AURORA, ON, Aug. 9, 2013 /PRNewswire/ - Magna
International Inc. (TSX: MG; NYSE: MGA) today reported
financial results for the second quarter ended June 30, 2013.
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THREE MONTHS ENDED
JUNE 30, |
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SIX MONTHS ENDED
JUNE 30, |
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2013 |
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2012 |
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2013 |
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2012 |
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Sales |
$ |
8,962 |
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$ |
7,727 |
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$ |
17,323 |
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$ |
15,393 |
Adjusted EBIT(1) |
$ |
547 |
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$ |
475 |
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$ |
1,014 |
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$ |
919 |
Income from operations before income
taxes |
$ |
543 |
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$ |
470 |
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$ |
1,000 |
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$ |
909 |
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Net income attributable to Magna
International Inc. |
$ |
415 |
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$ |
349 |
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$ |
784 |
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$ |
692 |
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Diluted earnings per share |
$ |
1.78 |
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$ |
1.48 |
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$ |
3.35 |
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$ |
2.94 |
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All results are
reported in millions of U.S. dollars, except per share figures,
which are in U.S. dollars.
(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, net; and other
expense, net. |
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THREE MONTHS ENDED JUNE 30, 2013
We posted record sales of $8.96 billion for the second quarter ended
June 30, 2013, an increase of 16%
from the second quarter of 2012. We achieved this sales increase in
a period when vehicle production increased 7% in North America and declined 1% in Europe, both relative to the second quarter of
2012. In the second quarter of 2013, our North American, European
and Rest of World production sales, as well as complete vehicle
assembly sales and tooling, engineering and other sales increased,
in each case relative to the comparable quarter in 2012.
Complete vehicle assembly sales increased 23% to
$796 million for the second quarter
of 2012 compared to $645 million
for the second quarter of 2012, while complete vehicle assembly
volumes increased 17% to approximately 39,000 units.
During the second quarter of 2013, income from
operations before income taxes was $543
million, net income attributable to Magna International Inc.
was $415 million and diluted earnings
per share were $1.78, increases of
$73 million, $66 million and $0.30 respectively, each compared to the second
quarter of 2012.
During the second quarter ended June 30, 2013, we generated cash from operations
of $714 million before changes in
non-cash operating assets and liabilities, and invested
$12 million in non-cash operating
assets and liabilities. Total investment activities for the second
quarter of 2013 were $285 million,
including $232 million in fixed
asset additions and $53 million in
investments and other assets.
SIX MONTHS ENDED JUNE 30,
2013
We posted record sales of $17.32 billion for the six months ended
June 30, 2013, an increase of 13%
from the six months ended June 30,
2012. This higher sales level reflected increases in our
North American, European and Rest of World production sales, as
well as complete vehicle assembly sales and tooling, engineering
and other sales, in each case relative to the first six months of
2012.
During the six months ended June 30, 2013, vehicle production increased 4% to
8.3 million units in North America
and decreased 5% to 9.8 million units in Europe, each compared to the first six months
of 2012.
Complete vehicle assembly sales increased 28% to
$1.59 billion for the six months
ended June 30, 2013 compared to
$1.24 billion for the six months
ended June 30, 2012, while complete
vehicle assembly volumes increased 21% to approximately 76,000
units.
During the six months ended June 30, 2013, income from operations before
income taxes was $1.00 billion, net
income attributable to Magna International Inc. was $784 million and diluted earnings per share were
$3.35, increases of $91 million, $92
million and $0.41,
respectively, each compared to the first six months of 2012.
During the six months ended June 30, 2013, we generated cash from operations
before changes in non-cash operating assets and liabilities of
$1.32 billion, and invested
$468 million in non-cash operating
assets and liabilities. Total investment activities for the first
six months of 2013 were $527 million,
including $426 million in fixed asset
additions and a $101 million increase
in investments and other assets.
A more detailed discussion of our consolidated
financial results for the second quarter and six months ended
June 30, 2013 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
June 30, 2013. This dividend is
payable on September 16, 2013 to
shareholders of record on August 30,
2013.
UPDATED 2013 OUTLOOK
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Light Vehicle Production (Units)
North America
Europe(1) |
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16.1 million
18.6 million |
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Production Sales
North America
Europe
Rest of World |
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$16.0 - $16.4 billion
$9.5 - $9.8 billion
$2.2 - $2.5 billion |
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Total
Production Sales |
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$27.7 - $28.7 billion |
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Complete Vehicle Assembly Sales |
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$2.8 - $3.1 billion |
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Total Sales |
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$33.3 - $34.7 billion |
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Operating Margin(2)(3) |
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Approximately 5.8% |
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Tax Rate(2) |
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Approximately 23.5% |
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Capital Spending |
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Approximately $1.4 billion |
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(1) Effective the
first quarter of 2013, we disclose total European rather than
Western European light vehicle production
(2) Excluding
other expense, net
(3) Excluding
$158 million amortization of intangibles related to the 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
314 manufacturing operations and 89 product development,
engineering and sales centres in 29 countries. Our 123,000
employees are focused on delivering superior value to our customers
through innovative processes and World Class Manufacturing. Our
product capabilities include producing body, chassis, interior,
exterior, seating, powertrain, electronic, vision, closure 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 second quarter results on
Friday, August 9, 2013 at
8:00 a.m. EDT. The conference call
will be chaired by Don Walker, Chief
Executive Officer. The number to use for this call is
1-800-909-7814. The number for overseas callers is 1-212-231-2939.
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 information" or "forward-looking statements"
within the meaning of applicable securities legislation, including,
but not limited to, statements relating to: forecast light vehicle
production volumes in North
America and Europe; Magna's
expected production sales in its North American, European and Rest
of World segments; total sales; complete vehicle assembly sales;
consolidated operating margin; average effective income tax rate;
capital spending; and other matters. The forward-looking
information in this press release 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;
risk of production disruptions due to natural disasters; pension
liabilities; 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
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 six months ended June
30, 2013 included in this press release, and the
audited consolidated financial statements and MD&A for the year
ended December 31, 2012
included in our 2012 Annual Report to Shareholders.
This MD&A has been prepared as at
August 8, 2013.
OVERVIEW
We are a leading global automotive supplier with 314
manufacturing operations and 89 product development, engineering
and sales centres in 29 countries. Our 123,000 employees are
focused on delivering superior value to our customers through
innovative processes and World Class Manufacturing. Our product
capabilities include producing body, chassis, interior, exterior,
seating, powertrain, electronic, vision, closure 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
Our second quarter 2013 sales increased 16% over the second
quarter of 2012 to a record $8.96
billion, as North American, European and Rest of World
production sales, as well as complete vehicle assembly sales and
tooling, engineering and other sales all increased over the
comparable quarter. North American light vehicle production
increased 7% in the second quarter of 2013 to 4.3 million units. In
Europe, light vehicle production
in the second quarter of 2013 declined 1% to 5.0 million units.
Our income from operations before income taxes
increased 16% to $543 million for the
second quarter of 2013, compared to $470
million in the second quarter of 2012. Our diluted earnings
per Common Share increased 20% to $1.78 in the second quarter of 2013, compared to
$1.48 for the second quarter of
2012.
Our North
America segment continues to perform well, with Adjusted
EBIT1 of $422 million,
which included $40 million of
amortization related to the August
2012 acquisition of Magna E-Car Systems Partnership
("E-Car"). This result compares to Adjusted EBIT of $415 million in the second quarter of 2012.
Our Europe
segment showed further improvement in the second quarter of 2013,
despite continued weak levels of vehicle production in Europe. We generated an Adjusted EBIT of
$120 million for the second quarter
of 2013, compared to $65 million in
the second quarter of 2012.
In our Rest of World segment, we reported
$2 million of Adjusted EBIT in the
second quarter of 2013, compared to an Adjusted EBIT loss of
$16 million in the second quarter of
2012. Within our Rest of World segment, our Asia Pacific business again generated a profit
while our business in South
America recorded a loss.
We continue to focus on improving operating
results in both Europe and
South America, and we expect to
generate improved Adjusted EBIT in both regions during 2013
compared to 2012.
Lastly, during the second quarter of 2013, we
repurchased 5.2 million Common Shares for aggregate consideration
of $337 million pursuant to our
outstanding Normal Course issuer bid that expires in November of
this year. We intend to continue purchasing our Common Shares under
the bid.
___________________
1 Adjusted EBIT represents income from operations before
income taxes; interest expense, net; and other expense, net
FINANCIAL RESULTS SUMMARY
During the second quarter of 2013, we posted sales of
$8.96 billion, an increase of 16%
from the second quarter of 2012. This higher sales level was a
result of increases in our North American, European and Rest of
World production sales, our tooling, engineering and other sales
and complete vehicle assembly sales. Comparing the second quarter
of 2013 to 2012:
- North American vehicle production increased 7% and our North
American production sales increased 10% to $4.30 billion;
- European vehicle production decreased 1% while our European
production sales increased 14% to $2.56
billion;
- Rest of World production sales increased 38% to $572 million;
- Complete vehicle assembly sales increased 23% to $796 million and complete vehicle assembly
volumes increased 17%; and
- Tooling, engineering and other sales increased 43% to
$733 million.
During the second quarter of 2013, we earned
income from operations before income taxes of $543 million compared to $470 million for the second quarter of 2012. The
$73 million increase was primarily as
a result of:
- margins earned on higher production sales;
- incremental margin earned on new programs that launched during
or subsequent to the second quarter of 2012;
- productivity and efficiency improvements at certain
facilities;
- the benefit of restructuring and downsizing activities
undertaken in Europe during or
subsequent to the second quarter of 2012;
- a loss on disposal of an investment in the second quarter of
2012;
- higher equity income;
- acquisitions completed during or subsequent to the second
quarter of 2012, including ixetic Verwaltungs GmbH ("ixetic");
and
- lower costs incurred in preparation for upcoming launches.
These factors were partially offset by:
- intangible asset amortization of $40
million related to the acquisition and re-measurement of
E-Car;
- programs that ended production during or subsequent to the
second quarter of 2012;
- a larger amount of employee profit sharing;
- the recovery of due diligence costs in the second quarter of
2012;
- increased pre-operating costs incurred at new facilities;
- favourable settlement of certain commercial items in the second
quarter of 2012;
- a $5 million net decrease in
revaluation gains in respect of asset-backed commercial paper
("ABCP"); and
- operational inefficiencies and other costs at certain
facilities.
During the second quarter of 2013, net income
was $412 million, an increase of
$63 million compared to the second
quarter of 2012.
During the second quarter of 2013, our diluted
earnings per share increased $0.30 to
$1.78 compared to $1.48 for the second quarter of 2012. The
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 the second quarter of 2013. The decrease in the
weighted average number of diluted shares outstanding was due to
the repurchase and cancellation of Common Shares, during or
subsequent to the second quarter of 2012, pursuant to our normal
course issuer bids and the cashless exercise of options, partially
offset by the issue of Common Shares related to the exercise of
stock options and an increase in the number of diluted options
outstanding as a result of an increase in the trading price of our
common stock.
INDUSTRY TRENDS AND RISKS
Our success is primarily dependent upon the levels of North
American and European car and light truck production by our
customers and the relative amount of content we have on various
programs. OEM production volumes in different regions may be
impacted by factors which may vary from one region to the next,
including but not limited to general economic and political
conditions, consumer confidence levels, interest rates, credit
availability, energy and fuel prices, international conflicts,
labour relations issues, regulatory requirements, trade agreements,
infrastructure, legislative changes, and environmental emissions
and safety standards. These factors and a number of other economic,
industry and risk factors which also affect our success, including
such things as relative currency values, commodities prices, price
reduction pressures from our customers, the financial condition of
our supply base and competition from other suppliers, are discussed
in our Annual Information Form and Annual Report on Form 40-F, each
in respect of the year ended December 31,
2012. The economic, industry and risk factors remain
substantially unchanged in respect of the second quarter ended
June 30, 2013, except that, as a
result of general economic conditions in Western Europe together with restructuring
actions being taken by us, our customers and other suppliers, there
may be a heightened risk of labour disruptions which could impact
some of our Western European divisions from time to time. While we
do not anticipate any such labour disruption having a material
impact on our results of operations, we cannot predict whether or
when any labour disruption may arise, or how long it lasts if it
does arise.
RESULTS OF OPERATIONS
Average Foreign Exchange
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For
the three months |
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For
the six months |
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ended June 30, |
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ended June 30, |
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2013 |
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2012 |
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Change |
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2013 |
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2012 |
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Change |
1 Canadian dollar equals U.S. dollars |
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0.977 |
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0.990 |
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- |
1% |
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0.984 |
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0.994 |
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- |
1% |
1 euro equals U.S. dollars |
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1.307 |
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1.283 |
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+ |
2% |
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1.313 |
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1.297 |
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+ |
1% |
1 British pound equals U.S. dollars |
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1.536 |
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1.582 |
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- |
3% |
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1.543 |
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1.576 |
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- |
2% |
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
changes in these foreign exchange rates for the three months and
six months ended June 30, 2013
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, foreign exchange gains and losses on
revaluation and/or settlement of monetary items denominated in a
currency other than an operation's functional currency impact
reported results. These gains and losses are recorded in selling,
general and administrative expense.
RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED
JUNE 30, 2013
Sales |
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For the three
months |
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ended June 30, |
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2013 |
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2012 |
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Change |
Vehicle Production
Volumes (millions of units) |
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North America |
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4.263 |
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3.990 |
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+ |
7% |
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Europe |
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4.993 |
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5.050 |
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- |
1% |
Sales |
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External Production |
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North America |
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$ |
4,301 |
|
$ |
3,907 |
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+ |
10% |
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Europe |
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|
2,560 |
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|
2,249 |
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+ |
14% |
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Rest of World |
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572 |
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415 |
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+ |
38% |
|
Complete Vehicle
Assembly |
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796 |
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645 |
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+ |
23% |
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Tooling, Engineering
and Other |
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733 |
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511 |
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+ |
43% |
Total Sales |
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$ |
8,962 |
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$ |
7,727 |
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+ |
16% |
External Production Sales - North America
External production sales in North America increased 10% or $394 million to $4.30
billion for the second quarter of 2013 compared to
$3.91 billion for the second quarter
of 2012. The increase in external production sales is primarily as
a result of:
- the launch of new programs during or subsequent to the second
quarter of 2012, including the:
-
- Ford Fusion and Lincoln MKZ;
- Ford Escape;
- Honda Accord; and
- GM full-size pickups;
- higher production volumes on certain existing programs;
and
- acquisitions completed during or subsequent to the second
quarter of 2012 which positively impacted sales by $46 million, including STT Technologies
("STT").
These factors were partially offset by:
- programs that ended production during or subsequent to the
second quarter of 2012, including the Jeep Liberty;
- a decrease in reported U.S. dollar sales primarily as a result
of the weakening of the Canadian dollar against the U.S. dollar;
and
- net customer price concessions subsequent to the second quarter
of 2012.
External Production Sales - Europe
External production sales in Europe increased 14% or $311 million to $2.56
billion for the second quarter of 2013 compared to
$2.25 billion for the second quarter
of 2012. The increase in external production sales is primarily as
a result of:
- the launch of new programs during or subsequent to the second
quarter of 2012, including the:
-
- Mercedes-Benz A-Class;
- MINI Paceman;
- Ford Transit Custom;
- Ford Kuga; and
- Mercedes-Benz CLA-Class;
- acquisitions completed during or subsequent to the second
quarter of 2012, which positively impacted sales by $126 million, including ixetic and the
re-acquisition of an interior systems operation; and
- an increase in reported U.S. dollar sales primarily as a result
of the strengthening of the euro against the U.S. dollar.
These factors were partially offset by lower
production volumes on certain existing programs.
External Production Sales - Rest of
World
External production sales in Rest of World
increased 38% or $157 million to
$572 million for the second quarter
of 2013 compared to $415 million for
the second quarter of 2012, primarily as a result of:
- the launch of new programs during or subsequent to the second
quarter of 2012, primarily in Brazil and China; and
- higher production volumes on certain existing programs.
These factors were partially offset by a
$14 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 and Argentine
peso.
Complete Vehicle Assembly Sales |
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|
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
Change |
Complete Vehicle Assembly Sales |
|
|
$ |
796 |
|
$ |
645 |
|
|
+ |
23% |
Complete Vehicle Assembly Volumes
(Units) |
|
|
|
38,605 |
|
|
33,064 |
|
|
+ |
17% |
|
|
|
|
|
|
|
|
|
|
|
|
Complete vehicle assembly sales increased 23%,
or $151 million, to $796 million for the second quarter of 2013
compared to $645 million for the
second quarter of 2012 and assembly volumes increased 17% or 5,541
units.
The increase in complete vehicle assembly sales
is primarily as a result of:
- the launch of the MINI Paceman during the fourth quarter of
2012;
- an increase in assembly volumes for the Mercedes-Benz G-Class;
and
- a $14 million increase in
reported U.S. dollar sales as a result of the strengthening of the
euro against the U.S. dollar.
These factors were partially offset by:
- a decrease in assembly volumes for the:
-
- MINI Countryman; and
- Peugeot RCZ; and
- the end of production of the Aston Martin Rapide at our
Magna Steyr facility during the
second quarter of 2012.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales increased
43% or $222 million to $733 million for the second quarter of 2013
compared to $511 million for the
second quarter of 2012.
In the second quarter of 2013, the major programs
for which we recorded tooling, engineering and other sales were
the:
- Skoda Octavia;
- GM full-size pickups and SUVs;
- Ford Transit;
- Ford Fusion;
- MINI Paceman;
- Qoros 3;
- Range Rover Evoque; and
- Mercedes-Benz M-Class.
In the second quarter of 2012, the
major programs for which we recorded tooling, engineering and other
sales were the:
- Ford Fusion;
- MINI Countryman;
- Qoros 3;
- Audi A1;
- Mercedes-Benz GL-Class;
- Mercedes-Benz SLS AMG;
- Cadillac ATS; and
- Chevrolet Silverado and GMC Sierra.
Cost of Goods
Sold and Gross Margin |
|
|
|
|
|
|
|
|
For the three
months |
|
|
|
|
ended June 30, |
|
|
|
|
2013 |
|
|
2012 |
Sales |
|
|
$ |
8,962 |
|
$ |
7,727 |
Cost of goods sold |
|
|
|
|
|
|
|
|
Material |
|
|
|
5,800 |
|
|
4,940 |
|
Direct labour |
|
|
|
556 |
|
|
510 |
|
Overhead |
|
|
|
1,438 |
|
|
1,292 |
|
|
|
|
7,794 |
|
|
6,742 |
Gross margin |
|
|
$ |
1,168 |
|
$ |
985 |
Gross margin as a percentage of
sales |
|
|
|
13.0% |
|
|
12.7% |
Cost of goods sold increased $1.05 billion to $7.79
billion for the second quarter of 2013 compared to
$6.74 billion for the second quarter
of 2012 primarily as a result of:
- higher material, overhead and labour costs associated with the
increase in sales, including wage increases at certain
operations;
- $181 million related to
acquisitions completed during or subsequent to the second quarter
of 2012, including ixetic, STT and E-Car and the re-acquisition of
an interior systems operation;
- a net increase in reported U.S. dollar cost of goods sold
primarily due to the strengthening of the euro against the U.S.
dollar partially offset by the weakening of the Canadian dollar,
Brazilian real, Argentine peso and British pound, each against the
U.S. dollar; and
- a larger amount of employee profit sharing.
Gross margin increased $183
million to $1.17 billion for
the second quarter of 2013 compared to $0.99
billion for the second quarter of 2012 and gross margin as a
percentage of sales increased to 13.0% for the second quarter of
2013 compared to 12.7% for the second quarter of 2012. The increase
in gross margin as a percentage of sales was primarily due to:
- margins earned on higher production sales;
- incremental margin earned on new programs that launched during
or subsequent to the second quarter of 2012;
- the closure of certain facilities;
- lower costs incurred in preparation for upcoming launches;
and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- an increase in tooling, engineering and other sales that have
low or no margins;
- an increase in complete vehicle assembly sales which have a
higher material content than our consolidated average;
- programs that ended production during or subsequent to the
second quarter of 2012;
- a larger amount of employee profit sharing;
- increased pre-operating costs incurred at new facilities;
- favourable settlement of certain commercial items in the second
quarter of 2012;
- the re-acquisition, in the second quarter of 2012, of an
interior systems operation; and
- operational inefficiencies and other costs at certain
facilities.
Depreciation and Amortization
Depreciation and amortization costs increased
$76 million to $260 million for the second quarter of 2013
compared to $184 million for the
second quarter of 2012. The higher depreciation and amortization
was primarily as a result of:
- intangible asset amortization of $40
million related to the acquisition and re-measurement of
E-Car;
- $21 million related to
acquisitions completed during or subsequent to the second quarter
of 2012, including ixetic, E-Car and STT;
- depreciation related to new facilities; and
- capital spending during or subsequent to the second quarter of
2012.
Selling, General and Administrative
("SG&A")
SG&A expense as a percentage of sales was
4.6% for the second quarter of 2013 compared to 4.8% for the second
quarter of 2012. SG&A expense increased $42 million to $410
million for the second quarter of 2012 compared to
$368 million for the second quarter
of 2012 primarily as a result of:
- increased costs incurred at new facilities;
- $10 million related to
acquisitions completed during or subsequent to the second quarter
of 2012, including ixetic, E-Car, and STT;
- higher incentive compensation;
- higher labour and other costs to support the growth in sales,
including wage increases at certain operations;
- an increase in reported U.S. dollar SG&A related to foreign
exchange;
- the recovery of due diligence costs in the second quarter of
2012; and
- a $5 million net decrease in
revaluation gains in respect of ABCP.
These factors were partially offset by:
- a loss on disposal of an investment in the second quarter of
2012; and
- lower restructuring and downsizing costs.
Equity Income
Equity income increased $7 million to $49
million for the second quarter of 2013 compared to
$42 million for the second quarter of
2012. Equity income for the second quarter of 2012 included
$10 million of equity loss related to
our investment in E-Car and $2
million of equity income related to our investment in STT.
Excluding this $8 million net equity
loss, the $1 million decrease in
equity income is primarily as a result of lower income from our
equity accounted investments in North
America.
Other Expense, net
During the second quarter of 2013 and 2012, no
other expense, net was recorded. We expect full year 2013
restructuring charges to be approximately $100 million.
During the first quarter of 2013, we recorded
net restructuring charges of $6
million ($6 million after tax)
in Europe at our exterior and
interior systems operations.
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, net; and other expense, net.
|
|
|
|
For the three months ended June 30, |
|
|
|
|
External Sales |
|
|
|
Adjusted EBIT |
|
|
|
|
2013 |
|
|
2012 |
|
|
Change |
|
|
|
2013 |
|
|
2012 |
|
|
Change |
North America |
|
|
$ |
4,589 |
|
$ |
4,111 |
|
$ |
478 |
|
|
$ |
422 |
|
$ |
415 |
|
$ |
7 |
Europe |
|
|
|
3,755 |
|
|
3,166 |
|
|
589 |
|
|
|
120 |
|
|
65 |
|
|
55 |
Rest of World |
|
|
|
609 |
|
|
444 |
|
|
165 |
|
|
|
2 |
|
|
(16) |
|
|
18 |
Corporate and
Other |
|
|
|
9 |
|
|
6 |
|
|
3 |
|
|
|
3 |
|
|
11 |
|
|
(8) |
Total reportable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
segments |
|
|
$ |
8,962 |
|
$ |
7,727 |
|
$ |
1,235 |
|
|
$ |
547 |
|
$ |
475 |
|
$ |
72 |
North
America
Adjusted EBIT in North
America increased $7 million
to $422 million for the second
quarter of 2013 compared to $415 million for the second quarter of 2012
primarily as a result of:
- margins earned on higher production sales;
- incremental margin earned on new programs that launched during
or subsequent to the second quarter of 2012; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- intangible asset amortization of $40
million related to the acquisition and re-measurement of
E-Car;
- programs that ended production during or subsequent to the
second quarter of 2012;
- operational inefficiencies and other costs at certain
facilities;
- increased commodity costs;
- lower equity income;
- a larger amount of employee profit sharing;
- higher warranty costs of $3
million; and
- net customer price concessions subsequent to the first quarter
of 2012.
Europe
Adjusted EBIT in Europe increased $55
million to $120 million for
the second quarter of 2013 compared to $65 million for the second quarter of 2012
primarily as a result of:
- margins earned on higher production sales;
- incremental margin earned on new programs that launched during
or subsequent to the second quarter of 2012;
- the benefit of restructuring and downsizing activities
undertaken during or subsequent to the second quarter of 2012;
- lower costs incurred in preparation for upcoming launches;
- decreased commodity costs;
- acquisitions completed during or subsequent to the second
quarter of 2012, including ixetic; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- favourable settlement of certain commercial items in the second
quarter of 2012;
- a larger amount of employee profit sharing;
- higher restructuring and downsizing costs;
- higher affiliation fees paid to corporate;
- the re-acquisition, in the second quarter of 2012, of an
interior systems operation; and
- operational inefficiencies and other costs at certain
facilities.
Rest of World
Rest of World Adjusted EBIT increased
$18 million to income of $2 million for the second quarter of 2013
compared to a loss of $16 million for
the second quarter of 2012 primarily as a result of:
- margins earned on higher production sales, including margins
earned on the launch of new facilities and new programs;
- productivity and efficiency improvements at certain
facilities;
- lower restructuring and downsizing costs; and
- higher equity income.
These factors were partially offset by:
- higher costs related to new facilities;
- higher launch costs; and
- increased commodity costs.
Corporate and Other
Corporate and Other Adjusted EBIT decreased
$8 million to $3 million for the second quarter of 2013
compared to $11 million for the
second quarter of 2012. The loss related to our equity accounted
investment in E-Car included in Corporate and Other was
$10 million for the second quarter of
2012. Excluding E-Car, Corporate and Other Adjusted EBIT decreased
$18 million to $3 million for the second quarter of 2013
compared to $21 million for the
second quarter of 2012 primarily as a result of:
- the recovery of due diligence costs in the second quarter of
2012;
- a $5 million net decrease in
revaluation gains in respect of ABCP; and
- higher incentive compensation.
These factors were partially offset by:
- a loss on disposal of an investment in the second quarter of
2012; and
- an increase in affiliation fees earned from our divisions.
Interest Expense, net
During the second quarter of 2013, we recorded
net interest expense of $4 million
compared to $5 million for the second
quarter of 2012.
Income from Operations before Income
Taxes
Income from operations before income taxes
increased $73 million to $543 million for the second quarter of 2013
compared to $470 million for the
second quarter of 2012. The increase in income from operations
before income taxes is the result of the increase in EBIT and the
decrease in net interest expense, as discussed above.
Income Taxes
The effective income tax rate on income from
operations before income taxes decreased to 24.1% for the second
quarter of 2013 compared to 25.7% for the second quarter of 2012
primarily as a result of a decrease in losses not benefitted in
Europe partially offset by a
change in mix of earnings, whereby proportionately more income was
earned in jurisdictions with higher tax rates.
Net Income
Net income of $412
million for the second quarter of 2013 increased
$63 million compared to the second
quarter of 2012. The increase in net income is the result of the
increase in income from operations before income taxes partially
offset by higher income taxes.
Net Loss Attributable to Non-controlling
Interests
Net loss attributable to non-controlling
interests was $3 million for the
second quarter of 2013 compared to $nil for the second quarter of
2012.
Net Income attributable to Magna
International Inc.
Net income attributable to Magna International
Inc. of $415 million for the second
quarter of 2013 increased $66 million
compared to the second quarter of 2012 as a result of the increase
in net income, as discussed above.
Earnings per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
ended June 30, |
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
Change |
Earnings per Common
Share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
1.80 |
|
$ |
1.50 |
|
|
+ |
20% |
|
Diluted |
|
|
$ |
1.78 |
|
$ |
1.48 |
|
|
+ |
20% |
Average number of
Common Shares outstanding (millions) |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
230.6 |
|
|
232.5 |
|
|
- |
1% |
|
Diluted |
|
|
|
233.2 |
|
|
235.3 |
|
|
- |
1% |
Diluted earnings per share increased
$0.30 to $1.78 for the second quarter of 2013 compared to
$1.48 for the second quarter of 2012.
The increase in diluted earnings per share was 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 the second quarter of 2013.
The decrease in the weighted average number of
diluted shares outstanding was due to the repurchase and
cancellation of Common Shares, during or subsequent to the second
quarter of 2012, pursuant to our normal course issuer bids and the
cashless exercise of options, partially offset by the issue of
Common Shares related to the exercise of stock options and an
increase in the number of diluted options outstanding as a result
of an increase in the trading price of our common stock.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL
RESOURCES
Cash Flow from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
Change |
Net income |
|
|
|
$ |
412 |
|
$ |
349 |
|
|
|
|
Items not involving current cash
flows |
|
|
|
|
302 |
|
|
237 |
|
|
|
|
|
|
|
|
|
714 |
|
|
586 |
|
|
$ |
128 |
Changes in non-cash operating assets and
liabilities |
|
|
|
|
(12) |
|
|
(122) |
|
|
|
|
Cash provided from operating activities |
|
|
|
$ |
702 |
|
$ |
464 |
|
|
$ |
238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operations before changes in
non-cash operating assets and liabilities increased $128 million to $714
million for the second quarter of 2013 compared to
$586 million for the second quarter
of 2012. The increase in cash flow from operations was due to a
$63 million increase in net income,
as discussed above, and a $65 million
increase in items not involving current cash flows. Items not
involving current cash flows are comprised of the following:
|
|
|
|
For the three
months |
|
|
|
|
ended
June 30, |
|
|
|
|
2013 |
|
|
2012 |
Depreciation and
amortization |
|
|
$ |
260 |
|
$ |
184 |
Amortization of other assets included in cost of
goods sold |
|
|
|
36 |
|
|
31 |
Other non-cash
charges |
|
|
|
58 |
|
|
48 |
Deferred income taxes |
|
|
|
(3) |
|
|
16 |
Equity income |
|
|
|
(49) |
|
|
(42) |
Items not involving current cash
flows |
|
|
$ |
302 |
|
$ |
237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash invested in non-cash operating assets and
liabilities amounted to $12 million
for the second quarter of 2013 compared to $122 million for the second quarter of 2012. The
change in non-cash operating assets and liabilities is comprised of
the following sources (and uses) of cash:
|
|
|
|
For the three
months |
|
|
|
|
ended
June 30, |
|
|
|
|
2013 |
|
|
2012 |
Accounts receivable |
|
|
$ |
26 |
|
$ |
56 |
Inventories |
|
|
|
(93) |
|
|
(148) |
Prepaid expenses and
other |
|
|
|
(6) |
|
|
17 |
Accounts
payable |
|
|
|
197 |
|
|
(122) |
Accrued salaries and
wages |
|
|
|
(72) |
|
|
(64) |
Other accrued
liabilities |
|
|
|
(53) |
|
|
83 |
Income taxes
payable |
|
|
|
(9) |
|
|
57 |
Deferred
revenue |
|
|
|
(2) |
|
|
(1) |
Changes in non-cash operating assets and
liabilities |
|
|
$ |
(12) |
|
$ |
(122) |
|
|
|
|
|
|
|
|
The increase in inventories was primarily due to
higher tooling inventory and increased production inventory to
support launch activities. The increase in accounts payable was
primarily due to an increase in production activities at the end of
the second quarter of 2013 and timing of payments. The decrease in
accrued salaries and wages was primarily due to employee profit
sharing payments.
Capital and Investment Spending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
Change |
Fixed asset additions |
|
|
$ |
(232) |
|
$ |
(267) |
|
|
|
|
Investments and other assets |
|
|
|
(53) |
|
|
(35) |
|
|
|
|
Fixed assets, investments and other assets
additions |
|
|
|
(285) |
|
|
(302) |
|
|
|
|
Purchase of subsidiaries |
|
|
|
― |
|
|
19 |
|
|
|
|
Proceeds from disposition |
|
|
|
30 |
|
|
25 |
|
|
|
|
Cash used for investment activities |
|
|
$ |
(255) |
|
$ |
(258) |
|
|
$ |
3 |
Fixed assets, investments and other assets additions
In the second quarter of 2013, we invested
$232 million 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 the second quarter of 2013 was
for manufacturing equipment for programs that will be launching
subsequent to the second quarter of 2013.
In the second quarter of 2013, we invested
$42 million in other assets related
primarily to fully reimbursable tooling costs for programs that
launched during the second quarter of 2013 or will be launching
subsequent to the second quarter of 2013, as well as $11 million in equity accounted investments.
Purchase of subsidiaries
During the second quarter of 2012, we
re-acquired an interior systems operation located in Germany. This acquisition resulted in acquired
cash of $19 million (net of
$1 million cash paid).
Proceeds from disposition
In the second quarter of 2013, the $30 million of proceeds include normal course
fixed and other asset disposals.
Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
Change |
Increase (decrease) in bank indebtedness |
|
|
$ |
21 |
|
$ |
(23) |
|
|
|
|
Repayments of debt |
|
|
|
(60) |
|
|
(120) |
|
|
|
|
Issues of debt |
|
|
|
25 |
|
|
158 |
|
|
|
|
Issues of Common Shares on exercise of stock
options |
|
|
|
11 |
|
|
― |
|
|
|
|
Repurchase of Common
Shares |
|
|
|
(337) |
|
|
― |
|
|
|
|
Contribution to subsidiaries by non-controlling
interests |
|
|
|
4 |
|
|
― |
|
|
|
|
Dividends paid |
|
|
|
(72) |
|
|
(64) |
|
|
|
|
Cash used for financing activities |
|
|
$ |
(408) |
|
$ |
(49) |
|
|
$ |
(359) |
During the second quarter of 2013, we
repurchased 5.2 million Common Shares for an aggregate purchase
price of $337 million under our
normal course issuer bid.
Cash dividends paid per Common Share were
$0.32 for the second quarter of 2013,
for a total of $72 million.
Financing Resources |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
As at |
|
|
|
|
|
|
|
|
June 30, |
|
|
|
December 31, |
|
|
|
|
|
|
|
|
2013 |
|
|
|
2012 |
|
|
|
Change |
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
$ |
54 |
|
|
$ |
71 |
|
|
|
|
|
Long-term debt due within one
year |
|
|
|
211 |
|
|
|
249 |
|
|
|
|
|
Long-term debt |
|
|
|
99 |
|
|
|
112 |
|
|
|
|
|
|
|
|
364 |
|
|
|
432 |
|
|
|
|
Non-controlling
interest |
|
|
|
28 |
|
|
|
29 |
|
|
|
|
Shareholders'
equity |
|
|
|
9,430 |
|
|
|
9,429 |
|
|
|
|
Total capitalization |
|
|
$ |
9,822 |
|
|
$ |
9,890 |
|
|
$ |
(68) |
Total capitalization decreased by $68 million to $9.82
billion at June 30, 2013
compared to $9.89 billion at
December 31, 2012,
primarily as a result of a $68
million decrease in liabilities. The decrease in liabilities
relates primarily to lower bank term debt in our Rest of Word
segment and reduced bank indebtedness.
Shareholders' equity increased $1 million as a result of net income earned in
the first six months of 2013 partially offset by:
- the repurchase of Common Shares in connection with our normal
course issuer bid;
- the $224 million net unrealized
loss on translation of net investment in foreign operations;
and
- dividends paid during the first six months of 2013.
Cash Resources
During the second quarter of 2013, our cash
resources increased by $32 million to $1.28
billion as a result of the cash provided from operating
activities partially offset by cash used for investing and
financing activities, as discussed above. In addition to our cash
resources at June 30, 2013, we had
term and operating lines of credit totalling $2.57 billion of which $2.20 billion was unused and available.
On June 20, 2013,
we amended our existing $2.25 billion
revolving credit facility to become a five year facility with a
maturity of June 20, 2018. The
facility now includes a $200 million
Asian tranche, a $50 million Mexican
tranche and a tranche for Canada,
U.S. and Europe, which is fully
transferable between jurisdictions and can be drawn in U.S.
Dollars, Canadian Dollars or euros.
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 August 8, 2013 were
exercised:
Common Shares |
|
|
|
|
|
|
|
|
|
|
228,116,201 |
Stock options (i) |
|
|
|
|
|
|
|
|
|
|
5,008,598 |
|
|
|
|
|
|
|
|
|
|
|
233,124,799 |
(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
There have been no material changes with respect
to the contractual obligations requiring annual payments during the
second quarter of 2013 that are outside the ordinary course of our
business. Refer to our MD&A included in our 2012 Annual
Report.
RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2013
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
For the six
months |
|
|
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
Change |
Vehicle Production
Volumes (millions of units) |
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
8.279 |
|
|
7.960 |
|
|
+ |
4% |
|
Europe |
|
|
|
9.805 |
|
|
10.342 |
|
|
- |
5% |
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
External Production |
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
$ |
8,348 |
|
$ |
7,822 |
|
|
+ |
7% |
|
|
Europe |
|
|
|
5,006 |
|
|
4,571 |
|
|
+ |
10% |
|
|
Rest of World |
|
|
|
1,088 |
|
|
823 |
|
|
+ |
32% |
|
Complete Vehicle
Assembly |
|
|
|
1,594 |
|
|
1,244 |
|
|
+ |
28% |
|
Tooling, Engineering and
Other |
|
|
|
1,287 |
|
|
933 |
|
|
+ |
38% |
|
Total Sales |
|
|
$ |
17,323 |
|
$ |
15,393 |
|
|
+ |
13% |
External Production Sales - North America
External production sales in North America increased 7% or $526 million to $8.35
billion for the six months ended June 30, 2013 compared to $7.82 billion for the six months ended
June 30, 2012. The increase in
external production sales is primarily as a result of:
- the launch of new programs during or subsequent to the six
months ended June 30, 2012, including
the:
-
- Ford Fusion and Lincoln MKZ;
- Honda Accord;
- Ford C-MAX;
- Tesla Model S;
- Cadillac ATS; and
- Nissan Pathfinder;
- acquisitions completed during or subsequent to the six months
ended June 30, 2012 which positively
impacted sales by $87 million,
including STT; and
- higher production volumes on certain existing programs.
These factors were partially offset by:
- programs that ended production during or subsequent to the six
months ended June 30, 2012, including
the:
-
- Jeep Liberty;
- Mazda 6; and
- Chevrolet Colorado;
- a decrease in reported U.S. dollar sales primarily as a result
of the weakening of the Canadian dollar against the U.S. dollar;
and
- net customer price concessions subsequent to June 30, 2012.
External Production Sales - Europe
External production sales in Europe increased 10% or $435 million to $5.01
billion for the six months ended June
30, 2013 compared to $4.57
billion for the six months ended June
30, 2012. The increase in external production sales is
primarily as a result of:
- the launch of new programs during or subsequent to the second
quarter of 2012, including the:
-
- MINI Paceman;
- Mercedes-Benz A-Class;
- Ford Transit Custom;
- Ford Kuga;
- Skoda Rapid and SEAT Toledo; and
- Mercedes-Benz CLA-Class;
- acquisitions completed during or subsequent to the six months
ended June 30, 2012, which positively
impacted sales by $289 million,
including ixetic and BDW and the re-acquisition of an interior
systems operation; and
- an increase in reported U.S. dollar sales primarily as a result
of the strengthening of the euro against the U.S. dollar.
These factors were partially offset by lower
production volumes on certain existing programs.
External Production Sales - Rest of
World
External production sales in Rest of World
increased 32% or $265 million to
$1.09 billion for the six months
ended June 30, 2013
compared to $0.82 billion for the six
months ended June 30, 2012, primarily
as a result of:
- the launch of new programs during or subsequent to the six
months ended June 30, 2012, primarily
in Brazil and China; and
- higher production volumes on certain existing programs.
These factors were partially offset by a
$37 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 and Argentine
peso.
Complete Vehicle Assembly Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six
months |
|
|
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
Change |
Complete Vehicle Assembly Sales |
|
|
$ |
1,594 |
|
$ |
1,244 |
|
|
+ |
28% |
Complete Vehicle Assembly Volumes
(Units) |
|
|
|
76,044 |
|
|
62,999 |
|
|
+ |
21% |
Complete vehicle assembly sales increased 28%,
or $350 million, to $1.59 billion for the six months ended
June 30, 2013 compared to
$1.24 billion for the six months
ended June 30, 2012 and assembly
volumes increased 21% or 13,045 units.
The increase in complete vehicle assembly sales
is primarily as a result of:
- an increase in assembly volumes for the Mercedes-Benz
G-Class;
- the launch of the MINI Paceman during the fourth quarter of
2012; and
- a $19 million increase in
reported U.S. dollar sales as a result of the strengthening of the
euro against the U.S. dollar.
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; and
- a decrease in assembly volumes for the:
-
- MINI Countryman; and
- Peugeot RCZ.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales increased
38% or $354 million to $1.29 billion for the six months ended
June 30, 2012 compared to
$0.93 billion for the six months
ended June 30, 2012.
In the six months ended June 30, 2013, the major programs for which we
recorded tooling, engineering and other sales were the:
- GM full-size pickups and SUVs;
- Ford Transit;
- Ford Fusion;
- Skoda Octavia;
- Jeep Grand Cherokee;
- Qoros 3;
- MINI Paceman; and
- MINI Countryman.
In the six months ended June 30, 2012, the major programs for which we
recorded tooling, engineering and other sales were the:
- Ford Fusion;
- MINI Countryman;
- Qoros 3;
- Mercedes-Benz M-Class;
- Ford Escape;
- Chevrolet Silverado and GMC Sierra; and
- Mercedes-Benz GL-Class.
Segment Analysis |
|
|
|
|
|
|
|
|
For the six months ended June 30, |
|
|
|
|
External Sales |
|
|
|
Adjusted EBIT |
|
|
|
|
2013 |
|
|
2012 |
|
|
Change |
|
|
|
2013 |
|
|
2012 |
|
|
Change |
North America |
|
|
$ |
8,877 |
|
$ |
8,190 |
|
$ |
687 |
|
|
$ |
803 |
|
$ |
820 |
|
$ |
(17) |
Europe |
|
|
|
7,260 |
|
|
6,319 |
|
|
941 |
|
|
|
192 |
|
|
128 |
|
|
64 |
Rest of World |
|
|
|
1,174 |
|
|
872 |
|
|
302 |
|
|
|
2 |
|
|
(25) |
|
|
27 |
Corporate and
Other |
|
|
|
12 |
|
|
12 |
|
|
― |
|
|
|
17 |
|
|
(4) |
|
|
21 |
Total reportable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
segments |
|
|
$ |
17,323 |
|
$ |
15,393 |
|
$ |
1,930 |
|
|
$ |
1,014 |
|
$ |
919 |
|
$ |
95 |
Excluded from Adjusted EBIT for the six months
ended June 30, 2013 was the
$6 million net restructuring costs
recorded in our Europe segment, as
discussed in the "Other Expense" section.
North
America
Adjusted EBIT in North
America decreased $17 million
to $803 million for the six months
ended June 30, 2013 compared to
$820 million for the six months
ended June 30, 2012 primarily as a
result of:
- intangible asset amortization of $79
million related to the acquisition and re-measurement of
E-Car;
- programs that ended production during or subsequent to the six
months ended June 30, 2012;
- operational inefficiencies and other costs at certain
facilities;
- increased commodity costs;
- a larger amount of employee profit sharing;
- higher affiliation fees paid to Corporate; and
- net customer price concessions subsequent to June 30, 2012.
These factors were partially offset by:
- margins earned on higher production sales;
- incremental margin earned on new programs that launched during
or subsequent to the six months ended June
30, 2012;
- lower restructuring and downsizing costs;
- lower costs incurred in preparation for upcoming launches;
and
- productivity and efficiency improvements at certain
facilities.
Europe
Adjusted EBIT in Europe increased $64
million to $192 million for
the six months ended June 30, 2013
compared to $128 million for the
six months ended June 30, 2012
primarily as a result of:
- margins earned on higher production sales;
- incremental margin earned on new programs that launched during
or subsequent to the six months ended June
30, 2012;
- acquisitions completed during or subsequent to the six months
ended June 30, 2012, including
ixetic;
- the benefit of restructuring and downsizing activities
undertaken during or subsequent to the six months ended
June 30, 2012;
- lower costs incurred in preparation for upcoming launches;
- decreased commodity costs; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- favourable settlement of certain commercial items in the second
quarter of 2012;
- a larger amount of employee profit sharing;
- higher restructuring and downsizing costs;
- the re-acquisition, in the second quarter of 2012, of an
interior systems operation; and
- operational inefficiencies and other costs at certain
facilities.
Rest of World
Rest of World Adjusted EBIT increased
$27 million to $2 million for the six months ended June 30, 2013 compared to a loss of $25 million for the six months ended June 30, 2012 primarily as a result of:
- margins earned on higher production sales, including margins
earned on the launch of new facilities and new programs;
- productivity and efficiency improvements at certain facilities;
and
- lower restructuring and downsizing costs.
These factors were partially offset by:
- higher costs related to new facilities;
- higher affiliation fees paid to Corporate; and
- a larger amount of employee profit sharing.
Corporate and Other
Corporate and Other Adjusted EBIT increased
$21 million to $17 million for the six months ended June 30, 2013 compared to a loss of $4 million for the six months ended June 30, 2012. The loss related to our equity
accounted investment in E-Car included in Corporate and Other was
$22 million for the six months ended
June 30, 2012. Excluding E-Car,
Corporate and Other Adjusted EBIT decreased $1 million to $17
million for the six months ended June 30, 2013 compared to $18 million for the six months ended June 30, 2012 primarily as a result of:
- the recovery of due diligence costs in the second quarter of
2012;
- higher incentive compensation; and
- lower equity income.
These factors were partially offset by:
- $10 million of cash received
related to the settlement of ABCP between the Investment Industry
Regulatory Organization of Canada
and financial institutions;
- an increase in affiliation fees earned from our divisions;
and
- a loss on disposal of an investment in the second quarter of
2012.
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 15 of our unaudited interim
consolidated financial statements for the six months ended
June 30, 2013, 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, 2012.
CONTROLS AND PROCEDURES
There have been no changes in our internal controls over
financial reporting that occurred during the six months ended
June 30, 2013 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:
light vehicle production and operating performance in our reporting
segments; implementation of improvement plans in our
underperforming operations, and/or restructuring actions, including
but not limited to, Europe and
South America; improved future
financial results in South America
and Europe; and future repurchases
of Common Shares under our 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;
risk of production disruptions due to natural disasters; pension
liabilities; 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 |
|
|
|
Six months
ended |
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
Note |
|
|
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
|
|
|
|
|
$ |
8,962 |
|
$ |
7,727 |
|
|
$ |
17,323 |
|
$ |
15,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
|
|
|
|
|
|
7,794 |
|
|
6,742 |
|
|
|
15,111 |
|
|
13,427 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
260 |
|
|
184 |
|
|
|
515 |
|
|
355 |
|
Selling, general and administrative |
|
|
|
11 |
|
|
|
|
410 |
|
|
368 |
|
|
|
777 |
|
|
766 |
|
Interest expense, net |
|
|
|
|
|
|
|
|
4 |
|
|
5 |
|
|
|
8 |
|
|
10 |
|
Equity income |
|
|
|
|
|
|
|
|
(49) |
|
|
(42) |
|
|
|
(94) |
|
|
(74) |
|
Other expense, net |
|
|
|
2 |
|
|
|
|
— |
|
|
— |
|
|
|
6 |
|
|
— |
Income from operations
before income taxes |
|
|
|
|
|
|
|
|
543 |
|
|
470 |
|
|
|
1,000 |
|
|
909 |
Income taxes |
|
|
|
|
|
|
|
|
131 |
|
|
121 |
|
|
|
221 |
|
|
219 |
Net income |
|
|
|
|
|
|
|
|
412 |
|
|
349 |
|
|
|
779 |
|
|
690 |
Net loss attributable to
non-controlling interests |
|
|
|
|
|
|
|
|
3 |
|
|
— |
|
|
|
5 |
|
|
2 |
Net income
attributable to Magna International Inc. |
|
|
|
|
|
|
|
$ |
415 |
|
$ |
349 |
|
|
$ |
784 |
|
$ |
692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Common Share: |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
$ |
1.80 |
|
$ |
1.50 |
|
|
$ |
3.39 |
|
$ |
2.98 |
|
Diluted |
|
|
|
|
|
|
|
$ |
1.78 |
|
$ |
1.48 |
|
|
$ |
3.35 |
|
$ |
2.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per Common
Share |
|
|
|
|
|
|
|
$ |
0.320 |
|
$ |
0.275 |
|
|
$ |
0.640 |
|
$ |
0.550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of Common Shares
outstanding during |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the period [in
millions]: |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
230.6 |
|
|
232.5 |
|
|
|
231.5 |
|
|
232.5 |
|
Diluted |
|
|
|
|
|
|
|
|
233.2 |
|
|
235.3 |
|
|
|
234.2 |
|
|
235.3 |
See accompanying notes |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
[Unaudited]
[U.S. dollars in millions]
|
|
|
|
|
|
|
|
|
Three months
ended |
|
|
|
Six months
ended |
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
Note |
|
|
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
$ |
412 |
|
$ |
349 |
|
|
$ |
779 |
|
$ |
690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income, net
of tax: |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized loss on translation of net
investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in foreign operations |
|
|
|
|
|
|
|
|
(91) |
|
|
(194) |
|
|
|
(224) |
|
|
(95) |
|
Net unrealized loss on available-for-sale
investments |
|
|
|
|
|
|
|
|
(5) |
|
|
(1) |
|
|
|
(4) |
|
|
(4) |
|
Net unrealized (loss) gain on cash flow
hedges |
|
|
|
|
|
|
|
|
(36) |
|
|
(14) |
|
|
|
(28) |
|
|
37 |
|
Reclassification of net gain on cash flow hedges
to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net income |
|
|
|
|
|
|
|
|
(6) |
|
|
(8) |
|
|
|
(12) |
|
|
(5) |
|
Reclassification of net loss on pensions to net
income |
|
|
|
|
|
|
|
|
3 |
|
|
— |
|
|
|
6 |
|
|
— |
Other comprehensive
loss |
|
|
|
|
|
|
|
|
(135) |
|
|
(217) |
|
|
|
(262) |
|
|
(67) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
277 |
|
|
132 |
|
|
|
517 |
|
|
623 |
Comprehensive loss
attributable to non-controlling interests |
|
|
|
|
|
|
|
|
3 |
|
|
— |
|
|
|
5 |
|
|
1 |
Comprehensive
income attributable to
Magna International Inc. |
|
|
|
|
|
|
|
$ |
280 |
|
$ |
132 |
|
|
$ |
522 |
|
$ |
624 |
See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited]
[U.S. dollars in millions]
|
|
|
|
|
|
|
|
|
Three months
ended |
|
|
|
Six months
ended |
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
Note |
|
|
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided from (used for): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
$ |
412 |
|
$ |
349 |
|
|
$ |
779 |
|
$ |
690 |
Items not involving current cash flows |
|
|
|
4 |
|
|
|
|
302 |
|
|
237 |
|
|
|
542 |
|
|
427 |
|
|
|
|
|
|
|
|
|
714 |
|
|
586 |
|
|
|
1,321 |
|
|
1,117 |
Changes in non-cash operating assets and
liabilities |
|
|
|
4 |
|
|
|
|
(12) |
|
|
(122) |
|
|
|
(468) |
|
|
(424) |
Cash provided from operating
activities |
|
|
|
|
|
|
|
|
702 |
|
|
464 |
|
|
|
853 |
|
|
693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed asset additions |
|
|
|
|
|
|
|
|
(232) |
|
|
(267) |
|
|
|
(426) |
|
|
(517) |
Purchase of subsidiaries |
|
|
|
|
|
|
|
|
— |
|
|
19 |
|
|
|
— |
|
|
(23) |
Increase in investments and other
assets |
|
|
|
|
|
|
|
|
(53) |
|
|
(35) |
|
|
|
(101) |
|
|
(69) |
Proceeds from disposition |
|
|
|
|
|
|
|
|
30 |
|
|
25 |
|
|
|
60 |
|
|
78 |
Cash used for investing
activities |
|
|
|
|
|
|
|
|
(255) |
|
|
(258) |
|
|
|
(467) |
|
|
(531) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in bank
indebtedness |
|
|
|
|
|
|
|
|
21 |
|
|
(23) |
|
|
|
(5) |
|
|
(22) |
Repayments of debt |
|
|
|
|
|
|
|
|
(60) |
|
|
(120) |
|
|
|
(101) |
|
|
(215) |
Settlement of stock options |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
(23) |
|
|
(4) |
Issues of debt |
|
|
|
|
|
|
|
|
25 |
|
|
158 |
|
|
|
57 |
|
|
272 |
Issue of Common Shares |
|
|
|
|
|
|
|
|
11 |
|
|
— |
|
|
|
50 |
|
|
3 |
Repurchase of Common Shares |
|
|
|
12 |
|
|
|
|
(337) |
|
|
— |
|
|
|
(425) |
|
|
— |
Contribution to subsidiaries by non-controlling
interests |
|
|
|
|
|
|
|
|
4 |
|
|
— |
|
|
|
4 |
|
|
— |
Dividends paid |
|
|
|
|
|
|
|
|
(72) |
|
|
(64) |
|
|
|
(145) |
|
|
(127) |
Cash used for financing
activities |
|
|
|
|
|
|
|
|
(408) |
|
|
(49) |
|
|
|
(588) |
|
|
(93) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
|
|
|
|
|
|
|
(7) |
|
|
(29) |
|
|
|
(41) |
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash
equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
during the period |
|
|
|
|
|
|
|
|
32 |
|
|
128 |
|
|
|
(243) |
|
|
68 |
Cash and cash equivalents, beginning of
period |
|
|
|
|
|
|
|
|
1,247 |
|
|
1,265 |
|
|
|
1,522 |
|
|
1,325 |
Cash and cash equivalents, end of
period |
|
|
|
|
|
|
|
$ |
1,279 |
|
$ |
1,393 |
|
|
$ |
1,279 |
|
$ |
1,393 |
See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
[Unaudited]
[U.S. dollars in millions]
|
|
|
|
|
|
|
|
As at |
|
|
|
As at |
|
|
|
|
|
|
|
|
June 30, |
|
|
|
December 31, |
|
|
|
|
Note |
|
|
|
2013 |
|
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
4 |
|
|
$ |
1,279 |
|
|
$ |
1,522 |
Accounts receivable |
|
|
|
|
|
|
|
5,552 |
|
|
|
4,774 |
Inventories |
|
|
|
5 |
|
|
|
2,705 |
|
|
|
2,512 |
Deferred tax assets |
|
|
|
|
|
|
|
203 |
|
|
|
170 |
Prepaid expenses and
other |
|
|
|
|
|
|
|
179 |
|
|
|
157 |
|
|
|
|
|
|
|
|
9,918 |
|
|
|
9,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
|
|
14 |
|
|
|
398 |
|
|
|
385 |
Fixed assets, net |
|
|
|
|
|
|
|
5,143 |
|
|
|
5,273 |
Goodwill |
|
|
|
|
|
|
|
1,485 |
|
|
|
1,473 |
Deferred tax assets |
|
|
|
|
|
|
|
89 |
|
|
|
90 |
Other assets |
|
|
|
6 |
|
|
|
661 |
|
|
|
753 |
|
|
|
|
|
|
|
$ |
17,694 |
|
|
$ |
17,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
|
|
|
|
$ |
54 |
|
|
$ |
71 |
Accounts payable |
|
|
|
|
|
|
|
4,885 |
|
|
|
4,450 |
Accrued salaries and
wages |
|
|
|
|
|
|
|
631 |
|
|
|
617 |
Other accrued liabilities |
|
|
|
7 |
|
|
|
1,453 |
|
|
|
1,185 |
Income taxes payable |
|
|
|
|
|
|
|
7 |
|
|
|
93 |
Deferred tax
liabilities |
|
|
|
|
|
|
|
20 |
|
|
|
19 |
Long-term debt due within one
year |
|
|
|
8 |
|
|
|
211 |
|
|
|
249 |
|
|
|
|
|
|
|
|
7,261 |
|
|
|
6,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term employee benefit
liabilities |
|
|
|
9 |
|
|
|
544 |
|
|
|
560 |
Long-term debt |
|
|
|
8 |
|
|
|
99 |
|
|
|
112 |
Other long-term liabilities |
|
|
|
10 |
|
|
|
196 |
|
|
|
154 |
Deferred tax
liabilities |
|
|
|
|
|
|
|
136 |
|
|
|
141 |
|
|
|
|
|
|
|
|
8,236 |
|
|
|
7,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[issued: 228,068,985; December 31, 2012 -
233,115,783] |
|
|
|
12 |
|
|
|
4,342 |
|
|
|
4,391 |
Contributed surplus |
|
|
|
|
|
|
|
64 |
|
|
|
80 |
Retained earnings |
|
|
|
|
|
|
|
4,812 |
|
|
|
4,462 |
Accumulated other comprehensive
income |
|
|
|
13 |
|
|
|
212 |
|
|
|
496 |
|
|
|
|
|
|
|
|
9,430 |
|
|
|
9,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests |
|
|
|
|
|
|
|
28 |
|
|
|
29 |
|
|
|
|
|
|
|
|
9,458 |
|
|
|
9,458 |
|
|
|
|
|
|
|
$ |
17,694 |
|
|
$ |
17,109 |
See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
[Unaudited]
[U.S. dollars in millions]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
|
|
Number |
|
|
Stated
Value |
|
|
Contributed
Surplus |
|
|
Retained
Earnings |
|
|
AOCI
(i) |
|
|
Non -
controlling
Interest |
|
|
Total
Equity |
|
|
|
|
|
[in
millions] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2012 |
|
|
|
|
233.1 |
|
$ |
4,391 |
|
$ |
80 |
|
$ |
4,462 |
|
$ |
496 |
|
$ |
29 |
|
$ |
9,458 |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
784 |
|
|
|
|
|
(5) |
|
|
779 |
Other comprehensive
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(262) |
|
|
|
|
|
(262) |
Issues of shares by
subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
4 |
Shares issued on exercise of
stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
options |
|
|
|
|
1.7 |
|
|
68 |
|
|
(18) |
|
|
|
|
|
|
|
|
|
|
|
50 |
Repurchase and cancellation
under |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
normal course issuer bid |
|
12 |
|
|
(6.8) |
|
|
(129) |
|
|
|
|
|
(274) |
|
|
(22) |
|
|
|
|
|
(425) |
Release of restricted stock |
|
|
|
|
|
|
|
7 |
|
|
(7) |
|
|
|
|
|
|
|
|
|
|
|
— |
Stock-based compensation
expense |
|
11 |
|
|
|
|
|
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
18 |
Settlement of stock options |
|
11 |
|
|
|
|
|
|
|
|
(9) |
|
|
(10) |
|
|
|
|
|
|
|
|
(19) |
Dividends paid |
|
|
|
|
0.1 |
|
|
5 |
|
|
|
|
|
(150) |
|
|
|
|
|
|
|
|
(145) |
Balance, June 30,
2013 |
|
|
|
|
228.1 |
|
$ |
4,342 |
|
$ |
64 |
|
$ |
4,812 |
|
$ |
212 |
|
$ |
28 |
|
$ |
9,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
|
|
Number |
|
|
Stated
Value |
|
|
Contributed
Surplus |
|
|
Retained
Earnings |
|
|
AOCI (i) |
|
|
Non -
controlling
Interest |
|
|
Total
Equity |
|
|
|
|
|
[in
millions] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011 |
|
|
|
|
233.3 |
|
$ |
4,373 |
|
$ |
63 |
|
$ |
3,317 |
|
$ |
422 |
|
$ |
27 |
|
$ |
8,202 |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
692 |
|
|
|
|
|
(2) |
|
|
690 |
Other comprehensive
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(68) |
|
|
1 |
|
|
(67) |
Divestiture of
subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
|
(4) |
Shares issued on exercise of
stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
options |
|
|
|
|
0.1 |
|
|
4 |
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
3 |
Release of restricted stock |
|
|
|
|
|
|
|
5 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
— |
Stock-based compensation
expense |
|
11 |
|
|
|
|
|
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
18 |
Settlement of stock options |
|
11 |
|
|
|
|
|
|
|
|
(1) |
|
|
(2) |
|
|
|
|
|
|
|
|
(3) |
Dividends paid |
|
|
|
|
0.1 |
|
|
2 |
|
|
|
|
|
(129) |
|
|
|
|
|
|
|
|
(127) |
Balance, June 30,
2012 |
|
|
|
|
233.5 |
|
$ |
4,384 |
|
$ |
74 |
|
$ |
3,878 |
|
$ |
354 |
|
$ |
22 |
|
$ |
8,712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2012.
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,
2012 audited consolidated financial statements and notes
included in the Company's 2012 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 June 30, 2013 and the results of operations,
changes in equity and cash flows for the three-month and six-month
periods ended June 30, 2013 and
2012.
[b] Accounting Changes
Intangibles
In July 2012, the
Financial Accounting Standards Board issued Accounting Standards
Update ["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. The adoption of this
ASU did not have a material impact on the Company's consolidated
financial statements.
[c] 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, NET
During the first quarter of 2013, the Company
recorded net restructuring charges of $6
million [$6 million after tax]
in Europe at its exterior and
interior systems operations.
3. EARNINGS PER SHARE
|
|
|
|
|
Three months
ended |
|
|
|
Six months
ended |
|
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Magna International Inc. |
|
|
|
$ |
415 |
|
$ |
349 |
|
|
$ |
784 |
|
$ |
692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
Common Shares outstanding |
|
|
|
|
230.6 |
|
|
232.5 |
|
|
|
231.5 |
|
|
232.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per Common
Share |
|
|
|
$ |
1.80 |
|
$ |
1.50 |
|
|
$ |
3.39 |
|
$ |
2.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per Common
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Magna International Inc. |
|
|
|
$ |
415 |
|
$ |
349 |
|
|
$ |
784 |
|
$ |
692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of Common Shares
outstanding |
|
|
|
|
230.6 |
|
|
232.5 |
|
|
|
231.5 |
|
|
232.5 |
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and restricted stock
[a] |
|
|
|
|
2.6 |
|
|
2.8 |
|
|
|
2.7 |
|
|
2.8 |
|
|
|
|
|
233.2 |
|
|
235.3 |
|
|
|
234.2 |
|
|
235.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per Common
Share |
|
|
|
$ |
1.78 |
|
$ |
1.48 |
|
|
$ |
3.35 |
|
$ |
2.94 |
[a] |
For the three and six months ended June 30, 2013, diluted
earnings per Common Share exclude nil [2012 - 2.6 million] and 0.2
million [2012 - 2.1 million] Common Shares issuable under the
Company's Incentive Stock Option Plan because these options were
not "in-the-money". |
4. DETAILS OF CASH FROM OPERATING
ACTIVITIES
[a] Cash and cash equivalents:
|
|
|
|
June 30, |
|
|
|
December 31, |
|
|
|
|
2013 |
|
|
|
2012 |
|
|
|
|
|
|
|
|
|
Bank term deposits, bankers' acceptances and
government paper |
|
|
$ |
1,112 |
|
|
$ |
1,220 |
Cash |
|
|
|
167 |
|
|
|
302 |
|
|
|
$ |
1,279 |
|
|
$ |
1,522 |
[b] Items not involving current cash
flows:
|
|
|
|
Three months
ended |
|
|
|
Six months
ended |
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
$ |
260 |
|
$ |
184 |
|
|
$ |
515 |
|
$ |
355 |
Other non-cash charges |
|
|
|
58 |
|
|
48 |
|
|
|
82 |
|
|
67 |
Amortization of other assets included in cost of
goods sold |
|
|
|
36 |
|
|
31 |
|
|
|
66 |
|
|
56 |
Deferred income taxes |
|
|
|
(3) |
|
|
16 |
|
|
|
(27) |
|
|
23 |
Equity income |
|
|
|
(49) |
|
|
(42) |
|
|
|
(94) |
|
|
(74) |
|
|
|
$ |
302 |
|
$ |
237 |
|
|
$ |
542 |
|
$ |
427 |
[c] Changes in non-cash operating assets and
liabilities:
|
|
|
|
Three months
ended |
|
|
|
Six months
ended |
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
$ |
26 |
|
$ |
56 |
|
|
$ |
(948) |
|
$ |
(695) |
Inventories |
|
|
|
(93) |
|
|
(148) |
|
|
|
(251) |
|
|
(302) |
Prepaid expenses and other |
|
|
|
(6) |
|
|
17 |
|
|
|
(33) |
|
|
18 |
Accounts payable |
|
|
|
197 |
|
|
(122) |
|
|
|
525 |
|
|
307 |
Accrued salaries and wages |
|
|
|
(72) |
|
|
(64) |
|
|
|
29 |
|
|
9 |
Other accrued liabilities |
|
|
|
(53) |
|
|
83 |
|
|
|
262 |
|
|
201 |
Income taxes payable |
|
|
|
(9) |
|
|
57 |
|
|
|
(51) |
|
|
41 |
Deferred revenue |
|
|
|
(2) |
|
|
(1) |
|
|
|
(1) |
|
|
(3) |
|
|
|
$ |
(12) |
|
$ |
(122) |
|
|
$ |
(468) |
|
$ |
(424) |
5. INVENTORIES
Inventories consist of:
|
|
|
|
|
June 30, |
December 31, |
|
|
|
|
|
2013 |
2012 |
|
|
|
|
|
|
|
|
|
Raw materials and supplies |
|
|
|
|
$ |
931 |
$ |
911 |
Work-in-process |
|
|
|
|
|
276 |
|
260 |
Finished goods |
|
|
|
|
|
300 |
|
283 |
Tooling and engineering |
|
|
|
|
|
1,198 |
|
1,058 |
|
|
|
|
|
$ |
2,705 |
$ |
2,512 |
Tooling and engineering inventory represents costs
incurred on tooling and engineering services contracts in excess of
billed and unbilled amounts included in accounts receivable.
6. OTHER ASSETS
Other assets consist of:
|
|
|
|
|
June
30, |
December 31, |
|
|
|
|
|
2013 |
2012 |
Preproduction costs related to
long-term supply agreements with
contractual guarantee for reimbursement |
|
|
|
|
$ |
289 |
$ |
297 |
Long-term receivables |
|
|
|
|
|
115 |
|
95 |
Patents and licences, net |
|
|
|
|
|
32 |
|
34 |
Unrealized gain on cash flow hedges |
|
|
|
|
|
21 |
|
32 |
E-Car intangible |
|
|
|
|
|
79 |
|
158 |
Other, net |
|
|
|
|
|
125 |
|
137 |
|
|
|
|
|
$ |
661 |
$ |
753 |
7. WARRANTY
The following is a continuity of the Company's
warranty accruals:
|
|
|
|
|
2013 |
2012 |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
|
$ |
94 |
$ |
76 |
Expense, net |
|
|
|
|
|
9 |
|
10 |
Settlements |
|
|
|
|
|
(5) |
|
(5) |
Foreign exchange and other |
|
|
|
|
|
8 |
|
2 |
Balance, March 31 |
|
|
|
|
|
106 |
|
83 |
Expense, net |
|
|
|
|
|
11 |
|
9 |
Settlements |
|
|
|
|
|
(6) |
|
(7) |
Foreign exchange and other |
|
|
|
|
|
(9) |
|
(1) |
Balance, June 30 |
|
|
|
|
$ |
102 |
$ |
84 |
|
|
|
|
|
|
|
|
|
8. LONG-TERM DEBT
On June 20, 2013, the
Company amended its existing $2.25
billion revolving credit facility to become a five year
facility with a maturity of June 20,
2018. The facility now includes a $200 million Asian tranche, a $50 million Mexican tranche and a tranche for
Canada, U.S. and Europe, which is fully transferable between
jurisdictions and can be drawn in U.S. dollars, Canadian dollars or
euros.
9. LONG-TERM EMPLOYEE BENEFIT
LIABILITIES
The Company recorded long-term employee benefit
expenses as follows:
|
Three months
ended |
|
Six months ended |
|
June 30, |
|
June 30, |
|
2013 |
2012 |
|
2013 |
2012 |
|
|
|
|
|
|
|
|
|
|
Defined benefit pension plan and other |
$ |
4 |
$ |
3 |
|
$ |
8 |
$ |
5 |
Termination and long service
arrangements |
|
6 |
|
7 |
|
|
14 |
|
15 |
Retirement medical benefit plan |
|
1 |
|
1 |
|
|
1 |
|
1 |
|
$ |
11 |
$ |
11 |
|
$ |
23 |
$ |
21 |
10. OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of:
|
|
|
|
|
June 30, |
December 31, |
|
|
|
|
|
2013 |
2012 |
|
|
|
|
|
|
|
|
|
Long-term portion of income taxes payable |
|
|
|
|
$ |
121 |
$ |
94 |
Asset retirement obligation |
|
|
|
|
|
38 |
|
39 |
Long-term portion of fair value of hedges |
|
|
|
|
|
28 |
|
10 |
Deferred revenue |
|
|
|
|
|
9 |
|
11 |
|
|
|
|
|
$ |
196 |
$ |
154 |
11. 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]:
|
2013 |
|
2012 |
|
Options outstanding |
|
|
Options outstanding |
|
|
Number
of options |
Exercise
price (i) |
Number
of options
exercisable |
|
Number
of options |
Exercise
price (i) |
Number
of options
exercisable |
|
|
|
|
|
|
|
|
Beginning of period |
6,623,242 |
35.39 |
3,227,574 |
|
6,867,367 |
31.54 |
2,066,700 |
Granted |
1,060,000 |
57.02 |
— |
|
1,341,500 |
48.22 |
— |
Exercised (ii) |
(2,178,383) |
29.76 |
(2,178,383) |
|
(321,454) |
25.83 |
(321,454) |
Cancelled |
(37,500) |
50.17 |
(20,000) |
|
— |
— |
— |
Vested |
— |
— |
2,105,501 |
|
— |
— |
2,366,667 |
March 31 |
5,467,359 |
41.73 |
3,134,692 |
|
7,887,413 |
34.61 |
4,111,913 |
Granted |
— |
— |
— |
|
47,500 |
48.22 |
— |
Exercised |
(329,881) |
37.05 |
(329,881) |
|
(5,000) |
32.75 |
(5,000) |
Cancelled |
(81,665) |
52.05 |
(41,667) |
|
(46,966) |
57.14 |
(36,966) |
Vested |
— |
— |
30,002 |
|
— |
— |
— |
June 30 |
5,055,813 |
41.87 |
2,793,146 |
|
7,882,947 |
34.56 |
4,069,947 |
(i) |
The exercise price noted above represents the weighted
average exercise price in Canadian dollars. |
|
|
(ii) |
On February 27, 2013, 133,333 options were exercised on a
cashless basis in accordance with the applicable stock option
plans. On exercise, cash payments totalling $3 million were
made to the stock option holder. |
|
|
|
On March 14, 2013, the Company's Honorary Chairman and
Founder, Mr. Stronach exercised 716,666 options on a cashless basis
in accordance with the applicable stock option plans. On exercise,
cash payments totalling $20 million were made to Mr.
Stronach. |
|
|
|
All cash payments were calculated using the
difference between the aggregate fair market value of the Option
Shares based on the closing price of the Company's Common Shares on
the Toronto Stock Exchange ["TSX"] on the date of exercise and the
aggregate Exercise Price of all such options surrendered. |
The weighted average assumptions used in measuring
the fair value of stock options granted or modified and the
compensation expense recorded in selling, general and
administrative expenses are as follows:
|
Three months ended |
|
Six months ended |
|
June 30, |
|
June 30, |
|
2013 |
2012 |
|
2013 |
2012 |
|
|
|
|
|
|
|
|
|
|
Risk free interest rate |
|
— |
|
2.23% |
|
|
1.32% |
|
2.23% |
Expected dividend yield |
|
— |
|
2.00% |
|
|
2.00% |
|
2.00% |
Expected volatility |
|
— |
|
43% |
|
|
34% |
|
43% |
Expected time until exercise |
|
— |
|
4.5 years |
|
|
4.5 years |
|
4.5 years |
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of
options
granted or modified in period [Cdn$] |
$ |
— |
$ |
12.11 |
|
$ |
14.02 |
$ |
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]:
|
2013 |
|
2012 |
|
Number |
Stated |
|
Number |
Stated |
|
of shares |
value |
|
of Shares |
value |
|
|
|
|
|
|
|
|
Awarded and not released, beginning of period |
882,988 |
$ |
30 |
|
1,026,304 |
$ |
35 |
Release of restricted stock |
(152,512) |
|
(5) |
|
(143,316) |
|
(5) |
Awarded and not released, March 31 and June 30 |
730,476 |
$ |
25 |
|
882,988 |
$ |
30 |
[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]:
|
2013 |
|
2012 |
|
Equity
classified
RSUs |
Liability
classified
RSUs |
Liability
classified
DSUs |
Total |
|
Equity
classified
RSUs |
Liability
classified
RSUs |
Liability
classified
DSUs |
Total |
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
605,430 |
20,099 |
206,923 |
832,452 |
|
367,726 |
29,806 |
198,446 |
595,978 |
Granted |
70,636 |
14,825 |
10,013 |
95,474 |
|
94,238 |
15,364 |
8,565 |
118,167 |
Dividend equivalents |
415 |
194 |
1,206 |
1,815 |
|
467 |
263 |
1,201 |
1,931 |
Released |
(8,259) |
— |
(113,007) |
(121,266) |
|
(8,259) |
— |
— |
(8,259) |
Balance, March 31 |
668,222 |
35,118 |
105,135 |
808,475 |
|
454,172 |
45,433 |
208,212 |
707,817 |
Granted |
71,391 |
— |
7,523 |
78,914 |
|
101,672 |
— |
8,838 |
110,510 |
Dividend equivalents |
348 |
164 |
626 |
1,138 |
|
558 |
325 |
1,522 |
2,405 |
Released |
(10,386) |
— |
— |
(10,386) |
|
(10,123) |
— |
— |
(10,123) |
Balance, June 30 |
729,575 |
35,282 |
113,284 |
878,141 |
|
546,279 |
45,758 |
218,572 |
810,609 |
[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 |
|
Six months
ended |
|
June 30, |
|
June 30, |
|
2013 |
2012 |
|
2013 |
2012 |
|
|
|
|
|
|
|
|
|
|
Incentive Stock Option Plan |
$ |
4 |
$ |
5 |
|
$ |
8 |
$ |
9 |
Long-term retention |
|
1 |
|
1 |
|
|
2 |
|
2 |
Restricted stock unit |
|
5 |
|
4 |
|
|
8 |
|
8 |
|
|
10 |
|
10 |
|
|
18 |
|
19 |
Fair value adjustment for liability classified DSUs |
|
2 |
|
(1) |
|
|
4 |
|
2 |
Total stock-based compensation expense |
$ |
12 |
$ |
9 |
|
$ |
22 |
$ |
21 |
12. COMMON SHARES
[a] |
During the six months ended June 30, 2013, the Company
purchased for cancellation 6,787,803 Common Shares under a normal
course issuer bid for cash consideration of $425 million. |
|
|
[b] |
The following table presents the maximum number of shares that
would be outstanding if all the dilutive instruments outstanding at
August 8, 2013 were exercised or converted: |
Common Shares |
|
|
|
|
|
|
|
|
228,116,201 |
Stock options (i) |
|
|
|
|
|
|
|
|
5,008,598 |
|
|
|
|
|
|
|
|
|
233,124,799 |
|
|
(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. |
13. ACCUMULATED OTHER COMPREHENSIVE INCOME
The following is a continuity schedule of
accumulated other comprehensive income:
|
2013 |
2012 |
|
|
|
|
|
|
Accumulated net unrealized gain on translation of
net investment in foreign operations |
|
|
|
Balance, beginning of period |
$ |
629 |
$ |
547 |
|
Net unrealized (loss) gain on translation of net investment in
foreign operations |
|
(133) |
|
98 |
|
Repurchase of shares under normal course issuer bid |
|
(5) |
|
— |
|
Balance, March 31 |
|
491 |
|
645 |
|
Net unrealized loss on translation of net investment in foreign
operations |
|
(91) |
|
(194) |
|
Repurchase of shares under normal course issuer
bid |
|
(17) |
|
— |
|
Balance, June 30 |
|
383 |
|
451 |
|
|
|
|
|
Accumulated net unrealized (loss) gain on cash flow
hedges (i) |
|
|
|
|
|
Balance, beginning of period |
|
34 |
|
(23) |
|
Net unrealized gain on cash flow hedges |
|
8 |
|
51 |
|
Reclassification of net (gain) loss on cash flow hedges to net
income |
|
(6) |
|
3 |
|
Balance, March 31 |
|
36 |
|
31 |
|
Net unrealized loss on cash flow hedges |
|
(36) |
|
(14) |
|
Reclassification of net gain on cash flow hedges to net
income |
|
(6) |
|
(8) |
|
Balance, June 30 |
|
(6) |
|
9 |
|
|
|
|
|
Accumulated net unrealized (loss) gain on
available-for-sale investments |
|
|
|
|
|
Balance, beginning of period |
|
1 |
|
5 |
|
Net unrealized gain (loss) on investments |
|
1 |
|
(3) |
|
Balance, March 31 |
|
2 |
|
2 |
|
Net unrealized loss on investments |
|
(5) |
|
(1) |
|
Balance, June 30 |
|
(3) |
|
1 |
|
|
|
|
|
Accumulated net unrealized loss on long-term
employee benefit liabilities (ii) |
|
|
|
|
|
Balance, beginning of period |
|
(168) |
|
(107) |
|
Reclassification of net loss on pensions to net
income |
|
3 |
|
— |
|
Balance, March 31 |
|
(165) |
|
(107) |
|
Reclassification of net loss on pensions to net
income |
|
3 |
|
— |
|
Balance, June 30 |
|
(162) |
|
(107) |
|
|
|
|
|
Total accumulated other comprehensive
income |
$ |
212 |
$ |
354 |
(i) The amount of income tax obligation
that has been netted in the accumulated net unrealized gain on cash
flow hedges is as follows:
|
2013 |
2012 |
|
|
|
|
|
Balance, beginning of period |
$ |
(13) |
$ |
12 |
Net unrealized gain |
|
(4) |
|
(21) |
Reclassifications of net gain (loss) on cash flow hedges to
net income |
|
2 |
|
(1) |
Balance, March 31 |
|
(15) |
|
(10) |
Net unrealized loss |
|
13 |
|
7 |
Reclassifications of net gain to net
income |
|
3 |
|
2 |
Balance, June 30 |
$ |
1 |
$ |
(1) |
(ii) The amount of income tax benefit that
has been netted in the accumulated net unrealized loss on long-term
employee benefit liabilities is as follows:
|
2013 |
2012 |
|
|
|
|
|
Balance, beginning of period |
$ |
36 |
$ |
24 |
Reclassification of net loss to net
income |
|
(1) |
|
— |
Balance, March 31 |
|
35 |
|
24 |
Reclassification of net (loss) gain to net
income |
|
(1) |
|
1 |
Balance, June 30 |
$ |
34 |
$ |
25 |
The amount of other comprehensive income that is
expected to be reclassified to net income over the next 12 months
is nil [net of income taxes of $1
million].
14. FINANCIAL INSTRUMENTS
[a] The Company's financial assets and
financial liabilities consist of the following:
|
June 30, |
December 31, |
|
2013 |
2012 |
|
|
|
|
|
Held for trading |
|
|
|
|
|
Cash and cash equivalents |
$ |
1,279 |
$ |
1,522 |
|
Investment in asset-backed commercial
paper |
|
91 |
|
90 |
|
$ |
1,370 |
$ |
1,612 |
|
|
|
|
|
Held to maturity investments |
|
|
|
|
|
Severance investments |
$ |
5 |
$ |
8 |
|
|
|
|
|
Available-for-sale |
|
|
|
|
|
Equity investments |
$ |
4 |
$ |
9 |
|
|
|
|
|
Loans and receivables |
|
|
|
|
|
Accounts receivable |
$ |
5,552 |
$ |
4,774 |
|
Long-term receivables included in other assets |
|
115 |
|
95 |
|
$ |
5,667 |
$ |
4,869 |
Other financial liabilities |
|
|
|
|
|
Bank indebtedness |
$ |
54 |
$ |
71 |
|
Long-term debt (including portion due within one year) |
|
310 |
|
361 |
|
Accounts payable |
|
4,885 |
|
4,450 |
|
$ |
5,249 |
$ |
4,882 |
|
June 30, |
December 31, |
|
2013 |
2012 |
|
|
|
|
|
Derivatives designated as effective hedges,
measured at fair value |
|
|
|
|
|
Foreign currency contracts |
|
|
|
|
|
|
Prepaid expenses |
$ |
33 |
$ |
37 |
|
|
Other assets |
|
21 |
|
32 |
|
|
Other accrued liabilities |
|
(29) |
|
(11) |
|
|
Other long-term liabilities |
|
(27) |
|
(9) |
|
|
(2) |
|
49 |
|
|
|
|
|
|
Natural gas contracts |
|
|
|
|
|
|
Prepaid expenses |
|
— |
|
2 |
|
|
Other accrued liabilities |
|
(2) |
|
(3) |
|
|
Other long-term liabilities |
|
(1) |
|
(1) |
|
|
(3) |
|
(2) |
|
$ |
(5) |
$ |
47 |
[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 June 30, 2013, the
Company held Canadian third party asset-backed commercial paper
["ABCP"] with a face value of Cdn$107
million [December 31, 2012 -
Cdn$107 million]. The carrying value and estimated fair value of
this investment was Cdn$95 million
[December 31, 2012 - Cdn$90 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 June 30, 2013, the
Company held available-for-sale investments in publicly traded
companies. The carrying value and fair value of these investments
was $4 million, which was based on
the closing share price of the investments on June 30, 2013.
Term debt
The Company's term debt includes $211 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
and six-month periods ended June 30,
2013, 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 June 30, 2013, 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 |
|
|
|
|
224 |
1,036 |
|
euro amount |
|
|
|
|
56 |
7 |
|
|
|
|
|
|
|
For U.S. dollars |
|
|
|
|
|
|
|
Peso amount |
|
|
|
|
5,023 |
521 |
|
|
|
|
|
|
|
For euros |
|
|
|
|
|
|
|
U.S. amount |
|
|
|
|
59 |
198 |
|
GBP amount |
|
|
|
|
66 |
47 |
|
Czech Koruna amount |
|
|
|
|
4,444 |
— |
|
Polish Zlotys amount |
|
|
|
|
232 |
— |
Forward contracts mature at various dates through
2018. 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 June 30, 2013, the net foreign exchange exposure
was not material.
15. 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.
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] A putative class action lawsuit alleging
violations of the United States Securities Exchange Act of 1934 was
filed in May 2012 in the United
States District Court, Southern District of New York, against the Company, as well as its
Chief Executive Officer and Chief Financial Officer, as well as its
founder. Boilermaker-Blacksmith National Pension Trust
["BBNPT"] was appointed the lead plaintiff on an uncontested motion
in July 2012. BBNPT
subsequently filed an amended complaint in October 2012, following which the defendants
filed a motion seeking dismissal of the lawsuit. By March 12, 2013, the motion was fully briefed and
submitted to the Court and the parties are now awaiting the Court's
decision. 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.
[c] 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 7]; 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.
16. 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 separately 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, net; and other expense, 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.
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 |
|
June 30, 2013 |
|
June 30, 2012 |
|
Total
sales |
External
sales |
Adjusted
EBIT |
Fixed
assets,
net |
|
Total
sales |
External
sales |
Adjusted
EBIT |
Fixed
assets,
net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
$ |
1,742 |
$ |
1,614 |
|
|
$ |
608 |
|
$ |
1,642 |
$ |
1,540 |
|
|
$ |
565 |
|
United States |
|
2,164 |
|
2,040 |
|
|
|
1,020 |
|
|
1,907 |
|
1,784 |
|
|
|
824 |
|
Mexico |
|
1,013 |
|
935 |
|
|
|
573 |
|
|
842 |
|
787 |
|
|
|
530 |
|
Eliminations |
|
(300) |
|
— |
|
|
|
— |
|
|
(258) |
|
— |
|
|
|
— |
|
|
4,619 |
|
4,589 |
$ |
422 |
|
2,201 |
|
|
4,133 |
|
4,111 |
$ |
415 |
|
1,919 |
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(excluding Great Britain) |
|
3,006 |
|
2,936 |
|
|
|
1,411 |
|
|
2,545 |
|
2,501 |
|
|
|
1,207 |
|
Great Britain |
|
277 |
|
275 |
|
|
|
57 |
|
|
244 |
|
243 |
|
|
|
53 |
|
Eastern Europe |
|
619 |
|
544 |
|
|
|
569 |
|
|
463 |
|
422 |
|
|
|
518 |
|
Eliminations |
|
(96) |
|
— |
|
|
|
— |
|
|
(50) |
|
— |
|
|
|
— |
|
|
3,806 |
|
3,755 |
|
120 |
|
2,037 |
|
|
3,202 |
|
3,166 |
|
65 |
|
1,778 |
Rest of World |
|
645 |
|
609 |
|
2 |
|
680 |
|
|
469 |
|
444 |
|
(16) |
|
549 |
Corporate and Other
(i) |
|
(108) |
|
9 |
|
3 |
|
225 |
|
|
(77) |
|
6 |
|
11 |
|
254 |
Total reportable segments |
|
8,962 |
|
8,962 |
|
547 |
|
5,143 |
|
|
7,727 |
|
7,727 |
|
475 |
|
4,500 |
Interest expense,
net |
|
|
|
|
|
(4) |
|
|
|
|
|
|
|
|
(5) |
|
|
|
$ |
8,962 |
$ |
8,962 |
$ |
543 |
|
5,143 |
|
$ |
7,727 |
$ |
7,727 |
$ |
470 |
|
4,500 |
Current
assets |
|
|
|
|
|
|
|
9,918 |
|
|
|
|
|
|
|
|
9,241 |
Investments, goodwill,
deferred tax assets, and
other
assets |
|
|
|
|
|
|
|
2,633 |
|
|
|
|
|
|
|
|
2,247 |
Consolidated total
assets |
|
|
|
|
|
|
$ |
17,694 |
|
|
|
|
|
|
|
$ |
15,988 |
(i) |
For the three months ended June 30, 2012, Corporate and
Other includes $10 million equity loss related to the Company's
investment in E-Car. |
|
Six months
ended |
|
Six months
ended |
|
June 30, 2013 |
|
June 30, 2012 |
|
|
|
|
Fixed |
|
|
|
|
Fixed |
|
Total |
External |
Adjusted |
assets, |
|
Total |
External |
Adjusted |
assets, |
|
sales |
sales |
EBIT |
net |
|
sales |
sales |
EBIT |
net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
$ |
3,423 |
$ |
3,167 |
|
|
$ |
608 |
|
$ |
3,249 |
$ |
3,038 |
|
|
$ |
565 |
|
United States |
|
4,118 |
|
3,883 |
|
|
|
1,020 |
|
|
3,827 |
|
3,582 |
|
|
|
824 |
|
Mexico |
|
1,978 |
|
1,827 |
|
|
|
573 |
|
|
1,676 |
|
1,570 |
|
|
|
530 |
|
Eliminations |
|
(588) |
|
— |
|
|
|
— |
|
|
(517) |
|
— |
|
|
|
— |
|
|
8,931 |
|
8,877 |
$ |
803 |
|
2,201 |
|
|
8,235 |
|
8,190 |
$ |
820 |
|
1,919 |
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(excluding Great Britain) |
|
5,908 |
|
5,771 |
|
|
|
1,411 |
|
|
5,045 |
|
4,960 |
|
|
|
1,207 |
|
Great Britain |
|
495 |
|
491 |
|
|
|
57 |
|
|
511 |
|
508 |
|
|
|
53 |
|
Eastern Europe |
|
1,146 |
|
998 |
|
|
|
569 |
|
|
932 |
|
851 |
|
|
|
518 |
|
Eliminations |
|
(191) |
|
— |
|
|
|
— |
|
|
(98) |
|
— |
|
|
|
— |
|
|
7,358 |
|
7,260 |
|
192 |
|
2,037 |
|
|
6,390 |
|
6,319 |
|
128 |
|
1,778 |
Rest of World |
|
1,239 |
|
1,174 |
|
2 |
|
680 |
|
|
922 |
|
872 |
|
(25) |
|
549 |
Corporate and Other
(i) |
|
(205) |
|
12 |
|
17 |
|
225 |
|
|
(154) |
|
12 |
|
(4) |
|
254 |
Total reportable segments |
|
17,323 |
|
17,323 |
|
1,014 |
|
5,143 |
|
|
15,393 |
|
15,393 |
|
919 |
|
4,500 |
Other expense, net |
|
|
|
|
|
(6) |
|
|
|
|
|
|
|
|
— |
|
|
Interest expense,
net |
|
|
|
|
|
(8) |
|
|
|
|
|
|
|
|
(10) |
|
|
|
$ |
17,323 |
$ |
17,323 |
$ |
1,000 |
|
5,143 |
|
$ |
15,393 |
$ |
15,393 |
$ |
909 |
|
4,500 |
Current assets |
|
|
|
|
|
|
|
9,918 |
|
|
|
|
|
|
|
|
9,241 |
Investments, goodwill
deferred tax assets and
other
assets |
|
|
|
|
|
|
|
2,633 |
|
|
|
|
|
|
|
|
2,247 |
Consolidated total
assets |
|
|
|
|
|
|
$ |
17,694 |
|
|
|
|
|
|
|
$ |
15,988 |
(i) |
For the six months ended June 30, 2012, Corporate and Other
includes $22 million equity loss related to the Company's
investment in E-Car. |
17. COMPARATIVE FIGURES
Certain of the comparative figures have been
reclassified to conform to the current period's method of
presentation.
SOURCE Magna International Inc.