AURORA, ON, Nov. 5, 2015 /PRNewswire/ - Magna
International Inc. (TSX: MG; NYSE: MGA) today reported
financial results for the third quarter ended September 30, 2015.
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THREE MONTHS ENDED
SEPTEMBER 30, |
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NINE MONTHS ENDED
SEPTEMBER 30, |
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2015 |
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2014 |
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2015 |
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2014 |
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Sales |
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$ |
7,661 |
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$ |
8,247 |
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$ |
23,566 |
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$ |
25,613 |
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Adjusted EBIT(1) |
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$ |
565 |
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$ |
627 |
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$ |
1,873 |
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$ |
1,967 |
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Income from continuing operations
before |
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income taxes |
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$ |
680 |
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$ |
611 |
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$ |
2,027 |
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$ |
1,909 |
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Net income from continuing operations |
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attributable to Magna International Inc. |
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$ |
470 |
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$ |
487 |
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$ |
1,463 |
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$ |
1,408 |
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Diluted earnings per share |
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from continuing operations |
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$ |
1.13 |
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$ |
1.14 |
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$ |
3.53 |
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$ |
3.21 |
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All results are reported in millions of U.S.
dollars, except per share figures, which are in U.S.
dollars. |
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(1) |
Adjusted EBIT is the measure of
segment profit or loss as reported in the Company's attached
unaudited interim consolidated financial statements. |
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Adjusted EBIT represents income from operations before income
taxes; interest expense, net; and other (income) expense, net. |
BASIS OF PRESENTATION
In the third quarter of 2015, we sold
substantially all of our interiors operations (excluding our
seating operations). The assets and liabilities, and operating
results for the previously reported interiors operations are
presented as discontinued operations and have therefore been
excluded from both continuing operations and segment results for
all periods presented in the attached financial statements. This
Press Release reflects the results of continuing operations, unless
otherwise noted.
THREE MONTHS ENDED SEPTEMBER 30, 2015
We posted sales of $7.7
billion for the third quarter ended September 30, 2015, a decrease of 7% from the
third quarter of 2014. The weakening of certain currencies against
our U.S. dollar reporting currency, in particular the euro and
Canadian dollar, had a significant negative impact on our reported
sales for the third quarter of 2015. Foreign currency
translation reduced our sales by approximately $870 million, as compared to the third quarter of
2014. Excluding the impact of foreign currency translation,
our sales increased 3% in the third quarter of 2015, compared to
the third quarter of 2014. North American light vehicle
production increased 4% to 4.3 million units and European light
vehicle production increased 4% to 4.7 million units in the third
quarter of 2015, compared to the third quarter of 2014.
Excluding the impact of foreign currency
translation, our complete vehicle assembly sales decreased 18% in
the third quarter of 2015, compared to the third quarter of
2014. Complete vehicle assembly volumes decreased 28% to
approximately 23,000 units.
During the third quarter of 2015, income from
continuing operations before income taxes was $680 million, an increase of $69 million over the third quarter of 2014. Net
income from continuing operations attributable to Magna
International Inc. was $470 million
and diluted earnings per share from continuing operations were
$1.13, decreases of $17 million and $0.01 respectively, both compared to the third
quarter of 2014.
For the third quarter of 2015, other (income)
expense positively impacted income from continuing operations
before income taxes by $124 million,
net income from continuing operations attributable to Magna
International Inc. by $68 million,
and diluted earnings per share from continuing operations by
$0.16, respectively.
For the third quarter of 2014, other (income)
expense negatively impacted income from continuing operations
before income taxes by $7 million,
net income from continuing operations attributable to Magna
International Inc. by $6 million, and
diluted earnings per share from continuing operations by
$0.01, respectively.
During the third quarter ended September 30, 2015, we generated cash from
operations of $563 million before
changes in operating assets and liabilities, and $33 million in operating assets and liabilities.
Total investment activities for the third quarter of 2015 were
$434 million, including $360 million in fixed asset additions and
$74 million in investments and other
assets.
NINE MONTHS ENDED SEPTEMBER 30,
2015
We posted sales of $23.6
billion for the nine months ended September 30, 2015, a decrease of 8% from the
nine months ended September 30, 2014.
The weakening of certain currencies against our U.S. dollar
reporting currency, in particular the euro and Canadian dollar, had
a significant negative impact on our reported sales for the first
nine months of 2015. Foreign currency translation reduced our
sales by approximately $2.6 billion,
as compared to the first nine months of 2014. Excluding the
impact of foreign currency translation, our sales increased 2% in
the first nine months of 2015, compared to the first nine months of
2014.
During the nine months ended September 30, 2015, vehicle production increased
2% to 12.9 million units in North
America and increased 2% to 15.3 million units in
Europe, each compared to the first
nine months of 2014.
Excluding the impact of foreign currency
translation, our complete vehicle assembly sales decreased 12% in
the first nine months of 2015, compared to the first nine months of
2014. Complete vehicle assembly volumes decreased 23% to
approximately 79,000 units.
During the nine months ended September 30, 2015, income from continuing
operations before income taxes was $2.0
billion, net income from continuing operations attributable
to Magna International Inc. was $1.5
billion and diluted earnings per share from continuing
operations were $3.53, increases of
$118 million, $55 million and $0.32, respectively, each compared to the first
nine months of 2014.
For the nine months ended September 30, 2015, other (income) expense
positively impacted income from continuing operations before income
taxes by $181 million, net income
from continuing operations attributable to Magna International Inc.
by $110 million, and diluted earnings
per share from continuing operations by $0.26 respectively.
For the nine months ended September 30, 2014, other (income) expense
negatively impacted income from continuing operations before income
taxes by $40 million. In
addition, for the nine months ended September 30, 2014, other (income) expense and
the impact of the Austrian tax reform together negatively impacted
net income from continuing operations attributable to Magna
International Inc. by $68 million,
and diluted earnings per share from continuing operations by
$0.16, respectively.
During the nine months ended September 30, 2015, we generated cash from
operations before changes in operating assets and liabilities of
$1.9 billion, and invested
$587 million in operating assets and
liabilities. Total investment activities for the first nine months
of 2015 were $1.1 billion, including
$987 million in fixed asset
additions, $152 million in
investments and other assets and $1
million to purchase subsidiaries.
A more detailed discussion of our consolidated
financial results for the third quarter and nine months ended
September 30, 2015 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 $0.22 with
respect to our outstanding Common Shares for the quarter ended
September 30, 2015. This dividend is
payable on December 11, 2015 to
shareholders of record on November 27,
2015.
OTHER MATTERS
Subject to approval by the Toronto Stock
Exchange and the New York Stock Exchange, our Board of Directors
approved a normal course issuer bid to purchase up to 40 million of
our Common Shares, representing approximately 9.9% of our public
float of Common Shares. This normal course issuer bid is
expected to commence on or about November
13, 2015 and will terminate one year later.
UPDATED 2015 OUTLOOK
The table below reflects our 2015 outlook and
2014 actual results, both from continuing operations:
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2015 Outlook |
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2014 Actual |
Light Vehicle Production (Units) |
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North America |
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17.4 million |
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17.0 million |
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Europe |
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20.5 million |
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20.1 million |
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Production Sales |
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North America |
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$17.4 - $17.8 billion |
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$17.4 billion |
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Europe |
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$7.0 - $7.3 billion |
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$8.8 billion |
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Asia |
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$1.5 - $1.6 billion |
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$1.6 billion |
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Rest of World |
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$0.4 -
$0.5 billion |
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$0.7 billion |
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Total Production Sales |
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$26.3 - $27.2 billion |
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$28.5 billion |
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Complete Vehicle Assembly Sales |
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$2.3 - $2.5 billion |
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$3.2 billion |
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Total Sales |
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$31.3 - $32.6 billion |
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$34.4 billion |
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Operating Margin(1) |
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Approximately 7.7% |
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7.7% |
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Tax Rate(1) |
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Approximately 26% |
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25.0% |
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Capital Spending |
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Approximately $1.5 billion |
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$1.5 billion |
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(1) Excluding
other (income) expense, net |
In this 2015 outlook, in addition to 2015 light
vehicle production, we have assumed no material acquisitions or
divestitures other than the divestiture of substantially all of our
interior operations as discussed above. 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
285 manufacturing operations and 83 product development,
engineering and sales centres in 29 countries. We have over
125,000 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, 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 third quarter results on
Thursday, November 5, 2015 at
8:00 a.m. EST. The conference call
will be chaired by Don Walker, Chief
Executive Officer. The number to use for this call is
1-800-616-7436. The number for overseas callers is 1-303-223-4365.
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 Thursday morning prior to the call.
FORWARD-LOOKING STATEMENTS
This press release contains statements that
constitute "forward-looking statements" or "forward-looking
information" within the meaning of applicable securities
legislation, including, but not limited to, statements relating to:
Magna's forecasts of light vehicle production in North America and Europe; expected consolidated sales, based on
such light vehicle production volumes; production sales, including
expected split by segment, in its North
America, Europe,
Asia and Rest of World segments
for 2015; complete vehicle assembly sales; consolidated operating
margin, effective income tax rate; fixed asset expenditures; and
future purchases of Common Shares under our NCIB. 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; fluctuations in relative currency
values; restructuring, downsizing and/or other significant
non-recurring costs; continued underperformance of one or more of
our operating Divisions; our ability to successfully launch
material new or takeover business; shifts in market share away from
our top customers; our inability to grow our business with OEMs;
shifts in market shares among vehicles or vehicle segments, or
shifts away from vehicles on which we have significant content; 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 labour disruption; 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; 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; impairment
charges related to goodwill and long-lived assets; exposure to, and
ability to offset, volatile commodities prices; risk of
production disruptions due to natural disasters or other
catastrophic events; the security and reliability of our IT
systems; legal claims and/or regulatory actions against us,
including the ongoing antitrust investigations being conducted by
German and Brazilian authorities and any proceedings that may arise
out of the internal global review initiated by us focused on
anti-trust risk; 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; our
ability to successfully identify, complete and integrate
acquisitions or achieve anticipated synergies; our ability to
conduct appropriate due diligence on acquisition targets; the
consummation of the acquisition of the Getrag group of companies
(the "Getrag Transaction"); the satisfaction or waiver of
conditions to complete the Getrag Transaction, including obtaining
required regulatory approvals; warranty or indemnity obligations in
relation to pre-closing liabilities in connection with the sale of
substantially all of our interiors operations; an increase in our
risk profile as a result of completed acquisitions; risks of
conducting business in foreign markets, including China, India,
Russia, Eastern Europe, Thailand, Brazil, Argentina and other non-traditional markets
for us; ongoing pricing pressures, including our ability to offset
price concessions demanded by our customers; our ability to
consistently develop innovative products or processes; warranty and
recall costs; pension liabilities; 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 nine months ended September
30, 2015 included in this press release, and the
audited consolidated financial statements and MD&A for the year
ended December 31, 2014
included in our 2014 Annual Report to Shareholders.
This MD&A has been prepared as at
November 4, 2015.
OVERVIEW
We are a leading global automotive supplier with
285 manufacturing operations and 83 product development,
engineering and sales centres in 29 countries. We have over 125,000
employees focused on delivering superior value to our customers
through innovative products, processes and World Class
Manufacturing. Our product capabilities include producing body,
chassis, 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
Basis of Presentation
In the third quarter of 2015, we sold
substantially all of our interiors operations (excluding our
seating operations). The assets and liabilities, and operating
results for the previously reported interiors operations are
presented as discontinued operations and have therefore been
excluded from both continuing operations and segment results for
all periods presented in the attached financial statements. This
Management's Discussion and Analysis reflects the results of
continuing operations, unless otherwise noted.
Operations
North American light vehicle production
increased 4% to 4.3 million units and European light vehicle
production increased 4% to 4.7 million units, each in the third
quarter of 2015 compared to the third quarter of 2014.
We posted sales of $7.66
billion for the third quarter of 2015, a decrease of
$586 million or 7% from the third
quarter of 2014. Although our financial results are reported in
U.S. dollars, we also generate sales in various other currencies,
including the euro and Canadian dollar. The weakening of these and
other functional currencies against the U.S. dollar reduced our
reported sales by approximately $870
million in the third quarter of 2015, as compared to the
third quarter of 2014. Excluding the negative impact of foreign
currency translation, our sales increased 3% in the third quarter
of 2015, compared to the third quarter of 2014.
Our Adjusted EBIT(1) decreased 10% to
$565 million in the third quarter of
2015, compared to the third quarter of 2014:
- North America: Adjusted EBIT
of $455 million for the third quarter
of 2015 declined 4% compared to $475
million for the third quarter of 2014. Segment total sales
increased 1% in the third quarter of 2015 compared to the third
quarter of 2014.
- Europe: Adjusted EBIT of
$91 million for the third quarter of
2015 declined 15% or $16 million from
the third quarter of 2014. Segment total sales declined 16% from
the third quarter of 2014 to the third quarter of 2015.
- Asia: Adjusted EBIT was
$13 million in the third quarter of
2015, compared to $35 million for the
third quarter of 2014. Segment total sales declined 11% in the
third quarter of 2015 compared to the third quarter of 2014.
- Rest of World: Our Adjusted EBIT loss of $7 million for the third quarter of 2015 compared
to an Adjusted EBIT loss of $6
million in the third quarter of 2014. Segment total sales
declined 39% to $115 million for the
third quarter of 2015 compared to the third quarter of 2014.
1 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
(income) expense, net.
Capital Structure
During the third quarter of 2015, we issued
$650 million 4.150% fixed-rate senior
unsecured notes which mature on October 1,
2025 (the "Senior Notes").
During the third quarter of 2015, we purchased
for cancellation 7.2 million Common Shares for cash consideration
of $346 million.
Lastly, subject to approval by the Toronto Stock
Exchange ("TSX") and the New York Stock Exchange ("NYSE"), our
Board of Directors approved a new normal course issuer bid ("NCIB")
to purchase up to 40 million of our Common Shares, representing
approximately 9.9% of our public float of Common Shares.
FINANCIAL RESULTS SUMMARY
During the third quarter of 2015, we posted
sales of $7.66 billion, a decrease of
7% from the third quarter of 2014. This lower sales level was
substantially a result of a decrease in reported U.S. dollar sales
due to the weakening of foreign currencies against the U.S. dollar.
Comparing the third quarter of 2015 to 2014:
- North American vehicle production increased 4% and our North
American production sales increased 2% to $4.28 billion;
- European vehicle production increased 4% but our European
production sales decreased 18% to $1.70
billion;
- Asian production sales decreased 12% to $346 million;
- Rest of World production sales decreased 38% to $111 million;
- Complete vehicle assembly volumes decreased 28% and sales
decreased 32% to $522 million;
and
- Tooling, engineering and other sales increased 8% to
$705 million.
During the third quarter of 2015, we earned
income from continuing operations before income taxes of
$680 million compared to $611 million for the third quarter of 2014.
Excluding other (income) expense, net ("Other Income" or "Other
Expense"), as discussed in the "Other Income" section, income from
continuing operations before income taxes decreased $62 million primarily as a result of:
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations in North America;
- the negative impact of foreign exchange translation from the
weakening of foreign currencies, including the Canadian dollar and
euro, each against the U.S. dollar;
- higher launch costs;
- lower recoveries associated with scrap steel;
- insurance recoveries, during the third quarter of 2014, related
to a fire at a body and chassis facility in North America;
- increased pre-operating costs incurred at new facilities;
and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by:
- incremental margin earned on new programs that launched during
or subsequent to the third quarter of 2014;
- lower warranty costs of $21
million;
- decreased commodity costs;
- the expiration, at the end of 2014, of our consulting
agreements with Frank Stronach;
- higher equity income; and
- productivity and efficiency improvements at certain
facilities.
During the third quarter of 2015, net income
attributable to Magna International Inc. from continuing operations
was $470 million, a decrease of
$17 million compared to the third
quarter of 2014 and diluted earnings per share from continuing
operations decreased $0.01 to
$1.13 for the third quarter of 2015
compared to the third quarter of 2014. Other Income and Other
Expense, after tax, as discussed in the "Other Income" section,
impacted net income attributable to Magna International Inc. from
continuing operations and diluted earnings per share from
continuing operations as follows:
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For
the three months ended September 30, |
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2015 |
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2014 |
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Net Income |
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Diluted |
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Net Income |
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Diluted |
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Attributable |
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Earnings |
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Attributable |
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Earnings |
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to Magna |
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per
Share |
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to Magna |
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per Share |
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Other (income) expense,
net |
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$ |
(124) |
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$ |
(0.30) |
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$ |
7 |
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$ |
0.01 |
Income tax
effect |
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56 |
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0.14 |
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(1) |
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— |
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$ |
(68) |
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$ |
(0.16) |
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$ |
6 |
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$ |
0.01 |
Excluding the $68
million positive impact for the third quarter of 2015 and
the $6 million negative impact for
the third quarter of 2014, net income attributable to Magna
International Inc. from continuing operations for the third quarter
of 2015 decreased $91 million
compared to the third quarter of 2014.
Excluding the $0.16 per share positive impact for the third
quarter of 2015 and the $0.01 per
share negative impact for the third quarter of 2014, diluted
earnings per share from continuing operations decreased
$0.18, as a result of the decrease in
net income attributable to Magna International Inc. from continuing
operations partially offset by a decrease in the weighted average
number of diluted shares outstanding during the third quarter of
2015. The decrease in the weighted average number of diluted shares
outstanding was due to the purchase and cancellation of Common
Shares, during or subsequent to the third quarter of 2014, pursuant
to our normal course issuer bids.
INDUSTRY TRENDS AND RISKS
Our operating results are 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. Original equipment manufacturers ("OEMs")
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 other factors affecting our performance such
as: operational inefficiencies; costs incurred to launch new or
takeover business; price reduction pressures from our customers;
warranty and recall costs; commodities and scrap prices;
restructuring, downsizing and other significant non-recurring
costs; and the financial condition of our supply base, are
discussed in our Annual Information Form and Annual Report on Form
40-F, each in respect of the year ended December 31, 2014, and remain substantially
unchanged in respect of the third quarter ended September 30, 2015, other than the potential
impact on production volumes and/or other consequences as a result
of the recent Volkswagen diesel engine emissions investigations,
which we continue to monitor.
RESULTS OF OPERATIONS
Average Foreign Exchange
|
|
|
For the three months |
|
|
For the nine
months |
|
|
|
ended
September 30, |
|
|
ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Canadian dollar equals U.S. dollars |
|
|
0.766 |
|
|
0.919 |
|
|
- 17% |
|
|
0.796 |
|
|
0.914 |
|
|
- 13% |
1 euro equals U.S. dollars |
|
|
1.113 |
|
|
1.326 |
|
|
- 16% |
|
|
1.116 |
|
|
1.356 |
|
|
- 18% |
1 British pound equals U.S. dollars |
|
|
1.551 |
|
|
1.669 |
|
|
- 7% |
|
|
1.534 |
|
|
1.669 |
|
|
- 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
nine months ended September 30, 2015
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
SEPTEMBER 30, 2015
Sales
|
|
|
For the three
months |
|
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle Production
Volumes (millions of units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
4.259 |
|
|
|
4.096 |
|
|
|
+ 4% |
|
Europe |
|
|
|
4.676 |
|
|
|
4.485 |
|
|
|
+ 4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
External Production |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
$ |
4,281 |
|
|
$ |
4,204 |
|
|
|
+ 2% |
|
|
Europe |
|
|
|
1,696 |
|
|
|
2,060 |
|
|
|
- 18% |
|
|
Asia |
|
|
|
346 |
|
|
|
391 |
|
|
|
- 12% |
|
|
Rest of World |
|
|
|
111 |
|
|
|
179 |
|
|
|
- 38% |
|
Complete Vehicle Assembly |
|
|
|
522 |
|
|
|
763 |
|
|
|
- 32% |
|
Tooling, Engineering and
Other |
|
|
|
705 |
|
|
|
650 |
|
|
|
+ 8% |
Total Sales |
|
|
$ |
7,661 |
|
|
$ |
8,247 |
|
|
|
- 7% |
External Production Sales - North America
External production sales in North America increased 2% or $77 million to $4.28
billion for the third quarter of 2015 compared to
$4.20 billion for the third quarter
of 2014, primarily as a result of:
- the launch of new programs during or subsequent to the third
quarter of 2014, including the:
- Lincoln MKX;
- Ford Mustang;
- Mercedes-Benz R-Class and GLE Coupe;
- Chevrolet Colorado and GMC Canyon;
- Ford Edge; and
- Honda HR-V; and
- higher production volumes on certain existing programs.
These factors were partially offset by:
- a $262 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of the Canadian dollar against the U.S. dollar;
- net divestitures subsequent to the third quarter of 2014, which
negatively impacted sales by $16
million;
- programs that ended production during or subsequent to the
third quarter of 2014; and
- net customer price concessions subsequent to the third quarter
of 2014.
External Production Sales - Europe
External production sales in Europe decreased 18% or $364 million to $1.70
billion for the third quarter of 2015 compared to
$2.06 billion for the third quarter
of 2014, primarily as a result of:
- a $344 million decrease in
reported U.S. dollar sales as a result of the weakening of foreign
currencies against the U.S. dollar, including the euro, Russian
ruble, Czech koruna and Polish zloty;
- programs that ended production during or subsequent to the
third quarter of 2014;
- lower production volumes on certain existing programs; and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by the
launch of new programs during or subsequent to the third quarter of
2014, including the:
- Skoda Superb;
- BMW 2-Series;
- Volkswagen Passat; and
- Volkswagen Touran.
External Production Sales - Asia
External production sales in Asia decreased 12% or $45 million to $346
million for the third quarter of 2015 compared to
$391 million for the third quarter of
2014, primarily as a result of:
- lower production volumes on certain existing programs;
- a $15 million decrease in
reported U.S. dollar sales as a result of the weakening of foreign
currencies against the U.S. dollar, including the Chinese renminbi
and South Korean won;
- programs that ended production during or subsequent to the
third quarter of 2014; and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by the
launch of new programs during or subsequent to the third quarter of
2014, primarily in China,
India and Thailand.
External Production Sales - Rest of
World
External production sales in Rest of World
decreased 38% or $68 million to
$111 million for the third quarter of
2015 compared to $179 million for the
third quarter of 2014, primarily as a result of:
- a $46 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
- lower production volumes on certain existing programs.
These factors were partially offset by:
- the launch of new programs during or subsequent to the third
quarter of 2014, primarily in Brazil; and
- net customer price increases subsequent to the third quarter of
2014.
Complete Vehicle Assembly Sales
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Complete Vehicle Assembly Sales |
|
|
|
|
|
|
$ 522 |
|
|
|
$ 763 |
|
|
|
- 32% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Complete Vehicle Assembly Volumes
(Units) |
|
|
|
|
|
|
23,176 |
|
|
|
32,204 |
|
|
|
- 28% |
Complete vehicle assembly sales decreased 32% or
$241 million to $522 million for the third quarter of 2015
compared to $763 million for the
third quarter of 2014 and assembly volumes decreased 28% or 9,028
units.
The decrease in complete vehicle assembly sales
is primarily as a result of:
- a decrease in assembly volumes for the MINI Countryman and MINI
Paceman; and
- a $107 million decrease in
reported U.S. dollar sales as a result of the weakening of the euro
against the U.S. dollar.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales increased
8% or $55 million to $705 million for the third quarter of 2015
compared to $650 million for the
third quarter of 2014.
In the third quarter of 2015, the major programs
for which we recorded tooling, engineering and other sales were
the:
- Audi A4;
- Chevrolet Cruze;
- Chevrolet Equinox and GMC Terrain;
- GMC Acadia, Buick Enclave and Chevrolet Traverse;
- Opel Astra;
- Volkswagen Golf:
- BMW 2-Series;
- Volkswagen Touran; and
- Skoda Superb.
In the third quarter of 2014, the major programs
for which we recorded tooling, engineering and other sales were
the:
- BMW X6;
- Ford Mustang;
- Dodge Charger;
- MINI Countryman;
- Chevrolet Cruze;
- Volkswagen Golf;
- QOROS 3; and
- Mercedes-Benz M-Class.
The weakening of certain foreign currencies
against the U.S. dollar, including the euro and Canadian dollar had
an unfavourable impact of $96 million
on our reported tooling, engineering and other sales.
Cost of Goods Sold and Gross
Margin
|
|
|
|
|
For the three
months |
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
2015 |
|
|
|
2014 |
Sales |
|
|
|
|
$ |
7,661 |
|
|
$ |
8,247 |
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
Material |
|
|
|
|
|
4,839 |
|
|
|
5,226 |
|
Direct labour |
|
|
|
|
|
507 |
|
|
|
510 |
|
Overhead |
|
|
|
|
|
1,247 |
|
|
|
1,339 |
|
|
|
|
|
|
6,593 |
|
|
|
7,075 |
Gross margin |
|
|
|
|
$ |
1,068 |
|
|
$ |
1,172 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin as a percentage of
sales |
|
|
|
|
|
13.9% |
|
|
|
14.2% |
Cost of goods sold decreased $482 million to $6.59
billion for the third quarter of 2015 compared to
$7.08 billion for the third quarter
of 2014 primarily as a result of:
- a decrease in reported U.S. dollar cost of goods sold as a
result of the weakening of foreign currencies against the U.S.
dollar, including the euro and Canadian dollar;
- lower warranty costs of $21
million;
- decreased commodity costs; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- higher material, overhead and labour costs associated with the
increase in local currency sales, in particular in North America;
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations in North America;
- higher launch costs;
- lower recoveries associated with scrap steel;
- insurance recoveries, during the third quarter of 2014, related
to a fire at a body and chassis facility in North America; and
- increased pre-operating costs incurred at new facilities.
Gross margin decreased $104 million to $1.07
billion for the third quarter of 2015 compared to
$1.17 billion for the third quarter
of 2014 and gross margin as a percentage of sales decreased to
13.9% for the third quarter of 2015 compared to 14.2% for the third
quarter of 2014. The decrease in gross margin as a percentage of
sales was primarily due to:
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations in North America;
- higher launch costs;
- lower recoveries associated with scrap steel;
- an increase in the proportion of tooling, engineering and other
sales relative to total sales, that have low or no margins;
- insurance recoveries, during the third quarter of 2014, related
to a fire at a body and chassis facility in North America; and
- increased pre-operating costs incurred at new facilities.
These factors were partially offset by:
- a decrease in the proportion of complete vehicle assembly sales
relative to total sales, which have a higher material content than
our consolidated average;
- lower warranty costs;
- decreased commodity costs;
- a decrease in the proportion of sales earned in Europe relative to total sales, which have a
lower margin than our consolidated average, primarily due to the
weakening of the euro against the U.S. dollar; and
- productivity and efficiency improvements at certain
facilities.
Depreciation and Amortization
Depreciation and amortization costs decreased
$17 million to $197 million for the third quarter of 2015
compared to $214 million for the
third quarter of 2014. The lower depreciation and amortization was
primarily as a result of a decrease in reported U.S. dollar
depreciation and amortization largely as a result of the weakening
of the euro, Canadian dollar and Russian ruble, each against the
U.S. dollar partially offset by higher depreciation related to new
facilities.
Selling, General and Administrative
("SG&A")
SG&A expense as a percentage of sales was
4.7% for the third quarter of 2015 compared to 4.6% for the third
quarter of 2014. SG&A expense decreased $24 million to $358
million for the third quarter of 2015 compared to
$382 million for the third quarter of
2014 primarily as a result of:
- the weakening of the Canadian dollar, euro, Russian ruble and
Brazilian real, each against the U.S. dollar; and
- the expiration, at the end of 2014, of our consulting
agreements with Frank Stronach.
These factors were partially offset by:
- higher consulting costs; and
- a $2 million net decrease in
valuation gains in respect of asset-backed commercial paper
("ABCP").
Equity Income
Equity income increased $1 million to $52
million for the third quarter of 2015 compared to
$51 million for the third quarter of
2014.
Other (Income) Expense, net
During the third quarter of 2015, we entered
into a joint venture arrangement for the manufacture and sale of
roof and other accessories for the Jeep market to OEM as well as
aftermarket customers. We contributed two manufacturing facilities
and received a 49% interest in the newly formed joint venture and
cash proceeds of $118 million. Total
consideration was valued at $160
million, and as a result we recognized a gain of
$136 million ($80 million after tax). We will account for our
ownership as an equity investment since we have significant
influence through our voting rights, but do not control the joint
venture. In addition, during the third quarter of 2015 we recorded
net restructuring charges of $12
million ($12 million after
tax) in Europe at our exterior
systems operations.
During the second quarter of 2015, we sold our
battery pack business to Samsung SDI for proceeds of $120 million, resulting in a gain of $57 million ($42
million after tax).
During the three and nine months ended
September 30, 2014, we recorded net
restructuring charges of $7 million
and $40 million ($6 million and $36
million after tax), respectively, in Europe at our exterior 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
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 our long-term strategic direction and future global growth.
Our chief operating decision maker uses Adjusted
EBIT as the measure of segment profit or loss, since we believe
Adjusted EBIT is the most appropriate measure of operational
profitability or loss for our reporting segments. Adjusted EBIT
represents income from operations before income taxes; interest
expense, net; and other expense, net.
|
|
|
For the three months ended September 30, |
|
|
|
Total Sales |
|
|
Adjusted EBIT |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
$ |
4,591 |
|
|
$ |
4,541 |
|
|
$ |
50 |
|
|
$ |
455 |
|
|
$ |
475 |
|
|
$ |
(20) |
Europe |
|
|
|
2,642 |
|
|
|
3,163 |
|
|
|
(521) |
|
|
|
91 |
|
|
|
107 |
|
|
|
(16) |
Asia |
|
|
|
428 |
|
|
|
479 |
|
|
|
(51) |
|
|
|
13 |
|
|
|
35 |
|
|
|
(22) |
Rest of World |
|
|
|
115 |
|
|
|
190 |
|
|
|
(75) |
|
|
|
(7) |
|
|
|
(6) |
|
|
|
(1) |
Corporate and Other |
|
|
|
(115) |
|
|
|
(126) |
|
|
|
11 |
|
|
|
13 |
|
|
|
16 |
|
|
|
(3) |
Total reportable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
segments |
|
|
$ |
7,661 |
|
|
$ |
8,247 |
|
|
$ |
(586) |
|
|
$ |
565 |
|
|
$ |
627 |
|
|
$ |
(62) |
Excluded from Adjusted EBIT for the three months
ended September 30, 2015 and 2014
were the following Other Income and Other Expense items, which have
been discussed in the "Other Income" section.
|
|
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale |
|
|
|
|
|
|
|
$ |
(136) |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
|
|
|
|
|
|
|
12 |
|
|
|
7 |
|
|
|
|
|
|
|
|
$ |
(124) |
|
|
$ |
7 |
North
America
Adjusted EBIT in North
America decreased $20 million
to $455 million for the third quarter
of 2015 compared to $475 million
for the third quarter of 2014 primarily as a result of:
- a decrease in reported U.S. dollar EBIT due to the weakening of
the Canadian dollar against the U.S. dollar;
- lower recoveries associated with scrap steel;
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations;
- higher launch costs;
- insurance recoveries, during the third quarter of 2014, related
to a fire at a body and chassis facility in North America;
- increased pre-operating costs incurred at new facilities;
- a greater amount of employee profit sharing; and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by:
- lower warranty costs of $14
million;
- decreased commodity costs;
- lower affiliation fees paid to Corporate;
- margins earned on higher production sales;
- higher equity income; and
- productivity and efficiency improvements at certain
facilities.
Europe
Adjusted EBIT in Europe decreased $16
million to $91 million for the
third quarter of 2015 compared to $107 million for the third quarter of 2014
primarily as a result of:
- a decrease in reported U.S. dollar EBIT as a result of the
weakening of foreign currencies against the U.S. dollar, including
the euro and Czech koruna;
- operational inefficiencies at certain facilities;
- higher launch costs; and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by:
- lower affiliation fees paid to Corporate;
- lower warranty costs of $6
million;
- decreased commodity costs;
- decreased pre-operating costs incurred at new facilities;
- productivity and efficiency improvements at certain
facilities;
- a lower amount of employee profit sharing;
- lower incentive compensation; and
- higher equity income.
Asia
Adjusted EBIT in Asia decreased $22
million to $13 million for the
third quarter of 2015 compared to $35
million for the third quarter of 2014 primarily as a result
of:
- reduced margins due to lower production sales;
- increased pre-operating costs incurred at new facilities;
- lower equity income;
- higher launch costs; and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by:
- a lower amount of employee profit sharing;
- lower affiliation fees paid to Corporate; and
- lower warranty costs of $1
million.
Rest of World
Adjusted EBIT in Rest of World decreased
$1 million to a loss of $7 million for the third quarter of 2015 compared
to a loss of $6 million for the third
quarter of 2014 primarily as a result of:
- higher production costs, including inflationary increases, that
we have not been fully successful in passing through to our
customers; and
- higher incentive compensation.
These factors were partially offset by:
- productivity and efficiency improvements at certain
facilities;
- a decrease in reported U.S. dollar EBIT loss due to the
weakening of the Brazilian real against the U.S. dollar;
- lower affiliation fees paid to Corporate; and
- net customer price increases subsequent to the third quarter of
2014.
Corporate and Other
Corporate and Other Adjusted EBIT decreased
$3 million to $13 million for the third quarter of 2015
compared to $16 million for the third
quarter of 2014 primarily as a result of:
- a decrease in affiliation fees earned from our divisions;
and
- a $2 million net decrease in
valuation gains in respect of ABCP.
These factors were partially offset by the
expiration, at the end of 2014, of our consulting agreements with
Frank Stronach.
Interest Expense, net
Interest expense, net was $9 million in the third quarters of 2015 and
2014. Lower interest income in North
America was offset by lower interest expense in Asia.
Income from Continuing Operations before
Income Taxes
Income from continuing operations before income
taxes increased $69 million to
$680 million for the third quarter of
2015 compared to $611 million for the
third quarter of 2014. Excluding Other Income and Other Expense,
discussed in the "Other Income" section, income from continuing
operations before income taxes for the third quarter of 2015
decreased $62 million. The decrease
in income from continuing operations before income taxes is the
result of the decrease in Adjusted EBIT, as discussed above.
Income Taxes
|
|
|
|
|
|
For the three months ended September 30, |
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
$ |
|
|
|
% |
|
|
|
$ |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes as reported |
|
|
|
|
|
$ |
211 |
|
|
|
31.0 |
|
|
$ |
125 |
|
|
|
20.5 |
Tax effect on Other Income and Other
Expense |
|
|
|
|
|
|
(56) |
|
|
|
(3.1) |
|
|
|
1 |
|
|
|
(0.1) |
|
|
|
|
|
|
$ |
155 |
|
|
|
27.9 |
|
|
$ |
126 |
|
|
|
20.4 |
Excluding Other Income and Other Expense, after
tax, the effective income tax rate increased to 27.9% for the third
quarter of 2015 compared to 20.4% for the third quarter of 2014
primarily as a result of lower favourable audit settlements and an
increase in permanent items.
Income (loss) from Discontinued
Operations, net of tax
Income (loss) from discontinued operations, net
of tax reflects the results of our interiors operations which are
classified as discontinued operations. During the third quarter of
2015, we sold these operations.
|
|
|
Three months ended |
|
|
|
September 30, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
Sales |
|
|
$ |
453 |
|
|
$ |
609 |
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
|
436 |
|
|
|
598 |
|
Depreciation and
amortization |
|
|
|
— |
|
|
|
10 |
|
Selling, general and
administrative |
|
|
|
4 |
|
|
|
24 |
|
Equity income |
|
|
|
(3) |
|
|
|
(1) |
Income (loss) from discontinued
operations before income taxes |
|
|
|
16 |
|
|
|
(22) |
Income taxes |
|
|
|
(51) |
|
|
|
(5) |
|
|
|
|
67 |
|
|
|
(17) |
Gain on divestiture of discontinued
operations, net of tax |
|
|
|
52 |
|
|
|
— |
Income (loss) from discontinued
operations, net of
tax |
|
|
$ |
119 |
|
|
$ |
(17) |
Income (loss) from discontinued operations, net
of tax increased $136 million to
$119 million for the third quarter of
2015 compared to a loss of $17
million for the third quarter of 2014 primarily as a result
of the $52 million after-tax gain on
divestiture, decreased income taxes (including $60 million of deferred tax expense relating to
timing differences that have become payable upon closing of the
transaction and therefore are now included in the gain on
divestiture of discontinued operations, net of tax), and lower
SG&A and depreciation costs.
Loss from Continuing Operations Attributable
to Non-Controlling Interests
Loss from continuing operations attributable to
non-controlling interests was $1
million for the third quarters of 2015 and 2014.
Net Income Attributable to Magna
International Inc.
Net income attributable to Magna International
Inc. of $589 million for the third
quarter of 2015 increased $119
million compared to the third quarter of 2014. Excluding
Other Income and Other Expense, after tax, as discussed in the
"Other Income" section, net income attributable to Magna
International Inc. increased $45
million primarily as a result of the increase in the income
from discontinued operations, net of tax partially offset by the
decrease in net income from continuing operations before income
taxes and higher income taxes, as discussed above.
Earnings per Share (restated)
|
|
|
For the three months |
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
$ |
1.15 |
|
|
$ |
1.15 |
|
|
— |
|
Attributable to Magna International Inc. |
|
|
$ |
1.44 |
|
|
$ |
1.11 |
|
|
+ 30% |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
$ |
1.13 |
|
|
$ |
1.14 |
|
|
- 1% |
|
Attributable to Magna International Inc. |
|
|
$ |
1.42 |
|
|
$ |
1.10 |
|
|
+ 29% |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Common
Shares outstanding (millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
408.5 |
|
|
|
422.4 |
|
|
- 3% |
|
Diluted |
|
|
|
413.8 |
|
|
|
428.4 |
|
|
- 3% |
Diluted earnings per share from continuing
operations decreased $0.01 to
$1.13 for the third quarter of 2015
compared to $1.14 for the third
quarter of 2014. Other Income and Other Expense, after tax,
positively impacted diluted earnings per share from continuing
operations by $0.16 in the third
quarter of 2015 and negatively impacted diluted earnings per share
from continuing operations by $0.01
in the third quarter of 2014 as discussed in the "Other Income"
section. Excluding the $0.16 per
share positive impact for the third quarter of 2015 and the
$0.01 per share negative impact for
the third quarter of 2014, diluted earnings per share from
continuing operations decreased $0.18
as a result of the decrease in net income attributable to Magna
International Inc. from continuing operations partially offset by a
decrease in the weighted average number of diluted shares
outstanding during the third quarter of 2015.
The decrease in the weighted average number of
diluted shares outstanding was due to the purchase and cancellation
of Common Shares, during or subsequent to the third quarter of
2014, pursuant to our normal course issuer bids.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flow from Operations
|
|
|
For the three months |
|
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
|
$ |
469 |
|
|
$ |
486 |
|
|
|
|
Items not involving current cash
flows |
|
|
|
94 |
|
|
|
262 |
|
|
|
|
|
|
|
|
563 |
|
|
|
748 |
|
|
$ |
(185) |
Changes in operating assets and
liabilities |
|
|
|
33 |
|
|
|
(17) |
|
|
|
|
Cash provided from operating activities |
|
|
$ |
596 |
|
|
$ |
731 |
|
|
$ |
(135) |
Cash flow from operations before changes in operating assets and
liabilities decreased $185 million to
$563 million for the third quarter of
2015 compared to $748 million for the
third quarter of 2014. The decrease in cash flow from operations
was due to a $168 million decrease in
items not involving current cash flows and a $17 million decrease in net income from
continuing operations. Items not involving current cash flows are
comprised of the following:
|
|
|
For the three
months |
|
|
|
ended September 30, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
$ |
197 |
|
|
$ |
214 |
Amortization of other assets included in cost of
goods sold |
|
|
|
32 |
|
|
|
35 |
Deferred income
taxes |
|
|
|
11 |
|
|
|
14 |
Other non-cash charges |
|
|
|
9 |
|
|
|
10 |
Equity income in excess of dividends
received |
|
|
|
(19) |
|
|
|
(11) |
Non-cash portion of Other
Income |
|
|
|
(136) |
|
|
|
— |
Items not involving current cash
flows |
|
|
$ |
94 |
|
|
$ |
262 |
Cash generated from operating assets and
liabilities amounted to $33 million
for the third quarter of 2015 compared to cash invested in
operating assets and liabilities of $17
million for the third quarter of 2014. The change in
operating assets and liabilities is comprised of the following
sources (and uses) of cash:
|
|
|
For the three months |
|
|
|
ended September 30, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
$ |
(116) |
|
|
$ |
154 |
Inventories |
|
|
|
(62) |
|
|
|
(166) |
Prepaid expenses and
other |
|
|
|
3 |
|
|
|
(2) |
Accounts payable |
|
|
|
68 |
|
|
|
(20) |
Accrued salaries and wages |
|
|
|
125 |
|
|
|
70 |
Other accrued liabilities |
|
|
|
(13) |
|
|
|
(41) |
Income taxes payable/receivable |
|
|
|
28 |
|
|
|
(12) |
Changes in operating assets and liabilities |
|
|
$ |
33 |
|
|
$ |
(17) |
Higher accounts receivable relate primarily to
higher tooling receivables. The increase in inventories was
primarily due to increased production inventory to support launch
activities. Higher account payable relate to timing of payments.
The increase in accrued salaries and wages was primarily due to
employee profit sharing.
Capital and Investment
Spending
|
|
|
For the three
months |
|
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed asset additions |
|
|
$ |
(360) |
|
|
$ |
(298) |
|
|
|
|
Investments and other assets |
|
|
|
(74) |
|
|
|
(51) |
|
|
|
|
Fixed assets, investments and other assets
additions |
|
|
|
(434) |
|
|
|
(349) |
|
|
|
|
Proceeds from disposition |
|
|
|
11 |
|
|
|
76 |
|
|
|
|
Sale of Interiors |
|
|
|
473 |
|
|
|
— |
|
|
|
|
Proceeds on disposal of
facilities |
|
|
|
118 |
|
|
|
— |
|
|
|
|
Cash used in discontinued
operations |
|
|
|
(15) |
|
|
|
(30) |
|
|
|
|
Cash used for investment activities |
|
|
$ |
153 |
|
|
$ |
(303) |
|
|
$ |
456 |
Fixed assets, investments and other assets additions
In the third quarter of 2015, we invested
$360 million in fixed assets.
While investments were made to refurbish or replace assets consumed
in the normal course of business and for productivity improvements,
a large portion of the investment in the third quarter of 2015 was
for manufacturing equipment for programs that will be launching
subsequent to the third quarter of 2015.
In the third quarter of 2015, we invested
$59 million in other assets related
primarily to fully reimbursable tooling and engineering costs for
programs that launched during the third quarter of 2015 or will be
launching subsequent to the third quarter of 2015. In addition, we
invested $15 million in equity
accounted investments.
Proceeds from disposition
In the third quarter of 2015, the $11 million of proceeds include normal course
fixed and other asset disposal.
Proceeds on disposal of facilities
In the third quarter of 2015, we received
$118 million of proceeds related to
the formation of the joint venture for the manufacture and sale of
roof and other accessories for the Jeep market to OEM as well as
aftermarket customers.
Financing
|
|
|
For the three
months |
|
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in bank
indebtedness |
|
|
$ |
(41) |
|
|
$ |
16 |
|
|
|
|
Issues of debt |
|
|
|
659 |
|
|
|
30 |
|
|
|
|
Repayments of debt |
|
|
|
(16) |
|
|
|
(45) |
|
|
|
|
Issues of Common Shares on exercise of stock
options |
|
|
|
6 |
|
|
|
6 |
|
|
|
|
Repurchase of Common
Shares |
|
|
|
(346) |
|
|
|
(614) |
|
|
|
|
Contributions by subsidiaries by non-controlling
interests |
|
|
|
10 |
|
|
|
— |
|
|
|
|
Dividends paid |
|
|
|
(91) |
|
|
|
(79) |
|
|
|
|
Cash used for financing activities |
|
|
$ |
181 |
|
|
$ |
(686) |
|
|
$ |
867 |
Issues of debt relate primarily to the issue of
the $650 million of 4.150% fixed-rate
Senior Notes which mature on October 1, 2025.
Interest is payable on April 1 and
October 1 of each year. The Senior
Notes are senior unsecured obligations 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 third quarter of 2015, we repurchased
7.2 million Common Shares for aggregate cash consideration of
$346 million under our normal
course issuer bid.
Cash dividends paid per Common Share were
$0.22 for the third quarter of 2015,
for a total of $91 million.
Financing Resources
|
|
|
As at |
|
|
As at |
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
$ |
31 |
|
|
$ |
30 |
|
|
|
|
|
Long-term debt due within one year |
|
|
|
158 |
|
|
|
183 |
|
|
|
|
|
Long-term debt |
|
|
|
1,442 |
|
|
|
812 |
|
|
|
|
|
|
|
|
1,631 |
|
|
|
1,025 |
|
|
|
|
Non-controlling
interests |
|
|
|
18 |
|
|
|
14 |
|
|
|
|
Shareholders' equity |
|
|
|
8,845 |
|
|
|
8,659 |
|
|
|
|
Total capitalization |
|
|
$ |
10,494 |
|
|
$ |
9,698 |
|
|
$ |
796 |
Total capitalization increased by $796 million to $10.49
billion at September 30, 2015
compared to $9.70 billion at
December 31, 2014,
primarily as a result of $606 million
increase in liabilities and a $186
million increase in shareholders' equity.
The increase in liabilities relates primarily to
the $650 million of Senior Notes
issued in September 2015.
The increase in shareholders' equity was
primarily as a result of the $1.54
billion of net income earned in the first nine months of
2015.
This factor was partially offset by:
- the $650 million net unrealized
loss on translation of our net investment in operations whose
functional currency is not the U.S. dollar;
- the $351 million repurchase and
cancellation of 7.2 million Common Shares under our normal course
issuer bid in the first nine months of 2015;
- $270 million of dividends paid
during the first nine months of 2015; and
- the $190 million net unrealized
loss on cash flow hedges.
Cash Resources
During the third quarter of 2015, our cash
resources increased by $852 million to $2.02
billion as a result of the cash provided from operating,
financing and investing activities, as discussed above. In addition
to our cash resources at September 30,
2015, we had term and operating lines of credit totalling
$2.50 billion of which $2.24 billion was unused and available.
On April 24, 2015,
our $2.25 billion revolving credit
facility maturing June 20, 2019 was
extended to June 22, 2020. 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 of up to an
aggregate of $2.00 billion of debt
securities from time to time over a 25 month period. During the
third quarter of 2015, we issued $650
million of Senior Notes under the filings. We previously
issued $750 million of 3.625%
fixed-rate senior notes which mature on June
15, 2024 during the second quarter of 2014.
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 November 4, 2015 were
exercised:
Common Shares |
|
|
|
|
|
|
|
|
|
|
404,380,164 |
Stock options
(i) |
|
|
|
|
|
|
|
|
|
|
8,563,750 |
|
|
|
|
|
|
|
|
|
|
|
412,943,914 |
(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
third quarter of 2015 that are outside the ordinary course of our
business. Refer to our MD&A included in our 2014 Annual
Report.
RESULTS OF OPERATIONS - FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2015
Sales
|
|
|
For the nine months |
|
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle Production Volumes
(millions of units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
12.907 |
|
|
|
12.626 |
|
|
|
+ 2% |
|
Europe |
|
|
|
15.260 |
|
|
|
14.916 |
|
|
|
+ 2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
External Production |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
$ |
13,089 |
|
|
$ |
12,933 |
|
|
|
+ 1% |
|
|
Europe |
|
|
|
5,420 |
|
|
|
6,766 |
|
|
|
- 20% |
|
|
Asia |
|
|
|
1,139 |
|
|
|
1,148 |
|
|
|
- 1% |
|
|
Rest of World |
|
|
|
367 |
|
|
|
499 |
|
|
|
- 26% |
|
Complete Vehicle Assembly |
|
|
|
1,729 |
|
|
|
2,417 |
|
|
|
- 28% |
|
Tooling, Engineering and
Other |
|
|
|
1,822 |
|
|
|
1,850 |
|
|
|
- 2% |
Total Sales |
|
|
$ |
23,566 |
|
|
$ |
25,613 |
|
|
|
- 8% |
External Production Sales - North America
External production sales in North America increased 1% or $156 million to $13.09
billion for the nine months ended September 30, 2015 compared to
$12.93 billion for the nine months
ended September 30, 2014 primarily as
a result of the launch of new programs during or subsequent to the
nine months ended September 30, 2014,
including the:
- Ford Transit;
- Ford Mustang;
- GM full-size pickups and SUVs;
- Mercedes-Benz C-Class;
- Chevrolet Colorado and GMC Canyon; and
- Ford Edge.
This factor was partially offset by:
- a $598 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;
- net divestitures subsequent to the third quarter of 2014, which
negatively impacted sales by $66
million;
- programs that ended production during or subsequent to the nine
months ended September 30, 2014;
and
- net customer price concessions subsequent to the nine months
ended September 30, 2014.
External Production Sales - Europe
External production sales in Europe decreased 20% or $1.35 billion to $5.42
billion for the nine months ended September 30, 2015 compared to $6.77 billion for the nine months ended
September 30, 2014 primarily as a
result of:
- a $1.20 billion decrease in
reported U.S. dollar sales as a result of the weakening of foreign
currencies against the U.S. dollar, including the euro, Russian
ruble, Czech koruna and Polish zloty;
- lower production volumes on certain existing programs;
- programs that ended production during or subsequent to the nine
months ended September 30, 2014;
and
- net customer price concessions subsequent to the nine months
ended September 30, 2014.
These factors were partially offset by the
launch of new programs during or subsequent to the nine months
ended September 30, 2014, including
the:
- Ford Transit;
- Volkswagen Passat;
- BMW 2-Series; and
- Citroën C4 Cactus.
External Production Sales - Asia
External production sales in Asia decreased 1% or $9
million to $1.14 billion for
the nine months ended September 30, 2015 compared to
$1.15 billion for the nine months
ended September 30, 2014 primarily as
a result of:
- lower production volumes on certain existing programs;
- 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 Chinese renminbi
and South Korean won;
- programs that ended production during or subsequent to the nine
months ended September 30, 2014;
and
- net customer price concessions subsequent to the nine months
ended September 30, 2014.
These factors were partially offset by the
launch of new programs during or subsequent to the third quarter of
2014, primarily in China and
India.
External Production Sales - Rest of
World
External production sales in Rest of World
decreased 26% or $132 million to
$367 million for the nine months
ended September 30, 2015
compared to $499 million for the nine
months ended September 30, 2014
primarily as a result of:
- a $112 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;
- lower production volumes on certain existing programs; and
- programs that ended production during or subsequent to the nine
months ended September 30, 2014.
These factors were partially offset by:
- the launch of new programs during or subsequent to the third
quarter of 2014, primarily in Brazil; and
- net customer price increases subsequent to the nine months
ended September 30, 2014.
Complete Vehicle Assembly Sales
|
|
|
For the nine
months |
|
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Complete Vehicle Assembly Sales |
|
|
$ |
1,729 |
|
|
$ |
2,417 |
|
|
|
- 28% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Complete Vehicle Assembly Volumes
(Units) |
|
|
|
78,862 |
|
|
|
102,161 |
|
|
|
- 23% |
Complete vehicle assembly sales decreased 28% or
$688 million to $1.73 billion for the nine months ended
September 30, 2015 compared to
$2.42 billion for the nine
months ended September 30, 2014 and
assembly volumes decreased 23% or 23,299 units.
The decrease in complete vehicle assembly sales
is primarily as a result of:
- a $402 million decrease in
reported U.S. dollar sales as a result of the weakening of the euro
against the U.S. dollar; and
- a decrease in assembly volumes for the MINI Countryman.
These factors were partially offset by an
increase in assembly volumes for the Mercedes-Benz G-Class.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales decreased
2% or $28 million to $1.82 billion for the nine months ended
September 30, 2015 compared to
$1.85 billion for the nine months
ended September 30, 2014.
In the nine months ended September 30, 2015, the major programs for which
we recorded tooling, engineering and other sales were the:
- Ford F-Series and F-Series SuperDuty;
- GMC Acadia, Buick Enclave and Chevrolet Traverse;
- Chevrolet Cruze;
- Audi A4;
- MINI Countryman;
- Ford Edge;
- Skoda Fabia;
- Chevrolet Equinox and GMC Terrain; and
- Honda HR-V.
In the nine months ended September 30, 2014, the major programs for which
we recorded tooling, engineering and other sales were the:
- MINI Countryman;
- Ford Mustang;
- Ford Transit;
- BMW X4;
- QOROS 3;
- Mercedes-Benz M-Class;
- Ford F-Series and F-Series SuperDuty; and
- Peugeot RCZ.
The weakening of certain foreign currencies
against the U.S. dollar, including the euro, Canadian dollar
and Czech koruna had an unfavourable impact of $249 million on our reported tooling, engineering
and other sales.
Segment Analysis
|
|
|
For the nine months ended September 30, |
|
|
|
Total Sales |
|
|
Adjusted EBIT |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
$ |
13,925 |
|
|
$ |
13,890 |
|
|
$ |
35 |
|
|
$ |
1,433 |
|
|
$ |
1,466 |
|
|
$ |
(33) |
Europe |
|
|
|
8,234 |
|
|
|
10,154 |
|
|
|
(1,920) |
|
|
|
339 |
|
|
|
386 |
|
|
|
(47) |
Asia |
|
|
|
1,357 |
|
|
|
1,401 |
|
|
|
(44) |
|
|
|
86 |
|
|
|
103 |
|
|
|
(17) |
Rest of World |
|
|
|
373 |
|
|
|
519 |
|
|
|
(146) |
|
|
|
(19) |
|
|
|
(30) |
|
|
|
11 |
Corporate and
Other |
|
|
|
(323) |
|
|
|
(351) |
|
|
|
28 |
|
|
|
34 |
|
|
|
42 |
|
|
|
(8) |
Total reportable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
segments |
|
|
$ |
23,566 |
|
|
$ |
25,613 |
|
|
$ |
(2,047) |
|
|
$ |
1,873 |
|
|
$ |
1,967 |
|
|
$ |
(94) |
Excluded from Adjusted EBIT for the nine months
ended September 30, 2015 and 2014
were the following Other Income and Other Expense items, which have
been discussed in the "Other Income" section.
|
|
|
|
|
|
For the nine
months |
|
|
|
|
|
|
ended September 30, |
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale |
|
|
|
|
|
$ |
(136) |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale |
|
|
|
|
|
|
(57) |
|
|
|
— |
|
Restructuring |
|
|
|
|
|
|
12 |
|
|
|
40 |
|
|
|
|
|
|
|
(45) |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(181) |
|
|
$ |
40 |
North
America
Adjusted EBIT in North
America decreased $33 million
to $1.43 billion for the nine months
ended September 30, 2015 compared to
$1.47 billion for the nine months
ended September 30, 2014 primarily as
a result of:
- a decrease in reported U.S. dollar EBIT due to the weakening of
the Canadian dollar against the U.S. dollar;
- lower recoveries associated with scrap steel;
- higher launch costs;
- operational inefficiencies at certain facilities, in particular
at certain body and chassis operations;
- a greater amount of employee profit sharing; and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by:
- lower affiliation fees paid to Corporate;
- decreased commodity costs;
- costs incurred, net of insurance recoveries, related to a fire
at a body and chassis facility, during the second quarter of
2014;
- margins earned on higher production sales;
- higher equity income;
- lower warranty costs of $7
million; and
- productivity and efficiency improvements at certain
facilities.
Europe
Adjusted EBIT in Europe decreased $47
million to $339 million for
the nine months ended September 30,
2015 compared to $386 million for the nine months ended
September 30, 2014 primarily as a
result of:
- a decrease in reported U.S. dollar EBIT as a result of the
weakening of foreign currencies against the U.S. dollar, including
the euro, Czech koruna and Russian ruble;
- higher launch costs;
- operational inefficiencies at certain facilities;
- lower equity income; and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by:
- lower affiliation fees paid to Corporate;
- decreased commodity costs;
- lower warranty costs of $9
million;
- productivity and efficiency improvements at certain facilities;
and
- a lower amount of employee profit sharing.
Asia
Adjusted EBIT in Asia decreased $17
million to $86 million for the
nine months ended September 30, 2015
compared to $103 million for the nine
months ended September 30, 2014
primarily as a result of:
- increased pre-operating costs incurred at new facilities;
- higher launch costs;
- reduced margins due to lower production sales; and
- net customer price concessions subsequent to the third quarter
of 2014.
These factors were partially offset by:
- a lower amount of employee profit sharing;
- lower affiliation fees paid to Corporate;
- decreased commodity costs; and
- lower warranty costs of $1
million.
Rest of World
Adjusted EBIT in Rest of World improved
$11 million to a loss of $19 million for the nine months ended
September 30, 2015 compared to a loss
of $30 million for the nine months
ended September 30, 2014 primarily as
a result of:
- productivity and efficiency improvements at certain
facilities;
- a decrease in reported U.S. dollar EBIT loss due to the
weakening of the Brazilian real against the U.S. dollar;
- lower affiliation fees paid to Corporate; and
- net customer price increases subsequent to the third quarter of
2014.
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;
- lower equity income;
- increased commodity costs; and
- higher incentive compensation.
Corporate and Other
Corporate and Other Adjusted EBIT decreased
$8 million to $34 million for the nine months ended
September 30, 2015 compared to
$42 million for the nine months ended
September 30, 2014 primarily as a
result of:
- a decrease in affiliation fees earned from our divisions;
- a $4 million net decrease in
valuation gains in respect of ABCP;
- increased stock-based compensation; and
- a greater amount of employee profit sharing.
These factors were partially offset by the
expiration, at the end of 2014, of our consulting agreements with
Frank Stronach.
SUBSEQUENT EVENT
Normal Course Issuer Bid
Subject to approval by the TSX and the NYSE, the
Board of Directors approved a new normal course issuer bid to
purchase up to 40 million of our Common Shares, representing
approximately 9.9% of our public float of Common Shares. The
primary purposes of the normal course issuer bid are purchases for
cancellation as well as purchases to fund our stock-based
compensation awards or programs and/or our obligations to our
deferred profit sharing plans. The normal course issuer bid is
expected to commence on or about November
13, 2015 and will terminate one year later. All purchases of
Common Shares will be made at the market price at the time of
purchase in accordance with the rules and policies of the TSX or on
the NYSE in compliance with Rule 10b-18 under the U.S. Securities
Exchange Act of 1934. Purchases may also be made through other
published markets, or by such other means permitted by the TSX,
including by private agreement at a discount to the prevailing
market price, pursuant to an issuer bid exemption order issued by a
securities regulatory authority.
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 16 of our unaudited interim
consolidated financial statements for the three and nine months
ended September 30, 2015, 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, 2014.
CONTROLS AND PROCEDURES
There have been no changes in our internal
controls over financial reporting that occurred during the nine
months ended September 30, 2015 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 statements" or "forward-looking
information" within the meaning of applicable securities
legislation, including, but not limited to, statements relating to:
future purchases of Common Shares under our NCIB; 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; fluctuations in relative currency values;
restructuring, downsizing and/or other significant non-recurring
costs; continued underperformance of one or more of our operating
Divisions; our ability to successfully launch material new or
takeover business; shifts in market share away from our top
customers; our inability to grow our business with OEMs; shifts in
market shares among vehicles or vehicle segments, or shifts away
from vehicles on which we have significant content; 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 labour disruption; 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; 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; impairment charges related to
goodwill and long-lived assets; exposure to, and ability to offset,
volatile commodities prices; risk of production disruptions
due to natural disasters or other catastrophic events; the security
and reliability of our IT systems; legal claims and/or regulatory
actions against us, including the ongoing antitrust investigations
being conducted by German and Brazilian authorities and any
proceedings that may arise out of the internal global review
initiated by us focused on anti-trust risk; 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; our ability to successfully identify, complete and
integrate acquisitions or achieve anticipated synergies; our
ability to conduct appropriate due diligence on acquisition
targets; the consummation of the acquisition of the Getrag group of
companies (the "Getrag Transaction"); the satisfaction or waiver of
conditions to complete the Getrag Transaction, including obtaining
required regulatory approvals; warranty or indemnity obligations in
relation to pre-closing liabilities in connection with the sale of
substantially all of our interiors operations; an increase in our
risk profile as a result of completed acquisitions; risks of
conducting business in foreign markets, including China, India,
Russia, Eastern Europe, Thailand, Brazil, Argentina and other non-traditional markets
for us; ongoing pricing pressures, including our ability to offset
price concessions demanded by our customers; our ability to
consistently develop innovative products or processes; warranty and
recall costs; pension liabilities; 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
September 30, |
|
|
Nine
months ended
September 30, |
|
|
|
|
Note |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
Sales |
|
|
|
|
|
|
$ |
7,661 |
|
|
$ |
8,247 |
|
|
$ |
23,566 |
|
|
$ |
25,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
|
|
|
|
|
6,593 |
|
|
|
7,075 |
|
|
|
20,223 |
|
|
|
21,975 |
|
Depreciation and
amortization |
|
|
|
|
|
|
|
197 |
|
|
|
214 |
|
|
|
589 |
|
|
|
631 |
|
Selling, general and
administrative |
|
|
|
12 |
|
|
|
358 |
|
|
|
382 |
|
|
|
1,036 |
|
|
|
1,192 |
|
Interest expense, net |
|
|
|
|
|
|
|
9 |
|
|
|
9 |
|
|
|
27 |
|
|
|
18 |
|
Equity income |
|
|
|
|
|
|
|
(52) |
|
|
|
(51) |
|
|
|
(155) |
|
|
|
(152) |
|
Other (income) expense, net |
|
|
|
3 |
|
|
|
(124) |
|
|
|
7 |
|
|
|
(181) |
|
|
|
40 |
Income from continuing operations
before income taxes |
|
|
|
|
|
|
|
680 |
|
|
|
611 |
|
|
|
2,027 |
|
|
|
1,909 |
Income taxes |
|
|
|
7 |
|
|
|
211 |
|
|
|
125 |
|
|
|
569 |
|
|
|
503 |
Net income from continuing
operations |
|
|
|
|
|
|
|
469 |
|
|
|
486 |
|
|
|
1,458 |
|
|
|
1,406 |
Income (loss) from
discontinued operations, net of tax |
|
|
|
2 |
|
|
|
119 |
|
|
|
(17) |
|
|
|
74 |
|
|
|
(35) |
Net income |
|
|
|
|
|
|
|
588 |
|
|
|
469 |
|
|
|
1,532 |
|
|
|
1,371 |
Loss from continuing operations
attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interests |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
5 |
|
|
|
2 |
Net income
attributable to Magna International Inc. |
|
|
|
|
|
|
$ |
589 |
|
|
$ |
470 |
|
|
$ |
1,537 |
|
|
$ |
1,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
(restated): |
|
|
|
1, 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
$ |
1.15 |
|
|
$ |
1.15 |
|
|
$ |
3.58 |
|
|
$ |
3.26 |
|
Discontinued
operations |
|
|
|
|
|
|
|
0.29 |
|
|
|
(0.04) |
|
|
|
0.18 |
|
|
|
(0.08) |
|
Attributable to Magna
International Inc. |
|
|
|
|
|
|
$ |
1.44 |
|
|
$ |
1.11 |
|
|
$ |
3.76 |
|
|
$ |
3.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
(restated): |
|
|
|
1, 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
$ |
1.13 |
|
|
$ |
1.14 |
|
|
$ |
3.53 |
|
|
$ |
3.21 |
|
Discontinued operations |
|
|
|
|
|
|
|
0.29 |
|
|
|
(0.04) |
|
|
|
0.18 |
|
|
|
(0.08) |
|
Attributable to Magna International
Inc. |
|
|
|
|
|
|
$ |
1.42 |
|
|
$ |
1.10 |
|
|
$ |
3.71 |
|
|
$ |
3.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per Common Share
(restated) |
|
|
|
1 |
|
|
$ |
0.22 |
|
|
$ |
0.19 |
|
|
$ |
0.66 |
|
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of Common Shares
outstanding during |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the period [in millions]
(restated): |
|
|
|
1, 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
408.5 |
|
|
|
422.4 |
|
|
|
409.2 |
|
|
|
432.0 |
|
|
Diluted |
|
|
|
|
|
|
|
413.8 |
|
|
|
428.4 |
|
|
|
414.7 |
|
|
|
438.2 |
See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
[Unaudited]
[U.S. dollars in millions]
|
|
|
|
|
|
|
Three
months ended
September 30, |
|
|
Nine
months ended
September 30, |
|
|
|
|
Note |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
588 |
|
|
$ |
469 |
|
|
$ |
1,532 |
|
|
$ |
1,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income, net
of tax: |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized loss on translation of
net investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in foreign operations |
|
|
|
|
|
|
|
(275) |
|
|
|
(346) |
|
|
|
(650) |
|
|
|
(358) |
|
Net unrealized (loss) gain on
available-for-sale investments |
|
|
|
|
|
|
|
(2) |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
Net unrealized loss on cash flow
hedges |
|
|
|
|
|
|
|
(123) |
|
|
|
(42) |
|
|
|
(190) |
|
|
|
(24) |
|
Reclassification of
net loss (gain) on cash flow hedges to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net income |
|
|
|
|
|
|
|
24 |
|
|
|
(1) |
|
|
|
56 |
|
|
|
4 |
|
Reclassification of
net loss on investments to net income |
|
|
|
|
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
Reclassification of net loss on
pensions to net income |
|
|
|
|
|
|
|
2 |
|
|
|
— |
|
|
|
5 |
|
|
|
3 |
|
Pension and post retirement
benefits |
|
|
|
|
|
|
|
(1) |
|
|
|
— |
|
|
|
(2) |
|
|
|
— |
Other comprehensive
loss |
|
|
|
|
|
|
|
(372) |
|
|
|
(388) |
|
|
|
(778) |
|
|
|
(375) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
216 |
|
|
|
81 |
|
|
|
754 |
|
|
|
996 |
Comprehensive loss
attributable to non-controlling interests |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
5 |
|
|
|
2 |
Comprehensive income attributable
to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Magna International
Inc. |
|
|
|
|
|
|
$ |
217 |
|
|
$ |
82 |
|
|
$ |
759 |
|
|
$ |
998 |
See accompanying notes |
|
|
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited]
[U.S. dollars in millions]
|
|
|
|
|
|
|
Three
months ended
September 30, |
|
|
Nine
months ended
September 30, |
|
|
|
|
Note |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided from (used
for): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations |
|
|
|
|
|
|
$ |
469 |
|
|
$ |
486 |
|
|
$ |
1,458 |
|
|
$ |
1,406 |
Items not involving current cash
flows |
|
|
|
5 |
|
|
|
94 |
|
|
|
262 |
|
|
|
445 |
|
|
|
759 |
|
|
|
|
|
|
|
|
563 |
|
|
|
748 |
|
|
|
1,903 |
|
|
|
2,165 |
Changes in operating assets and
liabilities |
|
|
|
5 |
|
|
|
33 |
|
|
|
(17) |
|
|
|
(587) |
|
|
|
(332) |
Cash provided from operating
activities |
|
|
|
|
|
|
|
596 |
|
|
|
731 |
|
|
|
1,316 |
|
|
|
1,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed asset additions |
|
|
|
|
|
|
|
(360) |
|
|
|
(298) |
|
|
|
(987) |
|
|
|
(863) |
Purchase of subsidiaries |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
(1) |
|
|
|
— |
Increase in investments and other
assets |
|
|
|
|
|
|
|
(74) |
|
|
|
(51) |
|
|
|
(152) |
|
|
|
(150) |
Proceeds from
disposition |
|
|
|
|
|
|
|
11 |
|
|
|
76 |
|
|
|
50 |
|
|
|
126 |
Sale of Interiors |
|
|
|
2 |
|
|
|
473 |
|
|
|
— |
|
|
|
473 |
|
|
|
— |
Proceeds on disposal of
facilities |
|
|
|
3 |
|
|
|
118 |
|
|
|
— |
|
|
|
221 |
|
|
|
— |
Cash used in discontinued
operations |
|
|
|
|
|
|
|
(15) |
|
|
|
(30) |
|
|
|
(56) |
|
|
|
(93) |
Cash provided from
(used for) investing activities |
|
|
|
|
|
|
|
153 |
|
|
|
(303) |
|
|
|
(452) |
|
|
|
(980) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in bank
indebtedness |
|
|
|
|
|
|
|
(41) |
|
|
|
16 |
|
|
|
29 |
|
|
|
19 |
Issues of debt |
|
|
|
10 |
|
|
|
659 |
|
|
|
30 |
|
|
|
690 |
|
|
|
824 |
Repayments of debt |
|
|
|
|
|
|
|
(16) |
|
|
|
(45) |
|
|
|
(70) |
|
|
|
(130) |
Issue of Common Shares on exercise of
stock options |
|
|
|
|
|
|
|
6 |
|
|
|
6 |
|
|
|
19 |
|
|
|
43 |
Repurchase of Common Shares |
|
|
|
13 |
|
|
|
(346) |
|
|
|
(614) |
|
|
|
(351) |
|
|
|
(1,429) |
Contributions by
non-controlling interests of subsidiaries |
|
|
|
|
|
|
|
10 |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
Dividends |
|
|
|
|
|
|
|
(91) |
|
|
|
(79) |
|
|
|
(270) |
|
|
|
(241) |
Cash provided from (used for)
financing activities |
|
|
|
|
|
|
|
181 |
|
|
|
(686) |
|
|
|
57 |
|
|
|
(914) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents |
|
|
|
|
|
|
|
(78) |
|
|
|
(60) |
|
|
|
(155) |
|
|
|
(54) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and
cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
during the period |
|
|
|
|
|
|
|
852 |
|
|
|
(318) |
|
|
|
766 |
|
|
|
(115) |
Cash and cash equivalents, beginning
of period |
|
|
|
|
|
|
|
1,163 |
|
|
|
1,754 |
|
|
|
1,249 |
|
|
|
1,551 |
Cash and cash equivalents of
continuing operations, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
end of period |
|
|
|
|
|
|
$ |
2,015 |
|
|
$ |
1,436 |
|
|
$ |
2,015 |
|
|
$ |
1,436 |
See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
[Unaudited]
[U.S. dollars in millions]
|
|
|
|
|
|
|
As at
September 30, |
|
|
As at
December 31, |
|
|
|
|
Note |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
5 |
|
|
$ |
2,015 |
|
|
$ |
1,249 |
Accounts receivable |
|
|
|
|
|
|
|
5,671 |
|
|
|
5,316 |
Inventories |
|
|
|
6 |
|
|
|
2,665 |
|
|
|
2,525 |
Income taxes receivable |
|
|
|
|
|
|
|
— |
|
|
|
13 |
Deferred tax assets |
|
|
|
|
|
|
|
190 |
|
|
|
181 |
Prepaid expenses and other |
|
|
|
|
|
|
|
243 |
|
|
|
150 |
Assets held for sale |
|
|
|
2 |
|
|
|
— |
|
|
|
609 |
|
|
|
|
|
|
|
|
10,784 |
|
|
|
10,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
|
|
15 |
|
|
|
440 |
|
|
|
379 |
Fixed assets, net |
|
|
|
|
|
|
|
5,450 |
|
|
|
5,402 |
Goodwill |
|
|
|
|
|
|
|
1,251 |
|
|
|
1,337 |
Deferred tax assets |
|
|
|
|
|
|
|
166 |
|
|
|
139 |
Other assets |
|
|
|
8 |
|
|
|
502 |
|
|
|
526 |
Noncurrent assets held for sale |
|
|
|
2 |
|
|
|
— |
|
|
|
348 |
|
|
|
|
|
|
|
$ |
18,593 |
|
|
$ |
18,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
|
|
|
|
$ |
31 |
|
|
$ |
30 |
Accounts payable |
|
|
|
|
|
|
|
4,681 |
|
|
|
4,765 |
Accrued salaries and wages |
|
|
|
|
|
|
|
747 |
|
|
|
686 |
Other accrued liabilities |
|
|
|
9 |
|
|
|
1,465 |
|
|
|
1,448 |
Income taxes payable |
|
|
|
|
|
|
|
134 |
|
|
|
— |
Deferred tax
liabilities |
|
|
|
|
|
|
|
35 |
|
|
|
21 |
Long-term debt due within one
year |
|
|
|
|
|
|
|
158 |
|
|
|
183 |
Liabilities held for sale |
|
|
|
2 |
|
|
|
— |
|
|
|
514 |
|
|
|
|
|
|
|
|
7,251 |
|
|
|
7,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
10 |
|
|
|
1,442 |
|
|
|
812 |
Long-term employee benefit
liabilities |
|
|
|
11 |
|
|
|
525 |
|
|
|
559 |
Other long-term liabilities |
|
|
|
|
|
|
|
350 |
|
|
|
278 |
Deferred tax liabilities |
|
|
|
7 |
|
|
|
162 |
|
|
|
171 |
Long-term liabilities held for
sale |
|
|
|
2 |
|
|
|
— |
|
|
|
34 |
|
|
|
|
|
|
|
|
9,730 |
|
|
|
9,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[issued: 404,356,086; December 31, 2014 -
410,325,270 (restated)] |
|
|
|
1, 13 |
|
|
|
3,944 |
|
|
|
3,979 |
Contributed surplus |
|
|
|
|
|
|
|
100 |
|
|
|
83 |
Retained earnings |
|
|
|
|
|
|
|
6,130 |
|
|
|
5,155 |
Accumulated other comprehensive
loss |
|
|
|
14 |
|
|
|
(1,329) |
|
|
|
(558) |
|
|
|
|
|
|
|
|
8,845 |
|
|
|
8,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
|
|
|
|
|
|
18 |
|
|
|
14 |
|
|
|
|
|
|
|
|
8,863 |
|
|
|
8,673 |
|
|
|
|
|
|
|
$ |
18,593 |
|
|
$ |
18,174 |
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) |
|
|
|
Interests |
|
|
|
Equity |
|
|
|
|
|
|
|
|
[in
millions] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014 |
|
|
|
|
|
|
410.3 |
|
|
$ |
3,979 |
|
$ |
83 |
|
|
$ |
5,155 |
|
|
$ |
(558) |
|
|
$ |
14 |
|
|
$ |
8,673 |
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,537 |
|
|
|
|
|
|
|
(5) |
|
|
|
1,532 |
Other comprehensive
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(778) |
|
|
|
|
|
|
|
(778) |
Shares
issued on exercise of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
options |
|
|
|
|
|
|
|
1.2 |
|
|
|
25 |
|
|
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19 |
Repurchase and
cancellation under |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
normal course
issuer bid |
|
|
|
13 |
|
|
|
(7.2) |
|
|
|
(72) |
|
|
|
|
|
|
(286) |
|
|
|
7 |
|
|
|
|
|
|
|
(351) |
Release of restricted
stock |
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Release of restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Stock-based compensation expense |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29 |
Reclassification of
liability |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
|
|
|
9 |
Dividends
paid |
|
|
|
|
|
|
|
0.1 |
|
|
|
6 |
|
|
|
|
|
|
(276) |
|
|
|
|
|
|
|
|
|
|
|
(270) |
Balance, September
30, 2015 |
|
|
|
|
|
|
|
404.4 |
|
|
$ |
3,944 |
|
$ |
100 |
|
|
$ |
6,130 |
|
|
$ |
(1,329) |
|
|
$ |
18 |
|
|
$ |
8,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
|
Contri- |
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stated |
|
|
buted |
|
|
|
Retained |
|
|
|
|
|
|
|
controlling |
|
|
|
Total |
|
|
|
|
Note |
|
|
|
Number |
|
|
|
Value |
|
|
Surplus |
|
|
|
Earnings |
|
|
|
AOCI
(i) |
|
|
|
Interests |
|
|
|
Equity |
|
|
|
|
|
|
|
|
[in millions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(restated)] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2013 |
|
|
|
|
|
|
|
442.3 |
|
|
$ |
4,230 |
|
$ |
69 |
|
|
$ |
5,011 |
|
|
$ |
313 |
|
|
$ |
16 |
|
|
$ |
9,639 |
Net
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,373 |
|
|
|
|
|
|
|
(2) |
|
|
|
1,371 |
Other comprehensive
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(375) |
|
|
|
|
|
|
|
(375) |
Shares issued on
exercise of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
options |
|
|
|
|
|
|
|
2.3 |
|
|
|
55 |
|
|
(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43 |
Repurchase and
cancellation under |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
normal course
issuer bid |
|
|
|
13 |
|
|
|
(28.2) |
|
|
|
(272) |
|
|
|
|
|
|
(1,132) |
|
|
|
(25) |
|
|
|
|
|
|
|
(1,429) |
Release of restricted
stock |
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Release of restricted
stock units |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
Stock-based
compensation expense |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 |
Reclassification of
liability |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 |
Dividends
paid |
|
|
|
|
|
|
|
0.2 |
|
|
|
7 |
|
|
|
|
|
|
(248) |
|
|
|
|
|
|
|
|
|
|
|
(241) |
Balance, September
30, 2014 |
|
|
|
|
|
|
|
416.6 |
|
|
$ |
4,026 |
|
$ |
88 |
|
|
$ |
5,004 |
|
|
$ |
(87) |
|
|
$ |
14 |
|
|
$ |
9,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 U.S.
dollars following U.S. generally accepted accounting principles
["GAAP"] and the accounting policies as set out in note 1 to the
annual consolidated financial statements for the year ended
December 31, 2014.
The unaudited interim consolidated financial
statements do not conform in all respects to the requirements of
GAAP for annual financial statements. Accordingly, these unaudited
interim consolidated financial statements should be read in
conjunction with the December 31,
2014 audited consolidated financial statements and notes
included in the Company's 2014 Annual Report.
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 September 30,
2015 and the results of operations, changes in equity and
cash flows for the three-month and nine-month periods ended
September 30, 2015 and 2014.
[b] Stock Split
On March 25, 2015,
the Company completed a two-for-one stock split, which was
implemented by way of a stock dividend, whereby shareholders
received an additional Common Share for each Common Share held. All
equity-based compensation plans or arrangements were adjusted to
reflect the issuance of additional Common Shares.
Accordingly, all of the Company's issued and
outstanding Common Shares, incentive stock options, and restricted
and deferred stock units have been restated for all periods
presented to reflect the stock split. In addition, earnings per
Common Share, Cash dividends paid per Common Share, weighted
average exercise price for stock options and the weighted average
fair value of options granted have been restated for all periods
presented to reflect the stock split.
[c] Discontinued Operations
The Company reports financial results for
discontinued operations separately from continuing operations to
distinguish the financial impact of disposal transactions from
ongoing operations. Discontinued operations reporting only occurs
when the disposal of a component or a group of components of the
Company represents a strategic shift that will have a major impact
on the Company's operations and financial results. In the
third quarter of 2015, the Company sold substantially all of its
interiors operations. Accordingly, the assets and liabilities,
operating results and operating cash flows for the previously
reported interiors operations are presented as discontinued
operations separate from the Company's continuing operations.
Prior period financial information has been reclassified to present
the interiors operations as a discontinued operation, and has
therefore been excluded from both continuing operations and segment
results in these interim consolidated financial statements and the
notes to the interim consolidated financial statements, unless
otherwise noted. Refer to Note 2 Discontinued Operations for
further information regarding the Company's discontinued
operations.
[d] Future Accounting Standard
Revenue Recognition
In May 2014, the
FASB issued ASU 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. In July 2015, the FASB
deferred the effective date to annual reporting periods beginning
after December 15, 2017 [including
interim reporting periods within those periods]. ASU 2014-09 may be
adopted using one 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.
[e] 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. DISCONTINUED OPERATIONS
During the second quarter of 2015, the Company
determined that its interiors business met the criteria to be
classified as a discontinued operation as a result of entering into
a definitive agreement for the sale of substantially all of its
operations. Accordingly, the held for sale assets and
liabilities of the disposed interiors operations were reclassified
in the consolidated balance sheet to current or long-term assets or
liabilities held for sale, as appropriate.
On August 31,
2015, the Company sold substantially all of its interiors
operations ["the disposed interiors operations"]. The Company
recognized a gain on the divestiture within income from
discontinued operations as follows:
|
|
|
August 31, |
|
|
|
2015 |
|
|
|
|
Proceeds on disposal, net of transaction
costs |
|
$ |
556 |
Net assets disposed |
|
|
438 |
|
|
|
118 |
Income taxes [includes $60 million recorded in the
second quarter of 2015] |
|
|
66 |
Gain on divestiture, net of
tax |
|
$ |
52 |
Consideration associated with the divestiture
remains subject to further adjustments, primarily related to
working capital. The Company does not anticipate significant
continuing involvement with the disposed interiors operations
subsequent to the close of the transaction.
The following table summarizes the carrying
value of the major classes of assets and liabilities of the
discontinued operations which were reflected as held for sale in
the consolidated balance sheet at December
31, 2014:
|
|
|
December 31, |
|
|
|
2014 |
|
|
|
|
Cash and cash
equivalents |
|
$ |
4 |
Accounts receivable |
|
|
355 |
Inventories |
|
|
232 |
Income taxes receivable |
|
|
3 |
Prepaid expenses and other |
|
|
10 |
Deferred tax assets |
|
|
12 |
Fixed assets, net |
|
|
263 |
Goodwill |
|
|
12 |
Investments |
|
|
40 |
Other assets |
|
|
26 |
Total assets of the discontinued operations
classified as held for sale |
|
$ |
957 |
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2014 |
|
|
|
|
Bank indebtedness |
|
$ |
3 |
Accounts payable |
|
|
376 |
Accrued salaries and wages |
|
|
44 |
Other accrued liabilities |
|
|
91 |
Long-term debt due within one
year |
|
|
1 |
Long-term employee benefit
liabilities |
|
|
20 |
Other long-term liabilities |
|
|
12 |
Deferred tax liabilities |
|
|
1 |
Total liabilities of the discontinued operations
classified as held for sale |
|
$ |
548 |
A reconciliation of the major classes of line
items constituting income (loss) from discontinued operations, net
of tax as presented in the statements of income is as follows:
|
|
Three months ended
September 30, |
|
|
Nine months ended
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
453 |
|
|
$ |
609 |
|
|
$ |
1,737 |
|
|
$ |
1,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
436 |
|
|
|
598 |
|
|
|
1,635 |
|
|
|
1,698 |
|
Depreciation and amortization |
|
|
— |
|
|
|
10 |
|
|
|
13 |
|
|
|
33 |
|
Selling, general and administrative |
|
|
4 |
|
|
|
24 |
|
|
|
58 |
|
|
|
73 |
|
Equity income |
|
|
(3) |
|
|
|
(1) |
|
|
|
(11) |
|
|
|
(5) |
Income (loss) from discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before income taxes and gain on
divestiture |
|
|
16 |
|
|
|
(22) |
|
|
|
42 |
|
|
|
(47) |
Income taxes [i] |
|
|
(51) |
|
|
|
(5) |
|
|
|
20 |
|
|
|
(12) |
Income (loss) from discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before gain on divestiture |
|
|
67 |
|
|
|
(17) |
|
|
|
22 |
|
|
|
(35) |
Gain on divestiture of discontinued
operations, net of tax [i] |
|
|
52 |
|
|
|
— |
|
|
|
52 |
|
|
|
— |
Income (loss) from discontinued
operations, net of tax |
|
$ |
119 |
|
|
$ |
(17) |
|
|
$ |
74 |
|
|
$ |
(35) |
[i] |
In the second quarter of 2015, income taxes included $60
million of deferred tax expense relating to timing differences that
have become payable upon closing of the transaction and therefore
are now included in the gain on divestiture of discontinued
operations, net of tax. |
The interiors operations were previously
included within all of the Company's reporting segments except for
Rest of World.
3. OTHER (INCOME) EXPENSE, NET
|
|
|
|
|
|
|
|
|
|
Nine months ended |
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal |
|
|
|
|
[a] |
|
|
|
|
$ |
(136) |
|
|
$ |
— |
|
Restructuring |
|
|
|
|
[b] |
|
|
|
|
|
12 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
(124) |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal |
|
|
|
|
[a] |
|
|
|
|
|
(57) |
|
|
|
— |
|
Restructuring |
|
|
|
|
[b] |
|
|
|
|
|
— |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
(57) |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
|
|
|
[b] |
|
|
|
|
|
— |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
$ |
(181) |
|
|
$ |
40 |
For the nine months ended September
30, 2015:
[a] Gain on disposal
During the third quarter of 2015, the Company
entered into a joint venture arrangement for the manufacture and
sale of roof and other accessories for the Jeep market to original
equipment manufacturers as well as aftermarket customers. The
Company contributed two manufacturing facilities and received a 49%
interest in the newly formed joint venture and cash proceeds of
$118 million. Total consideration was
valued at $160 million and as a
result the Company recognized a gain of $136
million [$80 million after
tax]. The Company will account for its ownership as an equity
investment since Magna has significant influence through its voting
rights, but does not control the joint venture.
During the second quarter of 2015, the company
sold its battery pack business to Samsung SDI for gross proceeds of
approximately $120 million, resulting
in a gain of $57 million
[$42 million after tax].
[b] Restructuring
During the third quarter of 2015, the Company
recorded net restructuring charges of $12
million, after tax in Europe related to its exterior systems
operations.
For the nine months ended September
30, 2014:
[b] Restructuring
During the first, second and third quarters of
2014, the Company recorded net restructuring charges of
$22 million, $11 million and $7
million [$20 million,
$10 million and $6 million after tax], respectively, in
Europe related to its exterior
systems operations.
4. EARNINGS PER SHARE
Earnings per share are computed as follows [restated [note
1]]:
|
|
Three months ended
September 30, |
|
|
Nine months ended
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to Common
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing
operations |
|
$ |
469 |
|
|
$ |
486 |
|
|
$ |
1,458 |
|
|
$ |
1,406 |
Loss from continuing operations
attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests |
|
|
1 |
|
|
|
1 |
|
|
|
5 |
|
|
|
2 |
Net income attributable to Magna
International Inc. from |
|
|
470 |
|
|
|
487 |
|
|
|
1,463 |
|
|
|
1,408 |
|
continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued
operations, net of
tax |
|
|
119 |
|
|
|
(17) |
|
|
|
74 |
|
|
|
(35) |
Net income attributable to Magna
International Inc. |
|
$ |
589 |
|
|
$ |
470 |
|
|
$ |
1,537 |
|
|
$ |
1,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
408.5 |
|
|
|
422.4 |
|
|
|
409.2 |
|
|
|
432.0 |
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and restricted stock
[i] |
|
|
5.3 |
|
|
|
6.0 |
|
|
|
5.5 |
|
|
|
6.2 |
Diluted |
|
|
413.8 |
|
|
|
428.4 |
|
|
|
414.7 |
|
|
|
438.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[i] |
For the three and nine months ended September 30,
2015, diluted earnings per Common Share exclude
1.6 million and 0.7 million Common Shares issuable under the
Company's Incentive Stock Option
Plan because these options were not "in-the-money". |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
1.15 |
|
|
$ |
1.15 |
|
|
$ |
3.58 |
|
|
$ |
3.26 |
|
Discontinued
operations |
|
|
0.29 |
|
|
|
(0.04) |
|
|
|
0.18 |
|
|
|
(0.08) |
|
Attributable to Magna International
Inc. |
|
$ |
1.44 |
|
|
$ |
1.11 |
|
|
$ |
3.76 |
|
|
$ |
3.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
1.13 |
|
|
$ |
1.14 |
|
|
$ |
3.53 |
|
|
$ |
3.21 |
|
Discontinued
operations |
|
|
0.29 |
|
|
|
(0.04) |
|
|
|
0.18 |
|
|
|
(0.08) |
|
Attributable to Magna International
Inc. |
|
$ |
1.42 |
|
|
$ |
1.10 |
|
|
$ |
3.71 |
|
|
$ |
3.13 |
5. DETAILS OF CASH FROM OPERATING ACTIVITIES
[a] Cash and cash equivalents:
|
|
|
September 30, |
|
|
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
Bank term deposits, bankers' acceptances and
government paper |
|
$ |
1,759 |
|
|
$ |
1,058 |
Cash |
|
|
256 |
|
|
|
191 |
|
|
$ |
2,015 |
|
|
$ |
1,249 |
[b] Items not involving current cash
flows:
|
|
Three months ended
September 30, |
|
|
Nine months ended
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
$ |
197 |
|
|
$ |
214 |
|
|
$ |
589 |
|
|
$ |
631 |
Amortization of other assets included in cost of
goods sold |
|
|
32 |
|
|
|
35 |
|
|
|
82 |
|
|
|
104 |
Deferred income taxes |
|
|
11 |
|
|
|
14 |
|
|
|
(5) |
|
|
|
43 |
Other non-cash charges |
|
|
9 |
|
|
|
10 |
|
|
|
21 |
|
|
|
25 |
Equity income in excess of dividends
received |
|
|
(19) |
|
|
|
(11) |
|
|
|
(49) |
|
|
|
(44) |
Non-cash portion of Other (income) expense, net
[note 3] |
|
|
(136) |
|
|
|
— |
|
|
|
(193) |
|
|
|
— |
|
|
$ |
94 |
|
|
$ |
262 |
|
|
$ |
445 |
|
|
$ |
759 |
[c] Changes in operating assets and liabilities:
|
|
Three months ended
September 30, |
|
|
Nine months ended
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
$ |
(116) |
|
|
$ |
154 |
|
|
$ |
(588) |
|
|
$ |
(698) |
Inventories |
|
|
(62) |
|
|
|
(166) |
|
|
|
(331) |
|
|
|
(264) |
Prepaid expenses and other |
|
|
3 |
|
|
|
(2) |
|
|
|
(9) |
|
|
|
1 |
Accounts payable |
|
|
68 |
|
|
|
(20) |
|
|
|
167 |
|
|
|
404 |
Accrued salaries and wages |
|
|
125 |
|
|
|
70 |
|
|
|
70 |
|
|
|
57 |
Other accrued liabilities |
|
|
(13) |
|
|
|
(41) |
|
|
|
27 |
|
|
|
100 |
Income taxes payable |
|
|
28 |
|
|
|
(12) |
|
|
|
77 |
|
|
|
68 |
|
|
$ |
33 |
|
|
$ |
(17) |
|
|
$ |
(587) |
|
|
$ |
(332) |
6. INVENTORIES
Inventories consist of:
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
|
December 31, |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials and supplies |
|
|
|
|
|
|
|
|
$ |
859 |
|
|
|
$ |
846 |
Work-in-process |
|
|
|
|
|
|
|
|
|
248 |
|
|
|
|
233 |
Finished goods |
|
|
|
|
|
|
|
|
|
284 |
|
|
|
|
338 |
Tooling and engineering |
|
|
|
|
|
|
|
|
|
1,274 |
|
|
|
|
1,108 |
|
|
|
|
|
|
|
|
|
$ |
2,665 |
|
|
|
$ |
2,525 |
Tooling and engineering inventory represents
costs incurred on tooling and engineering services contracts in
excess of billed and unbilled amounts included in accounts
receivable.
7. 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.
8. OTHER ASSETS
Other assets consist of:
|
|
|
September 30, |
|
|
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
Preproduction costs related to long-term supply
agreements with
contractual guarantee for reimbursement |
|
$ |
246 |
|
|
$ |
243 |
Long-term receivables |
|
|
87 |
|
|
|
85 |
Customer relationship intangibles |
|
|
83 |
|
|
|
108 |
Patents and licences, net |
|
|
29 |
|
|
|
32 |
Pension overfunded status |
|
|
13 |
|
|
|
13 |
Unrealized gain on cash flow hedges |
|
|
6 |
|
|
|
8 |
Other, net |
|
|
38 |
|
|
|
37 |
|
|
$ |
502 |
|
|
$ |
526 |
9. WARRANTY
The following is a continuity of the Company's
warranty accruals:
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
|
|
|
|
|
|
$ |
80 |
|
|
$ |
81 |
Expense, net |
|
|
|
|
|
|
|
|
|
8 |
|
|
|
7 |
Settlements |
|
|
|
|
|
|
|
|
|
(10) |
|
|
|
(7) |
Foreign exchange and other |
|
|
|
|
|
|
|
|
|
(6) |
|
|
|
— |
Balance, March 31 |
|
|
|
|
|
|
|
|
|
72 |
|
|
|
81 |
Expense, net |
|
|
|
|
|
|
|
|
|
10 |
|
|
|
7 |
Settlements |
|
|
|
|
|
|
|
|
|
(10) |
|
|
|
(8) |
Foreign exchange and other |
|
|
|
|
|
|
|
|
|
1 |
|
|
|
(1) |
Balance, June 30 |
|
|
|
|
|
|
|
|
|
73 |
|
|
|
79 |
Expense, net |
|
|
|
|
|
|
|
|
|
1 |
|
|
|
23 |
Settlements |
|
|
|
|
|
|
|
|
|
(10) |
|
|
|
(9) |
Foreign exchange and other |
|
|
|
|
|
|
|
|
|
(5) |
|
|
|
(5) |
Balance, September 30 |
|
|
|
|
|
|
|
|
$ |
59 |
|
|
$ |
88 |
10. LONG-TERM DEBT
[a] On September 16,
2015, the Company issued $650
million of 4.150% fixed-rate Senior Notes which mature
on October 1, 2025. Interest is payable on
April 1 and October 1 of each year. The Senior Notes
are senior unsecured obligations 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 April 24,
2015, the Company's $2.25
billion revolving credit facility maturing June 20, 2019 was extended to
June 22, 2020. The facility includes
a $200 million Asian tranche, a
$50 million Mexican tranche and a
tranche for Canada, the U.S. and
Europe, which is fully
transferable between jurisdictions and can be drawn in U.S.
dollars, Canadian dollars or euros.
11. LONG-TERM EMPLOYEE BENEFIT
LIABILITIES
The Company recorded long-term employee benefit
expenses as follows:
|
|
Three months ended
September 30, |
|
|
Nine months ended
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit pension plan and other |
|
$ |
3 |
|
|
$ |
2 |
|
|
$ |
10 |
|
|
$ |
9 |
Termination and long service
arrangements |
|
|
8 |
|
|
|
8 |
|
|
|
20 |
|
|
|
24 |
Retirement medical benefit plan |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
$ |
11 |
|
|
$ |
11 |
|
|
$ |
31 |
|
|
$ |
35 |
12. 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 - restated [note 1]]:
|
|
2015 |
|
|
|
2014 |
|
|
Options outstanding |
|
|
|
|
|
|
Options
outstanding |
|
|
|
|
|
Number
of options |
|
|
Exercise
price (i) |
|
|
Number
of options
exercisable |
|
|
|
Number
of options |
|
|
Exercise
price (i) |
|
|
Number
of options
exercisable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
8,314,658 |
|
|
27.03 |
|
|
4,614,488 |
|
|
|
9,516,216 |
|
|
20.91 |
|
|
5,694,218 |
Granted |
|
1,614,336 |
|
|
68.24 |
|
|
— |
|
|
|
1,502,600 |
|
|
53.36 |
|
|
— |
Exercised |
|
(239,362) |
|
|
29.49 |
|
|
(239,362) |
|
|
|
(1,360,704) |
|
|
19.75 |
|
|
(1,360,704) |
Cancelled |
|
(103,332) |
|
|
34.30 |
|
|
— |
|
|
|
(33,998) |
|
|
26.10 |
|
|
(12,000) |
Vested |
|
— |
|
|
— |
|
|
1,965,904 |
|
|
|
— |
|
|
— |
|
|
1,558,768 |
March 31 |
|
9,586,300 |
|
|
33.83 |
|
|
6,341,030 |
|
|
|
9,624,114 |
|
|
26.12 |
|
|
5,880,282 |
Exercised |
|
(308,424) |
|
|
26.33 |
|
|
(308,424) |
|
|
|
(592,070) |
|
|
20.99 |
|
|
(592,070) |
Cancelled |
|
(48,906) |
|
|
46.96 |
|
|
(2) |
|
|
|
(21,000) |
|
|
36.93 |
|
|
— |
June 30 |
|
9,228,970 |
|
|
34.01 |
|
|
6,032,604 |
|
|
|
9,011,044 |
|
|
26.43 |
|
|
5,288,212 |
Exercised |
|
(600,834) |
|
|
14.22 |
|
|
(600,833) |
|
|
|
(342,102) |
|
|
19.27 |
|
|
(342,102) |
Cancelled |
|
(10,910) |
|
|
56.11 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
September 30 |
|
8,617,226 |
|
|
35.36 |
|
|
5,431,771 |
|
|
|
8,668,942 |
|
|
26.72 |
|
|
4,946,110 |
(i) The exercise price noted above
represents the weighted average exercise price in Canadian
dollars.
The weighted average assumptions used in
measuring the fair value of stock options granted are as
follows:
|
|
|
|
Nine months ended |
|
|
|
|
September 30, |
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Risk free interest
rate |
|
|
|
|
0.97% |
|
|
|
1.60% |
Expected dividend
yield |
|
|
|
|
2.00% |
|
|
|
2.00% |
Expected
volatility |
|
|
|
|
26% |
|
|
|
29% |
Expected time until
exercise |
|
|
|
|
4.6 years |
|
|
|
4.5 years |
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of options granted in
period [Cdn$] [restated [note 1]] |
|
|
|
$ |
12.84 |
|
|
$ |
11.47 |
[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 -
restated [note 1]]:
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
Number
of shares |
|
|
Stated
value |
|
|
|
Number
of shares |
|
|
Stated
value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded and not released, beginning of
year |
|
|
|
1,174,648 |
|
|
$ |
20 |
|
|
|
1,460,952 |
|
|
$ |
25 |
Release of restricted stock |
|
|
|
(286,312) |
|
|
|
(4) |
|
|
|
(286,304) |
|
|
|
(5) |
Awarded and not released, March
31, June 30 and September 30 |
|
|
|
888,336 |
|
|
$ |
16 |
|
|
|
1,174,648 |
|
|
$ |
20 |
[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 - restated
[note 1]]:
|
|
2015 |
|
2014 |
|
|
Equity |
|
|
Liability |
|
|
Equity |
|
|
|
|
|
Equity |
|
|
Liability |
|
|
Equity |
|
|
|
|
|
classified |
|
|
classified |
|
|
classified |
|
|
|
|
|
classified |
|
|
classified |
|
|
classified |
|
|
|
|
|
RSUs |
|
|
RSUs |
|
|
DSUs |
|
|
Total |
|
|
RSUs |
|
|
RSUs |
|
|
DSUs |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of period |
|
985,278 |
|
|
46,052 |
|
|
303,261 |
|
|
1,334,591 |
|
|
1,263,709 |
|
|
60,238 |
|
|
254,894 |
|
|
1,578,841 |
Granted |
|
120,958 |
|
|
15,922 |
|
|
12,112 |
|
|
148,992 |
|
|
101,619 |
|
|
16,050 |
|
|
12,630 |
|
|
130,299 |
Dividend
equivalents |
|
424 |
|
|
262 |
|
|
1,009 |
|
|
1,695 |
|
|
505 |
|
|
306 |
|
|
1,058 |
|
|
1,869 |
Released |
|
(16,518) |
|
|
— |
|
|
— |
|
|
(16,518) |
|
|
(16,518) |
|
|
— |
|
|
— |
|
|
(16,518) |
Balance, March 31 |
|
1,090,142 |
|
|
62,236 |
|
|
316,382 |
|
|
1,468,760 |
|
|
1,349,315 |
|
|
76,594 |
|
|
268,582 |
|
|
1,694,491 |
Granted |
|
93,821 |
|
|
— |
|
|
9,793 |
|
|
103,614 |
|
|
110,484 |
|
|
2,000 |
|
|
10,714 |
|
|
123,198 |
Dividend
equivalents |
|
475 |
|
|
235 |
|
|
1,199 |
|
|
1,909 |
|
|
467 |
|
|
278 |
|
|
979 |
|
|
1,724 |
Balance, June 30 |
|
1,184,438 |
|
|
62,471 |
|
|
327,374 |
|
|
1,574,283 |
|
|
1,460,266 |
|
|
78,872 |
|
|
280,275 |
|
|
1,819,413 |
Granted |
|
72,317 |
|
|
— |
|
|
10,953 |
|
|
83,270 |
|
|
71,314 |
|
|
— |
|
|
9,684 |
|
|
80,998 |
Dividend equivalents |
|
347 |
|
|
281 |
|
|
1,491 |
|
|
2,119 |
|
|
342 |
|
|
262 |
|
|
977 |
|
|
1,581 |
Forfeitures |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(820) |
|
|
— |
|
|
(820) |
Released |
|
(25,861) |
|
|
— |
|
|
— |
|
|
(25,861) |
|
|
(25,460) |
|
|
— |
|
|
— |
|
|
(25,460) |
Balance, September
30 |
|
1,231,241 |
|
|
62,752 |
|
|
339,818 |
|
|
1,633,811 |
|
|
1,506,462 |
|
|
78,314 |
|
|
290,936 |
|
|
1,875,712 |
[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
September 30, |
|
|
Nine
months ended
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
Incentive Stock Option Plan |
|
$ |
3 |
|
|
$ |
4 |
|
|
$ |
9 |
|
|
$ |
11 |
Long-term retention |
|
|
1 |
|
|
|
1 |
|
|
|
3 |
|
|
|
3 |
Restricted stock unit |
|
|
4 |
|
|
|
5 |
|
|
|
16 |
|
|
|
17 |
Total stock-based compensation expense |
|
$ |
8 |
|
|
$ |
10 |
|
|
$ |
28 |
|
|
$ |
31 |
13. COMMON SHARES
[a] The Company repurchased shares under
normal course issuer bids as follows [restated [note1]]:
|
|
2015 |
|
|
2014 |
|
|
Number
of shares |
|
|
Cash
consideration |
|
|
|
Number
of shares |
|
|
Cash
consideration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
— |
|
|
$ |
— |
|
|
|
5,420,000 |
|
|
$ |
240 |
Second Quarter |
|
— |
|
|
|
— |
|
|
|
11,436,362 |
|
|
|
575 |
Third Quarter |
|
7,246,514 |
|
|
|
346 |
|
|
|
11,308,844 |
|
|
|
614 |
|
|
7,246,514 |
|
|
$ |
346 |
|
|
|
28,165,206 |
|
|
$ |
1,429 |
Refer to Subsequent Event Note 18 for more
information regarding the Company's Normal Course Issuer Bids.
[b] The following table presents the
maximum number of shares that would be outstanding if all the
dilutive instruments outstanding at November
4, 2015 were exercised or converted:
Common Shares |
|
|
|
|
|
404,380,164 |
Stock options (i) |
|
|
|
|
|
8,563,750 |
|
|
|
|
|
|
412,943,914 |
(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. |
14. ACCUMULATED OTHER COMPREHENSIVE
LOSS
The following is a continuity schedule of
accumulated other comprehensive loss:
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
Accumulated net unrealized (loss) gain
on translation of net investment in
foreign operations |
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
(255) |
|
|
$ |
454 |
|
Net unrealized loss |
|
|
(438) |
|
|
|
(112) |
|
Repurchase of shares under normal course issuer
bid |
|
|
— |
|
|
|
(4) |
|
Balance, March 31 |
|
|
(693) |
|
|
|
338 |
|
Net unrealized gain |
|
|
63 |
|
|
|
100 |
|
Repurchase of shares under normal course issuer
bid |
|
|
— |
|
|
|
(11) |
|
Balance, June 30 |
|
|
(630) |
|
|
|
427 |
|
Net unrealized loss |
|
|
(275) |
|
|
|
(346) |
|
Repurchase of shares under normal course issuer
bid |
|
|
7 |
|
|
|
(10) |
|
Balance, September 30 |
|
|
(898) |
|
|
|
71 |
|
|
|
|
|
|
|
|
Accumulated net unrealized loss on
cash flow hedges (i) |
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
(113) |
|
|
|
(20) |
|
Net unrealized loss |
|
|
(65) |
|
|
|
(31) |
|
Reclassification of net loss (gain) to net
income |
|
|
11 |
|
|
|
(1) |
|
Balance, March 31 |
|
|
(167) |
|
|
|
(52) |
|
Net unrealized (loss) gain |
|
|
(2) |
|
|
|
49 |
|
Reclassification of net loss to net income |
|
|
21 |
|
|
|
6 |
|
Balance, June 30 |
|
|
(148) |
|
|
|
3 |
|
Net unrealized loss |
|
|
(123) |
|
|
|
(42) |
|
Reclassification of net loss (gain) to net
income |
|
|
24 |
|
|
|
(1) |
|
Balance, September 30 |
|
|
(247) |
|
|
|
(40) |
|
|
|
|
|
|
|
|
Accumulated net unrealized loss on
available-for-sale investments |
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
(4) |
|
|
|
(4) |
|
Net unrealized gain (loss) |
|
|
1 |
|
|
|
(1) |
|
Balance, March 31 |
|
|
(3) |
|
|
|
(5) |
|
Net unrealized gain |
|
|
1 |
|
|
|
— |
|
Balance, June 30 |
|
|
(2) |
|
|
|
(5) |
|
Net unrealized (loss) gain |
|
|
(2) |
|
|
|
1 |
|
Reclassification of net loss to net
income |
|
|
3 |
|
|
|
— |
|
Balance, September 30 |
|
|
(1) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
Accumulated net unrealized loss on
pensions (ii) |
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
(186) |
|
|
|
(117) |
|
Net unrealized loss |
|
|
(1) |
|
|
|
— |
|
Reclassification of net loss to net
income |
|
|
1 |
|
|
|
1 |
|
Balance, March 31 |
|
|
(186) |
|
|
|
(116) |
|
Reclassification of net loss to net
income |
|
|
2 |
|
|
|
2 |
|
Balance, June 30 |
|
|
(184) |
|
|
|
(114) |
|
Net unrealized loss |
|
|
(1) |
|
|
|
— |
|
Reclassification of net loss to net
income |
|
|
2 |
|
|
|
— |
|
Balance, September 30 |
|
|
(183) |
|
|
|
(114) |
|
|
|
|
|
|
|
|
|
Total accumulated other comprehensive
loss |
|
$ |
(1,329) |
|
|
$ |
(87) |
(i) |
The amount of income tax benefit that has been netted in the
accumulated net unrealized loss on cash flow hedges is as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
Balance, beginning of period |
|
$ |
44 |
|
|
$ |
5 |
|
Net unrealized loss |
|
|
27 |
|
|
|
10 |
|
Reclassifications of
net (loss) gain to net income |
|
|
(5) |
|
|
|
1 |
|
Balance, March 31 |
|
|
66 |
|
|
|
16 |
|
Net unrealized gain |
|
|
(1) |
|
|
|
(18) |
|
Reclassifications of
net loss to net income |
|
|
(8) |
|
|
|
(1) |
|
Balance, June 30 |
|
|
57 |
|
|
|
(3) |
|
Net unrealized loss |
|
|
47 |
|
|
|
16 |
|
Reclassifications of
net (loss) gain to net income |
|
|
(10) |
|
|
|
1 |
|
Balance,
September 30 |
|
$ |
94 |
|
|
$ |
14 |
|
|
|
|
|
|
|
|
|
(ii) |
The amount of income tax benefit that has been netted in the
accumulated net unrealized loss on pensions is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
36 |
|
|
$ |
14 |
|
Reclassification of
net loss to net income |
|
|
— |
|
|
|
— |
|
Balance, March 31 |
|
|
36 |
|
|
|
14 |
|
Reclassification of
net loss to net income |
|
|
(1) |
|
|
|
— |
|
Balance, June 30 |
|
|
35 |
|
|
|
14 |
|
Net unrealized gain |
|
|
(1) |
|
|
|
— |
|
Reclassification of
net loss to net income |
|
|
(1) |
|
|
|
(1) |
|
Balance,
September 30 |
|
$ |
33 |
|
|
$ |
13 |
The amount of other comprehensive loss that is
expected to be reclassified to net income over the next 12 months
is $129 million [net of income
taxes of $50 million].
15. FINANCIAL INSTRUMENTS
[a] The Company's financial assets and
financial liabilities consist of the following:
|
|
|
September 30, |
|
|
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
Held for trading |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,015 |
|
|
$ |
1,249 |
|
Investment in asset-backed commercial
paper |
|
|
76 |
|
|
|
88 |
|
Equity
investments |
|
|
5 |
|
|
|
— |
|
|
$ |
2,096 |
|
|
$ |
1,337 |
|
|
|
|
|
|
|
|
Available-for-sale |
|
|
|
|
|
|
|
|
Equity investments |
|
$ |
— |
|
|
$ |
5 |
Held to maturity investments |
|
|
|
|
|
|
|
|
Severance investments |
|
$ |
3 |
|
|
$ |
4 |
|
|
|
|
|
|
|
|
Loans and receivables |
|
|
|
|
|
|
|
|
Accounts receivable |
|
$ |
5,671 |
|
|
$ |
5,316 |
|
Long-term receivables included in
other assets |
|
|
87 |
|
|
|
85 |
|
|
$ |
5,758 |
|
|
$ |
5,401 |
|
|
|
|
|
|
|
|
Other financial liabilities |
|
|
|
|
|
|
|
|
Bank indebtedness |
|
$ |
31 |
|
|
$ |
30 |
|
Long-term debt (including portion due
within one year) |
|
|
1,600 |
|
|
|
995 |
|
Accounts payable |
|
|
4,681 |
|
|
|
4,765 |
|
|
$ |
6,312 |
|
|
$ |
5,790 |
|
|
|
|
|
|
|
|
Derivatives designated as effective
hedges, measured at fair value |
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
$ |
27 |
|
|
$ |
21 |
|
|
Other assets |
|
|
6 |
|
|
|
8 |
|
|
Other accrued liabilities |
|
|
(187) |
|
|
|
(90) |
|
|
Other long-term liabilities |
|
|
(141) |
|
|
|
(80) |
|
|
|
(295) |
|
|
|
(141) |
Natural gas contracts |
|
|
|
|
|
|
|
|
Other accrued liabilities |
|
|
(1) |
|
|
|
(1) |
|
|
$ |
(296) |
|
|
$ |
(142) |
[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 interim
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
interim consolidated balance sheets and the unrecognized impacts of
master netting arrangements:
|
|
Gross
amounts
presented
in Consolidated
Balance Sheets |
|
|
Gross
amounts
not offset
in Consolidated
Balance Sheets |
|
|
Net
amounts |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
$ |
33 |
|
|
$ |
30 |
|
|
$ |
3 |
|
Liabilities |
|
$ |
(327) |
|
|
$ |
(35) |
|
|
$ |
(292) |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
$ |
30 |
|
|
$ |
28 |
|
|
$ |
2 |
|
Liabilities |
|
$ |
(174) |
|
|
$ |
(28) |
|
|
$ |
(146) |
[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 September 30,
2015, the Company held Canadian third party asset-backed
commercial paper ["ABCP"] with a face value of Cdn$107 million [December
31, 2014 - Cdn$107 million]. The carrying value and
estimated fair value of this investment was Cdn$102 million [December
31, 2014 - Cdn$102 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.
Term debt
The Company's term debt includes $158 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 September 30,
2015, the net book value of the Company's Senior Notes was
$1.40 billion and the estimated fair
value was $1.38 billion, determined
primarily using active market prices, categorized as Level 1 inputs
within the Accounting Standards Codification 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 the three and
nine-month periods ended September 30,
2015, sales to the Company's six largest customers
represented 84% and 83% of the Company's total sales, respectively,
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 on its monetary current assets and current
liabilities due to the short-term maturity of these items. 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
At September 30,
2015, 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. dollar amount |
|
|
|
|
|
191 |
|
|
|
1,627 |
|
euro amount |
|
|
|
|
|
54 |
|
|
|
47 |
|
Korean won amount |
|
|
|
|
|
17,097 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
For U.S. dollars |
|
|
|
|
|
|
|
|
|
|
|
Peso amount |
|
|
|
|
|
6,673 |
|
|
|
55 |
|
Korean won amount |
|
|
|
|
|
35,360 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
For euros |
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar amount |
|
|
|
|
|
185 |
|
|
|
327 |
|
British pounds amount |
|
|
|
|
|
— |
|
|
|
25 |
|
Czech koruna amount |
|
|
|
|
|
3,840 |
|
|
|
— |
Forward contracts mature at various dates through 2020. Foreign
currency exposures are reviewed quarterly. |
16. CONTINGENCIES
From time to time, the Company may become
involved in regulatory proceedings, or become liable for legal,
contractual and other claims by various parties, including
customers, suppliers, former employees, class action plaintiffs and
others. On an ongoing basis, the Company attempts to assess the
likelihood of any adverse judgments or outcomes to these
proceedings or claims, together with 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 2017. 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] In September
2013, representatives of the Bundeskartellamt, the German
Federal 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 automotive textile coverings and
components, particularly trunk linings.
In September 2014,
the Conselho Administrativo de Defesa Economica, Brazil's Federal competition authority,
attended at one of the Company's operating divisions in
Brazil to obtain information in
connection with an ongoing antitrust investigation relating to
suppliers of automotive door latches and related products.
Proceedings of this nature can often continue
for several years. Where wrongful conduct is found, the relevant
antitrust authority can, depending on the jurisdiction, initiate
administrative or criminal legal proceedings and impose
administrative or criminal fines or penalties taking into account
several mitigating and aggravating factors. In the case of
the German Federal Cartel Office, administrative fines are tied to
the level of affected sales and the consolidated sales of the group
of companies to which the offending entity belongs. At this time,
management is unable to predict the duration or outcome of the
German and Brazilian investigations, including whether any
operating divisions of the Company will be found liable for any
violation of law or the extent or magnitude of any liability, if
found to be liable.
The Company's policy is to comply with all
applicable laws, including antitrust and competition laws. The
Company has initiated a global review focused on antitrust risk led
by a team of external counsel. If any antitrust violation is found
as a result of the above-referenced investigations or otherwise,
Magna could be subject to fines, penalties and civil,
administrative or criminal legal proceedings that could have a
material adverse effect on Magna's profitability in the year in
which any such fine or penalty is imposed or the outcome of any
such proceeding is determined. Additionally, Magna could be subject
to other consequences, including reputational damage, which could
have a material adverse effect on the Company.
[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 9];
however, the ultimate amount of such costs could be materially
different. The Company continues to experience increased customer
pressure to assume greater warranty responsibility. Currently,
under most customer agreements, the Company only accounts for
existing or probable claims. Under certain complete vehicle
engineering and assembly contracts, the Company records an estimate
of future warranty-related costs based on the terms of the specific
customer agreements, and the specific customer's warranty
experience.
17. SEGMENTED INFORMATION
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 continuing operations before
income taxes; interest expense, net; and other (income) expense,
net.
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 continuing
operations before income taxes:
|
|
Three
months ended
September 30, 2015 |
|
|
|
|
Three
months ended
September 30, 2014 |
|
|
|
Total
sales |
|
|
|
External
sales |
|
|
|
Adjusted
EBIT |
|
|
|
Fixed
assets,
net |
|
|
|
|
|
Total
sales |
|
|
|
External
sales |
|
|
|
Adjusted
EBIT |
|
|
|
Fixed
assets,
net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
1,538 |
|
|
$ |
1,419 |
|
|
|
|
|
|
$ |
620 |
|
|
|
|
$ |
1,642 |
|
|
$ |
1,530 |
|
|
|
|
|
|
$ |
579 |
|
United States |
|
|
2,318 |
|
|
|
2,225 |
|
|
|
|
|
|
|
1,332 |
|
|
|
|
|
2,222 |
|
|
|
2,100 |
|
|
|
|
|
|
|
1,085 |
|
Mexico |
|
|
1,030 |
|
|
|
921 |
|
|
|
|
|
|
|
707 |
|
|
|
|
|
961 |
|
|
|
881 |
|
|
|
|
|
|
|
577 |
|
Eliminations |
|
|
(295) |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
(284) |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
4,591 |
|
|
|
4,565 |
|
|
$ |
455 |
|
|
|
2,659 |
|
|
|
|
|
4,541 |
|
|
|
4,511 |
|
|
$ |
475 |
|
|
|
2,241 |
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe excluding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Britain |
|
|
2,152 |
|
|
|
2,061 |
|
|
|
|
|
|
|
1,197 |
|
|
|
|
|
2,608 |
|
|
|
2,529 |
|
|
|
|
|
|
|
1,266 |
|
Great Britain |
|
|
80 |
|
|
|
79 |
|
|
|
|
|
|
|
47 |
|
|
|
|
|
88 |
|
|
|
89 |
|
|
|
|
|
|
|
36 |
|
Eastern Europe |
|
|
500 |
|
|
|
446 |
|
|
|
|
|
|
|
455 |
|
|
|
|
|
492 |
|
|
|
484 |
|
|
|
|
|
|
|
559 |
|
Eliminations |
|
|
(90) |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
(25) |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
2,642 |
|
|
|
2,586 |
|
|
|
91 |
|
|
|
1,699 |
|
|
|
|
|
3,163 |
|
|
|
3,102 |
|
|
|
107 |
|
|
|
1,861 |
Asia |
|
|
428 |
|
|
|
392 |
|
|
|
13 |
|
|
|
647 |
|
|
|
|
|
479 |
|
|
|
441 |
|
|
|
35 |
|
|
|
634 |
Rest of World |
|
|
115 |
|
|
|
114 |
|
|
|
(7) |
|
|
|
56 |
|
|
|
|
|
190 |
|
|
|
190 |
|
|
|
(6) |
|
|
|
90 |
Corporate and Other |
|
|
(115) |
|
|
|
4 |
|
|
|
13 |
|
|
|
389 |
|
|
|
|
|
(126) |
|
|
|
3 |
|
|
|
16 |
|
|
|
325 |
Total reportable
segments |
|
|
7,661 |
|
|
|
7,661 |
|
|
|
565 |
|
|
|
5,450 |
|
|
|
|
|
8,247 |
|
|
|
8,247 |
|
|
|
627 |
|
|
|
5,151 |
Other income
(expense), net |
|
|
|
|
|
|
|
|
|
|
124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7) |
|
|
|
|
Interest expense,
net |
|
|
|
|
|
|
|
|
|
|
(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
|
|
|
|
|
|
$ |
7,661 |
|
|
$ |
7,661 |
|
|
$ |
680 |
|
|
|
5,450 |
|
|
|
|
$ |
8,247 |
|
|
$ |
8,247 |
|
|
$ |
611 |
|
|
|
5,151 |
Current
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,445 |
Investments, goodwill, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
deferred tax assets, and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,491 |
Noncurrent assets held for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
376 |
Consolidated total
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
18,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
18,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended
September 30, 2015 |
|
|
|
|
Nine
months ended
September 30, 2014 |
|
|
|
Total
sales |
|
|
|
External
sales |
|
|
|
Adjusted
EBIT |
|
|
|
Fixed
assets,
net |
|
|
|
|
|
Total
sales |
|
|
|
External
sales |
|
|
|
Adjusted
EBIT |
|
|
|
Fixed
assets,
net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
4,578 |
|
|
$ |
4,237 |
|
|
|
|
|
|
$ |
620 |
|
|
|
|
$ |
5,040 |
|
|
$ |
4,676 |
|
|
|
|
|
|
$ |
579 |
|
United States |
|
|
7,112 |
|
|
|
6,805 |
|
|
|
|
|
|
|
1,332 |
|
|
|
|
|
6,806 |
|
|
|
6,425 |
|
|
|
|
|
|
|
1,085 |
|
Mexico |
|
|
3,085 |
|
|
|
2,803 |
|
|
|
|
|
|
|
707 |
|
|
|
|
|
2,945 |
|
|
|
2,698 |
|
|
|
|
|
|
|
577 |
|
Eliminations |
|
|
(850) |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
(901) |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
13,925 |
|
|
|
13,845 |
|
|
$ |
1,433 |
|
|
|
2,659 |
|
|
|
|
|
13,890 |
|
|
|
13,799 |
|
|
$ |
1,466 |
|
|
|
2,241 |
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe excluding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Britain |
|
|
6,653 |
|
|
|
6,434 |
|
|
|
|
|
|
|
1,197 |
|
|
|
|
|
8,400 |
|
|
|
8,183 |
|
|
|
|
|
|
|
1,266 |
|
Great Britain |
|
|
275 |
|
|
|
274 |
|
|
|
|
|
|
|
47 |
|
|
|
|
|
277 |
|
|
|
277 |
|
|
|
|
|
|
|
36 |
|
Eastern Europe |
|
|
1,548 |
|
|
|
1,373 |
|
|
|
|
|
|
|
455 |
|
|
|
|
|
1,707 |
|
|
|
1,532 |
|
|
|
|
|
|
|
559 |
|
Eliminations |
|
|
(242) |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
(230) |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
8,234 |
|
|
|
8,081 |
|
|
|
339 |
|
|
|
1,699 |
|
|
|
|
|
10,154 |
|
|
|
9,992 |
|
|
|
386 |
|
|
|
1,861 |
Asia |
|
|
1,357 |
|
|
|
1,262 |
|
|
|
86 |
|
|
|
647 |
|
|
|
|
|
1,401 |
|
|
|
1,292 |
|
|
|
103 |
|
|
|
634 |
Rest of World |
|
|
373 |
|
|
|
372 |
|
|
|
(19) |
|
|
|
56 |
|
|
|
|
|
519 |
|
|
|
519 |
|
|
|
(30) |
|
|
|
90 |
Corporate and Other |
|
|
(323) |
|
|
|
6 |
|
|
|
34 |
|
|
|
389 |
|
|
|
|
|
(351) |
|
|
|
11 |
|
|
|
42 |
|
|
|
325 |
Total reportable
segments |
|
|
23,566 |
|
|
|
23,566 |
|
|
|
1,873 |
|
|
|
5,450 |
|
|
|
|
|
25,613 |
|
|
|
25,613 |
|
|
|
1,967 |
|
|
|
5,151 |
Other income (expense),
net |
|
|
|
|
|
|
|
|
|
|
181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(40) |
|
|
|
|
Interest expense,
net |
|
|
|
|
|
|
|
|
|
|
(27) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18) |
|
|
|
|
|
|
$ |
23,566 |
|
|
$ |
23,566 |
|
|
$ |
2,027 |
|
|
|
5,450 |
|
|
|
|
$ |
25,613 |
|
|
$ |
25,613 |
|
|
$ |
1,909 |
|
|
|
5,151 |
Current
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,445 |
Investments, goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
deferred tax assets and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,491 |
Noncurrent assets held for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
376 |
Consolidated total
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
18,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
18,463 |
18. SUBSEQUENT EVENTS
Normal Course Issuer Bid
Subject to approval by the Toronto Stock
Exchange ["TSX"] and the New York Stock Exchange ["NYSE"], the
Board of Directors approved a new normal course issuer bid to
purchase up to 40 million of the Company's Common Shares,
representing approximately 9.9% of the Company's public float of
Common Shares. The primary purposes of the normal course issuer bid
are purchases for cancellation as well as purchases to fund the
Company's stock-based compensation awards or programs and/or its
obligations to its deferred profit sharing plans. The normal course
issuer bid is expected to commence on or about November 13, 2015 and will terminate one year
later. All purchases of Common Shares will be made at the market
price at the time of purchase in accordance with the rules and
policies of the TSX or on the NYSE in compliance with Rule 10b-18
under the U.S. Securities Exchange Act of 1934. Purchases may also
be made through other published markets, or by such other means
permitted by the TSX, including by private agreement at a discount
to the prevailing market price, pursuant to an issuer bid exemption
order issued by a securities regulatory authority.
SOURCE Magna International Inc.