months and year ended December 31, 2012, diluted
earnings per Common Share exclude 2.5 million [2011 - 2.9 million]
and 2.3 million [2011 - 2.1 million] Common Shares issuable under
the Company's Incentive Stock Option Plan, respectively, because
these options were not "in-the-money". |
4. DETAILS OF CASH FROM OPERATING
ACTIVITIES
[a] Cash and cash equivalents:
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2012 |
|
|
2011 |
Bank term deposits, bankers' acceptances and
government paper |
|
|
|
$ |
1,220 |
|
$ |
968 |
Cash |
|
|
|
|
302 |
|
|
357 |
|
|
|
|
$ |
1,522 |
|
$ |
1,325 |
|
|
|
|
|
|
|
|
|
[b] Items not involving current cash
flows:
|
|
|
|
|
Three months
ended |
|
|
Year ended |
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
Depreciation and amortization |
|
|
|
$ |
243 |
|
$ |
179 |
|
$ |
801 |
|
$ |
686 |
Other non-cash charges |
|
|
|
|
48 |
|
|
16 |
|
|
154 |
|
|
110 |
Amortization of other assets included in cost of
goods sold |
|
|
|
|
31 |
|
|
24 |
|
|
113 |
|
|
80 |
Non-cash portion of Other expense (income),
net |
|
|
|
|
(10) |
|
|
35 |
|
|
(163) |
|
|
147 |
Equity income |
|
|
|
|
(44) |
|
|
(28) |
|
|
(151) |
|
|
(121) |
Deferred income taxes |
|
|
|
|
(104) |
|
|
(70) |
|
|
(46) |
|
|
(76) |
|
|
|
|
$ |
164 |
|
$ |
156 |
|
$ |
708 |
|
$ |
826 |
[c] Changes in non-cash operating assets
and liabilities:
|
|
|
|
|
Three months
ended |
|
|
Year ended |
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
Accounts receivable |
|
|
|
$ |
580 |
|
$ |
328 |
|
$ |
(46) |
|
$ |
(909) |
Inventories |
|
|
|
|
60 |
|
|
41 |
|
|
(315) |
|
|
(282) |
Prepaid expenses and other |
|
|
|
|
40 |
|
|
(28) |
|
|
36 |
|
|
(49) |
Accounts payable |
|
|
|
|
27 |
|
|
(38) |
|
|
249 |
|
|
475 |
Accrued salaries and wages |
|
|
|
|
(21) |
|
|
(4) |
|
|
37 |
|
|
80 |
Other accrued liabilities |
|
|
|
|
(117) |
|
|
(33) |
|
|
97 |
|
|
87 |
Income taxes receivable (payable) |
|
|
|
|
(11) |
|
|
28 |
|
|
16 |
|
|
(29) |
Deferred revenue |
|
|
|
|
1 |
|
|
1 |
|
|
(2) |
|
|
(4) |
|
|
|
|
$ |
559 |
|
$ |
295 |
|
$ |
72 |
|
$ |
(631) |
5. ACQUISITIONS
For year ended December 31, 2012
[i] BDW
Technology Group
In January 2012,
the Company acquired BDW technologies group, a structural casting
supplier of aluminium components, which has operations in
Germany, Poland and Hungary. The acquired business has sales
primarily to Volkswagen, Audi, Porsche, Mercedes-Benz, Ferrari and
ZF.
[ii] Interior
Systems
As more fully described in note 2, during the
third quarter of 2011 the Company sold an interior systems
operation [the "Business"] located in Germany. Subsequent to disposal, the Business
continued to incur significant financial losses. By the end of the
first quarter of 2012, the Business was experiencing severe
liquidity issues. Although the Company had no legal obligation to
do so, in light of customer relationship issues and other relevant
considerations, on June 4, 2012, the
Company re-acquired the Business. This acquisition resulted in
acquired cash of $19 million [net of
$1 million cash paid].
As part of the acquisition, the Company was able
to obtain some pricing concessions from a majority of the Business'
customers. However, the Business is still expected to incur
significant losses over the next three years.
[iii] Magna E-Car Systems
LP
As more fully described in note 2, on
August 31, 2012 the Company acquired
the controlling 27% interest in the E-Car partnership for cash
consideration of $56 million [net of
$19 million cash acquired]. The
incremental investment in E-Car was accounted for under the
business acquisition method of accounting as a step acquisition
which requires that all assets acquired and liabilities assumed are
recorded at fair value.
The preliminary purchase equation allocated
$210 million to intangible assets
which are primarily technology based intangibles. Given the
continuing uncertainties regarding the timing and magnitude of a
viable electric vehicle industry, competing electric vehicle
technologies, significantly larger competitors, and other factors,
the Company has determined that the intangible assets should be
amortized on a straight-line basis over the period ending
December 31, 2013.
[iv] STT
Technologies Inc.
As more fully described in note 2, on
October 26, 2012 the Company acquired
the remaining 50% interest in STT for cash considerations of
$42 million [net of $13 million cash acquired]. The incremental
investment in STT required that all assets acquired and liabilities
were assumed at fair value. This transaction also resulted in
$58 million of goodwill recorded.
[v] ixetic Verwaltungs
GmbH
In December 2012,
the Company acquired ixetic Verwaltungs GmbH ["ixetic"] a
manufacturer of automotive vacuum, engine and transmission pumps,
which has operations in Germany,
Bulgaria and China as well as representation in
Brazil, India, Japan
and the United States. The
purchase price was $395 million [net
of $64 million cash acquired]
resulting in $169 million of
goodwill. The acquired business has sales primarily to BMW,
Daimler, Volkswagen, Schaeffler, ZF, Ford, Chrysler, Renault-Nissan
and Toyota.
The preliminary purchase equations for these
acquisitions are as follows:
|
|
|
BDW |
|
|
|
E-Car |
|
|
|
STT |
|
|
|
ixetic |
|
|
|
Other |
|
|
|
Total |
Cash |
|
$ |
11 |
|
|
$ |
19 |
|
|
$ |
13 |
|
|
$ |
64 |
|
|
$ |
20 |
|
|
$ |
127 |
Non-cash working capital |
|
|
(122) |
|
|
|
(48) |
|
|
|
9 |
|
|
|
54 |
|
|
|
(22) |
|
|
|
(129) |
Investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
Fixed assets |
|
|
188 |
|
|
|
87 |
|
|
|
30 |
|
|
|
186 |
|
|
|
10 |
|
|
|
501 |
Goodwill, net |
|
|
32 |
|
|
|
16 |
|
|
|
58 |
|
|
|
169 |
|
|
|
14 |
|
|
|
289 |
Other assets |
|
|
17 |
|
|
|
9 |
|
|
|
— |
|
|
|
68 |
|
|
|
— |
|
|
|
94 |
Purchase intangibles |
|
|
— |
|
|
|
210 |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
215 |
Long-term employee benefit
liabilities |
|
|
— |
|
|
|
(2) |
|
|
|
— |
|
|
|
(45) |
|
|
|
(2) |
|
|
|
(49) |
Long-term debt |
|
|
(24) |
|
|
|
— |
|
|
|
— |
|
|
|
(1) |
|
|
|
— |
|
|
|
(25) |
Other long-term liabilities |
|
|
(35) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(35) |
Deferred tax liabilities |
|
|
(23) |
|
|
|
— |
|
|
|
(5) |
|
|
|
(39) |
|
|
|
(1) |
|
|
|
(68) |
Non-controlling interests |
|
|
— |
|
|
|
(11) |
|
|
|
— |
|
|
|
-- |
|
|
|
-- |
|
|
|
(11) |
Fair value of net assets |
|
|
44 |
|
|
|
280 |
|
|
|
110 |
|
|
|
459 |
|
|
|
19 |
|
|
|
912 |
Less: |
Carrying value of Magna's equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounted investment |
|
|
— |
|
|
|
(52) |
|
|
|
(20) |
|
|
|
— |
|
|
|
— |
|
|
|
(72) |
|
Gain on re-measurement |
|
|
— |
|
|
|
(153) |
|
|
|
(35) |
|
|
|
— |
|
|
|
— |
|
|
|
(188) |
Consideration paid |
|
|
44 |
|
|
|
75 |
|
|
|
55 |
|
|
|
459 |
|
|
|
19 |
|
|
|
652 |
Less: Cash acquired |
|
|
(11) |
|
|
|
(19) |
|
|
|
(13) |
|
|
|
(64) |
|
|
|
(20) |
|
|
|
(127) |
Net cash outflow |
|
$ |
33 |
|
|
$ |
56 |
|
|
$ |
42 |
|
|
$ |
395 |
|
|
$ |
(1) |
|
|
$ |
525 |
The purchase price allocations for these
acquisitions are preliminary and adjustments to the allocations may
occur as a result of obtaining more information regarding asset
valuations.
For the year ended December 31, 2011
In December 2011,
Magna invested $93 million to
purchase ThyssenKrupp Automotive Systems do Brasil Ltda ["TKASB"],
which consists of four manufacturing facilities in Brazil that assemble chassis structural
components and modules. The acquired business has sales to Ford,
Fiat, Renault Nissan, Honda and PSA.
The total consideration for this acquisition and
certain other acquisitions was $157
million, consisting of $120
million paid in cash [net of cash acquired] and $37 million of assumed debt.
The net effect of the acquisitions on the
Company's 2011 consolidated balance sheet was an increase in
non-cash working capital of $35
million, and increases in fixed assets of $95 million, goodwill of $29 million, deferred tax assets of $6 million, other long-term liabilities of
$28 million, and non-controlling
interest of $7 million.
6. INVENTORIES
Inventories consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
|
2012 |
|
|
|
2011 |
Raw materials and supplies |
|
|
|
$ |
911 |
|
|
|
$ |
800 |
Work-in-process |
|
|
|
|
260 |
|
|
|
|
229 |
Finished goods |
|
|
|
|
283 |
|
|
|
|
253 |
Tooling and engineering |
|
|
|
|
1,058 |
|
|
|
|
763 |
|
|
|
|
$ |
2,512 |
|
|
|
$ |
2,045 |
Tooling and engineering inventory represents
costs incurred on tooling and engineering services contracts in
excess of billed and unbilled amounts included in accounts
receivable.
7. GOODWILL
The following is a continuity of the Company's
goodwill:
|
|
|
|
|
2012 |
|
|
|
|
2011 |
Balance, beginning of period |
|
|
|
$ |
1,196 |
|
|
|
$ |
1,194 |
Acquisitions |
|
|
|
|
34 |
|
|
|
|
— |
Foreign exchange and other |
|
|
|
|
(23) |
|
|
|
|
34 |
Balance, March 31 |
|
|
|
|
1,207 |
|
|
|
|
1,228 |
Acquisitions |
|
|
|
|
10 |
|
|
|
|
5 |
Foreign exchange and other |
|
|
|
|
(13) |
|
|
|
|
8 |
Balance, June 30 |
|
|
|
|
1,204 |
|
|
|
|
1,241 |
Acquisitions |
|
|
|
|
14 |
|
|
|
|
8 |
Foreign exchange and other |
|
|
|
|
14 |
|
|
|
|
(65) |
Balance, September 30 |
|
|
|
|
1,232 |
|
|
|
|
1,184 |
Acquisitions |
|
|
|
|
231 |
|
|
|
|
16 |
Foreign exchange and other |
|
|
|
|
10 |
|
|
|
|
(4) |
Balance, December 31 |
|
|
|
$ |
1,473 |
|
|
|
$ |
1,196 |
8. Other assets
Other assets consist of:
|
|
|
|
|
December 31, |
|
|
|
|
December 31, |
|
|
|
|
|
2012 |
|
|
|
|
2011 |
Preproduction costs related to long-term supply
agreements with contractual guarantee for reimbursement |
|
|
|
|
$ |
297 |
|
|
|
|
$ |
301 |
Long-term receivables |
|
|
|
|
|
95 |
|
|
|
|
|
176 |
Patents and licences, net |
|
|
|
|
|
34 |
|
|
|
|
|
30 |
Unrealized gain on cash flow hedges |
|
|
|
|
|
32 |
|
|
|
|
|
15 |
E-Car intangible [note 5] |
|
|
|
|
|
158 |
|
|
|
|
|
— |
Other, net |
|
|
|
|
|
137 |
|
|
|
|
|
72 |
|
|
|
|
|
$ |
753 |
|
|
|
|
$ |
594 |
9. Warranty
The following is a continuity of the Company's
warranty accruals:
|
|
|
|
|
2012 |
|
|
|
|
2011 |
Balance, beginning of period |
|
|
|
$ |
76 |
|
|
|
$ |
68 |
Expense, net |
|
|
|
|
10 |
|
|
|
|
10 |
Settlements |
|
|
|
|
(5) |
|
|
|
|
(9) |
Foreign exchange and other |
|
|
|
|
2 |
|
|
|
|
4 |
Balance, March 31 |
|
|
|
|
83 |
|
|
|
|
73 |
Expense, net |
|
|
|
|
9 |
|
|
|
|
9 |
Settlements |
|
|
|
|
(7) |
|
|
|
|
(12) |
Foreign exchange and other |
|
|
|
|
(1) |
|
|
|
|
3 |
Balance, June 30 |
|
|
|
|
84 |
|
|
|
|
73 |
Expense, net |
|
|
|
|
4 |
|
|
|
|
17 |
Settlements |
|
|
|
|
(10) |
|
|
|
|
(5) |
Foreign exchange and other |
|
|
|
|
5 |
|
|
|
|
(5) |
Balance, September 30 |
|
|
|
|
83 |
|
|
|
|
80 |
Expense, net |
|
|
|
|
20 |
|
|
|
|
10 |
Settlements |
|
|
|
|
(24) |
|
|
|
|
(12) |
Foreign exchange and other |
|
|
|
|
15 |
|
|
|
|
(2) |
Balance, December 31 |
|
|
|
$ |
94 |
|
|
|
$ |
76 |
10. LONG-TERM EMPLOYEE BENEFIT LIABILITIES
The Company recorded long-term employee benefit
expenses as follows:
|
|
|
|
Three months
ended |
|
|
|
Year ended |
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
|
2012 |
|
|
2011 |
|
|
|
2012 |
|
|
2011 |
Defined benefit pension plan and
other |
|
|
$ |
7 |
|
$ |
2 |
|
|
$ |
15 |
|
$ |
13 |
Termination and long service
arrangements |
|
|
|
19 |
|
|
4 |
|
|
|
39 |
|
|
25 |
Retirement medical benefit plan |
|
|
|
(1) |
|
|
(1) |
|
|
|
1 |
|
|
— |
|
|
|
$ |
25 |
|
$ |
5 |
|
|
$ |
55 |
|
$ |
38 |
11. OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of:
|
|
|
|
|
December
31, |
|
|
|
|
December
31, |
|
|
|
|
|
2012 |
|
|
|
|
2011 |
Long-term portion of income taxes
payable |
|
|
|
|
$ |
94 |
|
|
|
|
$ |
119 |
Asset retirement obligation |
|
|
|
|
|
39 |
|
|
|
|
|
36 |
Long-term portion of fair value of
hedges |
|
|
|
|
|
10 |
|
|
|
|
|
41 |
Deferred revenue |
|
|
|
|
|
11 |
|
|
|
|
|
11 |
|
|
|
|
|
$ |
154 |
|
|
|
|
$ |
207 |
12. INCOME TAXES
Accounting standards require that the Company
assess whether valuation allowances should be established or
maintained against its deferred tax assets, based on consideration
of all available evidence, using a "more likely than not" standard.
The factors the Company uses to assess the likelihood of
realization are its history of losses, forecasts of future pre-tax
income and tax planning strategies that could be implemented to
realize the deferred tax assets.
For the year ended December 31, 2012
The Company had valuation allowances against its
deferred tax assets in the United
Kingdom and Germany.
These valuation allowances were required based on historical losses
and uncertainty as to the timing of when the Company would be able
to generate the necessary level of earnings to recover these
deferred tax assets. Over the past few years, certain
divisions in the United Kingdom
have delivered sustained profits. Based on financial
forecasts and continued anticipated growth, the Company released a
portion of the valuation allowance set up against its deferred tax
assets in the United
Kingdom. The BDW and ixetic acquisitions in 2012 have
allowed the Company to release a portion of the valuation allowance
set up against its German deferred tax assets, during the fourth
quarter of 2012. Additionally, during the fourth quarter of
2012, the Company has released a portion of its valuation
allowances in Mexico and
China, which were partially offset
by a new valuation allowance against all of its deferred tax assets
in Brazil. The net effect of all
of these valuation allowance releases is $89
million.
For the year ended December 31, 2011
The Company had valuation allowances against all
of its deferred tax assets in the United
States. The U.S. valuation allowances were required based on
historical losses and uncertainty as to the timing of when the
Company would be able to generate the necessary level of earnings
to recover these deferred tax assets. During 2010 and 2011, the
Company's United States operations
delivered sustained profits. Based on financial forecasts and the
continued anticipated growth for the U.S. market, the Company
released $78 million of the U.S.
valuation allowances in the fourth quarter of 2011. As at
December 31, 2012, the Company has
remaining U.S. valuation allowances of $94
million, relating to deferred tax assets with restrictions
on their usability.
13. STOCK-BASED COMPENSATION
[a] Incentive Stock Option Plan
The following is a continuity schedule of
options outstanding [number of options in the table below are
expressed in whole numbers]:
|
|
|
2012 |
|
|
2011 |
|
|
|
Options outstanding |
|
|
|
|
|
Options
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
Number |
|
|
|
Number |
|
|
Exercise |
|
|
of
options |
|
|
Number |
|
|
Exercise |
|
|
of
options |
|
|
|
of
options |
|
|
price
(i) |
|
|
exercisable |
|
|
of
options |
|
|
price (i) |
|
|
exercisable |
Beginning of period |
|
|
6,867,367 |
|
|
31.54 |
|
|
2,066,700 |
|
|
11,142,450 |
|
|
34.22 |
|
|
3,362,116 |
Granted |
|
|
1,341,500 |
|
|
48.22 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Exercised |
|
|
(321,454) |
|
|
25.83 |
|
|
(321,454) |
|
|
(1,079,779) |
|
|
44.94 |
|
|
(1,079,779) |
Vested |
|
|
— |
|
|
— |
|
|
2,366,667 |
|
|
— |
|
|
— |
|
|
2,400,001 |
March 31 |
|
|
7,887,413 |
|
|
34.61 |
|
|
4,111,913 |
|
|
10,062,671 |
|
|
33.07 |
|
|
4,682,338 |
Granted |
|
|
47,500 |
|
|
48.22 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Exercised (ii) |
|
|
(5,000) |
|
|
32.75 |
|
|
(5,000) |
|
|
(1,216,973) |
|
|
25.72 |
|
|
(1,216,973) |
Cancelled |
|
|
(46,966) |
|
|
57.14 |
|
|
(36,966) |
|
|
(66,666) |
|
|
30.00 |
|
|
— |
Vested |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
72,000 |
June 30 |
|
|
7,882,947 |
|
|
34.56 |
|
|
4,069,947 |
|
|
8,779,032 |
|
|
34.11 |
|
|
3,537,365 |
Exercised (iii) |
|
|
(950,405) |
|
|
27.46 |
|
|
(950,405) |
|
|
(426,501) |
|
|
25.57 |
|
|
(426,501) |
Cancelled |
|
|
(6,000) |
|
|
50.66 |
|
|
(2,000) |
|
|
— |
|
|
— |
|
|
— |
Vested |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,000 |
September 30 |
|
|
6,926,542 |
|
|
35.52 |
|
|
3,117,542 |
|
|
8,352,531 |
|
|
34.55 |
|
|
3,112,864 |
Exercised |
|
|
(248,300) |
|
|
35.62 |
|
|
(248,300) |
|
|
(14,000) |
|
|
26.03 |
|
|
(14,000) |
Cancelled |
|
|
(55,000) |
|
|
49.99 |
|
|
(20,001) |
|
|
(1,471,164) |
|
|
48.68 |
|
|
(1,426,164) |
Vested |
|
|
— |
|
|
— |
|
|
378,333 |
|
|
— |
|
|
— |
|
|
394,000 |
December 31 |
|
|
6,623,242 |
|
|
35.39 |
|
|
3,227,574 |
|
|
6,867,367 |
|
|
31.54 |
|
|
2,066,700 |
(i) |
|
The exercise price noted above represents the weighted
average exercise price in Canadian dollars. |
(ii) |
|
During the second quarter of 2011, the Company's Honorary
Chairman and Founder, Mr. Stronach exercised 1,083,333 options on a
cashless basis in accordance with the applicable stock option
plans. On exercise, cash payments totalling $25 million were made
to Mr. Stronach. |
(iii) |
|
During the third quarter of 2012, Mr. Stronach exercised
900,001 options on a cashless basis in accordance with the
applicable stock option plans. On exercise, cash payments totalling
$15 million were made to Mr. Stronach. |
|
|
All cash payments were calculated using the
difference between the aggregate fair market value of the Option
Shares based on the closing price of the Company's Common Shares on
the Toronto Stock Exchange ["TSX"] on the date of exercise and the
aggregate Exercise Price of all such options surrendered. |
The weighted average assumptions used in
measuring the fair value of stock options granted or modified and
the compensation expense recorded in selling, general and
administrative expenses are as follows:
|
|
|
|
Year ended |
|
|
|
|
December 31, |
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
Risk free interest
rate |
|
|
|
2.23% |
|
|
|
— |
Expected dividend
yield |
|
|
|
2.00% |
|
|
|
— |
Expected
volatility |
|
|
|
43% |
|
|
|
— |
Expected time until
exercise |
|
|
|
4.5 years |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of options granted or
modified in period [Cdn$] |
|
|
|
$ |
15.37 |
|
|
|
— |
[b] Long-term retention program
The following is a continuity of the stock that
has not been released to the executives and is reflected as a
reduction in the stated value of the Company's Common Shares
[number of Common Shares in the table below are expressed in whole
numbers]:
|
|
|
2012 |
|
|
2011 |
|
|
|
Number |
|
|
|
Stated |
|
|
Number |
|
|
Stated |
|
|
|
of shares |
|
|
|
value |
|
|
of
shares |
|
|
value |
Awarded and not released, beginning of
period |
|
|
1,026,304 |
|
|
|
$ |
35 |
|
|
1,182,736 |
|
|
|
$ |
40 |
Release of restricted stock |
|
|
(143,316) |
|
|
|
|
(5) |
|
|
(156,432) |
|
|
|
|
(5) |
Awarded and not released, March 31, June 30,
September 30 and December 31 |
|
|
882,988 |
|
|
|
$ |
30 |
|
|
1,026,304 |
|
|
|
$ |
35 |
[c] Restricted stock unit
program
The following is a continuity schedule of
Restricted stock units ["RSUs"] and Independent Director stock
units ["DSUs"] outstanding [number of stock units in the table
below are expressed in whole numbers]:
|
|
2012 |
|
2011 |
|
|
Equity |
|
Liability |
|
Liability |
|
|
|
Equity |
|
Liability |
|
Liability |
|
|
|
|
classified |
|
classified |
|
classified |
|
|
|
classified |
|
classified |
|
classified |
|
|
|
|
RSUs |
|
RSUs |
|
DSUs |
|
Total |
|
RSUs |
|
RSUs |
|
DSUs |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
367,726 |
|
29,806 |
|
198,446 |
|
595,978 |
|
181,732 |
|
34,242 |
|
186,348 |
|
402,322 |
Granted |
|
94,238 |
|
15,364 |
|
8,565 |
|
118,167 |
|
87,866 |
|
3,150 |
|
4,248 |
|
95,264 |
Dividend equivalents |
|
467 |
|
263 |
|
1,201 |
|
1,931 |
|
471 |
|
188 |
|
958 |
|
1,617 |
Released |
|
(8,259) |
|
— |
|
— |
|
(8,259) |
|
(8,259) |
|
— |
|
— |
|
(8,259) |
Balance, March 31 |
|
454,172 |
|
45,433 |
|
208,212 |
|
707,817 |
|
261,810 |
|
37,580 |
|
191,554 |
|
490,944 |
Granted |
|
101,672 |
|
— |
|
8,838 |
|
110,510 |
|
42,614 |
|
1,000 |
|
5,101 |
|
48,715 |
Dividend equivalents |
|
558 |
|
325 |
|
1,522 |
|
2,405 |
|
420 |
|
204 |
|
982 |
|
1,606 |
Released |
|
(10,123) |
|
— |
|
— |
|
(10,123) |
|
(16,227) |
|
— |
|
(15,267) |
|
(31,494) |
Balance, June 30 |
|
546,279 |
|
45,758 |
|
218,572 |
|
810,609 |
|
288,617 |
|
38,784 |
|
182,370 |
|
509,771 |
Granted |
|
68,540 |
|
— |
|
9,778 |
|
78,318 |
|
30,088 |
|
— |
|
5,340 |
|
35,428 |
Dividend equivalents |
|
438 |
|
279 |
|
1,252 |
|
1,969 |
|
551 |
|
261 |
|
1,266 |
|
2,078 |
Released |
|
— |
|
— |
|
(34,124) |
|
(34,124) |
|
— |
|
— |
|
— |
|
— |
Balance, September 30 |
|
615,257 |
|
46,037 |
|
195,478 |
|
856,772 |
|
319,256 |
|
39,045 |
|
188,976 |
|
547,277 |
Granted |
|
55,681 |
|
— |
|
10,275 |
|
65,956 |
|
47,890 |
|
— |
|
7,980 |
|
55,870 |
Dividend equivalents |
|
432 |
|
266 |
|
1,170 |
|
1,868 |
|
580 |
|
293 |
|
1,490 |
|
2,363 |
Released |
|
(65,940) |
|
(26,204) |
|
— |
|
(92,144) |
|
— |
|
(9,532) |
|
— |
|
(9,532) |
Balance, December 31 |
|
605,430 |
|
20,099 |
|
206,923 |
|
832,452 |
|
367,726 |
|
29,806 |
|
198,446 |
|
595,978 |
[d] Compensation expense related to stock-based
compensation
Stock-based compensation expense recorded in
selling, general and administrative expenses related to the above
programs is as follows:
|
|
|
|
Three months ended |
|
|
|
Year ended |
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
2012 |
|
|
|
2011 |
Incentive Stock Option Plan |
|
|
$ |
5 |
|
|
$ |
4 |
|
|
$ |
19 |
|
|
$ |
21 |
Long-term retention |
|
|
|
2 |
|
|
|
2 |
|
|
|
5 |
|
|
|
7 |
Restricted stock unit |
|
|
|
3 |
|
|
|
1 |
|
|
|
14 |
|
|
|
6 |
|
|
|
|
10 |
|
|
|
7 |
|
|
|
38 |
|
|
|
34 |
Fair value adjustment for liability classified
DSUs |
|
|
|
1 |
|
|
|
(1) |
|
|
|
4 |
|
|
|
(3) |
Total stock-based compensation expense |
|
|
$ |
11 |
|
|
$ |
6 |
|
|
$ |
42 |
|
|
$ |
31 |
14. COMMON SHARES
[a] On November 9,
2011, the TSX accepted the Company's Notice of Intention to
Make a Normal Course Issuer Bid relating to the purchase for
cancellation, as well as purchases to fund the Company's
stock-based compensation awards or programs and/or the Company's
obligations to its deferred profit sharing plans, of up to
12,000,000 Magna Common Shares [the "2011 Bid"], representing 5.1%
of the Company's public float of Common Shares. The 2011 Bid
commenced on November 11, 2011 and
terminated on November 10, 2012
pursuant to which the Company has purchased 3,668,430 shares
related to the 2011 Bid.
On November 9,
2012, the TSX accepted the Company's Notice of Intention to
Make a Normal Course Issuer Bid relating to the purchase for
cancellation, as well as purchases to fund the Company's
stock-based compensation awards or programs and/or the Company's
obligations to its deferred profit sharing plans, of up to
12,000,000 Magna Common Shares [the "2012 Bid"], representing 5.2%
of the Company's public float of Common Shares. The 2012 Bid
commenced on November 13, 2012 and
will terminate no later than November 12,
2013. As at December 31, 2012,
the Company has purchased 427,402 shares.
During 2012, the Company purchased for
cancellation 895,032 [2011 - 10,747,300] Common Shares under a
normal course issuer bid for cash consideration of $39 million [2011 - $407
million].
All purchases of Common Shares are made at the
market price at the time of purchase in accordance with the rules
and policies of the TSX. Purchases may also be made on the NYSE in
compliance with Rule 10b-18 under the U.S. Securities Exchange Act
of 1934.
[b] The following table presents the
maximum number of shares that would be outstanding if all the
dilutive instruments outstanding at February
28, 2013 were exercised or converted:
Common Shares |
|
|
|
|
|
|
233,363,125 |
Stock options (i) |
|
|
|
|
|
|
6,355,900 |
|
|
|
|
|
|
|
239,719,025 |
(i) |
|
Options to purchase Common Shares are exercisable by the
holder in accordance with the vesting provisions and upon payment
of the exercise price as may be determined from time to time
pursuant to the Company's stock option plans. |
15. ACCUMULATED OTHER COMPREHENSIVE INCOME
The following is a continuity schedule of
accumulated other comprehensive income:
|
|
|
|
|
2012 |
|
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated net unrealized gain on
translation of net investment in foreign operations |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
$ |
547 |
|
|
|
$ |
759 |
|
Net unrealized gain on translation of net
investment in foreign operations |
|
|
|
|
98 |
|
|
|
|
235 |
|
Repurchase of shares under normal course issuer
bid |
|
|
|
|
— |
|
|
|
|
(9) |
|
Balance, March 31 |
|
|
|
|
645 |
|
|
|
|
985 |
|
Net unrealized (loss) gain on translation of net
investment in foreign operations |
|
|
|
|
(194) |
|
|
|
|
71 |
|
Balance, June 30 |
|
|
|
|
451 |
|
|
|
|
1,056 |
|
Net unrealized gain (loss) on translation of net
investment in foreign operations |
|
|
|
|
128 |
|
|
|
|
(415) |
|
Repurchase of shares under normal course issuer
bid |
|
|
|
|
(2) |
|
|
|
|
(21) |
|
Balance, September 30 |
|
|
|
|
577 |
|
|
|
|
620 |
|
Net unrealized gain (loss) on translation of net
investment in foreign operations |
|
|
|
|
54 |
|
|
|
|
(62) |
|
Repurchase of shares under normal course issuer
bid |
|
|
|
|
(2) |
|
|
|
|
(11) |
|
Balance, December 31 |
|
|
|
|
629 |
|
|
|
|
547 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated net unrealized gain (loss)
on cash flow hedges (i) |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period |
|
|
|
|
(23) |
|
|
|
|
40 |
|
Net unrealized gain on cash flow hedges |
|
|
|
|
51 |
|
|
|
|
25 |
|
Reclassification of net loss (gain) on cash flow
hedges to net income |
|
|
|
|
3 |
|
|
|
|
(7) |
|
Balance, March 31 |
|
|
|
|
31 |
|
|
|
|
58 |
|
Net unrealized (loss) gain on cash flow
hedges |
|
|
|
|
(14) |
|
|
|
|
5 |
|
Reclassification of net gain on cash flow hedges
to net income |
|
|
|
|
(8) |
|
|
|
|
(11) |
|
Balance, June 30 |
|
|
|
|
9 |
|
|
|
|
52 |
|
Net unrealized gain (loss) on cash flow
hedges |
|
|
|
|
39 |
|
|
|
|
(69) |
|
Reclassification of net gain on cash flow hedges
to net income |
|
|
|
|
(2) |
|
|
|
|
(10) |
|
Balance, September 30 |
|
|
|
|
46 |
|
|
|
|
(27) |
|
Net unrealized loss on cash flow hedges |
|
|
|
|
(1) |
|
|
|
|
(2) |
|
Reclassification of net (gain) loss on cash flow
hedges to net income |
|
|
|
|
(11) |
|
|
|
|
6 |
|
Balance, December 31 |
|
|
|
|
34 |
|
|
|
|
(23) |
|
|
|
|
|
|
|
|
|
|
|
Accumulated net unrealized gain on
available-for-sale investments |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period |
|
|
|
|
5 |
|
|
|
|
11 |
|
Net unrealized loss on investments |
|
|
|
|
(3) |
|
|
|
|
(3) |
|
Balance, March 31 |
|
|
|
|
2 |
|
|
|
|
8 |
|
Net unrealized loss on investments |
|
|
|
|
(1) |
|
|
|
|
— |
|
Balance, June 30 |
|
|
|
|
1 |
|
|
|
|
8 |
|
Net unrealized gain (loss) on
investments |
|
|
|
|
2 |
|
|
|
|
(6) |
|
Balance, September 30 |
|
|
|
|
3 |
|
|
|
|
2 |
|
Net unrealized (loss) gain on investments |
|
|
|
|
(2) |
|
|
|
|
3 |
|
Balance, December 31 |
|
|
|
|
1 |
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated net unrealized loss on
other long-term liabilities (ii) |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
|
(107) |
|
|
|
|
(58) |
|
Net unrealized gain on other long-term
liabilities |
|
|
|
|
— |
|
|
|
|
1 |
|
Balance, March 31, June 30, September 30 |
|
|
|
|
(107) |
|
|
|
|
(57) |
|
Net unrealized loss on other long-term
liabilities |
|
|
|
|
(19) |
|
|
|
|
(50) |
|
Reclassification of net gain to net
income |
|
|
|
|
(42) |
|
|
|
|
— |
|
Balance, December 31 |
|
|
|
|
(168) |
|
|
|
|
(107) |
|
|
|
|
|
|
|
|
|
|
|
Total accumulated other comprehensive
income |
|
|
|
$ |
496 |
|
|
|
$ |
422 |
(i) The amount of income tax
(obligation) benefit that has been netted in the accumulated net
unrealized gain (loss) on cash flow hedges is as follows:
|
|
|
|
|
2012 |
|
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
$ |
12 |
|
|
|
$ |
(15) |
Net unrealized gain |
|
|
|
|
(21) |
|
|
|
|
(8) |
Reclassifications of net (loss) gain to net
income |
|
|
|
|
(1) |
|
|
|
|
3 |
Balance, March 31 |
|
|
|
|
(10) |
|
|
|
|
(20) |
Net unrealized loss (gain) |
|
|
|
|
7 |
|
|
|
|
(4) |
Reclassifications of net gain to net
income |
|
|
|
|
2 |
|
|
|
|
3 |
Balance, June 30 |
|
|
|
|
(1) |
|
|
|
|
(21) |
Net unrealized (gain) loss |
|
|
|
|
(14) |
|
|
|
|
26 |
Reclassifications of net gain to net
income |
|
|
|
|
1 |
|
|
|
|
4 |
Balance, September 30 |
|
|
|
|
(14) |
|
|
|
|
9 |
Net unrealized (gain) loss |
|
|
|
|
(2) |
|
|
|
|
4 |
Reclassifications of net gain (loss) to net
income |
|
|
|
|
3 |
|
|
|
|
(1) |
Balance, December 31 |
|
|
|
$ |
(13) |
|
|
|
$ |
12 |
(ii) The amount of income tax benefit
that has been netted in the accumulated net unrealized loss on
other long-term liabilities is as follows:
|
|
|
|
|
2012 |
|
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
$ |
24 |
|
|
|
$ |
1 |
Net unrealized loss |
|
|
|
|
— |
|
|
|
|
1 |
Balance, March 31 |
|
|
|
|
24 |
|
|
|
|
2 |
Reclassification of net gain to net
income |
|
|
|
|
1 |
|
|
|
|
— |
Balance, June 30 |
|
|
|
|
25 |
|
|
|
|
2 |
Reclassification of net gain to net
income |
|
|
|
|
— |
|
|
|
|
— |
Balance, September 30 |
|
|
|
|
25 |
|
|
|
|
2 |
Reclassification of net gain to net
income |
|
|
|
|
4 |
|
|
|
|
— |
Net unrealized gain |
|
|
|
|
7 |
|
|
|
|
22 |
Balance, December 31 |
|
|
|
$ |
36 |
|
|
|
$ |
24 |
The amount of other comprehensive income that is
expected to be reclassified to net income over the next 12 months
is $7 million [net of income
taxes of $18 million].
16. FINANCIAL INSTRUMENTS
[a] The Company's financial assets and
financial liabilities consist of the following:
|
|
|
|
December
31, |
|
|
|
December
31, |
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
Held for trading |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
$ |
1,522 |
|
|
|
$ |
1,325 |
|
Investment in asset-backed commercial
paper |
|
|
|
|
90 |
|
|
|
|
82 |
|
|
|
|
$ |
1,612 |
|
|
|
$ |
1,407 |
Held to maturity investments |
|
|
|
|
|
|
|
|
|
|
|
Severance investments |
|
|
|
$ |
8 |
|
|
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
Equity investments |
|
|
|
$ |
9 |
|
|
|
$ |
12 |
|
|
|
|
|
|
|
|
|
|
|
Loans and receivables |
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
$ |
4,774 |
|
|
|
$ |
4,398 |
|
Long-term receivables included in
other assets |
|
|
|
|
95 |
|
|
|
|
176 |
|
|
|
|
$ |
4,869 |
|
|
|
$ |
4,574 |
|
|
|
|
|
|
|
|
|
|
|
Other financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
|
$ |
71 |
|
|
|
$ |
36 |
|
Long-term debt [including portion due
within one year] |
|
|
|
|
361 |
|
|
|
|
197 |
|
Accounts payable |
|
|
|
|
4,450 |
|
|
|
|
3,961 |
|
|
|
|
$ |
4,882 |
|
|
|
$ |
4,194 |
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as effective
hedges, measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
|
$ |
37 |
|
|
|
$ |
21 |
|
|
Other assets |
|
|
|
|
32 |
|
|
|
|
15 |
|
|
Other accrued liabilities |
|
|
|
|
(11) |
|
|
|
|
(31) |
|
|
Other long-term liabilities |
|
|
|
|
(9) |
|
|
|
|
(38) |
|
|
|
|
|
49 |
|
|
|
|
(33) |
|
Commodity contracts |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
|
|
2 |
|
|
|
|
— |
|
|
Other accrued liabilities |
|
|
|
|
(3) |
|
|
|
|
(6) |
|
|
Other long-term liabilities |
|
|
|
|
(1) |
|
|
|
|
(3) |
|
|
|
|
|
(2) |
|
|
|
|
(9) |
|
|
|
|
$ |
47 |
|
|
|
$ |
(42) |
[b] Fair value
The Company determined the estimated fair values
of its financial instruments based on valuation methodologies it
believes are appropriate; however, considerable judgment is
required to develop these estimates. Accordingly, these estimated
fair values are not necessarily indicative of the amounts the
Company could realize in a current market exchange. The estimated
fair value amounts can be materially affected by the use of
different assumptions or methodologies. The methods and assumptions
used to estimate the fair value of financial instruments are
described below:
Cash and cash equivalents, accounts
receivable, bank indebtedness and accounts payable.
Due to the short period to maturity of the
instruments, the carrying values as presented in the interim
consolidated balance sheets are reasonable estimates of fair
values.
Investments
At December 31,
2012, the Company held Canadian third party asset-backed
commercial paper ["ABCP"] with a face value of Cdn$107 million [December
31, 2011 - Cdn$125 million]. The carrying value and
estimated fair value of this investment was Cdn$90 million [December
31, 2011 - Cdn$84 million]. As
fair value information is not readily determinable for the
Company's investment in ABCP, the fair value was based on a
valuation technique estimating the fair value from the perspective
of a market participant.
At December 31,
2012, the Company held available-for-sale investments in
publicly traded companies. The carrying value and fair value of
these investments was $9 million,
which was based on the closing share price of the investments on
December 31, 2012.
Term debt
The Company's term debt includes $249 million due within one year. Due to the
short period to maturity of this debt, the carrying value as
presented in the interim consolidated balance sheets is a
reasonable estimate of its fair value.
[c] Credit risk
The Company's financial assets that are exposed
to credit risk consist primarily of cash and cash equivalents,
accounts receivable, held to maturity investments, and foreign
exchange forward contracts with positive fair values.
The Company's held for trading investments
include an investment in ABCP. Given the continuing uncertainties
regarding the value of the underlying assets, the amount and timing
over cash flows and the risk of collateral calls in the event that
spreads widened considerably, the Company could be exposed to
further losses on its investment.
Cash and cash equivalents, which consists of
short-term investments, are only invested in governments, bank term
deposits and bank commercial paper with an investment grade credit
rating. Credit risk is further reduced by limiting the amount which
is invested in certain governments or any major financial
institution.
The Company is also exposed to credit risk from
the potential default by any of its counterparties on its foreign
exchange forward contracts. The Company mitigates this credit risk
by dealing with counterparties who are major financial institutions
that the Company anticipates will satisfy their obligations under
the contracts.
In the normal course of business, the Company is
exposed to credit risk from its customers, substantially all of
which are in the automotive industry and are subject to credit
risks associated with the automotive industry. For both the three
month period and year ended December 31,
2012, sales to the Company's six largest customers
represented 83% of the Company's total sales and substantially all
of the Company's sales are to customers in which it has ongoing
contractual relationships.
[d] Interest rate risk
The Company is not exposed to significant
interest rate risk due to the short-term maturity of its monetary
current assets and current liabilities. In particular, the amount
of interest income earned on the Company's cash and cash
equivalents is impacted more by the investment decisions made and
the demands to have available cash on hand, than by movements in
the interest rates over a given period.
In addition, the Company is not exposed to
interest rate risk on its term debt instruments as the interest
rates on these instruments are fixed.
[e] Currency risk and foreign exchange contracts
The Company operates globally, which gives rise
to a risk that its earnings and cash flows may be adversely
impacted by fluctuations in foreign exchange rates. The Company is
exposed to fluctuations in foreign exchange rates when
manufacturing facilities have committed to the delivery of products
for which the selling price has been quoted in currencies other
than the facilities' functional currency, or when materials and
equipment are purchased in currencies other than the facilities'
functional currency.
In an effort to manage this net foreign exchange
exposure, the Company uses foreign exchange forward contracts for
the sole purpose of hedging certain of the Company's future
committed Canadian dollar, U.S. dollar and euro outflows and
inflows. All derivative instruments, including foreign exchange
contracts, are recorded on the interim consolidated balance sheet
at fair value. To the extent that cash flow hedges are effective,
the change in their fair value is recorded in other comprehensive
income; any ineffective portion is recorded in net income. Amounts
accumulated in other comprehensive income are reclassified to net
income in the period in which the hedged item affects net
income.
At December 31,
2012, the Company had outstanding foreign exchange forward
contracts representing commitments to buy and sell various foreign
currencies. Significant commitments are as follows:
|
|
|
|
|
Buys |
|
|
|
|
Sells |
|
|
|
|
|
|
|
|
|
|
|
For Canadian dollars |
|
|
|
|
|
|
|
|
|
|
|
U.S. amount |
|
|
|
|
295 |
|
|
|
|
979 |
|
euro amount |
|
|
|
|
82 |
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
For U.S. dollars |
|
|
|
|
|
|
|
|
|
|
|
Peso amount |
|
|
|
|
6,049 |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
For euros |
|
|
|
|
|
|
|
|
|
|
|
U.S. amount |
|
|
|
|
70 |
|
|
|
|
194 |
|
GBP amount |
|
|
|
|
85 |
|
|
|
|
14 |
|
Czech Koruna amount |
|
|
|
|
4,844 |
|
|
|
|
11 |
|
Polish Zlotys amount |
|
|
|
|
127 |
|
|
|
|
— |
Forward contracts mature at various dates
through 2016. Foreign currency exposures are reviewed
quarterly.
As a result of the hedging programs employed,
foreign currency transactions in any given period may not be fully
impacted by movements in exchange rates. As at December 31, 2012, the net foreign exchange
exposure was not material.
17. CONTINGENCIES
[a] In the ordinary course of business
activities, the Company may be contingently liable for litigation
and claims with customers, suppliers, former employees and other
parties. In addition, the Company may be, or could become, liable
to incur environmental remediation costs to bring environmental
contamination levels back within acceptable legal limits. On an
ongoing basis, the Company assesses the likelihood of any adverse
judgments or outcomes to these matters as well as potential ranges
of probable costs and losses.
A determination of the provision required, if
any, for these contingencies is made after analysis of each
individual issue. The required provision may change in the future
due to new developments in each matter or changes in approach such
as a change in settlement strategy in dealing with these
matters.
In November 1997,
the Company and two of its subsidiaries were sued by KS Centoco
Ltd., an Ontario-based steering
wheel manufacturer in which the Company has a 23% equity interest,
and by Centoco Holdings Limited, the owner of the remaining 77%
equity interest in KS Centoco Ltd. In March
1999, the plaintiffs were granted leave to make substantial
amendments to the original statement of claim in order to add
several new defendants and claim additional remedies, and in
February 2006, the plaintiffs further
amended their claim to add an additional remedy. The amended
statement of claim alleges, among other things:
- breach of fiduciary duty by the Company and two of its
subsidiaries;
- breach by the Company of its binding letter of intent with KS
Centoco Ltd., including its covenant not to have any interest,
directly or indirectly, in any entity that carries on the airbag
business in North America, other
than through MST Automotive Inc., a company to be 77% owned by
Magna and 23% owned by Centoco Holdings Limited;
- the plaintiff's exclusive entitlement to certain airbag
technologies in North America
pursuant to an exclusive licence agreement, together with an
accounting of all revenues and profits resulting from the alleged
use by the Company, TRW Inc. ["TRW"] and other unrelated third
party automotive supplier defendants of such technology in
North America;
- a conspiracy by the Company, TRW and others to deprive KS
Centoco Ltd. of the benefits of such airbag technology in
North America and to cause Centoco
Holdings Limited to sell to TRW its interest in KS Centoco Ltd. in
conjunction with the Company's sale to TRW of its interest in MST
Automotive GmbH and TEMIC Bayern-Chemie Airbag GmbH; and
- oppression by the defendants.
The plaintiffs are seeking, amongst other
things, damages of approximately Cdn$3.5
billion. Document production, completion of undertakings and
examinations for discovery are substantially complete, although
limited additional examinations for discovery may occur. A trial is
not expected to commence until late 2014, at the earliest. The
Company believes it has valid defences to the plaintiffs' claims
and therefore intends to continue to vigorously defend this case.
At this time, notwithstanding the amount of time which has
transpired since the claim was filed, these legal proceedings
remain at an early stage and, accordingly, it is not possible to
predict their outcome.
[b] During the fourth quarter of 2011, the
Company announced that it was cooperating with the United States
Department of Justice ["DOJ"] with respect to an antitrust
investigation of the automobile tooling industry. The scope of the
DOJ inquiry subsequently changed to include tooling quotation and
program management practices. The DOJ's investigation has since
been concluded without any action being taken by the DOJ.
[c] A putative class action lawsuit
alleging violations of the United States Securities Exchange Act of
1934 has been filed in the United States District Court, Southern
District of New York, against the
Company, as well as its Chief Executive Officer, Chief Financial
Officer and Founder and Honorary Chairman. Boilermaker-Blacksmith
National Pension Trust ["BBNPT"] was appointed the lead plaintiff
on an uncontested motion. BBNPT subsequently filed an amended
complaint, following which the defendants' filed motion materials
seeking dismissal of the lawsuit. The motion to dismiss is expected
to be heard by the end of the second quarter of 2013. The
defendants believe the lawsuit is without merit and therefore
intend to vigorously defend the case. Given the early stages of the
legal proceedings, it is not possible to predict the outcome of the
claim.
[d] In certain circumstances, the Company
is at risk for warranty costs including product liability and
recall costs. Due to the nature of the costs, the Company makes its
best estimate of the expected future costs [note 9];
however, the ultimate amount of such costs could be materially
different. The Company continues to experience increased customer
pressure to assume greater warranty responsibility. Currently,
under most customer agreements, the Company only accounts for
existing or probable claims. Under certain complete vehicle
engineering and assembly contracts, the Company records an estimate
of future warranty-related costs based on the terms of the specific
customer agreements, and the specific customer's warranty
experience.
18. SEGMENTED INFORMATION
Given the differences between the regions in
which the Company operates, Magna's operations are segmented on a
geographic basis between North
America, Europe and Rest of
World. Consistent with the above, the Company's internal financial
reporting segments key internal operating performance measures
between North America,
Europe and Rest of World for
purposes of presentation to the chief operating decision maker to
assist in the assessment of operating performance, the allocation
of resources, and the long-term strategic direction and future
global growth of the Company.
The Company's chief operating decision maker
uses Adjusted EBIT as the measure of segment profit or loss, since
management believes Adjusted EBIT is the most appropriate measure
of operational profitability or loss for its reporting segments.
Adjusted EBIT represents income from operations before income
taxes; interest expense (income), net; and other expense (income),
net.
The accounting policies of each segment are the
same as those set out under "Significant Accounting Policies"
[note 1] and intersegment sales and transfers are accounted
for at fair market value.
As more fully described in notes 2 and 5, on
August 31, 2012 the Company acquired
the controlling 27% interest in the E-Car partnership. Prior to the
acquisition, the Company held the remaining 73% non-controlling
interest in E-Car and accounted for this investment using the
equity method of accounting. For segment reporting purposes, prior
to the closing date the Company recorded its proportionate share of
the losses of E-Car in the Corporate and Other segment.
Beginning on August 31, 2012, the
consolidated results of E-Car are recorded in the Company's
North America and Europe segments as follows:
|
|
|
|
For the three months ended |
|
|
|
For
the four months ended |
|
|
|
|
December 31, 2012 |
|
|
|
December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North |
|
|
|
|
|
|
|
|
|
|
|
|
North |
|
|
|
|
|
|
|
|
|
|
|
|
|
America |
|
|
|
Europe |
|
|
|
|
Total |
|
|
|
America |
|
|
|
Europe |
|
|
|
|
Total |
Total Sales |
|
|
|
$ |
9 |
|
|
|
$ |
9 |
|
|
|
$ |
18 |
|
|
|
$ |
12 |
|
|
|
$ |
12 |
|
|
|
$ |
24 |
Adjusted EBIT |
|
|
|
$ |
(59) |
|
|
|
$ |
(4) |
|
|
|
$ |
(63) |
|
|
|
$ |
(76) |
|
|
|
$ |
(6) |
|
|
|
$ |
(82) |
Amortization of E-car Intangibles included in
Adjusted EBIT [note 5] |
|
|
|
$ |
(39) |
|
|
|
$ |
— |
|
|
|
$ |
(39) |
|
|
|
$ |
(52) |
|
|
|
$ |
— |
|
|
|
$ |
(52) |
The following tables show segment information
for the Company's reporting segments and a reconciliation of
Adjusted EBIT to the Company's consolidated income from operations
before income taxes:
|
|
|
Three months
ended |
|
|
Three months ended |
|
|
|
December 31, 2012 |
|
|
December 31, 2011 |
|
|
|
Total |
|
|
External |
|
|
Adjusted |
|
|
Fixed
assets, |
|
|
Total |
|
|
External |
|
|
Adjusted |
|
|
Fixed
assets, |
|
|
|
sales |
|
|
sales |
|
|
EBIT |
|
|
net |
|
|
sales |
|
|
sales |
|
|
EBIT |
|
|
net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
1,621 |
|
$ |
1,496 |
|
|
|
|
$ |
660 |
|
$ |
1,441 |
|
$ |
1,347 |
|
|
|
|
$ |
586 |
|
United States |
|
|
1,902 |
|
|
1,788 |
|
|
|
|
|
973 |
|
|
1,728 |
|
|
1,612 |
|
|
|
|
|
804 |
|
Mexico |
|
|
882 |
|
|
814 |
|
|
|
|
|
573 |
|
|
740 |
|
|
691 |
|
|
|
|
|
477 |
|
Eliminations |
|
|
(280) |
|
|
— |
|
|
|
|
|
— |
|
|
(234) |
|
|
— |
|
|
|
|
|
— |
|
|
|
4,125 |
|
|
4,098 |
|
$ |
373 |
|
|
2,206 |
|
|
3,675 |
|
|
3,650 |
|
$ |
335 |
|
|
1,867 |
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe (excluding Great
Britain) |
|
|
2,653 |
|
|
2,606 |
|
|
|
|
|
1,490 |
|
|
2,555 |
|
|
2,513 |
|
|
|
|
|
1,111 |
|
Great Britain |
|
|
261 |
|
|
257 |
|
|
|
|
|
58 |
|
|
264 |
|
|
262 |
|
|
|
|
|
53 |
|
Eastern Europe |
|
|
516 |
|
|
470 |
|
|
|
|
|
584 |
|
|
451 |
|
|
390 |
|
|
|
|
|
438 |
|
Eliminations |
|
|
(57) |
|
|
— |
|
|
|
|
|
— |
|
|
(70) |
|
|
— |
|
|
|
|
|
— |
|
|
|
3,373 |
|
|
3,333 |
|
|
24 |
|
|
2,132 |
|
|
3,200 |
|
|
3,165 |
|
|
(3) |
|
|
1,602 |
Rest of World |
|
|
622 |
|
|
596 |
|
|
(8) |
|
|
686 |
|
|
451 |
|
|
425 |
|
|
14 |
|
|
485 |
Corporate and Other
(i) |
|
|
(87) |
|
|
6 |
|
|
(2) |
|
|
249 |
|
|
(75) |
|
|
11 |
|
|
(25) |
|
|
282 |
Total reportable
segments |
|
|
8,033 |
|
|
8,033 |
|
|
387 |
|
|
5,273 |
|
|
7,251 |
|
|
7,251 |
|
|
321 |
|
|
4,236 |
Other expense,
net |
|
|
|
|
|
|
|
|
(45) |
|
|
|
|
|
|
|
|
|
|
|
(33) |
|
|
|
Interest (expense) income,
net |
|
|
|
|
|
|
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
|
|
$ |
8,033 |
|
$ |
8,033 |
|
$ |
341 |
|
|
5,273 |
|
$ |
7,251 |
|
$ |
7,251 |
|
$ |
291 |
|
|
4,236 |
Current
assets |
|
|
|
|
|
|
|
|
|
|
|
9,135 |
|
|
|
|
|
|
|
|
|
|
|
8,146 |
Investments, goodwill, deferred tax
assets, and other
assets |
|
|
|
|
|
|
|
|
|
|
|
2,701 |
|
|
|
|
|
|
|
|
|
|
|
2,297 |
Consolidated total
assets |
|
|
|
|
|
|
|
|
|
|
$ |
17,109 |
|
|
|
|
|
|
|
|
|
|
$ |
14,679 |
(i) Prior
to the Company's acquisition of the 27% controlling interest in
E-Car, Corporate and Other includes the Company's proportionate
share of the net loss in E-Car which was recorded as equity loss.
For the three months ended December 31,
2011, the partnership recorded sales of $30 million and an EBIT loss of $18 million.
|
Year ended |
|
Year ended |
|
December 31, 2012 |
|
December
31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
Total |
|
|
External |
|
|
Adjusted |
|
|
assets, |
|
|
Total |
|
|
External |
|
|
Adjusted |
|
|
assets, |
|
|
|
sales |
|
|
sales |
|
|
EBIT |
|
|
net |
|
|
sales |
|
|
sales |
|
|
EBIT |
|
|
net |
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
6,343 |
|
$ |
5,907 |
|
|
|
|
$ |
660 |
|
$ |
5,951 |
|
$ |
5,552 |
|
|
|
|
$ |
586 |
|
United States |
|
|
7,518 |
|
|
7,053 |
|
|
|
|
|
973 |
|
|
7,025 |
|
|
6,514 |
|
|
|
|
|
804 |
|
Mexico |
|
|
3,520 |
|
|
3,281 |
|
|
|
|
|
573 |
|
|
2,902 |
|
|
2,698 |
|
|
|
|
|
477 |
|
Eliminations |
|
|
(1,046) |
|
|
— |
|
|
|
|
|
— |
|
|
(1,023) |
|
|
— |
|
|
|
|
|
— |
|
|
|
16,335 |
|
|
16,241 |
|
$ |
1,521 |
|
|
2,206 |
|
|
14,855 |
|
|
14,764 |
|
$ |
1,373 |
|
|
1,867 |
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe (excluding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Britain) |
|
|
10,089 |
|
|
9,927 |
|
|
|
|
|
1,490 |
|
|
10,124 |
|
|
9,963 |
|
|
|
|
|
1,111 |
|
Great Britain |
|
|
961 |
|
|
952 |
|
|
|
|
|
58 |
|
|
913 |
|
|
909 |
|
|
|
|
|
53 |
|
Eastern Europe |
|
|
1,847 |
|
|
1,684 |
|
|
|
|
|
584 |
|
|
1,708 |
|
|
1,557 |
|
|
|
|
|
438 |
|
Eliminations |
|
|
(188) |
|
|
— |
|
|
|
|
|
— |
|
|
(189) |
|
|
— |
|
|
|
|
|
— |
|
|
|
12,709 |
|
|
12,563 |
|
|
165 |
|
|
2,132 |
|
|
12,556 |
|
|
12,429 |
|
|
(22) |
|
|
1,602 |
Rest of World |
|
|
2,111 |
|
|
2,010 |
|
|
(28) |
|
|
686 |
|
|
1,599 |
|
|
1,506 |
|
|
56 |
|
|
485 |
Corporate and Other
(i) |
|
|
(318) |
|
|
23 |
|
|
— |
|
|
249 |
|
|
(262) |
|
|
49 |
|
|
(40) |
|
|
282 |
Total reportable
segments |
|
|
30,837 |
|
|
30,837 |
|
|
1,658 |
|
|
5,273 |
|
|
28,748 |
|
|
28,748 |
|
|
1,367 |
|
|
4,236 |
Other income
(expense), net |
|
|
|
|
|
|
|
|
108 |
|
|
|
|
|
|
|
|
|
|
|
(156) |
|
|
|
Interest (expense) income, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net |
|
|
|
|
|
|
|
|
(16) |
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
$ |
30,837 |
|
$ |
30,837 |
|
$ |
1,750 |
|
|
5,273 |
|
$ |
28,748 |
|
$ |
28,748 |
|
$ |
1,217 |
|
|
4,236 |
Current
assets |
|
|
|
|
|
|
|
|
|
|
|
9,135 |
|
|
|
|
|
|
|
|
|
|
|
8,146 |
Investments, goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
deferred tax assets and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
assets |
|
|
|
|
|
|
|
|
|
|
|
2,701 |
|
|
|
|
|
|
|
|
|
|
|
2,297 |
Consolidated total
assets |
|
|
|
|
|
|
|
|
|
|
$ |
17,109 |
|
|
|
|
|
|
|
|
|
|
$ |
14,679 |
|
|
(i) |
Prior to the Company's acquisition of the 27% controlling
interest in E-Car, Corporate and Other includes the Company's
proportionate share of the net loss in E-Car which was recorded as
equity loss. For the eight months ended August 31, 2012, the
partnership recorded sales of $67 million and an EBIT loss of $49
million. For the year ended December 31, 2011, the
partnership recorded sales of $92 million and an EBIT loss of $91
million. |
19. COMPARATIVE FIGURES
Certain of the comparative figures have been
reclassified to conform to the current period's method of
presentation.
SOURCE Magna International Inc.