AURORA, ON,
Aug. 8, 2014 /PRNewswire/ - Magna
International Inc. (TSX: MG; NYSE: MGA) today reported
financial results for the second quarter ended June 30, 2014.
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THREE MONTHS ENDED
JUNE 30, |
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SIX MONTHS ENDED
JUNE 30, |
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2014 |
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2013 |
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2014 |
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2013 |
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Sales |
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$ |
9,464 |
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$ |
8,962 |
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$ |
18,425 |
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$ |
17,323 |
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Adjusted EBIT(1) |
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$ |
710 |
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$ |
547 |
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$ |
1,315 |
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$ |
1,014 |
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Income from operations before income taxes |
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$ |
692 |
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$ |
543 |
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$ |
1,273 |
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$ |
1,000 |
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Net income attributable to Magna International
Inc. |
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$ |
510 |
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$ |
415 |
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$ |
903 |
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$ |
784 |
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Diluted earnings per share |
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$ |
2.32 |
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$ |
1.78 |
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$ |
4.08 |
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$ |
3.35 |
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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. |
THREE MONTHS ENDED JUNE 30, 2014
We posted record sales of $9.46 billion for the second quarter ended
June 30, 2014, an increase of 6% over
the second quarter of 2013. We achieved this sales increase in a
period when vehicle production increased 3% in North America and 2% in Europe, both relative to the second quarter of
2013. In the second quarter of 2014, our North American, European
and Asian production sales increased, while Rest of World
production sales, complete vehicle assembly sales and tooling,
engineering and other sales decreased, in each case relative to the
comparable quarter in 2013.
Complete vehicle assembly sales decreased to
$793 million for the second quarter
of 2014 compared to $796 million
for the second quarter of 2013, while complete vehicle assembly
volumes decreased 11% to approximately 34,000 units.
During the second quarter of 2014, income from
operations before income taxes was $692
million, net income attributable to Magna International Inc.
was $510 million and diluted earnings
per share were $2.32, increases of
$149 million, $95 million and $0.54 respectively, each compared to the second
quarter of 2013.
During the second quarter ended June 30, 2014, we generated cash from operations
of $748 million before changes in
operating assets and liabilities, and invested $148 million in operating assets and liabilities.
Total investment activities for the second quarter of 2014 were
$432 million, including $384 million in fixed asset additions and
$48 million in investments and other
assets.
Financing activities during the second quarter
ended June 30, 2014 included the
issuance of $750 million of 3.625%
fixed rate Senior Notes which mature on June
15, 2024, as well as the repurchase of $575 million of our Common Shares.
SIX MONTHS ENDED JUNE 30,
2014
We posted record sales of $18.43 billion for the six months ended
June 30, 2014, an increase of 6% from
the six months ended June 30, 2013.
This higher sales level reflected increases in our North American,
European and Asian production sales, as well as complete vehicle
assembly sales, partially offset by decreases in Rest of World
production sales and tooling, engineering and other sales, in each
case relative to the first six months of 2013.
During the six months ended June 30, 2014, vehicle production increased 4% to
8.6 million units in North America
and 6% to 10.5 million units in Europe, each compared to the first six months
of 2013.
Complete vehicle assembly sales increased 1% to
$1.61 billion for the six months
ended June 30, 2014 compared to the
six months ended June 30, 2013, while
complete vehicle assembly volumes decreased 8% to approximately
70,000 units.
During the six months ended June 30, 2014, income from operations before
income taxes was $1.27 billion, net
income attributable to Magna International Inc. was $903 million and diluted earnings per share were
$4.08, increases of $273 million, $119
million and $0.73,
respectively, each compared to the first six months of 2013.
During the six months ended June 30, 2014, we generated cash from operations
before changes in operating assets and liabilities of $1.42 billion, and invested $345 million in operating assets and liabilities.
Total investment activities for the first six months of 2014 were
$703 million, including $601 million in fixed asset additions and a
$102 million increase in investments
and other assets.
Financing activities during the six months ended
June 30, 2014 included the issuance
of $750 million of 3.625% fixed rate
Senior Notes which mature on June 15,
2024, as well as the repurchase of $815 million of our Common Shares.
A more detailed discussion of our consolidated
financial results for the second quarter and six months ended
June 30, 2014 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 $0.38 with
respect to our outstanding Common Shares for the quarter ended
June 30, 2014. This dividend is
payable on September 12, 2014 to
shareholders of record on August 29,
2014.
UPDATED 2014 OUTLOOK
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Light Vehicle Production (Units) |
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16.9 million |
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North America |
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19.8 million |
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Europe |
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Production Sales |
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North America |
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$17.6 - $18.2 billion |
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Europe |
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$9.9 - $10.3 billion |
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Asia |
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$1.6 - $1.8 billion |
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Rest of World |
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$0.7 -
$0.8 billion |
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Total Production Sales |
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$29.8 - $31.1 billion |
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Complete Vehicle
Assembly Sales |
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$3.0 - $3.3 billion |
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Total Sales |
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$35.6 - $37.3
billion |
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Operating Margin(1) |
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High 6% range |
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Tax Rate(1) |
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Approximately
24.5% |
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Capital Spending |
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Approximately
$1.4 billion |
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(1) |
Excluding other
expense, net |
In this 2014 outlook, in addition to 2014 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
317 manufacturing operations and 83 product development,
engineering and sales centres in 29 countries. We have over
130,000 employees focused on delivering superior value to our
customers through innovative products and 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 8, 2014 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 1-800-404-8174. The number for overseas callers is
1-416-981-9093. 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: Magna's expected production sales, based on expected
light vehicle production in North
America and Europe; Magna's
expected production sales in the North
America, Europe,
Asia and Rest of World segments;
total sales; complete vehicle assembly sales; consolidated
operating margin; effective income tax rate; fixed asset
expenditures; future purchases of our Common Shares under our
Normal Course Issuer Bid; and future issuances of debt securities.
The forward-looking information in this document is presented for
the purpose of providing information about management's current
expectations and plans and such information may not be appropriate
for other purposes. Forward-looking statements may include
financial and other projections, as well as statements regarding
our future plans, objectives or economic performance, or the
assumptions underlying any of the foregoing, and other statements
that are not recitations of historical fact. We use words such as
"may", "would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "forecast", "outlook",
"project", "estimate" and similar expressions suggesting future
outcomes or events to identify forward-looking statements. Any such
forward-looking statements are based on information currently
available to us, and are based on assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments, as
well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a
number of risks, assumptions and uncertainties, many of which are
beyond our control, and the effects of which can be difficult to
predict, including, without limitation the impact of economic or
political conditions on consumer confidence, consumer demand for
vehicles and vehicle production; our ability to successfully launch
material new or takeover business; continued underperformance of
one or more of our operating Divisions; restructuring, downsizing
or other significant non-recurring costs, including in our European
business; ongoing pricing pressures, including our ability to
offset price concessions demanded by our customers; warranty and
recall costs; fines or penalties imposed by antitrust and
regulatory authorities, including the German Cartel Office; our
ability to grow our business with Asian-based customers; 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, Russia, Brazil, Argentina, Eastern
Europe and other nontraditional markets for us; a prolonged
disruption in the supply of components to us from our suppliers;
shutdown of our or our customers' or sub-suppliers' production
facilities due to a work stoppage or labour dispute; scheduled
shutdowns of our customers' production facilities (typically in the
third and fourth quarters of each calendar year); 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; our
ability to consistently develop innovative products or processes;
impairment charges related to goodwill and long-lived assets;
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 sufficient
due diligence on acquisition targets; risk of production
disruptions due to natural disasters; pension liabilities; legal
claims and/or regulatory actions against us; 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; changes in credit ratings
assigned to us; changes in laws and governmental regulations; costs
associated with compliance with environmental laws and regulations;
liquidity risks as a result of an unanticipated deterioration of
economic conditions; our ability to achieve future investment
returns that equal or exceed past returns; the unpredictability of,
and fluctuation in, the trading price of our Common Shares; and
other factors set out in our Annual Information Form filed with
securities commissions in Canada
and our annual report on Form 40-F filed with the United States
Securities and Exchange Commission, and subsequent filings. In
evaluating forward-looking statements, we caution readers not to
place undue reliance on any forward-looking statements and readers
should specifically consider the various factors which could cause
actual events or results to differ materially from those indicated
by such forward-looking statements. Unless otherwise required by
applicable securities laws, we do not intend, nor do we undertake
any obligation, to update or revise any forward-looking statements
to reflect subsequent information, events, results or circumstances
or otherwise.
For further information about Magna, please see our website
at www.magna.com. Copies of financial data and other
publicly filed documents are available through the internet on the
Canadian Securities Administrators' System for Electronic Document
Analysis and Retrieval (SEDAR) which can be accessed at
www.sedar.com and on the United States Securities and Exchange
Commission's Electronic Data Gathering, Analysis and Retrieval
System (EDGAR) which can be accessed at www.sec.gov |
MAGNA INTERNATIONAL INC.
Management's Discussion and Analysis of Results of Operations
and Financial Position
Unless otherwise noted, all amounts in this
Management's Discussion and Analysis of Results of Operations and
Financial Position ("MD&A") are in U.S. dollars and all tabular
amounts are in millions of U.S. dollars, except per share figures,
which are in U.S. dollars. When we use the terms "we", "us", "our"
or "Magna", we are referring to Magna International Inc. and its
subsidiaries and jointly controlled entities, unless the context
otherwise requires.
This MD&A should be read in conjunction with
the unaudited interim consolidated financial statements for the
three months and six months ended June 30,
2014 included in this press release, and the audited
consolidated financial statements and MD&A for the year ended
December 31, 2013 included
in our 2013 Annual Report to Shareholders.
This MD&A has been prepared as at
August 7, 2014.
OVERVIEW
We are a leading global automotive supplier with
317 manufacturing operations and 83 product development,
engineering and sales centres in 29 countries. We have over 130,000
employees focused on delivering superior value to our customers
through innovative products and 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.
HIGHLIGHTS
North American light vehicle production
increased 3% in the second quarter of 2014, compared to the second
quarter of 2013, to 4.4 million units. In Europe, light vehicle production increased 2%
in the second quarter of 2014 to 5.3 million units.
Our second quarter 2014 sales increased 6% over
the second quarter of 2013 to $9.46
billion. Our North American, European and Asian production
sales all increased over the comparable quarter, while Rest of
World production sales, complete vehicle assembly sales and
tooling, engineering and other sales all declined from the second
quarter of 2013.
Adjusted EBIT(1) increased 30% to
$710 million in the second quarter of
2014, compared to $547 million in the
second quarter of 2013.
- Our North America segment
generated Adjusted EBIT of $537
million for the second quarter of 2014. This compared to
Adjusted EBIT of $422 million,
including $40 million of amortization
related to the August 2012
acquisition of Magna E-Car Systems partnership ("E-Car"), for the
second quarter of 2013. The E-Car acquisition intangibles were
fully amortized at the end of 2013
.
- Our Europe segment reported
Adjusted EBIT of $125 million in the
second quarter of 2014, compared to $120
million in the second quarter of 2013. This represents our
tenth consecutive quarter of year-over-year improved Adjusted EBIT
in our Europe segment.
- Our Asia segment posted
Adjusted EBIT of $42 million in the
second quarter of 2014, compared to $19
million in the comparable quarter. This increase largely
reflects the launch of business in existing and recently
constructed facilities.
- Our Rest of World segment reported an Adjusted EBIT loss of
$11 million in the second quarter of
2014, compared to a loss of $17
million in the second quarter of 2013. We continue to focus
on reducing operating losses and addressing commercial challenges
in South America, the most
substantial market in our Rest of World segment.
During the second quarter of 2014, we issued
$750 million of 3.625% fixed-rate
Senior Notes which mature on June 15,
2024 (the "Senior Notes").
Lastly, during the second quarter of 2014, we
repurchased 5.7 million Common Shares for cash consideration of
$575 million and subsequent to the
second quarter repurchased an additional 1.5 million Common Shares
for $161 million pursuant to our
outstanding normal course issuer bid that expires in November 2014.
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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 2014, we posted
sales of $9.46 billion, an increase
of 6% over the second quarter of 2013. This higher sales level was
a result of increases in our North American, European and Asian
production sales partially offset by lower Rest of World production
sales, complete vehicle assembly sales and tooling, engineering and
other sales. Comparing the second quarter of 2014 to 2013:
- North American vehicle production increased 3% and our North
American production sales increased 10% to $4.75 billion;
- European vehicle production increased 2% and our European
production sales increased 4% to $2.66
billion;
- Asian production sales increased 23% to $402 million;
- Rest of World production sales decreased 33% to $163 million;
- Complete vehicle assembly volumes decreased 11% and sales
decreased $3 million to $793 million; and
- Tooling, engineering and other sales decreased by 5% to
$697 million.
During the second quarter of 2014, we earned
income from operations before income taxes of $692 million compared to $543 million for the second quarter of 2013.
Excluding other expense, net ("Other Expense") recorded in the
second quarter of 2014, as discussed in the "Other Expense"
section, the $160 million increase in
income from operations before income taxes was primarily as a
result of:
- margins earned on higher production sales;
- incremental margin earned on new programs that launched during
or subsequent to the second quarter of 2013;
- intangible asset amortization of $40
million, recorded in the second quarter of 2013, related to
the acquisition and re-measurement of E-Car;
- productivity and efficiency improvements at certain
facilities;
- the benefit of restructuring and downsizing activities recently
undertaken;
- higher equity income;
- lower warranty costs of $4
million; and
- decreased commodity costs.
These factors were partially offset by:
- higher launch costs, including unanticipated costs at certain
interiors facilities;
- approximately $25 million of
costs incurred related to a fire at a body and chassis facility in
North America;
- operational inefficiencies and other costs at certain
facilities;
- a larger amount of employee profit sharing;
- higher incentive compensation;
- increased pre-operating costs incurred at new facilities;
- a $1 million net decrease in
valuation gains in respect of ABCP; and
- net customer price concessions subsequent to the second quarter
of 2013.
During the second quarter of 2014, net income
attributable to Magna International Inc. was $510 million, an increase of $95 million compared to the second quarter
of 2013 and diluted earnings per share increased $0.54 to $2.32 for
the second quarter of 2014 compared to $1.78 for the second quarter of 2013. Other
Expense, after tax, as discussed in the "Other Expense" section,
negatively impacted net income attributable to Magna International
Inc. and diluted earnings per share as follows:
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For the three months ended June
30, |
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2014 |
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2013 |
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Net
Income |
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Diluted |
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Net
Income |
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Diluted |
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Attributable |
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Earnings |
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Attributable |
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Earnings |
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to
Magna |
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per
Share |
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to Magna |
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per Share |
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Other expense |
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$ |
11 |
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$ |
0.05 |
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$ |
— |
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$ |
— |
Income tax effect |
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(1) |
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— |
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— |
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— |
Net income impact |
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$ |
10 |
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$ |
0.05 |
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$ |
— |
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$ |
— |
Excluding the negative impact of Other Expense,
after tax, for the second quarter of 2014 of $10 million, net income attributable to Magna
International Inc. for the second quarter of 2014 increased
$105 million compared to the second
quarter of 2013.
Excluding the $0.05 per share negative impact of Other Expense,
after tax, for the second quarter of 2014, diluted earnings per
share increased $0.59, as 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 2014. The decrease in the
weighted average number of diluted shares outstanding was primarily
due to the repurchase and cancellation of Common Shares, during or
subsequent to the second quarter of 2013, pursuant to our normal
course issuer bids partially offset by an increase in the number of
diluted options outstanding as a result of an increase in the
trading price of our common stock and the issue of Common Shares
related to the exercise of stock options.
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; relative currency
values; commodities prices; international conflicts; labour
relations issues; regulatory requirements; trade agreements;
infrastructure; legislative changes; and environmental emissions
and safety standards. These factors together with such specific
factors as: operational inefficiencies; costs incurred to launch
new or takeover business; restructuring, downsizing and other
significant non-recurring costs; price reduction pressures from our
customers; warranty and recall costs; the financial condition of
our supply base; and competition from manufacturers with operations
in low cost countries, are discussed in our Annual Information Form
and Annual Report on Form 40-F, each in respect of the year ended
December 31, 2013, and remain
substantially unchanged in respect of the second quarter ended
June 30, 2014.
RESULTS OF OPERATIONS
Average Foreign Exchange
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For the three months |
|
For the six months |
|
|
ended June 30, |
|
ended June 30, |
|
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
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1 Canadian dollar equals U.S. dollars |
|
0.917 |
|
0.977 |
|
- |
6% |
|
0.912 |
|
0.984 |
|
- |
7% |
1 euro equals U.S. dollars |
|
1.371 |
|
1.307 |
|
+ |
5% |
|
1.371 |
|
1.313 |
|
+ |
4% |
1 British pound equals U.S. dollars |
|
1.683 |
|
1.536 |
|
+ |
10% |
|
1.669 |
|
1.543 |
|
+ |
8% |
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, 2014
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, 2014
Sales
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For the three months |
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|
|
ended June 30, |
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2014 |
|
2013 |
|
Change |
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Vehicle Production
Volumes (millions of units) |
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North America |
|
|
4.402 |
|
|
4.260 |
|
+ |
3% |
|
Europe |
|
|
5.272 |
|
|
5.155 |
|
+ |
2% |
|
|
Sales |
|
|
External Production |
|
|
|
North America |
|
$ |
4,747 |
|
$ |
4,301 |
|
+ |
10% |
|
|
Europe |
|
|
2,662 |
|
|
2,560 |
|
+ |
4% |
|
|
Asia |
|
|
402 |
|
|
328 |
|
+ |
23% |
|
|
Rest of World |
|
|
163 |
|
|
244 |
|
- |
33% |
|
Complete Vehicle
Assembly |
|
|
793 |
|
|
796 |
|
|
— |
|
Tooling, Engineering and
Other |
|
|
697 |
|
|
733 |
|
- |
5% |
Total Sales |
|
$ |
9,464 |
|
$ |
8,962 |
|
+ |
6% |
External Production Sales - North America
External production sales in North America increased 10% or $446 million to $4.75
billion for the second quarter of 2014 compared to
$4.30 billion for the second quarter
of 2013 primarily as a result of the launch of new programs during
or subsequent to the second quarter of 2013, including GM full-size
pickups and SUVs, the Jeep Cherokee and the Nissan Rogue.
The launch of new programs was partially offset
by:
- a $105 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of the Canadian dollar against the U.S. dollar;
- lower production volumes on certain existing programs; and
- net customer price concessions subsequent to the second quarter
of 2013.
External Production Sales - Europe
External production sales in Europe increased 4% or $102 million to $2.66
billion for the second quarter of 2014 compared to
$2.56 billion for the second quarter
of 2013 primarily as a result of:
- a $105 million increase in
reported U.S. dollar sales primarily as a result of the
strengthening of the euro against the U.S. dollar; and
- the launch of new programs during or subsequent to the second
quarter of 2013, including the:
-
- Mercedes-Benz GLA; and
- Range Rover Sport.
These factors were partially offset by:
- a decrease in content on certain programs, including the
-
- MINI Cooper; and
- Mercedes-Benz C-Class;
- lower production volumes on certain existing programs; and
- net customer price concessions subsequent to the second quarter
of 2013.
External Production Sales - Asia
External production sales in Asia increased 23% or $74 million to $402
million for the second quarter of 2014 compared to
$328 million for the second quarter
of 2013 primarily as a result of higher production volumes on
certain existing programs and the launch of new programs during or
subsequent to the second quarter of 2013, primarily in China. These factors were partially offset by
net customer price concessions subsequent to the second quarter of
2013.
External Production Sales - Rest of
World
External production sales in Rest of World
decreased 33% or $81 million to
$163 million for the second quarter
of 2014 compared to $244 million for
the second quarter of 2013 primarily as a result of:
- lower production volumes on certain existing programs; and
- a $27 million decrease in
reported U.S. dollar sales as a result of the weakening of foreign
currencies against the U.S. dollar, including the Argentine peso
and Brazilian real.
These factors were partially offset by net
customer price increases subsequent to the second quarter of
2013.
Complete Vehicle Assembly Sales
|
|
For the three
months |
|
|
|
|
|
ended June 30, |
|
|
|
|
|
2014 |
|
2013 |
|
Change |
|
|
|
|
|
|
|
|
|
|
Complete Vehicle Assembly Sales |
|
$ |
793 |
|
$ |
796 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Complete Vehicle Assembly Volumes
(Units) |
|
|
34,299 |
|
|
38,605 |
|
- |
11% |
Complete vehicle assembly sales decreased
$3 million to $793 million for the second quarter of 2014
compared to $796 million for the
second quarter of 2013 while assembly volumes decreased 11% or
4,306 units.
The decrease in complete vehicle assembly sales
is primarily as a result of a decrease in assembly volumes for the
MINI Paceman, which was partially offset by:
- a $39 million increase in
reported U.S. dollar sales as a result of the strengthening of the
euro against the U.S. dollar; and
- an increase in assembly volumes for the Mercedes-Benz G-Class
and the MINI Countryman.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales decreased
5% or $36 million to $697 million for the second quarter of 2014
compared to $733 million for the
second quarter of 2013.
In the second quarter of 2014, the major
programs for which we recorded tooling, engineering and other sales
were the:
- BMW X4;
- MINI Countryman;
- Ford Transit;
- Mercedes-Benz M-Class;
- QOROS 3;
- Lincoln MKC:
- Dodge Challenger; and
- Acura TL.
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.
Cost of Goods Sold and Gross Margin
|
|
For the three months |
|
|
ended June 30, |
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
Sales |
|
$ |
9,464 |
|
$ |
8,962 |
Cost of goods
sold |
|
Material |
|
|
6,023 |
|
|
5,800 |
|
Direct labour |
|
|
603 |
|
|
556 |
|
Overhead |
|
|
1,529 |
|
|
1,438 |
|
|
|
8,155 |
|
|
7,794 |
Gross margin |
|
$ |
1,309 |
|
$ |
1,168 |
|
|
|
|
|
|
|
Gross margin as a
percentage of sales |
|
|
13.8% |
|
|
13.0% |
Cost of goods sold increased $361 million to $8.16
billion for the second quarter of 2014 compared to
$7.79 billion for the second quarter
of 2013 primarily as a result of:
- higher material, overhead and labour costs associated with the
increase in sales, including wage increases at certain
operations;
- higher launch costs, including unanticipated costs at certain
interiors facilities;
- a net increase in reported U.S. dollar cost of goods sold
primarily due to the strengthening of the euro and British pound,
both against the U.S. dollar partially offset by the weakening of
the Canadian dollar, Argentine peso and Brazilian real, each
against the U.S. dollar;
- costs incurred related to a fire at a body and chassis facility
in North America; and
- a larger amount of employee profit sharing.
Gross margin increased $141 million to $1.31
billion for the second quarter of 2014 compared to
$1.17 billion for the second quarter
of 2013 and gross margin as a percentage of sales increased to
13.8% for the second quarter of 2014 compared to 13.0% for the
second quarter of 2013. The increase in gross margin as a
percentage of sales was primarily due to:
- productivity and efficiency improvements at certain
facilities;
- a decrease in the proportion of complete vehicle assembly sales
relative to total sales, which have a higher material content than
our consolidated average;
- a decrease in tooling, engineering and other sales that have
low or no margins;
- lower warranty costs; and
- decreased commodity costs.
These factors were partially offset by:
- higher launch costs, including unanticipated costs at certain
interiors facilities;
- operational inefficiencies and other costs at certain
facilities;
- costs incurred related to a fire at a body and chassis facility
in North America;
- a larger amount of employee profit sharing; and
- increased pre-operating costs incurred at new facilities.
Depreciation and Amortization
Depreciation and amortization costs decreased
$37 million to $223 million for the second quarter of 2014
compared to $260 million for the
second quarter of 2013 primarily as a result of intangible asset
amortization of $40 million recorded
in the second quarter of 2013 related to the acquisition and
re-measurement of E-Car.
Selling, General and Administrative
("SG&A")
SG&A expense as a percentage of sales was
4.6% for the second quarters of 2014 and 2013. SG&A expense
increased $23 million to
$433 million for the second quarter
of 2014 compared to $410 million for
the second quarter of 2013 primarily as a result of:
- higher labour and other costs to support the growth in sales,
including wage increases at certain operations;
- higher incentive compensation;
- an increase in reported U.S. dollar SG&A related to foreign
exchange;
- increased costs incurred at new facilities; and
- a $1 million net decrease in
valuation gains in respect of ABCP.
Equity Income
Equity income increased $8 million to $57
million for the second quarter of 2014 compared to
$49 million for the second quarter of
2013 primarily as a result of higher income generated by most of
our equity accounted investments.
Other Expense, net
During the second quarter of 2014, we recorded
net restructuring charges of $11
million ($10 million after
tax) in Europe at our exterior and
interior systems operations. We expect full year 2014 restructuring
charges to be approximately $75
million.
In addition, during the first quarter of 2014
and 2013, we recorded net restructuring charges of $22 million and $6
million ($20 million and
$6 million after tax), respectively,
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. Consistent with the above, our internal financial reporting
segments key internal operating performance measures between
North America, Europe, Asia
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.
During the fourth quarter of 2013, we began
reporting Asia and Rest of World
as separate reporting segments.
|
|
For the three months ended June 30, |
|
|
External Sales |
|
Adjusted EBIT |
|
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
5,098 |
|
$ |
4,589 |
|
$ |
509 |
|
$ |
537 |
|
$ |
422 |
|
$ |
115 |
Europe |
|
|
3,744 |
|
|
3,755 |
|
|
(11) |
|
|
125 |
|
|
120 |
|
|
5 |
Asia |
|
|
450 |
|
|
361 |
|
|
89 |
|
|
42 |
|
|
19 |
|
|
23 |
Rest of World |
|
|
168 |
|
|
248 |
|
|
(80) |
|
|
(11) |
|
|
(17) |
|
|
6 |
Corporate and Other |
|
|
4 |
|
|
9 |
|
|
(5) |
|
|
17 |
|
|
3 |
|
|
14 |
Total reportable segments |
|
$ |
9,464 |
|
$ |
8,962 |
|
$ |
502 |
|
$ |
710 |
|
$ |
547 |
|
$ |
163 |
Excluded from Adjusted EBIT for the three months
ended June 30, 2014 was $11 million of net restructuring costs recorded
in our Europe segment, as
discussed in the "Other Expense" section.
North
America
Adjusted EBIT in North
America increased $115 million
to $537 million for the second
quarter of 2014 compared to $422 million for the second quarter of 2013
primarily as a result of:
- margins earned on higher production sales;
- intangible asset amortization of $40
million, recorded in the second quarter of 2013, related to
the acquisition and re-measurement of E-Car;
- higher equity income;
- lower warranty costs of $3
million; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- approximately $25 million of
costs incurred related to a fire at a body and chassis facility in
North America;
- higher launch costs, including unanticipated costs at certain
interiors facilities;
- operational inefficiencies and other costs at certain
facilities;
- a larger amount of employee profit sharing;
- higher affiliation fees paid to Corporate;
- increased pre-operating costs incurred at new facilities;
and
- higher incentive compensation and stock-based
compensation.
Europe
Adjusted EBIT in Europe increased $5
million to $125 million for
the second quarter of 2014 compared to $120 million for the second quarter of 2013
primarily as a result of:
- margins earned on higher production sales;
- lower downsizing costs;
- higher equity income;
- productivity and efficiency improvements at certain
facilities;
- the benefit of restructuring and downsizing activities recently
undertaken;
- decreased commodity costs; and
- lower warranty costs of $2
million.
These factors were partially offset by:
- higher launch costs, including unanticipated costs at certain
interiors facilities in the United
Kingdom;
- higher pre-operating costs incurred at new facilities;
- a larger amount of employee profit sharing;
- higher affiliation fees paid to Corporate; and
- operational inefficiencies and other costs at certain
facilities.
Asia
Adjusted EBIT in Asia increased $23
million to $42 million for the
second quarter of 2014 compared to $19
million for the second quarter of 2013 primarily as a result
of:
- margins earned on higher production sales, including margins
earned on the launch of new facilities and new programs;
- lower pre-operating costs incurred at new facilities;
- lower launch costs; and
- higher equity income.
These factors were partially offset by:
- higher affiliation fees paid to Corporate;
- higher incentive compensation; and
- operational inefficiencies and other costs at certain
facilities.
Rest of World
Rest of World Adjusted EBIT improved
$6 million to a loss of $11 million for the second quarter of 2014
compared to a loss of $17 million for
the second quarter of 2013 primarily as a result of:
- the benefit of restructuring and downsizing activities recently
undertaken;
- productivity and efficiency improvements at certain
facilities;
- decreased commodity costs;
- lower affiliation fees paid to Corporate; and
- net customer price increases subsequent to the second quarter
of 2013.
These factors were partially offset by:
- higher production costs, including inflationary increases, that
we have not been fully successful in passing through to our
customers;
- higher launch costs; and
- higher warranty costs of $1
million.
Corporate and Other
Corporate and Other Adjusted EBIT increased
$14 million to $17 million for the second quarter of 2014
compared to $3 million for the second
quarter of 2013 primarily as a result of an increase in affiliation
fees earned from our divisions partially offset by a $1 million net decrease in valuation gains in
respect of ABCP.
Interest Expense, net
During the second quarter of 2014, we recorded
net interest expense of $7 million
compared to $4 million for the second
quarter of 2013. The $3 million
increase is primarily as a result of interest incurred on
government debt in Europe and
interest expense on the $750 million
Senior Notes issued during the second quarter of 2014.
Income from Operations before Income
Taxes
Income from operations before income taxes
increased $149 million to
$692 million for the second quarter
of 2014 compared to $543 million for
the second quarter of 2013. Excluding Other Expense, discussed in
the "Other Expense" section, income from operations before income
taxes for the second quarter of 2014 increased $160 million. The increase in income from
operations before income taxes is the result of the increase in
Adjusted EBIT partially offset by the increase in net interest
expense, as discussed above.
Income Taxes
|
|
|
|
For the three months ended June 30, |
|
|
|
|
2014 |
|
2013 |
|
|
|
|
$ |
|
% |
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes as
reported |
|
|
|
$ |
182 |
|
26.3 |
|
$ |
131 |
|
24.1 |
Tax effect on Other expense,
net |
|
|
|
|
1 |
|
(0.3) |
|
|
— |
|
— |
|
|
|
|
$ |
183 |
|
26.0 |
|
$ |
131 |
|
24.1 |
Excluding Other Expense, after tax, the
effective income tax rate increased to 26.0% for the second quarter
of 2014 compared to 24.1% for the second quarter of 2013 primarily
as a result of favourable audit settlements, recorded in the second
quarter of 2013.
Net Income
Net income of $510
million for the second quarter of 2014 increased
$98 million compared to the second
quarter of 2013. Excluding Other Expense, after tax, discussed in
the "Other Expense" section, net income increased $108 million. The increase in net income is the
result of the increase in income from operations before income
taxes partially offset by higher income taxes.
Net Loss Attributable to Non-controlling
Interests
Net loss attributable to non-controlling
interests was $nil for the second quarter of 2014 compared to
$3 million for the second quarter of
2013.
Net Income Attributable to Magna
International Inc.
Net income attributable to Magna International
Inc. of $510 million for the second
quarter of 2014 increased $95 million
compared to the second quarter of 2013. Excluding Other Expense,
after tax, discussed in the "Other Expense" section, net income
attributable to Magna International Inc. increased $105 million as a result of the increase in net
income, as discussed above.
Earnings per Share
|
|
For the three
months |
|
|
|
|
|
ended June 30, |
|
|
|
|
|
2014 |
|
2013 |
|
Change |
|
|
Earnings per Common
Share |
|
|
Basic |
|
$ |
2.36 |
|
$ |
1.80 |
|
+ |
31% |
|
Diluted |
|
$ |
2.32 |
|
$ |
1.78 |
|
+ |
30% |
|
|
Weighted average number
of Common Shares outstanding (millions) |
|
|
Basic |
|
|
216.6 |
|
|
230.6 |
|
- |
6% |
|
Diluted |
|
|
219.6 |
|
|
233.2 |
|
- |
6% |
Diluted earnings per share increased
$0.54 to $2.32 for the second quarter of 2014 compared to
$1.78 for the second quarter of 2013.
Other Expense, after tax, negatively impacted diluted earnings per
share in the second quarter of 2014 by $0.05 as discussed in the "Other Expense"
section. Excluding this amount, diluted earnings per share
increased $0.59 as 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 2014.
The decrease in the weighted average number of
diluted shares outstanding was primarily due to the repurchase and
cancellation of Common Shares, during or subsequent to the second
quarter of 2013, pursuant to our normal course issuer bids
partially offset by an increase in the number of diluted options
outstanding as a result of an increase in the trading price of our
common stock and the issue of Common Shares related to the exercise
of stock options.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flow from Operations
|
|
|
|
For the three months |
|
|
|
|
|
|
|
ended June 30, |
|
|
|
|
|
|
|
2014 |
|
2013 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
$ |
510 |
|
$ |
412 |
|
|
|
Items not involving current cash
flows |
|
|
|
|
238 |
|
|
292 |
|
|
|
|
|
|
|
|
748 |
|
|
704 |
|
$ |
44 |
Changes in operating assets and
liabilities |
|
|
|
|
(148) |
|
|
(12) |
|
|
|
Cash provided from operating activities |
|
|
|
$ |
600 |
|
$ |
692 |
|
$ |
(92) |
Cash flow from operations before changes in
operating assets and liabilities increased $44 million to $748
million for the second quarter of 2014 compared to
$704 million for the second quarter
of 2013. The increase in cash flow from operations was due to the
$98 million increase in net income,
as discussed above, partially offset by a $54 million decrease 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, |
|
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
|
$ |
223 |
|
$ |
260 |
Amortization of other assets included in cost of
goods sold |
|
|
|
|
42 |
|
|
36 |
Other charges |
|
|
|
|
10 |
|
|
2 |
Deferred income taxes and portion of current
taxes |
|
|
|
|
(13) |
|
|
(3) |
Equity income in excess of dividends
received |
|
|
|
|
(24) |
|
|
(3) |
Items not involving current cash
flows |
|
|
|
$ |
238 |
|
$ |
292 |
Cash invested in operating assets and
liabilities amounted to $148 million
for the second quarter of 2014 compared to $12 million for the second quarter of 2013.
The change in operating assets and liabilities is comprised of the
following sources (and uses) of cash:
|
|
|
|
For the three
months |
|
|
|
|
ended June 30, |
|
|
|
|
2014 |
|
2013 |
Accounts receivable |
|
|
|
$ |
(39) |
|
$ |
26 |
Inventories |
|
|
|
|
(98) |
|
|
(93) |
Prepaid expenses and other |
|
|
|
|
(5) |
|
|
(6) |
Accounts payable |
|
|
|
|
114 |
|
|
197 |
Accrued salaries and wages |
|
|
|
|
(107) |
|
|
(72) |
Other accrued liabilities |
|
|
|
|
(21) |
|
|
(53) |
Income taxes
payable |
|
|
|
|
11 |
|
|
(9) |
Deferred
revenue |
|
|
|
|
(3) |
|
|
(2) |
Changes in operating assets and
liabilities |
|
|
|
$ |
(148) |
|
$ |
(12) |
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 due
to the timing of payments and an increase in production activities
at the end of the second quarter of 2014. 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, |
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Change |
Fixed asset additions |
|
$ |
(384) |
|
$ |
(232) |
|
|
|
|
Investments and other assets |
|
|
(48) |
|
|
(43) |
|
|
|
|
Fixed assets, investments and other assets
additions |
|
|
(432) |
|
|
(275) |
|
|
|
|
Proceeds from disposition |
|
|
15 |
|
|
30 |
|
|
|
|
Cash used for investment activities |
|
$ |
(417) |
|
$ |
(245) |
|
|
$ |
(172) |
Fixed assets, investments and other assets additions
In the second quarter of 2014, we invested
$384 million in fixed assets,
including $105 million for the
purchase of eight leased facilities in Mexico from Granite Real Estate Investment
Trust ("Mexican Properties").
In the second quarter of 2014, we invested
$48 million in other assets related
primarily for fully reimbursable engineering costs and tooling for
programs that launched during the second quarter of 2014 or will be
launching subsequent to the second quarter of 2014.
Proceeds from disposition
In the second quarter of 2014, the $15 million of proceeds include normal course
fixed and other asset disposals.
Financing
|
|
For the three months |
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Change |
Issues of debt |
|
$ |
764 |
|
$ |
25 |
|
|
|
|
Increase (decrease) in bank
indebtedness |
|
|
2 |
|
|
21 |
|
|
|
|
Repayments of debt |
|
|
(15) |
|
|
(60) |
|
|
|
|
Issues of Common Shares on exercise of stock
options |
|
|
12 |
|
|
11 |
|
|
|
|
Repurchase of Common
Shares |
|
|
(575) |
|
|
(337) |
|
|
|
|
Contribution to subsidiaries by non-controlling
interests |
|
|
— |
|
|
4 |
|
|
|
|
Dividends |
|
|
(79) |
|
|
(72) |
|
|
|
|
Cash used for financing activities |
|
$ |
109 |
|
$ |
(408) |
|
|
$ |
517 |
Issues of debt relates primarily to the issue of
the $750 million Senior Notes. The
Senior Notes are senior unsecured obligations, interest is payable
on June 15 and December 15 of each year, and do not include any
financial covenants. We may redeem the Senior Notes in whole or in
part at any time, and from time to time, at specified redemption
prices determined in accordance with the terms of the indenture
governing the Senior Notes.
During the second quarter of 2014, we
repurchased 5.7 million Common Shares for aggregate cash
consideration of $575 million
under our normal course issuer bid.
Cash dividends paid per Common Share were
$0.38 for the second quarter of 2014,
for a total of $79 million.
Financing Resources
|
|
|
As at |
|
|
As at |
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Change |
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness |
|
$ |
49 |
|
$ |
41 |
|
|
|
|
|
Long-term debt due within one
year |
|
|
212 |
|
|
230 |
|
|
|
|
|
Long-term debt |
|
|
837 |
|
|
102 |
|
|
|
|
|
|
|
1,098 |
|
|
373 |
|
|
|
|
Non-controlling
interest |
|
|
15 |
|
|
16 |
|
|
|
|
Shareholders'
equity |
|
|
9,626 |
|
|
9,623 |
|
|
|
|
Total capitalization |
|
$ |
10,739 |
|
$ |
10,012 |
|
|
$ |
727 |
Total capitalization increased by $727 million to $10.74
billion at June 30, 2014
compared to $10.01 billion at
December 31, 2013 primarily
as a result of a $725 million
increase in liabilities ans a $3
million increase in shareholders' equity.
The increase in liabilities relates primarily to
long-term debt issued in relation to the $750 million Senior Notes.
The increase in shareholders' equity was
primarily as a result of:
- $903 million of net income earned
in the first six months of 2014;
- $37 million of shares issued on
exercise of stock options; and
- the $18 million net unrealized
gain on cash flow hedges.
These factors were partially offset by:
- the $815 million repurchase and
cancellation of 8.4 million Common Shares under our normal course
issuer bid in the first six months of 2014;
- $167 million of dividends paid
during the first six months of 2014; and
- the $12 million net unrealized
loss on translation of our net investment in foreign
operations.
Cash Resources
During the second quarter of 2014, our cash
resources increased by $317 million to $1.76
billion as a result of the cash provided from operating and
financing activities and the favourable effect of foreign exchange
partially offset by cash used for investing activities, all as
discussed above. In addition to our cash resources, at June 30, 2014 we had term and operating lines of
credit totalling $2.57 billion of
which $2.22 billion was unused and
available.
On May 16, 2014,
our $2.25 billion revolving credit
facility maturing June 20, 2018 was
extended to June 20, 2019. The
facility 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.
During the first quarter of 2014, we filed a
short form base shelf prospectus with the Ontario Securities
Commission and a corresponding shelf registration statement with
the United States Securities and Exchange Commission on Form F-10.
The filings provide for the potential offering in Ontario and the
United States of up to an aggregate of $2.00 billion of debt securities from time to
time over a 25 month period. During the second quarter of 2014, we
issued $750 million of Senior Notes
under the filings, as discussed in the "Financing" section.
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 7, 2014 were
exercised:
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212,302,563 |
Stock options (i) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,486,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,789,248 |
(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 2014 that are outside the ordinary course of our
business, other than the issue of the $750
million Senior Notes that require $27
million of annual interest payments and the reduction of
annual operating lease payments as a result of the purchase of the
Mexican Properties. Refer to our MD&A included in our 2013
Annual Report.
RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2014
Sales
|
|
For the six months |
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Change |
Vehicle Production Volumes
(millions of units) |
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
8.600 |
|
|
8.275 |
|
|
+ |
4% |
|
Europe |
|
|
10.493 |
|
|
9.916 |
|
|
+ |
6% |
Sales |
|
|
|
|
|
|
|
|
|
|
|
External Production |
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
9,154 |
|
$ |
8,348 |
|
|
+ |
10% |
|
|
Europe |
|
|
5,296 |
|
|
5,006 |
|
|
+ |
6% |
|
|
Asia |
|
|
783 |
|
|
633 |
|
|
+ |
24% |
|
|
Rest of World |
|
|
320 |
|
|
455 |
|
|
- |
30% |
|
Complete Vehicle
Assembly |
|
|
1,606 |
|
|
1,594 |
|
|
+ |
1% |
|
Tooling, Engineering and
Other |
|
|
1,266 |
|
|
1,287 |
|
|
- |
2% |
Total Sales |
|
$ |
18,425 |
|
$ |
17,323 |
|
|
+ |
6% |
External Production Sales - North America
External production sales in North America increased 10% or $806 million to $9.15
billion for the six months ended June 30, 2014 compared to $8.35 billion for the six months ended
June 30, 2013 primarily as a result
of:
- the launch of new programs during or subsequent to the six
months ended June 30, 2013, including
the:
-
- Jeep Cherokee;
- GM full-size pickups and SUVs;
- Nissan Rogue; and
- Cadillac CTS; and
- higher production volumes on certain existing programs.
These factors were partially offset by:
- a $237 million 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, 2013.
External Production Sales - Europe
External production sales in Europe increased 6% or $290 million to $5.30
billion for the six months ended June
30, 2014 compared to $5.01
billion for the six months ended June
30, 2013 primarily as a result of:
- the launch of new programs during or subsequent to the six
months ended June 30, 2013, including
the:
-
- Mercedes-Benz GLA;
- Skoda Octavia; and
- Range Rover Sport; and
- a $179 million 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:
- a decrease in content on certain programs, including the MINI
Cooper and the Mercedes-Benz C-Class; and
- net customer price concessions subsequent to June 30, 2013.
External Production Sales - Asia
External production sales in Asia increased 24% or $150 million to $783
million for the six months ended June 30, 2014 compared to $633 million for the six months ended
June 30, 2013 primarily as a result
of:
- higher production volumes on certain existing programs;
and
- the launch of new programs during or subsequent to the six
months ended June 30, 2013, primarily
in China, including the Audi Q3
and the Ford Mondeo.
These factors were partially offset by net
customer price concessions subsequent to June 30, 2013.
External Production Sales - Rest of
World
External production sales in Rest of World
decreased 30% or $135 million to
$320 million for the six months ended
June 30, 2014 compared to
$455 million for the six months ended
June 30, 2013 primarily as a result
of:
- lower production volumes on certain existing programs; and
- a $65 million decrease in
reported U.S. dollar sales as a result of the weakening of foreign
currencies against the U.S. dollar, including the Brazilian real
and Argentine peso.
These factors were partially offset by net
customer price increases subsequent to the six months ended
June 30, 2013.
Complete Vehicle Assembly Sales
|
|
For the six months |
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Change |
Complete Vehicle Assembly Sales |
|
$ |
1,606 |
|
$ |
1,594 |
|
|
+ |
1% |
Complete Vehicle Assembly Volumes
(Units) |
|
|
69,957 |
|
|
76,044 |
|
|
- |
8% |
Complete vehicle assembly sales increased 1%, or
$12 million, to $1.61 billion for the six months ended
June 30, 2014 compared to
$1.59 billion for the six months
ended June 30, 2013 while assembly
volumes decreased 8% or 6,087 units.
The increase in complete vehicle assembly sales
is primarily as a result of:
- a $70 million increase in
reported U.S. dollar sales as a result of the strengthening of the
euro against the U.S. dollar; and
- an increase in assembly volumes for the Mercedes-Benz G-Class
and the MINI Countryman.
These factors were partially offset by a
decrease in assembly volumes for the MINI Paceman.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales decreased
2% or $21 million to $1.27 billion for the six months ended
June 30, 2014 compared to
$1.29 billion for the six months
ended June 30, 2013.
In the six months ended June 30, 2014, the major programs for which we
recorded tooling, engineering and other sales were the:
- BMW X4;
- MINI Countryman;
- Ford Transit;
- QOROS 3;
- Mercedes-Benz M-Class;
- Ford Mustang;
- Honda Fit;
- Peugeot RCZ;
- Chrysler 200; and
- Lincoln MKC.
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.
Segment Analysis
|
|
For
the six months ended June 30, |
|
|
External Sales |
|
Adjusted EBIT |
|
|
|
2014 |
|
|
2013 |
|
|
|
Change |
|
|
2014 |
|
|
2013 |
|
|
|
Change |
North America |
|
$ |
9,740 |
|
$ |
8,877 |
|
|
$ |
863 |
|
$ |
980 |
|
$ |
803 |
|
|
$ |
177 |
Europe |
|
|
7,471 |
|
|
7,260 |
|
|
|
211 |
|
|
252 |
|
|
192 |
|
|
|
60 |
Asia |
|
|
878 |
|
|
695 |
|
|
|
183 |
|
|
71 |
|
|
30 |
|
|
|
41 |
Rest of World |
|
|
329 |
|
|
479 |
|
|
|
(150) |
|
|
(24) |
|
|
(28) |
|
|
|
4 |
Corporate and
Other |
|
|
7 |
|
|
12 |
|
|
|
(5) |
|
|
36 |
|
|
17 |
|
|
|
19 |
Total reportable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
segments |
|
$ |
18,425 |
|
$ |
17,323 |
|
|
$ |
1,102 |
|
$ |
1,315 |
|
$ |
1,014 |
|
|
$ |
301 |
Excluded from Adjusted EBIT for the six months
ended June 30, 2014 and 2013 was
$33 million and $6 million, respectively, of net restructuring
costs recorded in our Europe
segment, as discussed in the "Other Expense" section.
North
America
Adjusted EBIT in North
America increased $177 million
to $980 million for the six months
ended June 30, 2014 compared to
$803 million for the six months
ended June 30, 2013 primarily as a
result of:
- margins earned on higher production sales;
- intangible asset amortization of $79
million, recorded in the first six months of 2013, related
to the acquisition and re-measurement of E-Car;
- lower warranty costs of $5
million;
- decreased commodity costs;
- higher equity income; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- higher launch costs, including unanticipated costs at certain
interiors facilities;
- operational inefficiencies and other costs at certain
facilities;
- approximately $25 million of
costs incurred related to a fire at a body and chassis facility in
North America;
- a larger amount of employee profit sharing;
- higher affiliation fees paid to Corporate;
- increased pre-operating costs incurred at new facilities;
- higher incentive compensation; and
- increased stock-based compensation.
Europe
Adjusted EBIT in Europe increased $60
million to $252 million for
the six months ended June 30, 2014
compared to $192 million for the
six months ended June 30, 2013
primarily as a result of:
- margins earned on higher production sales;
- lower downsizing costs;
- the benefit of restructuring and downsizing activities recently
undertaken;
- higher equity income;
- decreased commodity costs;
- lower warranty costs of $2
million; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- higher launch costs, including unanticipated costs at certain
interiors facilities in the United
Kingdom;
- higher affiliation fees paid to Corporate;
- higher pre-operating costs incurred at new facilities;
- a larger amount of employee profit sharing;
- operational inefficiencies and other costs at certain
facilities; and
- increased stock-based compensation.
Asia
Adjusted EBIT in Asia increased $41
million to $71 million for the
six months ended June 30, 2014
compared to $30 million for the six
months ended June 30, 2013 primarily
as a result of:
- margins earned on higher production sales, including margins
earned on the launch of new facilities and new programs;
- higher equity income; and
- lower pre-operating costs incurred at new facilities.
These factors were partially offset by:
- higher costs incurred in preparation for upcoming
launches;
- higher affiliation fees paid to Corporate;
- higher incentive compensation; and
- operational inefficiencies and other costs at certain
facilities.
Rest of World
Rest of World Adjusted EBIT improved
$4 million to a loss of $24 million for the six months ended June 30, 2014 compared to a loss of $28 million for the six months ended June 30, 2013 primarily as a result of:
- productivity and efficiency improvements at certain
facilities;
- the benefit of restructuring and downsizing activities recently
undertaken;
- an decrease in reported U.S. dollar EBIT loss due to the
weakening of the Brazilian real and Argentine peso, each against
the U.S. dollar;
- lower affiliation fees paid to Corporate; and
- net customer price increases subsequent to the six months ended
June 30, 2013.
These factors were partially offset by:
- higher production costs, including inflationary increases, that
we have not been fully successful in passing through to our
customers;
- higher costs incurred in preparation for upcoming
launches;
- lower equity income;
- increased commodity costs; and
- higher warranty costs of $1
million.
Corporate and Other
Corporate and Other Adjusted EBIT increased
$19 million to $36 million for the six months ended June 30, 2014 compared to $17 million for the six months ended June 30, 2013 primarily as a result of:
- an increase in affiliation fees earned from our divisions;
and
- decreased stock-based compensation.
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 in the first quarter of 2013;
- higher incentive compensation; and
- a $3 million net decrease in
valuation gains in respect of ABCP.
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, 2014, 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, 2013.
CONTROLS AND PROCEDURES
There have been no changes in our internal
controls over financial reporting that occurred during the six
months ended June 30, 2014 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:
implementation of improvement plans in our underperforming
operations, and/or restructuring actions; improved future results
in South America through actions
to address commercial challenges and reduce operational
inefficiencies; future purchases of our Common Shares under the
Normal Course Issuer Bid; and future issuances of debt securities.
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 impact of economic or
political conditions on consumer confidence, consumer demand for
vehicles and vehicle production; our ability to successfully launch
material new or takeover business; continued underperformance of
one or more of our operating Divisions; restructuring, downsizing
or other significant non-recurring costs, including in our European
business; ongoing pricing pressures, including our ability to
offset price concessions demanded by our customers; warranty and
recall costs; fines or penalties imposed by antitrust and
regulatory authorities, including the German Cartel Office; our
ability to grow our business with Asian-based customers; 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, Russia, Brazil, Argentina, Eastern
Europe and other non-traditional markets for us; a prolonged
disruption in the supply of components to us from our suppliers;
shutdown of our or our customers' or sub-suppliers' production
facilities due to a work stoppage or labour dispute; scheduled
shutdowns of our customers' production facilities (typically in the
third and fourth quarters of each calendar year); 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; our
ability to consistently develop innovative products or processes;
impairment charges related to goodwill and long-lived assets;
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 sufficient
due diligence on acquisition targets; risk of production
disruptions due to natural disasters; pension liabilities; legal
claims and/or regulatory actions against us; 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; changes in credit ratings
assigned to us; changes in laws and governmental regulations; costs
associated with compliance with environmental laws and regulations;
liquidity risks as a result of an unanticipated deterioration of
economic conditions; our ability to achieve future investment
returns that equal or exceed past returns; the unpredictability of,
and fluctuation in, the trading price of our Common Shares; 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 |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Sales |
|
|
$ |
9,464 |
|
$ |
8,962 |
|
$ |
18,425 |
|
$ |
17,323 |
|
Costs and
expenses |
|
Cost of goods
sold |
|
|
|
8,155 |
|
|
7,794 |
|
|
15,917 |
|
|
15,111 |
|
Depreciation and
amortization |
|
|
|
223 |
|
|
260 |
|
|
440 |
|
|
515 |
|
Selling, general and
administrative |
11 |
|
|
433 |
|
|
410 |
|
|
858 |
|
|
777 |
|
Interest expense,
net |
|
|
|
7 |
|
|
4 |
|
|
9 |
|
|
8 |
|
Equity income |
|
|
|
(57) |
|
|
(49) |
|
|
(105) |
|
|
(94) |
|
Other expense, net |
2 |
|
|
11 |
|
|
— |
|
|
33 |
|
|
6 |
Income from operations before income
taxes |
|
|
|
692 |
|
|
543 |
|
|
1,273 |
|
|
1,000 |
Income taxes |
6 |
|
|
182 |
|
|
131 |
|
|
371 |
|
|
221 |
Net income |
|
|
|
510 |
|
|
412 |
|
|
902 |
|
|
779 |
Net loss attributable to
non-controlling interests |
|
|
|
— |
|
|
3 |
|
|
1 |
|
|
5 |
Net income attributable to Magna
International Inc. |
|
|
$ |
510 |
|
$ |
415 |
|
$ |
903 |
|
$ |
784 |
|
|
Earnings per Common Share: |
3 |
|
Basic |
|
|
$ |
2.36 |
|
$ |
1.80 |
|
$ |
4.13 |
|
$ |
3.39 |
|
Diluted |
|
|
$ |
2.32 |
|
$ |
1.78 |
|
$ |
4.08 |
|
$ |
3.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per Common
Share |
|
|
$ |
0.38 |
|
$ |
0.32 |
|
$ |
0.76 |
|
$ |
0.64 |
|
|
Average number of Common Shares
outstanding during the period [in millions]: |
3 |
|
Basic |
|
|
|
216.6 |
|
|
230.6 |
|
|
218.4 |
|
|
231.5 |
|
Diluted |
|
|
|
219.6 |
|
|
233.2 |
|
|
221.6 |
|
|
234.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Net income |
|
|
$ |
510 |
|
$ |
412 |
|
$ |
902 |
|
$ |
779 |
|
|
Other comprehensive income (loss), net
of tax: |
13 |
|
Net unrealized gain (loss) on translation of net investment in
foreign operations |
|
|
|
100 |
|
|
(91) |
|
|
(12) |
|
|
(224) |
|
Net unrealized loss on available-for-sale
investments |
|
|
|
— |
|
|
(5) |
|
|
(1) |
|
|
(4) |
|
Net unrealized gain (loss) on cash flow
hedges |
|
|
|
49 |
|
|
(36) |
|
|
18 |
|
|
(28) |
|
Reclassification of net loss (gain) on cash flow
hedges to net income |
|
|
|
6 |
|
|
(6) |
|
|
5 |
|
|
(12) |
|
Reclassification of net loss on pensions to net
income |
|
|
|
2 |
|
|
3 |
|
|
3 |
|
|
6 |
Other comprehensive income
(loss) |
|
|
|
157 |
|
|
(135) |
|
|
13 |
|
|
(262) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
667 |
|
|
277 |
|
|
915 |
|
|
517 |
Comprehensive loss attributable to
non-controlling interests |
|
|
|
— |
|
|
3 |
|
|
1 |
|
|
5 |
Comprehensive income attributable
to Magna International Inc. |
|
|
$ |
667 |
|
$ |
280 |
|
$ |
916 |
|
$ |
522 |
|
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 |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Cash provided from (used for): |
|
|
|
OPERATING ACTIVITIES |
|
Net income |
|
|
$ |
510 |
|
$ |
412 |
|
$ |
902 |
|
$ |
779 |
Items not involving current cash flows |
4 |
|
|
238 |
|
|
292 |
|
|
517 |
|
|
532 |
|
|
|
|
748 |
|
|
704 |
|
|
1,419 |
|
|
1,311 |
Changes in operating assets and
liabilities |
4 |
|
|
(148) |
|
|
(12) |
|
|
(345) |
|
|
(468) |
Cash provided from operating
activities |
|
|
|
600 |
|
|
692 |
|
|
1,074 |
|
|
843 |
|
|
INVESTMENT ACTIVITIES |
|
Fixed asset additions |
|
|
|
(384) |
|
|
(232) |
|
|
(601) |
|
|
(426) |
Increase in investments and other
assets |
|
|
|
(48) |
|
|
(43) |
|
|
(102) |
|
|
(91) |
Proceeds from disposition |
|
|
|
15 |
|
|
30 |
|
|
52 |
|
|
60 |
Cash used for investing
activities |
|
|
|
(417) |
|
|
(245) |
|
|
(651) |
|
|
(457) |
|
|
FINANCING ACTIVITIES |
|
Issues of debt |
9 |
|
|
764 |
|
|
25 |
|
|
795 |
|
|
57 |
Increase (decrease) in bank
indebtedness |
|
|
|
2 |
|
|
21 |
|
|
5 |
|
|
(5) |
Repayments of debt |
|
|
|
(15) |
|
|
(60) |
|
|
(85) |
|
|
(101) |
Settlement of stock options |
|
|
|
— |
|
|
— |
|
|
— |
|
|
(23) |
Issue of Common Shares |
|
|
|
12 |
|
|
11 |
|
|
37 |
|
|
50 |
Repurchase of Common Shares |
12 |
|
|
(575) |
|
|
(337) |
|
|
(815) |
|
|
(425) |
Contribution to subsidiaries by non-controlling
interests |
|
|
|
— |
|
|
4 |
|
|
— |
|
|
4 |
Dividends paid |
|
|
|
(79) |
|
|
(72) |
|
|
(162) |
|
|
(145) |
Cash provided from (used for) financing
activities |
|
|
|
109 |
|
|
(408) |
|
|
(225) |
|
|
(588) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
|
|
25 |
|
|
(7) |
|
|
4 |
|
|
(41) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash
equivalents during the period |
|
|
|
317 |
|
|
32 |
|
|
202 |
|
|
(243) |
Cash and cash equivalents, beginning of
period |
|
|
|
1,439 |
|
|
1,247 |
|
|
1,554 |
|
|
1,522 |
Cash and cash equivalents, end of
period |
|
|
$ |
1,756 |
|
$ |
1,279 |
|
$ |
1,756 |
|
$ |
1,279 |
|
See accompanying
notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
[Unaudited]
[U.S. dollars in millions]
|
|
|
As at |
|
As
at |
|
|
|
June 30, |
|
December 31, |
|
Note |
|
2014 |
|
2013 |
|
|
ASSETS |
|
Current assets |
|
Cash and cash equivalents |
4 |
|
$ |
1,756 |
|
$ |
1,554 |
Accounts receivable |
|
|
|
6,107 |
|
|
5,246 |
Inventories |
5 |
|
|
2,756 |
|
|
2,637 |
Deferred tax assets |
|
|
|
239 |
|
|
275 |
Prepaid expenses and
other |
|
|
|
205 |
|
|
211 |
|
|
|
|
11,063 |
|
|
9,923 |
|
|
|
|
|
|
|
|
Investments |
14 |
|
|
442 |
|
|
391 |
Fixed assets, net |
|
|
|
5,586 |
|
|
5,441 |
Goodwill |
|
|
|
1,434 |
|
|
1,440 |
Deferred tax assets |
|
|
|
136 |
|
|
120 |
Other assets |
7 |
|
|
663 |
|
|
675 |
|
|
|
$ |
19,324 |
|
$ |
17,990 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
Current
liabilities |
Bank indebtedness |
|
|
$ |
49 |
|
$ |
41 |
Accounts payable |
|
|
|
5,166 |
|
|
4,781 |
Accrued salaries and wages |
|
|
|
698 |
|
|
704 |
Other accrued liabilities |
8 |
|
|
1,671 |
|
|
1,538 |
Income taxes payable |
|
|
|
33 |
|
|
6 |
Deferred tax
liabilities |
|
|
|
29 |
|
|
9 |
Long-term debt due within one
year |
|
|
|
212 |
|
|
230 |
|
|
|
|
7,858 |
|
|
7,309 |
|
|
|
|
|
|
|
|
Long-term debt |
9 |
|
|
837 |
|
|
102 |
Long-term employee benefit
liabilities |
10 |
|
|
534 |
|
|
532 |
Other long-term
liabilities |
|
|
|
265 |
|
|
208 |
Deferred tax liabilities |
6 |
|
|
189 |
|
|
200 |
|
|
|
|
9,683 |
|
|
8,351 |
|
|
Shareholders' equity |
|
Capital stock |
|
|
Common Shares |
|
|
|
[issued: 213,749,157; December 31, 2013 -
221,151,704] |
12 |
|
|
4,125 |
|
|
4,230 |
Contributed surplus |
|
|
|
81 |
|
|
69 |
Retained earnings |
|
|
|
5,109 |
|
|
5,011 |
Accumulated other comprehensive
income |
13 |
|
|
311 |
|
|
313 |
|
|
|
|
9,626 |
|
|
9,623 |
|
|
|
|
|
|
|
|
Non-controlling
interests |
|
|
|
15 |
|
|
16 |
|
|
|
|
9,641 |
|
|
9,639 |
|
|
|
$ |
19,324 |
|
$ |
17,990 |
|
See accompanying
notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
[Unaudited]
[U.S. dollars in millions]
|
|
|
Common Shares |
|
Contri- |
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
Stated |
|
buted |
|
Retained |
|
|
|
|
controlling |
|
Total |
|
Note |
|
Number |
|
Value |
|
Surplus |
|
Earnings |
|
AOCI
(i) |
|
Interest |
|
Equity |
|
|
|
[in
millions] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2013 |
|
|
221.2 |
|
$ |
4,230 |
|
$ |
69 |
|
$ |
5,011 |
|
$ |
313 |
|
$ |
16 |
|
$ |
9,639 |
Net income |
|
|
|
|
|
|
|
|
|
|
|
903 |
|
|
|
|
|
(1) |
|
|
902 |
Other comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 |
|
|
|
|
|
13 |
Issues of shares by
subsidiaries |
Shares issued on exercise of stock
options |
|
|
0.9 |
|
|
47 |
|
|
(10) |
|
|
|
|
|
|
|
|
|
|
|
37 |
Repurchase and cancellation
under |
normal course issuer bid |
12 |
|
(8.4) |
|
|
(162) |
|
|
|
|
|
(638) |
|
|
(15) |
|
|
|
|
|
(815) |
Release of restricted stock |
|
|
|
|
|
5 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
— |
Stock-based compensation expense |
11 |
|
|
|
|
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
20 |
Reclassification from liability |
11 |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
7 |
Dividends paid |
|
|
|
|
|
5 |
|
|
|
|
|
(167) |
|
|
|
|
|
|
|
|
(162) |
Balance, June 30,
2014 |
|
|
213.7 |
|
$ |
4,125 |
|
$ |
81 |
|
$ |
5,109 |
|
$ |
311 |
|
$ |
15 |
|
$ |
9,641 |
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
Contri- |
|
|
|
|
|
|
Non- |
|
|
|
|
|
Stated |
|
buted |
|
Retained |
|
|
|
controlling |
|
Total |
|
Note |
|
Number |
|
Value |
|
Surplus |
|
Earnings |
|
AOCI
(i) |
|
Interest |
|
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) |
Divestiture of
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 |
|
(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, 2013.
The unaudited interim consolidated financial
statements do not conform in all respects to the requirements of
GAAP for annual financial statements in that they do not include
all of the information and notes required for complete financial
statements. Accordingly, these unaudited interim consolidated
financial statements should be read in conjunction with the
December 31, 2013 audited
consolidated financial statements and notes included in the
Company's 2013 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, 2014 and the results of operations,
changes in equity and cash flows for the three-month and six-month
periods ended June 30, 2014 and
2013.
[b] Accounting Changes
Revenue Recognition
In May 2014, the
FASB issued Accounting Standards Update No. 2014-09, Revenue from
Contracts with Customers: Topic 606 (ASU 2014-09), to supersede
nearly all existing revenue recognition guidance under GAAP. The
core principle of ASU 2014-09 is to recognize revenues when
promised goods or services are transferred to customers in an
amount that reflects the consideration that is expected to be
received for those goods or services. ASU 2014-09 is effective for
the Company in the first quarter of fiscal 2017 using either of two
methods: [i] retrospective to each prior reporting period presented
with the option to elect certain practical expedients as defined
within ASU 2014-09; or [ii] retrospective with the cumulative
effect of initially applying ASU 2014-09 recognized at the date of
initial application and providing certain additional disclosures as
defined per ASU 2014-09. The Company is currently evaluating the
impact of its pending adoption of ASU 2014-09 on its 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
|
|
|
|
|
|
|
|
Six months
ended |
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
Second
Quarter |
|
|
|
|
|
|
|
|
Restructuring |
|
|
|
[a] |
|
|
|
$ |
11 |
|
$ |
— |
|
|
|
|
|
|
|
|
First
Quarter |
|
|
|
|
|
|
|
|
Restructuring |
|
|
|
[a, b] |
|
|
|
|
22 |
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
33 |
|
$ |
6 |
For the six months ended June 30,
2014:
[a] Restructuring
During the second and first quarters of 2014,
the Company recorded net restructuring charges of $11 million and $22
million [$10 million and
$20 million after tax], respectively,
in Europe at its exterior and
interior systems operations.
For the six months ended June 30,
2013:
[b] Restructuring
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, |
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
Basic earnings per
Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Magna
International Inc. |
|
$ |
510 |
|
$ |
415 |
|
$ |
903 |
|
$ |
784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of Common Shares
outstanding |
|
|
216.6 |
|
|
230.6 |
|
|
218.4 |
|
|
231.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per Common
Share |
|
$ |
2.36 |
|
$ |
1.80 |
|
$ |
4.13 |
|
$ |
3.39 |
|
Diluted earnings
per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Magna
International Inc. |
|
$ |
510 |
|
$ |
415 |
|
$ |
903 |
|
$ |
784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of Common Shares
outstanding |
|
|
216.6 |
|
|
230.6 |
|
|
218.4 |
|
|
231.5 |
Adjustments |
|
Stock options and restricted stock
[a] |
|
|
3.0 |
|
|
2.6 |
|
|
3.2 |
|
|
2.7 |
|
|
|
219.6 |
|
|
233.2 |
|
|
221.6 |
|
|
234.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per Common
Share |
|
$ |
2.32 |
|
$ |
1.78 |
|
$ |
4.08 |
|
$ |
3.35 |
[a] |
For the three and six months ended June 30, 2014, diluted
earnings per Common Share exclude nil [2013 - nil] and 0.1 million
[2013 - 0.2 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, |
|
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
Bank term deposits, bankers' acceptances and
government paper |
|
|
|
$ |
1,599 |
|
$ |
1,331 |
Cash |
|
|
|
|
157 |
|
|
223 |
|
|
|
|
$ |
1,756 |
|
$ |
1,554 |
[b] Items not involving current cash
flows:
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
$ |
223 |
|
$ |
260 |
|
$ |
440 |
|
$ |
515 |
Amortization of other assets included in cost of
goods sold |
|
|
42 |
|
|
36 |
|
|
71 |
|
|
66 |
Other non-cash charges |
|
|
10 |
|
|
2 |
|
|
16 |
|
|
5 |
Deferred income taxes |
|
|
(13) |
|
|
(3) |
|
|
25 |
|
|
(27) |
Equity income in excess of dividends
received |
|
|
(24) |
|
|
(3) |
|
|
(35) |
|
|
(27) |
|
|
$ |
238 |
|
$ |
292 |
|
$ |
517 |
|
$ |
532 |
[c] Changes in operating assets and
liabilities:
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
$ |
(39) |
|
$ |
26 |
|
$ |
(873) |
|
$ |
(948) |
Inventories |
|
|
(98) |
|
|
(93) |
|
|
(127) |
|
|
(251) |
Prepaid expenses and other |
|
|
(5) |
|
|
(6) |
|
|
4 |
|
|
(33) |
Accounts payable |
|
|
114 |
|
|
197 |
|
|
442 |
|
|
525 |
Accrued salaries and wages |
|
|
(107) |
|
|
(72) |
|
|
(2) |
|
|
29 |
Other accrued liabilities |
|
|
(21) |
|
|
(53) |
|
|
147 |
|
|
262 |
Income taxes payable |
|
|
11 |
|
|
(9) |
|
|
67 |
|
|
(51) |
Deferred revenue |
|
|
(3) |
|
|
(2) |
|
|
(3) |
|
|
(1) |
|
|
$ |
(148) |
|
$ |
(12) |
|
$ |
(345) |
|
$ |
(468) |
5. INVENTORIES
Inventories consist of:
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
Raw materials and supplies |
|
|
|
$ |
971 |
|
$ |
947 |
Work-in-process |
|
|
|
|
274 |
|
|
273 |
Finished goods |
|
|
|
|
354 |
|
|
339 |
Tooling and engineering |
|
|
|
|
1,157 |
|
|
1,078 |
|
|
|
|
$ |
2,756 |
|
$ |
2,637 |
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. INCOME TAXES
During the first quarter of 2014, the Austrian
government enacted legislation abolishing the utilization of
foreign losses, where the foreign subsidiary is not a member of the
European Union. Furthermore, any foreign losses used by Austrian
entities arising in those non European Union subsidiaries are
subject to recapture in Austria.
As a consequence of this change, the Company recorded a charge to
tax expense of $32 million in the
first quarter of 2014.
7. OTHER ASSETS
Other assets consist of:
|
|
June 30, |
|
December 31, |
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
Preproduction costs related to long-term supply
agreements with contractual guarantee for reimbursement |
|
$ |
298 |
|
$ |
291 |
Customer relationship intangibles |
|
|
129 |
|
|
143 |
Long-term receivables |
|
|
106 |
|
|
111 |
Patents and licences, net |
|
|
41 |
|
|
44 |
Pension overfunded status |
|
|
26 |
|
|
26 |
Unrealized gain on cash flow hedges |
|
|
20 |
|
|
20 |
Other, net |
|
|
43 |
|
|
40 |
|
|
$ |
663 |
|
$ |
675 |
8. WARRANTY
The following is a continuity of the Company's
warranty accruals:
|
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
$ |
91 |
|
$ |
94 |
Expense, net |
|
|
|
|
7 |
|
|
9 |
Settlements |
|
|
|
|
(7) |
|
|
(5) |
Foreign exchange and other |
|
|
|
|
— |
|
|
8 |
Balance, March 31 |
|
|
|
|
91 |
|
|
106 |
Expense, net |
|
|
|
|
7 |
|
|
11 |
Settlements |
|
|
|
|
(8) |
|
|
(6) |
Foreign exchange and other |
|
|
|
|
— |
|
|
(9) |
Balance, June 30 |
|
|
|
$ |
90 |
|
$ |
102 |
9. LONG-TERM DEBT
[a] On June 16,
2014, the Company issued $750
million of 3.625% fixed-rate Senior Notes which mature on
June 15, 2024. The Senior Notes
are senior unsecured obligations, interest is payable on
June 15 and December 15 of each year, and do not include any
financial covenants. The Company may redeem the Senior Notes
in whole or in part at any time, and from time to time, at
specified redemption prices determined in accordance with the terms
of the indenture governing the Senior Notes.
[b] On May 16,
2014, the Company's $2.25
billion revolving credit facility maturing June 20, 2018 was extended to June 20, 2019. The facility 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.
10. 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, |
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit pension plan and
other |
|
$ |
4 |
|
$ |
4 |
|
$ |
7 |
|
$ |
8 |
Termination and long service
arrangements |
|
|
7 |
|
|
6 |
|
|
16 |
|
|
14 |
Retirement medical benefit
plan |
|
|
1 |
|
|
1 |
|
|
1 |
|
|
1 |
|
|
$ |
12 |
|
$ |
11 |
|
$ |
24 |
|
$ |
23 |
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]:
|
|
2014 |
|
2013 |
|
|
Options outstanding |
|
|
|
Options outstanding |
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
Number |
|
|
Number |
|
Exercise |
|
of
options |
|
Number |
|
Exercise |
|
of
options |
|
|
of
options |
|
price
(i) |
|
exercisable |
|
of options |
|
price (i) |
|
exercisable |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
4,758,108 |
|
41.82 |
|
2,847,109 |
|
6,623,242 |
|
35.39 |
|
3,227,574 |
Granted |
|
751,300 |
|
106.71 |
|
— |
|
1,060,000 |
|
57.02 |
|
— |
Exercised (ii) |
|
(680,352) |
|
39.49 |
|
(680,352) |
|
(2,178,383) |
|
29.76 |
|
(2,178,383) |
Cancelled |
|
(16,999) |
|
52.19 |
|
(6,000) |
|
(37,500) |
|
50.17 |
|
(20,000) |
Vested |
|
— |
|
— |
|
779,384 |
|
— |
|
— |
|
2,105,503 |
March 31 |
|
4,812,057 |
|
52.24 |
|
2,940,141 |
|
5,467,359 |
|
41.73 |
|
3,134,694 |
Exercised |
|
(296,035) |
|
41.97 |
|
(296,035) |
|
(329,881) |
|
37.05 |
|
(329,881) |
Cancelled |
|
(10,500) |
|
73.85 |
|
— |
|
(81,665) |
|
52.05 |
|
(11,667) |
June 30 |
|
4,505,522 |
|
52.86 |
|
2,644,106 |
|
5,055,813 |
|
41.87 |
|
2,793,146 |
(i) |
The exercise price noted above
represents the weighted average exercise price in Canadian
dollars. |
|
|
(ii) |
During the three months ended
March 31, 2013, 849,999 options were exercised on a cashless basis
in accordance with the applicable stock option plans. On
exercise, cash payments totalling $23 million were made to the
stock option holders. |
|
|
|
All cash payments were calculated
using the difference between the aggregate fair market value
of the Option Shares based on the closing price of the Company's
Common Shares on the Toronto Stock Exchange on the date of exercise
and the aggregate Exercise Price of all such options
surrendered. |
The weighted average assumptions used in
measuring the fair value of stock options granted are as
follows:
|
|
Six months ended |
|
|
June 30, |
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
Risk free interest
rate |
|
|
1.60% |
|
|
1.32% |
Expected dividend
yield |
|
|
2.00% |
|
|
2.00% |
Expected
volatility |
|
|
29% |
|
|
34% |
Expected time until
exercise |
|
4.5 years |
|
4.5 years |
|
|
|
|
|
|
|
Weighted average fair value of options granted in
period [Cdn$] |
|
$ |
22.94 |
|
$ |
14.02 |
[b] Long-term retention program
The following is a continuity of the stock that
has not been released to 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]:
|
|
2014 |
|
2013 |
|
|
Number |
|
Stated |
|
Number |
|
Stated |
|
|
of
shares |
|
value |
|
of shares |
|
value |
|
|
|
|
|
|
|
|
|
|
|
Awarded and not released, beginning of
period |
|
730,476 |
|
$ |
25 |
|
882,988 |
|
$ |
30 |
Release of restricted stock |
|
(143,152) |
|
|
(4) |
|
(152,512) |
|
|
(5) |
Awarded and not released, March 31 and June
30 |
|
587,324 |
|
$ |
21 |
|
730,476 |
|
$ |
25 |
[c] Restricted stock unit
program
The following is a continuity schedule of
restricted stock unit programs outstanding [number of stock units
in the table below are expressed in whole numbers]:
|
|
2014 |
|
2013 |
|
|
Equity |
|
Liability |
|
Equity
(i) |
|
|
|
Equity |
|
Liability |
|
Liability |
|
|
|
|
classified |
|
classified |
|
classified |
|
|
|
classified |
|
classified |
|
classified |
|
|
|
|
RSUs |
|
RSUs |
|
DSUs |
|
Total |
|
RSUs |
|
RSUs |
|
DSUs |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period |
|
631,854 |
|
30,119 |
|
127,447 |
|
789,420 |
|
605,430 |
|
20,099 |
|
206,923 |
|
832,452 |
Granted |
|
50,809 |
|
8,025 |
|
6,315 |
|
65,149 |
|
70,636 |
|
13,825 |
|
10,013 |
|
94,474 |
Dividend equivalents |
|
253 |
|
153 |
|
529 |
|
935 |
|
415 |
|
189 |
|
1,206 |
|
1,810 |
Released |
|
(8,259) |
|
— |
|
— |
|
(8,259) |
|
(8,259) |
|
— |
|
(113,007) |
|
(121,266) |
Balance, March 31 |
|
674,657 |
|
38,297 |
|
134,291 |
|
847,245 |
|
668,222 |
|
34,113 |
|
105,135 |
|
807,470 |
Granted |
|
55,242 |
|
1,000 |
|
5,357 |
|
61,599 |
|
71,391 |
|
— |
|
7,523 |
|
78,914 |
Dividend equivalents |
|
233 |
|
139 |
|
489 |
|
861 |
|
348 |
|
158 |
|
626 |
|
1,132 |
Released |
|
— |
|
— |
|
— |
|
— |
|
(10,386) |
|
— |
|
— |
|
(10,386) |
Balance, June 30 |
|
730,132 |
|
39,436 |
|
140,137 |
|
909,705 |
|
729,575 |
|
34,271 |
|
113,284 |
|
877,130 |
(i) |
Effective January 1, 2014, the Deferred Share Units ["DSUs"]
awarded under the Non-Employee Director Share-Based Compensation
Plan will be settled by delivering Magna Common Shares equal to the
whole DSUs credited to the Independent Director in satisfaction of
the redemption value of the DSUs. Previously, the DSUs were
settled in cash. Accordingly, effective January 1, 2014, the
DSUs are accounted for through equity. |
[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, |
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Stock Option Plan |
|
$ |
3 |
|
$ |
4 |
|
$ |
7 |
|
$ |
8 |
Long-term retention |
|
|
1 |
|
|
1 |
|
|
2 |
|
|
2 |
Restricted stock unit |
|
|
5 |
|
|
5 |
|
|
10 |
|
|
8 |
|
|
|
9 |
|
|
10 |
|
|
19 |
|
|
18 |
Fair value adjustment for liability classified
DSUs |
|
|
— |
|
|
2 |
|
|
— |
|
|
4 |
Total stock-based compensation expense |
|
$ |
9 |
|
$ |
12 |
|
$ |
19 |
|
$ |
22 |
12. COMMON SHARES
[a] The Company repurchased shares
under normal course issuer bids as follows:
|
|
|
|
2014 |
|
2013 |
|
|
|
|
Number |
|
Cash |
|
Number |
|
Cash |
|
|
|
|
of
shares |
|
consideration |
|
of shares |
|
consideration |
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
|
2,710,000 |
|
$ |
240 |
|
1,593,615 |
|
$ |
88 |
Second Quarter |
|
|
|
5,718,181 |
|
|
575 |
|
5,194,188 |
|
|
337 |
|
|
|
|
8,428,181 |
|
$ |
815 |
|
6,787,803 |
|
$ |
425 |
The Company can purchase up to 20 million shares
under a normal course issuer bid that will terminate no later than
November 12, 2014. Between
July 1, 2014 and August 7, 2014, the Company purchased for
cancellation 1,465,431 Common Shares for cash consideration of
$161 million through a pre-defined
automatic securities purchase plan with a designated broker.
As at August 7, 2014, the Company had
7,596,665 shares remaining to be repurchased under the normal
course issuer bid.
[b] The following table presents the
maximum number of shares that would be outstanding if all the
dilutive instruments outstanding at August
7, 2014 were exercised or converted:
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212,302,563 |
Stock options (i) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,486,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,789,248 |
(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:
|
|
2014 |
|
2013 |
|
|
Accumulated net unrealized gain on
translation of net investment in foreign operations |
|
|
Balance, beginning of period |
|
$ |
454 |
|
$ |
629 |
|
Net unrealized loss |
|
|
(112) |
|
|
(133) |
|
Repurchase of shares under normal course issuer
bid |
|
|
(4) |
|
|
(5) |
|
Balance, March 31 |
|
|
338 |
|
|
491 |
|
Net unrealized gain (loss) |
|
|
100 |
|
|
(91) |
|
Repurchase of shares under normal course issuer
bid |
|
|
(11) |
|
|
(17) |
|
Balance, June 30 |
|
|
427 |
|
|
383 |
|
Accumulated net
unrealized gain (loss) on cash flow hedges (i) |
|
Balance, beginning of period |
|
|
(20) |
|
|
34 |
|
Net unrealized (loss) gain |
|
|
(31) |
|
|
8 |
|
Reclassification of net gain to net income |
|
|
(1) |
|
|
(6) |
|
Balance, March 31 |
|
|
(52) |
|
|
36 |
|
Net unrealized gain (loss) |
|
|
49 |
|
|
(36) |
|
Reclassification of net loss (gain) to net
income |
|
|
6 |
|
|
(6) |
|
Balance, June 30 |
|
|
3 |
|
|
(6) |
|
|
Accumulated net unrealized loss on pensions
(ii) |
|
|
Balance, beginning of period |
|
|
(117) |
|
|
(168) |
|
Reclassification of net loss to net income |
|
|
1 |
|
|
3 |
|
Balance, March 31 |
|
|
(116) |
|
|
(165) |
|
Reclassification of net loss to net income |
|
|
2 |
|
|
3 |
|
Balance, June 30 |
|
|
(114) |
|
|
(162) |
|
Accumulated net
unrealized loss on available-for-sale investments |
|
Balance, beginning of period |
|
|
(4) |
|
|
1 |
|
Net unrealized (loss) gain |
|
|
(1) |
|
|
1 |
|
Balance, March 31 |
|
|
(5) |
|
|
2 |
|
Net unrealized loss |
|
|
— |
|
|
(5) |
|
Balance, June 30 |
|
|
(5) |
|
|
(3) |
|
|
|
|
|
|
|
Total accumulated other comprehensive
income |
|
$ |
311 |
|
$ |
212 |
|
|
(i) |
The amount of income tax (obligation) benefit that has been
netted in the accumulated net unrealized gain (loss) on cash flow
hedges is as follows: |
|
|
|
|
|
|
|
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
$ |
5 |
|
$ |
(13) |
|
|
|
|
|
|
Net unrealized loss (gain) |
|
|
|
|
10 |
|
|
(4) |
|
|
|
|
|
|
Reclassifications of
net gain to net income |
|
|
|
|
1 |
|
|
2 |
|
|
|
|
|
|
Balance, March 31 |
|
|
|
|
16 |
|
|
(15) |
|
|
|
|
|
|
Net unrealized (gain) loss |
|
|
|
|
(18) |
|
|
13 |
|
|
|
|
|
|
Reclassifications of
net (loss) gain to net income |
|
|
|
|
(1) |
|
|
3 |
|
|
|
|
|
|
Balance, June
30 |
|
|
|
$ |
(3) |
|
$ |
1 |
|
|
(ii) |
The amount of income tax benefit that has been netted in the
accumulated net unrealized loss on pensions is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
|
|
|
|
|
|
|
$ |
14 |
|
$ |
36 |
|
|
|
|
|
|
Reclassification of
net loss to net income |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
(1) |
|
|
|
|
|
|
Balance, March 31 |
|
|
|
|
|
|
|
|
|
|
|
14 |
|
|
35 |
|
|
|
|
|
|
Reclassification of
net loss to net income |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
(1) |
|
|
|
|
|
|
Balance, June
30 |
|
|
|
|
|
|
|
|
|
|
$ |
14 |
|
$ |
34 |
The amount of other comprehensive income that is
expected to be reclassified to net income over the next 12 months
is $5 million [net of income taxes of
$3 million].
14. FINANCIAL INSTRUMENTS
[a] The Company's financial assets and
financial liabilities consist of the following:
|
|
June 30, |
|
December 31, |
|
|
2014 |
|
2013 |
|
Held for trading |
|
Cash and cash
equivalents |
|
$ |
1,756 |
|
$ |
1,554 |
|
Investment in
asset-backed commercial paper |
|
|
94 |
|
|
92 |
|
|
$ |
1,850 |
|
$ |
1,646 |
|
Held to maturity
investments |
|
Severance
investments |
|
$ |
5 |
|
$ |
5 |
|
Available-for-sale |
|
Equity investments |
|
$ |
4 |
|
$ |
4 |
|
Loans and
receivables |
|
Accounts receivable |
|
$ |
6,107 |
|
$ |
5,246 |
|
Long-term receivables
included in other assets |
|
|
106 |
|
|
111 |
|
|
$ |
6,213 |
|
$ |
5,357 |
|
Other financial
liabilities |
|
Bank
indebtedness |
|
$ |
49 |
|
$ |
41 |
|
Long-term debt (including
portion due within one year) |
|
|
1,049 |
|
|
332 |
|
Accounts
payable |
|
|
5,166 |
|
|
4,781 |
|
|
$ |
6,264 |
|
$ |
5,154 |
|
Derivatives designated as
effective hedges, measured at fair value |
|
Foreign currency
contracts |
|
|
Prepaid expenses |
|
$ |
39 |
|
$ |
42 |
|
|
Other assets |
|
|
20 |
|
|
20 |
|
|
Other accrued liabilities |
|
|
(29) |
|
|
(37) |
|
|
Other long-term liabilities |
|
|
(16) |
|
|
(28) |
|
|
|
14 |
|
|
(3) |
|
Natural gas
contracts |
|
|
Other accrued liabilities |
|
|
(1) |
|
|
(1) |
|
|
$ |
13 |
|
$ |
(4) |
[b] Derivatives designated as effective hedges, measured
at fair value
The Company presents derivatives that are
designated as effective hedges at gross fair values in the
Consolidated Balance Sheets. However, master netting and other
similar arrangements allow net settlements under certain
conditions. The following table shows the Company's derivative
foreign currency contracts at gross fair value as reflected in the
Consolidated Balance Sheets and the unrecognized impacts of master
netting arrangements:
|
|
|
|
|
Gross |
|
Gross |
|
|
|
|
|
amounts |
|
amounts |
|
|
|
|
|
presented |
|
not
offset |
|
|
|
|
|
in
Consolidated |
|
in Consolidated |
|
|
|
|
|
Balance
Sheets |
|
Balance Sheets |
|
Net amounts |
|
|
|
|
|
June 30, 2014 |
|
|
|
|
|
Assets |
|
|
|
|
$ |
59 |
|
$ |
33 |
|
$ |
26 |
|
Liabilities |
|
|
|
|
$ |
(45) |
|
$ |
(33) |
|
$ |
(12) |
|
|
|
|
|
December 31, 2013 |
|
|
|
|
|
Assets |
|
|
|
|
$ |
62 |
|
$ |
42 |
|
$ |
20 |
|
Liabilities |
|
|
|
|
$ |
(65) |
|
$ |
(42) |
|
$ |
(23) |
[c] 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, 2014,
the Company held Canadian third party asset-backed commercial paper
["ABCP"] with a face value of Cdn$107
million [December 31, 2013 -
Cdn$107 million]. The carrying value and estimated fair value of
this investment was Cdn$101 million
[December 31, 2013 - Cdn$99 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, 2014,
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, 2014.
Term debt
The Company's term debt includes $212 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.
Senior Notes
At June 30, 2014,
the total estimated fair value of the Senior Notes was
approximately $754 million,
determined primarily using active market prices, categorized as
Level 1 inputs within the ASC 820 fair value hierarchy.
[d] 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,
2014, 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.
[e] 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 and Senior Notes as the
interest rates on these instruments are fixed.
[f] 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, euro, British pound and
Indian rupee 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, 2014,
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280 |
|
1,273 |
|
euro amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67 |
|
12 |
|
Korean won amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,956 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For U.S. dollars |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peso amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,050 |
|
278 |
|
Korean won amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,212 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For euros |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98 |
|
254 |
|
GBP amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18 |
|
23 |
|
Czech Koruna amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,468 |
|
8 |
|
Polish Zlotys amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
224 |
|
— |
Forward contracts mature at various dates
through 2019. Foreign currency exposures are reviewed
quarterly.
15. CONTINGENCIES
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.
[a] 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 2015, 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] On September 24,
2013, representatives of the Bundeskartellamt, the German
Federal Cartel Office [the "Cartel Office"], attended at one of the
Company's operating divisions in Germany to obtain information in connection
with an ongoing antitrust investigation relating to suppliers of
automobile textile coverings and components, particularly trunk
linings. Investigations of this nature can continue for several
years. Where wrongful conduct is found, the Cartel Office has the
authority to impose administrative fines that are calculated in
accordance with formula-based guidelines tied to the level of
affected sales, the gravity of the infringement, the consolidated
sales of the group of companies to which the offending entity
belongs, as well as other mitigating and aggravating factors.
The Company's policy is to comply with all
applicable laws, including antitrust and competition laws. In light
of the early stage of the investigation, management is unable to
predict its duration or outcome, including whether any operating
division of the Company could be found liable for any violation of
law or the extent of any fine, if found to be liable. In the event
of any such violation, any fines imposed under the Cartel Office
guidelines referred to above could have a material adverse effect
on Magna's profitability in the year such fine is imposed.
[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 8];
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. Consistent with the above, the Company's
internal financial reporting separately segments key internal
operating performance measures between North America, Europe, Asia
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. During the fourth quarter of 2013, the
Company began reporting Asia and
Rest of World as separate reporting segments.
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, 2014 |
|
June 30, 2013 |
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
Total |
|
External |
|
Adjusted |
|
assets, |
|
Total |
|
External |
|
Adjusted |
|
assets, |
|
|
sales |
|
sales |
|
EBIT |
|
net |
|
sales |
|
sales |
|
EBIT |
|
net |
|
North America |
|
Canada |
|
$ |
1,795 |
|
$ |
1,660 |
|
|
|
|
$ |
596 |
|
$ |
1,742 |
|
$ |
1,614 |
|
|
|
|
$ |
608 |
|
United States |
|
|
2,550 |
|
|
2,415 |
|
|
|
|
|
1,143 |
|
|
2,164 |
|
|
2,040 |
|
|
|
|
|
1,020 |
|
Mexico |
|
|
1,109 |
|
|
1,023 |
|
|
|
|
|
612 |
|
|
1,013 |
|
|
935 |
|
|
|
|
|
573 |
|
Eliminations |
|
|
(326) |
|
|
— |
|
|
|
|
|
— |
|
|
(300) |
|
|
— |
|
|
|
|
|
— |
|
|
|
5,128 |
|
|
5,098 |
|
$ |
537 |
|
|
2,351 |
|
|
4,619 |
|
|
4,589 |
|
$ |
422 |
|
|
2,201 |
Europe |
|
Western Europe (excluding Great
Britain) |
|
|
3,050 |
|
|
2,977 |
|
|
|
|
|
1,396 |
|
|
3,006 |
|
|
2,936 |
|
|
|
|
|
1,411 |
|
Great Britain |
|
|
195 |
|
|
195 |
|
|
|
|
|
88 |
|
|
277 |
|
|
275 |
|
|
|
|
|
57 |
|
Eastern
Europe |
|
|
668 |
|
|
572 |
|
|
|
|
|
675 |
|
|
619 |
|
|
544 |
|
|
|
|
|
569 |
|
Eliminations |
|
|
(117) |
|
|
— |
|
|
|
|
|
— |
|
|
(96) |
|
|
— |
|
|
|
|
|
— |
|
|
|
3,796 |
|
|
3,744 |
|
|
125 |
|
|
2,159 |
|
|
3,806 |
|
|
3,755 |
|
|
120 |
|
|
2,037 |
Asia |
|
|
486 |
|
|
450 |
|
|
42 |
|
|
613 |
|
|
398 |
|
|
361 |
|
|
19 |
|
|
570 |
Rest of
World |
|
|
168 |
|
|
168 |
|
|
(11) |
|
|
103 |
|
|
248 |
|
|
248 |
|
|
(17) |
|
|
110 |
Corporate and
Other |
|
|
(114) |
|
|
4 |
|
|
17 |
|
|
360 |
|
|
(109) |
|
|
9 |
|
|
3 |
|
|
225 |
Total reportable
segments |
|
|
9,464 |
|
|
9,464 |
|
|
710 |
|
|
5,586 |
|
|
8,962 |
|
|
8,962 |
|
|
547 |
|
|
5,143 |
Other expense,
net |
|
|
|
|
|
|
|
|
(11) |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
Interest expense,
net |
|
|
|
|
|
|
|
|
(7) |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
|
|
|
|
$ |
9,464 |
|
$ |
9,464 |
|
$ |
692 |
|
|
5,586 |
|
$ |
8,962 |
|
$ |
8,962 |
|
$ |
543 |
|
|
5,143 |
Current assets |
|
|
|
|
|
|
|
|
|
|
|
11,063 |
|
|
|
|
|
|
|
|
|
|
|
9,918 |
Investments, goodwill,
deferred tax assets, and other
assets |
|
|
|
|
|
|
|
|
|
|
|
2,675 |
|
|
|
|
|
|
|
|
|
|
|
2,633 |
Consolidated total
assets |
|
|
|
|
|
|
|
|
|
|
$ |
19,324 |
|
|
|
|
|
|
|
|
|
|
$ |
17,694 |
|
|
|
|
|
|
|
Six months ended |
|
Six months
ended |
|
|
June 30, 2014 |
|
June 30, 2013 |
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
Total |
|
External |
|
Adjusted |
|
assets, |
|
Total |
|
External |
|
Adjusted |
|
assets, |
|
|
sales |
|
sales |
|
EBIT |
|
net |
|
sales |
|
sales |
|
EBIT |
|
net |
|
|
North America |
|
|
Canada |
|
$ |
3,399 |
|
$ |
3,147 |
|
|
|
|
$ |
596 |
|
$ |
3,423 |
|
$ |
3,167 |
|
|
|
|
$ |
608 |
|
United States |
|
|
4,871 |
|
|
4,612 |
|
|
|
|
|
1,143 |
|
|
4,118 |
|
|
3,883 |
|
|
|
|
|
1,020 |
|
Mexico |
|
|
2,148 |
|
|
1,981 |
|
|
|
|
|
612 |
|
|
1,978 |
|
|
1,827 |
|
|
|
|
|
573 |
|
Eliminations |
|
|
(622) |
|
|
— |
|
|
|
|
|
— |
|
|
(588) |
|
|
— |
|
|
|
|
|
— |
|
|
|
9,796 |
|
|
9,740 |
|
$ |
980 |
|
|
2,351 |
|
|
8,931 |
|
|
8,877 |
|
$ |
803 |
|
|
2,201 |
Europe |
|
Western Europe (excluding Great
Britain) |
|
|
6,130 |
|
|
5,992 |
|
|
|
|
|
1,396 |
|
|
5,908 |
|
|
5,771 |
|
|
|
|
|
1,411 |
|
Great Britain |
|
|
377 |
|
|
377 |
|
|
|
|
|
88 |
|
|
495 |
|
|
491 |
|
|
|
|
|
57 |
|
Eastern
Europe |
|
|
1,297 |
|
|
1,102 |
|
|
|
|
|
675 |
|
|
1,146 |
|
|
998 |
|
|
|
|
|
569 |
|
Eliminations |
|
|
(235) |
|
|
— |
|
|
|
|
|
— |
|
|
(191) |
|
|
— |
|
|
|
|
|
— |
|
|
|
7,569 |
|
|
7,471 |
|
|
252 |
|
|
2,159 |
|
|
7,358 |
|
|
7,260 |
|
|
192 |
|
|
2,037 |
Asia |
|
|
949 |
|
|
878 |
|
|
71 |
|
|
613 |
|
|
762 |
|
|
695 |
|
|
30 |
|
|
570 |
Rest of World |
|
|
329 |
|
|
329 |
|
|
(24) |
|
|
103 |
|
|
479 |
|
|
479 |
|
|
(28) |
|
|
110 |
Corporate and
Other |
|
|
(218) |
|
|
7 |
|
|
36 |
|
|
360 |
|
|
(207) |
|
|
12 |
|
|
17 |
|
|
225 |
Total reportable
segments |
|
|
18,425 |
|
|
18,425 |
|
|
1,315 |
|
|
5,586 |
|
|
17,323 |
|
|
17,323 |
|
|
1,014 |
|
|
5,143 |
Other expense,
net |
|
|
|
|
|
|
|
|
(33) |
|
|
|
|
|
|
|
|
|
|
|
(6) |
|
|
|
Interest expense,
net |
|
|
|
|
|
|
|
|
(9) |
|
|
|
|
|
|
|
|
|
|
|
(8) |
|
|
|
|
|
$ |
18,425 |
|
$ |
18,425 |
|
$ |
1,273 |
|
|
5,586 |
|
$ |
17,323 |
|
$ |
17,323 |
|
$ |
1,000 |
|
|
5,143 |
Current
assets |
|
|
|
|
|
|
|
|
|
|
|
11,063 |
|
|
|
|
|
|
|
|
|
|
|
9,918 |
Investments, goodwill
deferred tax assets and other assets |
|
|
|
|
|
|
|
|
|
|
|
2,675 |
|
|
|
|
|
|
|
|
|
|
|
2,633 |
Consolidated total
assets |
|
|
|
|
|
|
|
|
|
|
$ |
19,324 |
|
|
|
|
|
|
|
|
|
|
$ |
17,694 |
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.