ITEM 1.
|
FINANCIAL STATEMENTS
|
3
CONSOLIDATED STATEMENTS OF NET INCOME (UNAUDITED)
(Dollars in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
June 30,
2016
|
|
|
June 30,
2015
|
|
|
June 30,
2016
|
|
|
June 30,
2015
|
|
Net sales
|
|
$
|
2,578.5
|
|
|
$
|
2,291.5
|
|
|
$
|
5,008.5
|
|
|
$
|
4,465.6
|
|
|
|
|
|
|
Cost of sales
|
|
|
(2,052.0
|
)
|
|
|
(1,831.5
|
)
|
|
|
(3,981.0
|
)
|
|
|
(3,582.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
526.5
|
|
|
|
460.0
|
|
|
|
1,027.5
|
|
|
|
883.3
|
|
Selling, general and administrative expenses
|
|
|
(120.3
|
)
|
|
|
(101.2
|
)
|
|
|
(233.4
|
)
|
|
|
(201.8
|
)
|
Research, development and engineering expenses, net
|
|
|
(176.4
|
)
|
|
|
(140.3
|
)
|
|
|
(335.2
|
)
|
|
|
(266.8
|
)
|
Amortization of intangibles
|
|
|
(11.9
|
)
|
|
|
(3.3
|
)
|
|
|
(19.8
|
)
|
|
|
(7.0
|
)
|
Other expense, net
|
|
|
(5.2
|
)
|
|
|
(6.5
|
)
|
|
|
(21.2
|
)
|
|
|
(119.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
212.7
|
|
|
|
208.7
|
|
|
|
417.9
|
|
|
|
288.7
|
|
Income from equity method investments
|
|
|
0.1
|
|
|
|
1.6
|
|
|
|
0.7
|
|
|
|
2.9
|
|
Interest income
|
|
|
0.9
|
|
|
|
0.6
|
|
|
|
2.1
|
|
|
|
1.0
|
|
Interest expense
|
|
|
(15.6
|
)
|
|
|
(16.9
|
)
|
|
|
(31.1
|
)
|
|
|
(34.0
|
)
|
Other non-operating items, net
|
|
|
2.3
|
|
|
|
0.5
|
|
|
|
1.1
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
200.4
|
|
|
|
194.5
|
|
|
|
390.7
|
|
|
|
259.0
|
|
|
|
|
|
|
Income tax expense
|
|
|
(52.0
|
)
|
|
|
(57.7
|
)
|
|
|
(108.8
|
)
|
|
|
(86.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
148.4
|
|
|
$
|
136.8
|
|
|
$
|
281.9
|
|
|
$
|
172.5
|
|
Less: Net income attributable to non-controlling interest
|
|
|
0.0
|
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to controlling interest
|
|
$
|
148.4
|
|
|
$
|
136.7
|
|
|
$
|
281.6
|
|
|
$
|
172.4
|
|
|
|
|
|
|
Net earnings per share basic
|
|
$
|
1.68
|
|
|
$
|
1.55
|
|
|
$
|
3.19
|
|
|
$
|
1.95
|
|
Net earnings per share diluted
|
|
$
|
1.68
|
|
|
$
|
1.55
|
|
|
$
|
3.19
|
|
|
$
|
1.95
|
|
|
|
|
|
|
Weighted average number of shares outstanding, net of treasury shares (in
millions)
|
|
|
88.2
|
|
|
|
88.0
|
|
|
|
88.2
|
|
|
|
88.2
|
|
|
|
|
|
|
Weighted average number of shares outstanding, assuming dilution and net of treasury shares (in
millions)
|
|
|
88.4
|
|
|
|
88.3
|
|
|
|
88.4
|
|
|
|
88.4
|
|
|
|
|
|
|
Number of shares outstanding, excluding dilution and net of treasury shares (in
millions)
|
|
|
88.2
|
|
|
|
88.1
|
|
|
|
88.2
|
|
|
|
88.1
|
|
|
|
|
|
|
Cash dividend per share declared
|
|
$
|
0.58
|
|
|
$
|
0.56
|
|
|
$
|
1.16
|
|
|
$
|
1.12
|
|
Cash dividend per share paid
|
|
$
|
0.58
|
|
|
$
|
0.56
|
|
|
$
|
1.14
|
|
|
$
|
1.10
|
|
See Notes to unaudited condensed consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
June 30,
2016
|
|
|
June 30,
2015
|
|
|
June 30,
2016
|
|
|
June 30,
2015
|
|
Net income
|
|
$
|
148.4
|
|
|
$
|
136.8
|
|
|
$
|
281.9
|
|
|
$
|
172.5
|
|
Other comprehensive income (loss) before tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cumulative translation adjustments
|
|
|
(21.2
|
)
|
|
|
20.1
|
|
|
|
38.6
|
|
|
|
(90.7
|
)
|
Net change in cash flow hedges
|
|
|
5.0
|
|
|
|
(0.6
|
)
|
|
|
3.5
|
|
|
|
(0.6
|
)
|
Net change in unrealized components of defined benefit plans
|
|
|
0.9
|
|
|
|
2.1
|
|
|
|
2.0
|
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), before tax
|
|
|
(15.3
|
)
|
|
|
21.6
|
|
|
|
44.1
|
|
|
|
(87.0
|
)
|
|
|
|
|
|
Tax effect allocated to other comprehensive income (loss)
|
|
|
(1.4
|
)
|
|
|
(0.4
|
)
|
|
|
(1.4
|
)
|
|
|
(1.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax
|
|
|
(16.7
|
)
|
|
|
21.2
|
|
|
|
42.7
|
|
|
|
(88.1
|
)
|
|
|
|
|
|
Comprehensive income
|
|
$
|
131.7
|
|
|
$
|
158.0
|
|
|
$
|
324.6
|
|
|
$
|
84.4
|
|
|
|
|
|
|
Less: Comprehensive income attributable to non-controlling interest
|
|
|
9.5
|
|
|
|
0.1
|
|
|
|
10.0
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to controlling interest
|
|
$
|
122.2
|
|
|
$
|
157.9
|
|
|
$
|
314.6
|
|
|
$
|
84.3
|
|
See Notes to unaudited condensed consolidated financial statements.
5
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,113.1
|
|
|
$
|
1,333.5
|
|
Receivables, net
|
|
|
2,092.0
|
|
|
|
1,787.6
|
|
Inventories, net
|
|
|
750.4
|
|
|
|
711.4
|
|
Other current assets
|
|
|
167.0
|
|
|
|
205.8
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
4,122.5
|
|
|
|
4,038.3
|
|
|
|
|
Property, plant and equipment, net
|
|
|
1,616.3
|
|
|
|
1,437.1
|
|
Investments and other non-current assets
|
|
|
354.2
|
|
|
|
255.8
|
|
Goodwill
|
|
|
1,894.2
|
|
|
|
1,666.3
|
|
Intangible assets, net
|
|
|
257.1
|
|
|
|
128.0
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
8,244.3
|
|
|
$
|
7,525.5
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
95.4
|
|
|
$
|
39.6
|
|
Accounts payable
|
|
|
1,281.9
|
|
|
|
1,169.6
|
|
Accrued expenses
|
|
|
876.8
|
|
|
|
755.6
|
|
Other current liabilities
|
|
|
213.7
|
|
|
|
261.6
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
2,467.8
|
|
|
|
2,226.4
|
|
|
|
|
Long-term debt
|
|
|
1,460.0
|
|
|
|
1,499.4
|
|
Pension liability
|
|
|
216.4
|
|
|
|
197.0
|
|
Other non-current liabilities
|
|
|
147.7
|
|
|
|
134.6
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
1,824.1
|
|
|
|
1,831.0
|
|
|
|
|
Common stock
|
|
|
102.8
|
|
|
|
102.8
|
|
Additional paid-in capital
|
|
|
1,329.3
|
|
|
|
1,329.3
|
|
Retained earnings
|
|
|
3,678.7
|
|
|
|
3,499.4
|
|
Accumulated other comprehensive (loss) income
|
|
|
(375.5
|
)
|
|
|
(408.5
|
)
|
Treasury stock
|
|
|
(1058.5
|
)
|
|
|
(1,067.4
|
)
|
|
|
|
|
|
|
|
|
|
Total controlling interest
|
|
|
3,676.8
|
|
|
|
3,455.6
|
|
Non-controlling interest
|
|
|
275.6
|
|
|
|
12.5
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
3,952.4
|
|
|
|
3,468.1
|
|
|
|
|
Total liabilities and equity
|
|
$
|
8,244.3
|
|
|
$
|
7,525.5
|
|
See Notes to unaudited condensed consolidated financial statements.
6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
281.9
|
|
|
$
|
172.5
|
|
Depreciation and amortization
|
|
|
181.8
|
|
|
|
149.5
|
|
Other, net
|
|
|
3.5
|
|
|
|
(14.7
|
)
|
Changes in operating assets and liabilities
|
|
|
(164.1
|
)
|
|
|
(69.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
303.1
|
|
|
|
237.9
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
|
|
(223.5
|
)
|
|
|
(250.0
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
2.4
|
|
|
|
12.7
|
|
Acquisitions and divestitures of businesses and other, net
|
|
|
(227.8
|
)
|
|
|
(9.0
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(448.9
|
)
|
|
|
(246.3
|
)
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Net decrease (increase) in short-term debt
|
|
|
16.4
|
|
|
|
21.6
|
|
Repayments and other changes in long-term debt
|
|
|
|
|
|
|
(8.4
|
)
|
Dividends paid to non-controlling interest
|
|
|
(1.7
|
)
|
|
|
|
|
Dividends paid
|
|
|
(100.5
|
)
|
|
|
(97.1
|
)
|
Repurchased shares
|
|
|
|
|
|
|
(104.4
|
)
|
Common stock options exercised
|
|
|
4.6
|
|
|
|
15.6
|
|
Other, net
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(80.7
|
)
|
|
|
(172.6
|
)
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
6.1
|
|
|
|
(24.7
|
)
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
|
(220.4
|
)
|
|
|
(205.7
|
)
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
1,333.5
|
|
|
|
1,529.0
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
1,113.1
|
|
|
$
|
1,323.3
|
|
See Notes to unaudited condensed consolidated financial statements.
7
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unless
otherwise noted, all amounts are presented in millions of dollars,
except for per share amounts)
June
30, 2016
1 Basis of Presentation
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted
accounting principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete
financial statements. In the opinion of management, unaudited condensed consolidated financial statements have been prepared on the same basis as the prior year audited financial statements and all adjustments considered necessary for a fair
presentation have been included in the financial statements. All such adjustments are of a normal recurring nature. The result for the interim period is not necessarily indicative of the results to be expected for any future period or for the fiscal
year ending December 31, 2016.
The Condensed Consolidated Balance Sheet at December 31, 2015 has been derived from the audited financial
statements at that date, but does not include all the information and footnotes required by U.S. GAAP for complete financial statements.
Statements in
this report that are not of historical fact are forward-looking statements that involve risks and uncertainties that could affect the actual results of the Company. A description of the important factors that could cause Autolivs actual
results to differ materially from the forward-looking statements contained in this report may be found in this report and Autolivs other reports filed with the Securities and Exchange Commission (the SEC). For further information,
refer to the consolidated financial statements, footnotes and definitions thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 19, 2016.
2 Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13,
Financial InstrumentsCredit Losses (Topic 326)
,
Measurement of Credit Losses on Financial
Instruments (ASU 2016-13)
, which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for public companies during the fiscal year 2020, and earlier adoption is permitted during
the fiscal year 2019. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our consolidated financial statements.
In March
2016, the Financial Accounting Standards Board (FASB), issued Accounting Standards Update (ASU) 2016-09,
Compensation - Stock Compensation (Topic 718)
, which simplifies the accounting for share-based payment transactions, including the income
tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public business entities, the amendments in this Update are effective for annual periods beginning after
December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected
as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum
statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is
adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring
recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of
excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842)
, to increase transparency and comparability among organizations by recognizing
lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exceptions. For public business entities, the
amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early application is permitted for all entities. The Company is
currently evaluating the impact of adopting this standard on its consolidated financial statements, which will require right of use assets and lease liabilities be recorded in the consolidated balance sheet for operating leases.
In November 2015, the FASB issued ASU 2015-17,
Balance Sheet Classification of Deferred Taxes (Topic 740)
, which simplifies the presentation of
deferred income taxes. The amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Update apply
8
to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and
presented as a single amount is not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and
interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this Update may be applied either prospectively to all deferred tax
liabilities and assets or retrospectively to all periods presented. The Company early adopted the standard prospectively in its interim reporting for March 31, 2016. The impact of the change on the consolidated condensed balance sheet was
approximately $70 million reclassified from current deferred tax assets to non-current deferred tax assets and approximately $20 million reclassified from current deferred tax liabilities to non-current deferred tax liabilities.
In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (Topic 606)
, which will supersede nearly all existing revenue
recognition guidance under U.S. GAAP. The core principle of the guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects
to be entitled in exchange for those goods or services. The standard was originally to be effective for public entities for annual and interim periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from
Contracts with Customers (Topic 606), that defers the effective date of ASU 2014-09 for all entities by one year. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017,
including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In April
2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing, which is an amendment that clarifies the following two aspects of Topic 606: identifying performance
obligations and the licensing implementation guidance. The effective date and transition requirements for the amendments in this Update are the same as in Topic 606. The potential impact of this Update is still being assessed. The Company is
currently in the process of evaluating which adoption method to use and assessing the potential impact the new standard and the related Updates will have on its operations and consolidated financial statements.
In July 2015, the FASB issued ASU 2015-11,
Inventory (Topic 330)
, which requires an entity to measure inventory at the lower of cost and net realizable
value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or
the retail inventory method. For public business entities, this update is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in this update should be applied
prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company plans to adopt this standard as of January 1, 2017. The adoption of this standard is not expected to have a material
impact for any periods presented.
In April 2015, the FASB issued ASU 2015-03,
Interest - Imputation of Interest (Subtopic 835-30)
, simplifying the
Presentation of Debt Issuance Costs, that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.
The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning
after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued. An entity should apply the new guidance on a
retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable
disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively
adjusted, and the effect of the change on the financial statement line items (that is, debt issuance cost asset and the debt liability). The Company adopted the standard in its interim reporting for March 31, 2016. The effect of the change on
the financial statement as of March 31, 2016 and June 30, 2016 was $1.7 million reclassified from debt issuance cost asset to the debt liability. Since the adoption of ASU 2015-03 had no material impact on the Companys consolidated
financial statements for any period presented the prior-period information have not been retrospectively adjusted.
3 Business
Combinations
Autoliv-Nissin Brake Systems
On
March 31, 2016, the Company acquired a 51% interest in the entities that formed Autoliv-Nissin Brake Systems (ANBS) for approximately $264 million in cash. ANBS designs, manufactures and sells products in the brake control and actuation systems
business. Nissin Kogyo retained a 49% interest in the entities that formed ANBS. The Company has management and operational control and will consolidate the results of operations and balance sheet of ANBS. The transaction was accounted for as a
business combination.
9
The acquisition combines Nissin Kogyos world leading expertise and technology in brake control and
actuation systems with Autolivs global reach and customer base to create a global competitive offering in the growing global brake control systems market. ANBS will also further strengthen the Companys role as a leading system supplier
of products and systems for autonomous driving vehicles. The operating results of the ANBS business have been included in the Consolidated Statements of Net Income since the date of the acquisition. ANBS is included in the Electronics segment. From
the date of the acquisition through June 30, 2016, the ANBS business reported net sales of $137 million and a break even operating income. Operating income from the date of the acquisition through June 30, 2016 included $1.3 million of
purchase accounting inventory fair value step-up adjustments in cost of sales upon the sale of acquired inventory. The total purchase accounting inventory fair value step-up adjustments included in the balance sheet at the acquisition date were $1.3
million.
Total ANBS acquisition related costs were approximately $3.5 million for the year ended December 31, 2015 and approximately $2.0 million
for the six months ended June 30, 2016 and were reflected in Selling, general and administrative expenses in the Consolidated Statements of Net Income.
The pro forma effects of this acquisition would not materially impact the Companys reported results for any period presented.
The acquisition date fair value of the consideration transferred for the Companys 51% interest in the entities that formed ANBS was $264.3 million in a
cash transaction.
The following table summarizes the preliminary fair values of identifiable assets acquired and liabilities assumed as of March 31,
2016 that are reflected in the Companys Consolidated Balance Sheet:
Amounts recognized as of acquisition date March 31, 2016 (in millions)
|
|
|
|
|
Assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
37.7
|
|
Receivables
|
|
|
1.5
|
|
Inventories
|
|
|
32.9
|
|
Other current assets
|
|
|
7.6
|
|
Property, plant and equipment
|
|
|
115.0
|
|
Other non-current assets
|
|
|
0.7
|
|
Intangibles
|
|
|
131.8
|
|
Goodwill
|
|
|
221.4
|
|
|
|
|
|
|
Total assets
|
|
$
|
548.6
|
|
|
|
Liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
5.9
|
|
Other current liabilities
|
|
|
16.1
|
|
Pension liabilities
|
|
|
8.3
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
30.3
|
|
Net assets acquired
|
|
$
|
518.3
|
|
Less: Non-controlling interest
|
|
$
|
(254.0
|
)
|
|
|
|
|
|
Controlling interest
|
|
$
|
264.3
|
|
Acquired Intangibles primarily consist of the fair value of customer contracts of $64.9 million and certain technology of
$59.6 million. The customer contracts will be amortized straight-line over 7 years and the technology will be amortized straight-line over 10 years.
The
recognized goodwill of $221.4 million reflects expected synergies from combining Autolivs global reach and customer base with Nissin Kogyos world leading expertise (including workforce) and technology in brake control and actuation
systems. A significant portion of the goodwill is deductible for tax purposes.
The fair values recognized for the acquired assets, assumed liabilities
and goodwill are preliminary pending finalization of valuation process.
4 Fair Value Measurement
Assets and liabilities measured at fair value on a recurring basis
The carrying value of cash and cash equivalents, accounts receivable, accounts payable, other current liabilities and short-term debt approximate their fair
value because of the short term maturity of these instruments.
The fair value of the contingent consideration relating to the M/A-COM acquisition in
August 2015 is re-measured on a recurring basis (for further information, see the Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 19, 2016). As of June 30, 2016, there was no material
change in the fair value of this contingent consideration.
10
The Company uses derivative financial instruments, derivatives, as part of its debt management to
mitigate the market risk that occurs from its exposure to changes in interest and foreign exchange rates. The Company does not enter into derivatives for trading or other speculative purposes. The Companys use of derivatives is in accordance
with the strategies contained in the Companys overall financial risk policy. The derivatives outstanding at June 30, 2016 were foreign exchange swaps and forward contracts. All swaps principally match the terms and maturity of the
underlying debt and no swaps have a maturity beyond six months. The foreign exchange forward contracts are designated as cash flow hedges of certain external purchases. All derivatives are recognized in the consolidated financial statements at fair
value. Certain derivatives are from time to time designated either as fair value hedges or cash flow hedges in line with the hedge accounting criteria. For certain other derivatives, hedge accounting is not applied either because non-hedge
accounting treatment creates the same accounting result or the hedge does not meet the hedge accounting requirements, although entered into applying the same rationale concerning mitigating market risk that occurs from changes in interest and
foreign exchange rates.
When a hedge is classified as a fair value hedge, the change in the fair value of the hedge is recognized in the Consolidated
Statements of Net Income along with the off-setting change in the fair value of the hedged item. When a hedge is classified as a cash flow hedge, any change in the fair value of the hedge is initially recorded in equity as a component of Other
Comprehensive Income (OCI) and reclassified into the Consolidated Statements of Net Income when the hedge transaction affects net earnings. The Company uses the forward rate with respect to the measurement of changes in fair value of cash flow
hedges when revaluing foreign exchange forward contracts. There were no material reclassifications from OCI to the Consolidated Statements of Net Income during the first six months of 2016. Any ineffectiveness in the first six months of 2016 was not
material.
The Companys derivatives are all classified as Level 2 of the fair value hierarchy and there have been no transfers between the levels
during this or comparable periods.
The tables below present information about the Companys financial assets and liabilities measured at fair value
on a recurring basis as of June 30, 2016 and December 31, 2015. The carrying value is the same as the fair value as these instruments are recognized in the consolidated financial statements at fair value. Although the Company is party to
close-out netting agreements (ISDA agreements) with all derivative counterparties, the fair values in the tables below and in the Condensed Consolidated Balance Sheet at June 30, 2016 and in the Consolidated Balance Sheet at December 31,
2015, have been presented on a gross basis. The amounts subject to netting agreements that the Company chose not to offset are presented below. According to the close-out netting agreements, transaction amounts payable to a counterparty on the same
date and in the same currency can be netted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
|
Fair Value
Measurements
|
|
|
|
|
Description
|
|
Nominal
volume
|
|
|
Derivative
asset
|
|
|
Derivative
liability
|
|
|
Balance sheet location
|
|
Derivatives designated as hedging instruments
1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts, less than 1 year (cash flow hedge)
|
|
$
|
64.2
|
|
|
$
|
2.1
|
|
|
$
|
0.0
|
|
|
|
Other current assets/ Other
current liabilities
|
|
|
|
|
|
|
Foreign exchange forward contracts, less than 2 year (cash flow hedge)
|
|
|
30.0
|
|
|
|
1.6
|
|
|
|
0.0
|
|
|
|
Other non-current assets/
Other non-current liabilities
|
|
|
|
|
|
|
Total derivatives designated as hedging instruments
|
|
$
|
94.2
|
|
|
$
|
3.7
|
|
|
$
|
0.0
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange swaps, less than 6 months
|
|
$
|
321.8
|
2)
|
|
$
|
1.3
|
3)
|
|
$
|
0.4
|
4)
|
|
|
Other current assets/ Other
current liabilities
|
|
|
|
|
|
|
Total derivatives not designated as hedging instruments
|
|
$
|
321.8
|
|
|
$
|
1.3
|
|
|
$
|
0.4
|
|
|
|
|
|
1)
|
There is no netting since there are no offsetting contracts.
|
2)
|
Net nominal amount after deducting for offsetting swaps under ISDA agreements is $290.6 million.
|
3)
|
Net amount after deducting for offsetting swaps under ISDA agreements is $1.3 million.
|
4)
|
Net amount after deducting for offsetting swaps under ISDA agreements is $0.3 million.
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
Fair Value
Measurements
|
|
|
|
Description
|
|
Nominal
volume
|
|
|
Derivative
asset
|
|
|
Derivative
liability
|
|
|
Balance sheet location
|
|
|
|
|
|
Derivatives designated as hedging instruments
1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts, less than 1 year (cash flow hedge)
|
|
$
|
58.0
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
Other current assets/ Other current liabilities
|
|
|
|
|
|
Foreign exchange forward contracts, less than 2 year (cash flow hedge)
|
|
|
11.3
|
|
|
|
0.0
|
|
|
|
0.1
|
|
|
Other non-current assets/ Other non-current liabilities
|
|
|
|
|
|
Total derivatives designated as hedging instruments
|
|
$
|
69.3
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange swaps, less than 6 months
|
|
$
|
482.4
|
2)
|
|
$
|
2.5
|
3)
|
|
$
|
5.1
|
4)
|
|
Other current assets/ Other current liabilities
|
|
|
|
|
|
Total derivatives not designated as hedging instruments
|
|
$
|
482.4
|
|
|
$
|
2.5
|
|
|
$
|
5.1
|
|
|
|
1)
|
There is no netting since there are no offsetting contracts.
|
2)
|
Net nominal amount after deducting for offsetting swaps under ISDA agreements is $435.8 million.
|
3)
|
Net amount after deducting for offsetting swaps under ISDA agreements is $2.4 million.
|
4)
|
Net amount after deducting for offsetting swaps under ISDA agreements is $4.9 million.
|
Derivatives
designated as hedging instruments
The derivatives designated as hedging instruments outstanding at June 30, 2016 were foreign exchange forward
contracts, classified as cash flow hedges. For the three and six months ended June 30, 2016, the cumulative gains and losses recognized in OCI on the cash flow hedges were a gain of $3.8 million and a gain of $2.8 million (net of taxes),
12
respectively. The derivatives designated as hedging instruments outstanding at June 30, 2015 were foreign exchange forward contracts, classified as cash flow hedges. For the three and six
months ended June 30, 2015, the cumulative gains and losses recognized in OCI on derivative effective portion, net were a loss of $0.4 million and a loss of $0.4 million, respectively.
For the three and six months ended June 30, 2016, the gains and losses reclassified from OCI and recognized in the Consolidated Statements of Net Income
were a loss of $0.1 million and a gain of $0.2 million (net of taxes), respectively. Gains and losses recognized and remaining in OCI as of June 30, 2016 is a gain of $2.6 million (net of taxes). Any ineffectiveness in the first six months of
2016 was not material. For the three and six months ended June 30, 2015, the gains and losses reclassified from OCI and recognized in the Consolidated Statements of Net Income, net were a gain of $0.0 million and a gain of $0.0 million,
respectively. Gains and losses recognized and remaining in OCI as of June 30, 2015 was a loss of $0.4 million (net of taxes). There was no material ineffectiveness recorded during the first six months of 2015.
Derivatives not designated as hedging instruments
Derivatives not designated as hedging instruments relate to economic hedges and are marked to market with all amounts recognized in the Consolidated Statements
of Net Income. The derivatives not designated as hedging instruments outstanding at June 30, 2016 were foreign exchange swaps. During the first quarter of 2016, the Company entered into foreign exchange option contracts to hedge foreign
exchange risk related to the ANBS acquisition. The foreign exchange option contracts were no longer outstanding as of March 31, 2016.
For the three
and six months ended June 30, 2016, the gains and losses recognized in other non-operating items, net were a gain of $0.4 million and a gain of $1.2 million, respectively, for derivative instruments not designated as hedging instruments. The
derivatives not designated as hedging instruments outstanding at June 30, 2015 were foreign exchange swaps. For the three and six months ended June 30, 2015, the gains and losses recognized in other financial items, net were a gain of $0.7
million and a loss of $1.6 million, respectively, for derivative instruments not designated as hedging instruments. For the three and six months ended June 30, 2016 and June 30, 2015, the gains and losses recognized as interest
expense were immaterial.
Fair Value of Debt
The
fair value of long-term debt is determined either from quoted market prices as provided by participants in the secondary market or for long-term debt without quoted market prices, from estimates using a discounted cash flow method based on the
Companys current borrowing rates for similar types of financing. The fair value and carrying value of debt is summarized in the table below. The Company has determined that each of these fair value measurements of debt reside within Level 2 of
the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
June 30,
2016
Carrying
value
1)
|
|
|
June 30,
2016
Fair
value
|
|
|
December 31,
2015
Carrying
value
1)
|
|
|
December 31,
2015
Fair
value
|
|
U.S. Private placement
|
|
$
|
1,418.5
|
|
|
$
|
1,531.7
|
|
|
$
|
1,421.5
|
|
|
$
|
1,472.6
|
|
Medium-term notes
|
|
|
41.3
|
|
|
|
42.8
|
|
|
|
77.8
|
|
|
|
79.6
|
|
Other long-term debt
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,460.0
|
|
|
$
|
1,574.7
|
|
|
$
|
1,499.4
|
|
|
$
|
1,552.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overdrafts and other short-term debt
|
|
$
|
59.9
|
|
|
$
|
59.9
|
|
|
$
|
39.4
|
|
|
$
|
39.4
|
|
Short-term portion of long-term debt
|
|
|
35.5
|
|
|
|
35.7
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
95.4
|
|
|
$
|
95.6
|
|
|
$
|
39.6
|
|
|
$
|
39.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Debt as reported in balance sheet.
|
Assets and liabilities measured at fair value on a non-recurring basis
In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company also has assets and liabilities in its balance
sheet that are measured at fair value on a non-recurring basis. Assets and liabilities that are measured at fair value on a non-recurring basis include long-lived assets, including equity method investments.
The Company has determined that the fair value measurements included in each of these assets and liabilities rely primarily on Company-specific inputs and the
Companys assumptions about the use of the assets and settlements of liabilities, as observable inputs are not available. The Company has determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy.
To determine the fair value of long-lived assets, the Company utilizes the projected cash flows expected to be generated by the long-lived assets, then discounts the future cash flows over the expected life of the long-lived assets.
13
For the three and six month periods ended June 30, 2016, the Company did not record any material impairment
charges on its long-lived assets.
5 Income Taxes
The effective tax rate in the second quarter of 2016 was 25.9% compared to 29.7% in the same quarter of 2015. Discrete tax items, net had a favorable
impact of 1.2% in 2016. In the second quarter of 2015, discrete tax items, net had a favorable impact of 4.3%, primarily related to the resolution of a prior year tax refund claim.
The effective tax rate in the first six months of 2016 was 27.8% compared to 33.4% for the first six months of 2015. In the first six months of 2016, the net
impact of discrete tax items caused a 0.2% increase to the effective tax rate. The net impact of discrete tax items in the first six months of 2015 caused a 0.7% decrease to the effective tax rate.
For the three and six month periods ended June 30, 2016, the tax rate has been favorably impacted by the mix of earnings by various jurisdictions
compared to the same period in the prior year.
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and
foreign jurisdictions. At any given time, the Company is undergoing tax audits in several tax jurisdictions covering multiple years. The Company is no longer subject to income tax examination by the U.S. federal income tax authorities for years
prior to 2012. With few exceptions, the Company is no longer subject to income tax examination by U.S. state or local tax authorities or by non-U.S. tax authorities for years prior to 2009.
As of June 30, 2016 the Company is not aware of any proposed income tax adjustments resulting from tax examinations that would have a material impact on
the Companys condensed consolidated financial statements. The conclusion of such audits could result in additional increases or decreases to unrecognized tax benefits in some future period or periods.
During the second quarter of 2016, the Company recorded a net increase of $2.3 million to income tax reserves for unrecognized tax benefits based on tax
positions related to the current year, including accruing additional interest related to unrecognized tax benefits of prior years. During the second quarter of 2016, the Company recorded a net decrease of $0.5 million to income tax reserves for
unrecognized tax benefits of prior years due to the lapse of the applicable statute of limitations. Of the total unrecognized tax benefits of $32.9 million recorded at June 30, 2016, $10.8 million is classified as current tax payable and $22.1
million is classified as non-current tax payable on the Condensed Consolidated Balance Sheet.
6 Inventories
Inventories are stated at the lower of cost (principally FIFO) or market. The components of inventories were as follows:
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
Raw materials
|
|
$
|
365.0
|
|
|
$
|
339.9
|
|
Work in progress
|
|
|
261.7
|
|
|
|
243.4
|
|
Finished products
|
|
|
222.8
|
|
|
|
217.9
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
849.5
|
|
|
|
801.2
|
|
|
|
|
|
|
|
|
|
|
Inventory valuation reserve
|
|
|
(99.1
|
)
|
|
|
(89.8
|
)
|
|
|
|
|
|
|
|
|
|
Total inventories, net of reserve
|
|
$
|
750.4
|
|
|
$
|
711.4
|
|
7 Goodwill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passive Safety
Segment
|
|
|
Electronics
Segment
|
|
|
Total
|
|
Carrying amount December 31, 2015
|
|
$
|
1,388.3
|
|
|
$
|
278.0
|
|
|
$
|
1,666.3
|
|
Acquisition
|
|
|
|
|
|
|
221.4
|
|
|
|
221.4
|
|
Effect of currency translation
|
|
|
1.2
|
|
|
|
5.3
|
|
|
|
6.5
|
|
Carrying amount June 30, 2016
|
|
$
|
1,389.5
|
|
|
$
|
504.7
|
|
|
$
|
1,894.2
|
|
The goodwill recognized in the first quarter of 2016 was related to the ANBS acquisition (see Note 3).
14
8 Restructuring
Restructuring provisions are made on a case-by-case basis and primarily include severance costs incurred in connection with headcount reductions and plant
consolidations. The Company expects to finance restructuring programs over the next several years through cash generated from its ongoing operations or through cash available under existing credit facilities. The Company does not expect that the
execution of these activities will have a material adverse impact on its liquidity position. The majority of restructuring activities relate to the Passive Safety Segment. The changes in the employee-related reserves have been charged against Other
income (expense), net in the Consolidated Statements of Net Income.
Three months ended June 30, 2016
The employee-related restructuring provisions and cash payments for the three months ended June 30, 2016 mainly related to headcount reductions in
high-cost countries in Europe and Asia. The table below summarizes the change in the balance sheet position of the restructuring reserves from March 31, 2016 to June 30, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Provision/
|
|
|
Provision/
|
|
|
Cash
|
|
|
Translation
|
|
|
June 30,
|
|
|
|
2016
|
|
|
Charge
|
|
|
Reversal
|
|
|
payments
|
|
|
difference
|
|
|
2016
|
|
Restructuring employee-related
|
|
$
|
86.8
|
|
|
$
|
3.7
|
|
|
$
|
(0.3
|
)
|
|
$
|
(21.5
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
66.5
|
|
Other
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reserve
|
|
$
|
87.0
|
|
|
$
|
3.7
|
|
|
$
|
(0.3
|
)
|
|
$
|
(21.5
|
)
|
|
$
|
(2.3
|
)
|
|
$
|
66.6
|
|
Six months ended June 30, 2016
The employee-related restructuring provisions and cash payments for the six months ended June 30, 2016 mainly related to headcount reductions in high-cost
countries in Europe and Asia. The table below summarizes the change in the balance sheet position of the restructuring reserves from December 31, 2015 to June 30, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Provision/
|
|
|
Provision/
|
|
|
Cash
|
|
|
Translation
|
|
|
June 30,
|
|
|
|
2015
|
|
|
Charge
|
|
|
Reversal
|
|
|
payments
|
|
|
difference
|
|
|
2016
|
|
Restructuring employee-related
|
|
$
|
87.7
|
|
|
$
|
17.3
|
|
|
$
|
(0.7
|
)
|
|
$
|
(39.1
|
)
|
|
$
|
1.3
|
|
|
$
|
66.5
|
|
Other
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reserve
|
|
$
|
87.9
|
|
|
$
|
17.3
|
|
|
$
|
(0.7
|
)
|
|
$
|
(39.1
|
)
|
|
$
|
1.2
|
|
|
$
|
66.6
|
|
Three months ended June 30, 2015
The employee-related restructuring provisions and cash payments for the three months ended June 30, 2015 mainly related to headcount reductions in
high-cost countries in Europe. The table below summarizes the change in the balance sheet position of the restructuring reserves from March 31, 2015 to June 30, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Provision/
|
|
|
Provision/
|
|
|
Cash
|
|
|
Translation
|
|
|
June 30,
|
|
|
|
2015
|
|
|
Charge
|
|
|
Reversal
|
|
|
payments
|
|
|
difference
|
|
|
2015
|
|
Restructuring employee-related
|
|
$
|
79.3
|
|
|
$
|
7.4
|
|
|
$
|
(0.9
|
)
|
|
$
|
(6.7
|
)
|
|
$
|
2.8
|
|
|
$
|
81.9
|
|
Other
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reserve
|
|
$
|
79.3
|
|
|
$
|
7.6
|
|
|
$
|
(0.9
|
)
|
|
$
|
(6.9
|
)
|
|
$
|
2.8
|
|
|
$
|
81.9
|
|
Six months ended June 30, 2015
The employee-related restructuring provisions and cash payments for the six months ended June 30, 2015 mainly related to headcount reductions in high-cost
countries in Europe. The table below summarizes the change in the balance sheet position of the restructuring reserves from December 31, 2014 to June 30, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Provision/
|
|
|
Provision/
|
|
|
Cash
|
|
|
Translation
|
|
|
June 30,
|
|
|
|
2014
|
|
|
Charge
|
|
|
Reversal
|
|
|
payments
|
|
|
difference
|
|
|
2015
|
|
Restructuring employee-related
|
|
$
|
79.6
|
|
|
$
|
42.9
|
|
|
$
|
(1.8
|
)
|
|
$
|
(32.6
|
)
|
|
$
|
(6.2
|
)
|
|
$
|
81.9
|
|
Other
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reserve
|
|
$
|
79.8
|
|
|
$
|
43.2
|
|
|
$
|
(1.8
|
)
|
|
$
|
(33.1
|
)
|
|
$
|
(6.2
|
)
|
|
$
|
81.9
|
|
15
9 Product-Related Liabilities
The Company has reserves for product risks. Such reserves are related to product performance issues including recall, product liability and warranty issues.
For further explanation, see Note 12 Contingent Liabilities below.
The table below summarizes the change in the balance sheet position of the
product-related liabilities. The provisions and cash paid for the three and six months ended June 30, 2016 and June 30, 2015 mainly related to warranty related issues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
Reserve at beginning of the period
|
|
$
|
61.8
|
|
|
$
|
47.2
|
|
|
$
|
60.8
|
|
|
$
|
51.3
|
|
Change in reserve
|
|
|
13.3
|
|
|
|
23.1
|
|
|
|
17.3
|
|
|
|
24.9
|
|
Cash payments
|
|
|
(6.9
|
)
|
|
|
(7.7
|
)
|
|
|
(10.5
|
)
|
|
|
(12.2
|
)
|
Translation difference
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
0.7
|
|
|
|
(1.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve at end of the period
|
|
$
|
68.3
|
|
|
$
|
62.9
|
|
|
$
|
68.3
|
|
|
$
|
62.9
|
|
10 Retirement Plans
The Company has contributory and non-contributory defined benefit pension plans covering employees at most operations in the U.S. and in certain other
countries. The main plan is the U.S. plan for which the benefits are based on an average of the employees earnings in the years preceding retirement and on credited service. Certain supplemental funded and unfunded plan arrangements also
provide retirement benefits to specified groups of participants.
The Company has frozen participation in the U.S. pension plans to include only those
employees hired as of December 31, 2003. The U.K. defined benefit plan is the most significant individual non-U.S. pension plan and the Company has frozen participation to include only those employees hired as of April 30, 2003.
The Net Periodic Benefit Costs related to Other Post-retirement Benefits were not significant to the condensed consolidated financial statements of the
Company for the three and six month periods ended June 30, 2016 and June 30, 2015 and are not included in the table below.
The components of
total Net Periodic Benefit Cost associated with the Companys defined benefit retirement plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
Service cost
|
|
$
|
5.4
|
|
|
$
|
5.8
|
|
|
$
|
10.7
|
|
|
$
|
11.6
|
|
Interest cost
|
|
|
5.4
|
|
|
|
5.2
|
|
|
|
10.7
|
|
|
|
10.5
|
|
Expected return on plan assets
|
|
|
(5.2
|
)
|
|
|
(5.4
|
)
|
|
|
(10.3
|
)
|
|
|
(10.7
|
)
|
Amortization prior service credit
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.3
|
)
|
|
|
(0.3
|
)
|
Amortization of actuarial loss
|
|
|
1.5
|
|
|
|
2.5
|
|
|
|
3.0
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Periodic Benefit Cost
|
|
$
|
7.0
|
|
|
$
|
8.0
|
|
|
$
|
13.8
|
|
|
$
|
16.1
|
|
16
11 Controlling and Non-Controlling Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
|
Equity attributable to
|
|
|
Equity attributable to
|
|
|
|
Controlling
interest
|
|
|
Non-controlling
interest
|
|
|
Total
|
|
|
Controlling
interest
|
|
|
Non-controlling
interest
|
|
|
Total
|
|
Balance at beginning of period
|
|
$
|
3,600.2
|
|
|
$
|
265.0
|
|
|
$
|
3,865.2
|
|
|
$
|
3,210.6
|
|
|
$
|
15.0
|
|
|
$
|
3,225.6
|
|
|
|
|
|
|
|
|
Total Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
148.4
|
|
|
|
0.0
|
|
|
|
148.4
|
|
|
|
136.7
|
|
|
|
0.1
|
|
|
|
136.8
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
(30.7
|
)
|
|
|
9.5
|
|
|
|
(21.2
|
)
|
|
|
20.1
|
|
|
|
(0.0
|
)
|
|
|
20.1
|
|
Net change in cash flow hedges
|
|
|
3.9
|
|
|
|
|
|
|
|
3.9
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
(0.4
|
)
|
Defined benefit pension plan
|
|
|
0.6
|
|
|
|
|
|
|
|
0.6
|
|
|
|
1.5
|
|
|
|
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income
|
|
|
122.2
|
|
|
|
9.5
|
|
|
|
131.7
|
|
|
|
157.9
|
|
|
|
0.1
|
|
|
|
158.0
|
|
Common Stock incentives
|
|
|
5.6
|
|
|
|
|
|
|
|
5.6
|
|
|
|
6.5
|
|
|
|
|
|
|
|
6.5
|
|
Cash dividends declared
|
|
|
(51.2
|
)
|
|
|
|
|
|
|
(51.2
|
)
|
|
|
(49.1
|
)
|
|
|
|
|
|
|
(49.1
|
)
|
Repurchased shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to non-controlling interest on subsidiary shares
|
|
|
|
|
|
|
(0
|
)
|
|
|
(0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiary by non-controlling interest
|
|
|
|
|
|
|
1.1
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
3,676.8
|
|
|
$
|
275.6
|
|
|
$
|
3,952.4
|
|
|
$
|
3,325.9
|
|
|
$
|
15.1
|
|
|
$
|
3,341.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
|
Equity attributable to
|
|
|
Equity attributable to
|
|
|
|
Controlling
interest
|
|
|
Non-controlling
interest
|
|
|
Total
|
|
|
Controlling
interest
|
|
|
Non-controlling
interest
|
|
|
Total
|
|
Balance at beginning of period
|
|
$
|
3,455.6
|
|
|
$
|
12.5
|
|
|
$
|
3,468.1
|
|
|
$
|
3,427.1
|
|
|
$
|
15.0
|
|
|
$
|
3,442.1
|
|
|
|
|
|
|
|
|
Total Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
281.5
|
|
|
|
0.4
|
|
|
|
281.9
|
|
|
|
172.4
|
|
|
|
0.1
|
|
|
|
172.5
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
29.0
|
|
|
|
9.6
|
|
|
|
38.6
|
|
|
|
(90.7
|
)
|
|
|
(0.0
|
)
|
|
|
(90.7
|
)
|
Net change in cash flow hedges
|
|
|
2.7
|
|
|
|
|
|
|
|
2.7
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
(0.4
|
)
|
Defined benefit pension plan
|
|
|
1.4
|
|
|
|
|
|
|
|
1.4
|
|
|
|
3.0
|
|
|
|
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income
|
|
|
314.6
|
|
|
|
10.0
|
|
|
|
324.6
|
|
|
|
84.3
|
|
|
|
0.1
|
|
|
|
84.4
|
|
Common Stock incentives
|
|
|
8.9
|
|
|
|
|
|
|
|
8.9
|
|
|
|
17.4
|
|
|
|
|
|
|
|
17.4
|
|
Cash dividends declared
|
|
|
(102.3
|
)
|
|
|
|
|
|
|
(102.3
|
)
|
|
|
(98.5
|
)
|
|
|
|
|
|
|
(98.5
|
)
|
Repurchased shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(104.4
|
)
|
|
|
|
|
|
|
(104.4
|
)
|
Dividends paid to non-controlling interest on subsidiary shares
|
|
|
|
|
|
|
(1.7
|
)
|
|
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiary by non-controlling interest
|
|
|
|
|
|
|
254.8
|
|
|
|
254.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
3,676.8
|
|
|
$
|
275.6
|
|
|
$
|
3,952.4
|
|
|
$
|
3,325.9
|
|
|
$
|
15.1
|
|
|
$
|
3,341.0
|
|
12 Contingent Liabilities
Legal Proceedings
Various claims, lawsuits and
proceedings are pending or threatened against the Company or its subsidiaries, covering a range of matters that arise in the ordinary course of its business activities with respect to commercial, product liability and other matters. Litigation is
subject to many uncertainties, and the outcome of any litigation cannot be assured. After discussions with counsel, and with the exception of losses resulting from the antitrust proceedings described below, it is the opinion of management that the
various legal proceedings and investigations to which the Company currently is a party will not have a material adverse impact on the consolidated financial position of Autoliv, but the Company cannot provide assurance that Autoliv will not
experience material litigation, product liability or other losses in the future.
17
In October 2014, one of the Companys Brazilian subsidiaries received a notice of deficiency from the state
tax authorities from the state of São Paulo, Brazil which, primarily, alleged violations of ICMS (VAT) payments and improper warehousing documentation. The aggregate assessment for all alleged violations was R$66.4 million (approximately
$20.6 million), inclusive of fines, penalties and interest. The Company believes the full amount assessed is baseless and that it has reasonable legal and factual defenses to the assessment and, consequently, plans to defend its interests
vigorously. However, the Company believes that a loss is probable with respect to at least a portion of the assessed amount and has accrued an amount that is not material to the Companys results of operations for the period ended
December 31, 2015. However, the Company cannot predict or estimate the duration or ultimate outcome of this matter.
In March 2015, the Company was
informed of an investigation being conducted in Turkey by the Directorate of Kocaeli Customs Custody, Smuggling and Enquiry into the Companys import and customs payment structure and the associated import taxes and fees for the period of
20062012. The Company cannot predict the duration, scope or ultimate outcome of this investigation and is unable to estimate the financial impact it may have, or predict the reporting periods in which any such financial impacts may be
recorded. Consequently, the Company has made no provision for any expenses as of June 30, 2016 with respect to this investigation.
ANTITRUST
MATTERS
Authorities in several jurisdictions are currently conducting broad, and in some cases, long-running investigations of suspected
anti-competitive behavior among parts suppliers in the global automotive vehicle industry. These investigations include, but are not limited to, segments in which the Company operates. In addition to pending matters, authorities of other countries
with significant light vehicle manufacturing or sales may initiate similar investigations. It is the Companys policy to cooperate with governmental investigations.
On June 7-9, 2011, representatives of the European Commission (EC), the European antitrust authority, visited two facilities of a Company
subsidiary in Germany to gather information for an investigation of anti-competitive behavior among suppliers of occupant safety systems. The investigation is still pending and the Company remains unable to estimate the financial impact such
investigation will have or predict the reporting periods in which such financial impact may be recorded and has consequently not recorded a provision for loss as of June 30, 2016. However, management has concluded that it is probable that the
Companys operating results and cash flows will be materially adversely impacted for the reporting periods in which the EC investigation is resolved or becomes estimable.
In August 2014, the Competition Commission of South Africa (the CCSA) contacted the Company regarding an investigation into the Companys
sales of occupant safety systems in South Africa. The Company is cooperating with the CCSA. The Company believes that a loss with respect to this investigation is probable and accrued an amount for the period ended June 30, 2016 related to this
investigation that is not material to the Companys results of operations. The Company cannot predict or estimate the duration or ultimate outcome of the CCSA investigation.
On July 6, 2015, the Company learned that the General Superintendence of the Administrative Council for Economic Defense (CADE) in Brazil had
initiated an investigation of an alleged cartel involving sales in Brazil of seatbelts, airbags, and steering wheels by the Companys Brazilian subsidiary and the Brazilian subsidiary of a competitor. The Company believes that a loss in the
form of a civil penalty is probable with respect to this matter and accrued an initial amount for the period ended December 31, 2015. Due to further developments with CADEs investigation the Company accrued an additional amount during the
period ended March 31, 2016. The aggregate accrued amount remains not material to the Companys results of operations. The Company cannot predict or estimate the duration or ultimate outcome of this matter.
The Company is also subject to civil litigation alleging anti-competitive conduct in the U.S. and Canada. Specifically, the Company, several of its
subsidiaries and its competitors were named as defendants in a total of nineteen purported antitrust class action lawsuits filed between June 2012 and June 2015. Fifteen of these lawsuits were filed in the U.S. and were consolidated in the Occupant
Safety Systems (OSS) segment of the Automobile Parts Antitrust Litigation, a Multi-District Litigation (MDL) proceeding in the United States District Court for the Eastern District of Michigan. Plaintiffs in the U.S. cases sought to represent four
purported classes - direct purchasers, auto dealers, end-payors, and, as of the filing of the last class action in June 2015, truck and equipment dealers - who purchased occupant safety systems or components directly from a defendant, indirectly
through purchases or leases of new vehicles containing such systems, or through purchases of replacement parts.
In May 2014, the Company, without
admitting any liability, entered into separate settlement agreements with representatives of the three classes of plaintiffs then pending in the MDL. Pursuant to the settlement agreements, the Company agreed to pay $40 million to the direct
purchaser settlement class, $6 million to the auto dealer settlement class, and $19 million to the end-payor settlement class, for a total of $65 million. This amount was expensed during the second quarter of 2014. In exchange, the plaintiffs agreed
that the plaintiffs and the settlement classes would release Autoliv from all claims regarding their U.S. purchases that were or could have been asserted on behalf of the three classes in the MDL. In January 2015, the MDL court granted final
approval of the direct purchaser class settlement, which had been reduced to approximately $35.5 million because of opt-outs; in December 2015, the MDL court granted final approval of the auto dealer class settlement; and on June 20, 2016, the
MDL court granted final approval of the end-payor class settlement, over the objections of several individual class members, some of whom have appealed the MDL courts
18
approval of the Companys end-payor settlement and several other defendants settlements that were approved at the same time. This appeal will delay the finality of the Companys
settlement with the end-payor class. In addition, several individuals and one insurer (and its affiliated entities) have opted-out of all of the pending end-payor class settlements, including the Companys settlement. The insurer and its
affiliated entities have informed the Company and other settling defendants that they plan to file a lawsuit seeking relief regarding damages allegedly sustained in their purchases of replacement parts and vehicles containing allegedly affected
parts. The class settlements do not resolve any claims of settlement class members who opt-out of the settlements or the unasserted claims of any purchasers of occupant safety systems who are not otherwise included in a settlement class, such as
states and municipalities.
In March 2015, the Company, without admitting any liability, reached agreements regarding additional settlements to resolve
certain direct purchasers global (including U.S.) or non-U.S. antitrust claims that were not covered by the direct purchaser class settlement described above. The total amount of these additional settlements was $81 million. Autoliv expensed
during the first quarter of 2015 approximately $77 million as a result of these additional settlements, net of existing amounts that had been accrued in 2014.
In April 2016, the Company reached an agreement to settle with the truck and equipment dealers class for a non-material amount. The settlement is subject to
court approval following notice to the class and the opportunity for class members to object to or opt-out of the settlement.
The remaining four
antitrust class action lawsuits are pending in Canada (Sheridan Chevrolet Cadillac Ltd. et al. v. Autoliv, Inc. et al., filed in the Ontario Superior Court of Justice on January 18, 2013; M. Serge Asselin v. Autoliv, Inc. et al., filed in the
Superior Court of Quebec on March 14, 2013; Ewert v. Autoliv, Inc. et al., filed in the Supreme Court of British Columbia on July 18, 2013; and Cindy Retallick and Jagjeet Singh Rajput v. Autoliv ASP, Inc. et al., filed in the Queens
Bench of the Judicial Center of Regina in the province of Saskatchewan on May 14, 2014). The Canadian cases assert claims on behalf of putative classes of both direct and indirect purchasers of occupant safety systems. The Company believes that
a loss is probable with respect to these Canadian antitrust cases and accrued an initial amount for the three month period ended March 31, 2016 related to these claims. Due to further developments with respect to these claims, the Company
accrued an additional amount during the three month period ended June 30, 2016. The aggregate accrued amount remains not material to the Companys results of operations. There is currently no timeline for class certification or discovery
in the Canadian occupant safety systems class actions. These actions have been stayed pending proceedings in certain earlier-filed auto parts cases. The Company cannot predict or estimate the duration or ultimate outcome of the Canadian antitrust
cases.
PRODUCT WARRANTY, RECALLS AND INTELLECTUAL PROPERTY
Autoliv is exposed to various claims for damages and compensation if products fail to perform as expected. Such claims can be made, and result in costs and
other losses to the Company, even where the product is eventually found to have functioned properly. Where a product (actually or allegedly) fails to perform as expected, the Company faces warranty and recall claims. Where such (actual or alleged)
failure results, or is alleged to result, in bodily injury and/or property damage, the Company may also face product-liability claims. There can be no assurance that the Company will not experience material warranty, recall or product (or other)
liability claims or losses in the future, or that the Company will not incur significant costs to defend against such claims. The Company may be required to participate in a recall involving its products. Each vehicle manufacturer has its own
practices regarding product recalls and other product liability actions relating to its suppliers. As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers
are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. Government safety regulators may also play a role in warranty and recall practices. A warranty, recall or product-liability claim
brought against the Company in excess of its insurance may have a material adverse effect on the Companys business. Vehicle manufacturers are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear
the costs of repair and replacement of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold the Company responsible for some, or all, of the repair or replacement costs of products when the product supplied did not
perform as represented by us or expected by the customer. Accordingly, the future costs of warranty claims by the customers may be material. However, the Company believes its established reserves are adequate. Autolivs warranty reserves are
based upon the Companys best estimates of amounts necessary to settle future and existing claims. The Company regularly evaluates the adequacy of these reserves, and adjusts them when appropriate. However, the final amounts actually due
related to these matters could differ materially from the Companys recorded estimates.
In addition, as vehicle manufacturers increasingly use
global platforms and procedures, quality performance evaluations are also conducted on a global basis. Any one or more quality, warranty or other recall issue(s) (including those affecting few units and/or having a small financial impact) may cause
a vehicle manufacturer to implement measures such as a temporary or prolonged suspension of new orders, which may have a material impact on the Companys results of operations.
The Company carries insurance for potential recall and product liability claims at coverage levels based on our prior claims experience. Autoliv cannot assure
that the level of coverage will be sufficient to cover every possible claim that can arise in our businesses, now or in the future, or that such coverage always will be available should we, now or in the future, wish to extend, increase or otherwise
adjust our insurance.
19
On June 29, 2016, the Company announced that it is cooperating with Toyota Motor Corp. in its recall of
approximately 1.4 million vehicles equipped with a certain model of the Companys side curtain airbag (the Toyota Recall). Toyota has informed the Company that there have been seven reported incidents where a side curtain airbag has
partially inflated without a deployment signal from the airbag control unit. The incidents have all occurred in parked, unoccupied vehicles and no personal injuries have been reported. The root cause analysis of the issue is ongoing. However, at
this point in time the Company believes that a compromised manufacturing process at a sub-supplier may be a contributing factor and, as no incidents have been reported in vehicles produced by other OEMs with the same inflator produced during the
same period as those recalled by Toyota, that vehicle-specific characteristics may also contribute to the issue. The sub-suppliers manufacturing process was changed in January 2012, and the vehicles now recalled by Toyota represent more than
half of all inflators of the relevant type manufactured before the sub-supplier process was changed.
As previously disclosed in our Quarterly Report on
Form 10-Q for the period ended March 31, 2016, the Company determined pursuant to ASC 450 that a loss with respect to this issue is reasonably possible. If the Company is obligated to indemnify Toyota for the costs associated with the Toyota Recall,
the Company expects that its insurance will generally cover such costs and liabilities and estimates that the Companys loss, net of expected insurance recoveries, would be less than $20 million. However, the ultimate costs of the Toyota Recall
could be materially different. The main variables affecting the ultimate cost for the Company are: the determination of proportionate responsibility (if any) among Toyota, the Company, and any relevant sub-suppliers; the ultimate number of vehicles
repaired; the cost of repair per vehicle; and the actual recoveries from sub-suppliers and insurers. The Companys insurance policies generally include coverage of the costs of a recall, although costs related to replacement parts are generally
not covered.
In its products, the Company utilizes technologies which may be subject to intellectual property rights of third parties. While the Company
does seek to procure the necessary rights to utilize intellectual property rights associated with its products, it may fail to do so. Where the Company so fails, the Company may be exposed to material claims from the owners of such rights. Where the
Company has sold products which infringe upon such rights, its customers may be entitled to be indemnified by the Company for the claims they suffer as a result thereof. Such claims could be material.
The table in Note 9 Product-Related Liabilities above summarizes the change in the balance sheet position of the product related liabilities for the three
month period ended June 30, 2016.
13 Stock Incentive Plan
As a result of an initiative to more closely link the Companys stock incentive program to the Companys financial performance, the Compensation
Committee approved a new long-term equity incentive program, pursuant to which performance shares will replace stock options. The first grants under the new long-term incentive (LTI) program were made in February 2016.
On February 15, 2016 and May 9, 2016, the Compensation Committee of the Board of Directors granted shares under the LTI program pursuant to which
certain employees received 50% of their LTI grant value in the form of performance shares and 50% in the form of restricted stock units. The restricted stock units granted on February 15, 2016 and May 9, 2016 will vest in three
approximately equal annual installments beginning on the first anniversary of the grant date, subject to the grantees continued employment with the Company on each vesting date. Additionally, the grantee may earn 0%-200% of the target number
of performance shares based on the Companys achievement of specified targets for the Companys compound annual growth rate (CAGR) for sales and the Companys CAGR in earnings per share relative to an established benchmark growth
rate. Each performance target is weighted 50% and results are measured at the end of the three-year performance period.
The fair value of the restricted
stock units and performance shares granted under the LTI program are calculated as the grant date fair value of the shares expected to be issued. The grant date fair value for the restricted stock units at February 15, 2016 and May 9, 2016
was $7.0 million and $0.2 million, respectively. This cost will be amortized straight line over the vesting periods. The grant date fair value of the performance shares at February 15, 2016 and May 9, 2016 was $6.9 million and $0.2
million, respectively, and is based upon the market value of the Autoliv common stock at the grant date. The performance conditions are not considered in the determination of the grant date fair value for these awards. Compensation expense is
recognized over the performance period based on managements estimate of the number of units expected to vest. Management evaluates its estimate of the actual number of shares expected to be issued at the end of the program on a quarterly
basis. The cumulative effect of the change in estimate is recognized in the period of change as an adjustment to compensation expense, if necessary.
14 Earnings per share
The Company calculates basic earnings per share (EPS) by dividing net income attributable to controlling interest by the
weighted-average number of shares of common stock outstanding for the period (net of treasury shares). When it would not be antidilutive (such as during periods of net loss), the diluted EPS also reflects the potential dilution that could occur if
common stock were issued for awards under the Companys Stock Incentive Plan.
For the three and six months ended June 30, 2016, approximately
6 thousand shares of common stock, respectively, were not included in the computation of the diluted EPS, which could potentially dilute basic EPS in the future. For the three and six months ended June 30, 2015, approximately
2 thousand shares of common stock were not included in the computation of the diluted EPS, which could potentially dilute basic EPS in the future.
During the three months ended June 30, 2016 and June 30, 2015, approximately 0.1 million and 0.2 million shares of common stock,
respectively, from the treasury stock have been utilized by the Companys Stock Incentive Plan. During the six months ended June 30, 2016 and June 30, 2015, approximately 29 thousand and 0.2 million shares of common stock,
respectively, from the treasury stock have been utilized by the Companys Stock Incentive Plan.
20
Actual weighted average shares used in calculating EPS were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
June 30,
2016
|
|
|
June 30,
2015
|
|
|
June 30,
2016
|
|
|
June 30,
2015
|
|
Weighted average shares basic
|
|
|
88.2
|
|
|
|
88.0
|
|
|
|
88.2
|
|
|
|
88.2
|
|
Effect of dilutive securities: - stock options/share awards
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares diluted
|
|
|
88.4
|
|
|
|
88.3
|
|
|
|
88.4
|
|
|
|
88.4
|
|
15 Segment Information
The Company currently reports two operating segments, Passive Safety and Electronics. Passive Safety includes the Companys airbag, seatbelt and steering
wheel businesses, while Electronics combines all of the Companys electronics resources and expertise in both passive safety electronics and active safety electronics. The fair value of the net assets acquired related to the ANBS acquisition
(as of March 31, 2016) is being reported in the Electronics Segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
Net sales, including Intersegment Sales
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
(Dollars in millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Passive Safety
|
|
$
|
1,996.1
|
|
|
$
|
1,925.3
|
|
|
$
|
3,984.8
|
|
|
$
|
3,755.7
|
|
Electronics
|
|
|
597.8
|
|
|
|
377.1
|
|
|
|
1,054.2
|
|
|
|
728.3
|
|
Total segment sales
|
|
$
|
2,593.9
|
|
|
$
|
2,302.4
|
|
|
$
|
5,039.0
|
|
|
$
|
4,484.0
|
|
Corporate and other
|
|
|
1.6
|
|
|
|
2.9
|
|
|
|
1.9
|
|
|
|
7.1
|
|
Intersegment sales
|
|
|
(17.0
|
)
|
|
|
(13.8
|
)
|
|
|
(32.4
|
)
|
|
|
(25.5
|
)
|
Total net sales
|
|
$
|
2,578.5
|
|
|
$
|
2,291.5
|
|
|
$
|
5008.5
|
|
|
$
|
4,465.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
Income before Income Taxes
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
(Dollars in millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Passive Safety
|
|
$
|
206.8
|
|
|
$
|
195.7
|
|
|
$
|
398.4
|
|
|
$
|
258.9
|
|
Electronics
|
|
|
14.9
|
|
|
|
11.9
|
|
|
|
26.7
|
|
|
|
20.9
|
|
Segment operating income
|
|
$
|
221.7
|
|
|
$
|
207.6
|
|
|
$
|
425.1
|
|
|
$
|
279.8
|
|
Corporate and other
|
|
|
(9.0
|
)
|
|
|
1.1
|
|
|
|
(7.2
|
)
|
|
|
8.9
|
|
Interest and other non-operating expenses, net
|
|
|
(12.4
|
)
|
|
|
(15.8
|
)
|
|
|
(27.9
|
)
|
|
|
(32.6
|
)
|
Income from equity method investments
|
|
|
0.1
|
|
|
|
1.6
|
|
|
|
0.7
|
|
|
|
2.9
|
|
Income before income taxes
|
|
$
|
200.4
|
|
|
$
|
194.5
|
|
|
$
|
390.7
|
|
|
$
|
259.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
Capital Expenditures
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
(Dollars in millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Passive Safety
|
|
$
|
100.5
|
|
|
$
|
101.2
|
|
|
$
|
173.3
|
|
|
$
|
222.4
|
|
Electronics
|
|
|
27.7
|
|
|
|
13.1
|
|
|
|
43.9
|
|
|
|
24.7
|
|
Corporate and other
|
|
|
3.5
|
|
|
|
0.9
|
|
|
|
6.3
|
|
|
|
2.9
|
|
Total capital expenditures
|
|
$
|
131.7
|
|
|
$
|
115.2
|
|
|
$
|
223.5
|
|
|
$
|
250.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
Depreciation and Amortization
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
(Dollars in millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Passive Safety
|
|
$
|
69.4
|
|
|
$
|
63.7
|
|
|
$
|
137.6
|
|
|
$
|
125.5
|
|
Electronics
|
|
|
25.1
|
|
|
|
11.1
|
|
|
|
39.8
|
|
|
|
21.8
|
|
Corporate and other
|
|
|
2.2
|
|
|
|
1.0
|
|
|
|
4.4
|
|
|
|
2.2
|
|
Total depreciation and amortization
|
|
$
|
96.7
|
|
|
$
|
75.8
|
|
|
$
|
181.8
|
|
|
$
|
149.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
Segment Assets
|
|
June 30,
|
|
|
December 31,
|
|
(Dollars in millions)
|
|
2016
|
|
|
2015
|
|
Passive Safety
|
|
$
|
5,790.0
|
|
|
$
|
5,539.3
|
|
Electronics
|
|
|
1,735.0
|
|
|
|
966.5
|
|
Segment assets
|
|
$
|
7,525.0
|
|
|
$
|
6,505.8
|
|
Corporate and other
1)
|
|
|
719.3
|
|
|
|
1,019.7
|
|
Total assets
|
|
$
|
8,244.3
|
|
|
$
|
7,525.5
|
|
1)
|
Corporate and other assets mainly consist of cash and cash equivalents, income taxes and equity method investments.
|
16 Subsequent Events
On
July 14, 2016, the Company and its wholly owned subsidiaries, Autoliv ASP, Inc. and Autoliv AB, refinanced its existing revolving credit facility by entering into a US $1.1 billion multi-currency revolving credit facility agreement with 14
banks. The refinanced revolving credit facility matures in July 2021, but, subject to the banks approval, can be extended by the Company for up to two additional years. Under the credit agreement, the Company pays a commitment fee on the
undrawn amount of 0.08% per annum, representing 35% of the applicable margin, which is 0.225% given the Companys current credit rating of A- from Standard and Poors. The Company may draw loans with maturities of up to five years and
any amounts drawn under the facility shall be used for general corporate purposes. The facility is guaranteed by the Company and Autoliv ASP, Inc. As with all of the existing principal debt arrangements of the Company, the credit agreement does
not have any financial covenants, i.e. performance-related restrictions.
22
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and
accompanying Notes thereto included elsewhere herein and with our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the United States Securities and Exchange Commission (the SEC) on February 19, 2016. Unless
otherwise noted, all dollar amounts are in millions.
Autoliv, Inc. (Autoliv or the Company) is a Delaware corporation with
its principal executive offices in Stockholm, Sweden. It was created from the merger of Autoliv AB (AAB) and the automotive safety products business of Morton International, Inc., in 1997. The Company functions as a holding corporation
and owns two principal subsidiaries, AAB and Autoliv ASP, Inc.
Autoliv is a leading developer, manufacturer and supplier of automotive safety systems to
the automotive industry with a broad range of product offerings, including passive safety systems and active safety systems. Passive safety systems are primarily meant to improve vehicle safety, and include modules and components for passenger and
driver-side airbags, side-impact airbag protection systems, seatbelts, steering wheels, passive safety electronics, whiplash protection systems and child seats, and components for such systems. Active safety products include automotive radars, night
vision systems, cameras with driver assist systems, positioning systems, active seatbelts and brake control systems.
Autolivs filings with the SEC,
which include this Quarterly Report on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, proxy statements and other information and all related amendments thereto, are made available free of charge on our corporate website at
www.autoliv.com and are available as soon as reasonably practicable after they are electronically filed with the SEC.
Shares of Autoliv common stock
trade on the New York Stock Exchange under the symbol ALV. Swedish Depository Receipts representing shares of Autoliv common stock (SDRs) trade on NASDAQ Stockholm under the symbol ALIV SDB, and options in SDRs
trade on the same exchange under the name Autoliv SDB. Options in Autoliv shares trade on NASDAQ OMX PHLX and NYSE Amex Options under the symbol ALV. Our fiscal year ends on December 31.
EXECUTIVE OVERVIEW
The transformation of the Company
continues, and in the first six months of 2016, the Company saw continued strong order intake, which is likely to continue. This is a positive development for the Companys future growth. The Companys current long-term outlook now shows
that the Company should surpass its end of decade sales target of $12 billion.
As preparation for the delivery of the Companys products begins two
to three years before the start of production and as future growth is accelerating, the Company has added close to 400 engineering resources during the second quarter. In order to be able to capture the future growth opportunities and maintain the
Companys focus on quality first in everything we do, in addition the Company is planning to add more than 1,000 engineering resources in the next twelve months.
Besides the strong developments in passive safety, the Company also saw several positive developments in its electronics business. During the quarter, the
Company secured important customer wins, Autoliv-Nissin Brake Systems had a solid start in its first quarter of operations and in active safety, the Company grew 30% organically (Non-U.S. GAAP measure, see reconciliation table below).
During the quarter, the Company was able to capture significant future business and balance further investments for growth with healthy full year operating
margins within the Companys long-term target range of 8-9%, while also delivering on its quarterly margin guidance despite slightly lower than expected organic growth, mainly from a lower global light vehicle production.
Non-U.S. GAAP financial measures
Some of the following
discussions refer to non-U.S. GAAP
financial measures: see Organic sales, Operating working capital, Net debt and Leverage ratio. Management believes that these non-U.S. GAAP
financial
measures assist investors in analyzing trends in the Companys business. Additional descriptions regarding managements use of these financial measures are included below. Investors should consider these non-U.S. GAAP
financial
measures in addition to, rather than as a substitute for, financial reporting measures prepared in accordance with U.S. GAAP. These historical non-U.S. GAAP
financial measures have been identified as applicable in each section of this report
with a tabular presentation reconciling them to U.S. GAAP. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.
23
RESULTS OF OPERATIONS
Overview
The following table shows some of the key ratios
management uses internally to analyze the Companys current and future financial performance and core operations as well as to identify trends in the Companys financial conditions and results of operations. We have provided this
information to investors to assist in meaningful comparisons of past and present operating results and to assist in highlighting the results of ongoing core operations. These ratios are more fully explained in our MD&A section below and should
be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K and the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
KEY RATIOS
(Dollars in
millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
or as of June 30
|
|
|
Six Months ended
or as of June 30
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
Total parent shareholders equity per share
|
|
$
|
41.69
|
|
|
$
|
37.75
|
|
|
$
|
41.69
|
|
|
$
|
37.75
|
|
Operating working capital
1)
|
|
$
|
685
|
|
|
$
|
639
|
|
|
$
|
685
|
|
|
$
|
639
|
|
Capital employed
6)
|
|
$
|
4,390
|
|
|
$
|
3,610
|
|
|
$
|
4,390
|
|
|
$
|
3,610
|
|
Net debt
1)
|
|
$
|
438
|
|
|
$
|
269
|
|
|
$
|
438
|
|
|
$
|
269
|
|
Net debt to capitalization, %
11)
|
|
|
10
|
|
|
|
7
|
|
|
|
10
|
|
|
|
7
|
|
|
|
|
|
|
Gross margin, %
2)
|
|
|
20.4
|
|
|
|
20.1
|
|
|
|
20.5
|
|
|
|
19.8
|
|
Operating margin, %
3)
|
|
|
8.2
|
|
|
|
9.1
|
|
|
|
8.3
|
|
|
|
6.5
|
|
|
|
|
|
|
Return on total equity, %
7)
|
|
|
15.2
|
|
|
|
16.7
|
|
|
|
15.0
|
|
|
|
10.3
|
|
Return on capital employed, %
8)
|
|
|
19.8
|
|
|
|
23.7
|
|
|
|
20.4
|
|
|
|
16.5
|
|
|
|
|
|
|
No. of employees at period-end
9)
|
|
|
59,748
|
|
|
|
52,536
|
|
|
|
59,748
|
|
|
|
52,536
|
|
Headcount at period-end
10)
|
|
|
67,465
|
|
|
|
62,018
|
|
|
|
67,465
|
|
|
|
62,018
|
|
Days receivables outstanding
4)
|
|
|
75
|
|
|
|
72
|
|
|
|
76
|
|
|
|
74
|
|
Days inventory outstanding
5)
|
|
|
30
|
|
|
|
31
|
|
|
|
31
|
|
|
|
32
|
|
1)
|
See tabular presentation reconciling this non-U.S. GAAP measure to U.S. GAAP below under the heading Liquidity and Sources of Capital
|
2)
|
Gross profit relative to sales
|
3)
|
Operating income relative to sales
|
4)
|
Outstanding receivables relative to average daily sales
|
5)
|
Outstanding inventory relative to average daily sales
|
6)
|
Total equity and net debt
|
7)
|
Net income relative to average total equity
|
8)
|
Operating income and income from equity method investments, relative to average capital employed
|
9)
|
Employees with a continuous employment agreement, recalculated to full time equivalent heads
|
10)
|
Employees plus temporary, hourly workers
|
11)
|
Net debt in relation to capital employed
|
THREE MONTHS ENDED JUNE 30, 2016 COMPARED WITH THREE
MONTHS ENDED JUNE 30, 2015
Market overview
Light Vehicle Production Development
Change vs. same
quarter last year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
Japan
|
|
|
RoA
|
|
|
Americas
|
|
|
Europe
|
|
|
Total
|
|
LVP
1)
|
|
|
4.2
|
%
|
|
|
(1.7
|
)%
|
|
|
0.8
|
%
|
|
|
(1.2
|
)%
|
|
|
8.1
|
%
|
|
|
3.0
|
%
|
1)
|
Source: IHS July 15, 2016.
|
24
During the three month period from April to June 2016, global LVP is estimated by IHS to have grown by 3%
compared to the same quarter in 2015. This was 1pp less than IHSs expectation at the beginning of the quarter.
In
China,
which accounts for
around 16% of Autolivs sales, LVP grew by more than 4%, 4pp less than the April estimate.
In
Japan,
which accounts for around 9% of
Autolivs sales, LVP declined by close to 2%, more than 7pp worse than the April estimate.
In the
RoA,
which represents around 9% of
Autolivs sales,
LVP was up by close to 1%, less than 1pp worse than the April estimate.
In the
Americas,
which accounts for around
one third of Autolivs sales, LVP declined by more than 1%, more than 2pp worse than in the April estimate. In North America, LVP increased by more than 1%, which was close to 3pp worse than the April estimate. In South America, the decline was
more than 15%, in line with the decline expected in IHSs April estimate.
In
Europe,
where Autoliv currently generates around one third of
its sales, LVP increased by more than 8%, which was more than 3pp better than IHSs April estimate. In Western Europe, LVP grew by more than 9%, close to 3pp better than the April estimate. In Eastern Europe, LVP grew by more than 5%, more than
5pp better than the April estimate.
Consolidated Sales
The Company has substantial operations outside the U.S. and at the present time approximately 73% of its sales are denominated in currencies other than the
U.S. dollar. This makes the Company and its performance in regions outside the U.S. sensitive to changes in U.S. dollar exchange rates when translated. The measure Organic sales presents the increase or decrease in the Companys
overall U.S. dollar net sales on a comparative basis, allowing separate discussion of the impacts of acquisitions/divestments and exchange rate fluctuations and our ongoing core operations and results. The tabular reconciliation below presents the
change in Organic sales reconciled to the change in the total net sales as can be derived from our unaudited financial statements.
Consolidated sales increased by more than 12% to $2,579 million compared to $2,292 million in the same quarter of 2015. Excluding negative currency
translation effects of $37 million and effects from M&A activities, the organic sales growth (non-U.S. GAAP measure, see reconciliation table below) was 7.7%, compared to the organic sales growth of around 10% expected at the
beginning of the quarter.
Sales by Product
Change vs. same quarter last year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
(MUSD)
|
|
|
Reported
(U.S. GAAP)
|
|
|
Acquisitions/
Divestures
|
|
|
Currency
effects
1)
|
|
|
Organic
change
3)
|
|
Airbags
2)
|
|
$
|
1,314.6
|
|
|
|
4.0
|
%
|
|
|
|
|
|
|
(1.7
|
)%
|
|
|
5.7
|
%
|
Seatbelts
2)
|
|
|
681.8
|
|
|
|
2.7
|
%
|
|
|
|
|
|
|
(2.3
|
)%
|
|
|
5.0
|
%
|
Passive Safety Electronics
|
|
|
262.8
|
|
|
|
13.6
|
%
|
|
|
|
|
|
|
(0.6
|
)%
|
|
|
14.2
|
%
|
Active Safety
|
|
|
185.9
|
|
|
|
40.8
|
%
|
|
|
9.9
|
%
|
|
|
1.3
|
%
|
|
|
29.6
|
%
|
Brake Control Systems
|
|
|
133.4
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,578.5
|
|
|
|
12.5
|
%
|
|
|
6.4
|
%
|
|
|
(1.6
|
)%
|
|
|
7.7
|
%
|
1)
|
Effects from currency translations. 2) Including Corporate and other sales.
|
3)
|
Non-U.S. GAAP measure, see reconciliation table below.
|
Reconciliation of the change
in Organic sales to U.S. GAAP financial measure
Components of net sales increase (decrease)
Three months ended June 30, 2016
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Airbag
Products
2)
|
|
|
Seatbelt Products
2)
|
|
|
Passive Safety
Electronics
|
|
|
Active
Safety
|
|
|
Break
Control
|
|
|
Total
|
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
Organic change
|
|
|
5.7
|
|
|
$
|
71.7
|
|
|
|
5.0
|
|
|
$
|
33.5
|
|
|
|
14.2
|
|
|
$
|
32.8
|
|
|
|
29.6
|
|
|
$
|
39.1
|
|
|
|
|
|
|
|
|
|
|
|
7.7
|
|
|
$
|
177.1
|
|
Currency effects
1)
|
|
|
(1.7
|
)
|
|
|
(21.1
|
)
|
|
|
(2.3
|
)
|
|
|
(15.7
|
)
|
|
|
(0.6
|
)
|
|
|
(1.4
|
)
|
|
|
1.3
|
|
|
|
1.6
|
|
|
|
|
|
|
|
|
|
|
|
(1.6
|
)
|
|
|
(36.6
|
)
|
Acquisitions/divestitures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.9
|
|
|
|
13.1
|
|
|
|
100.0
|
|
|
|
133.4
|
|
|
|
6.4
|
|
|
|
146.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported change
|
|
|
4.0
|
|
|
$
|
50.6
|
|
|
|
2.7
|
|
|
$
|
17.8
|
|
|
|
13.6
|
|
|
$
|
31.4
|
|
|
|
40.8
|
|
|
$
|
53.8
|
|
|
|
100.0
|
|
|
$
|
133.4
|
|
|
|
12.5
|
|
|
$
|
287.0
|
|
1)
|
Effects from currency translations. 2) Including Corporate and other sales.
|
25
The organic sales growth (non-U.S. GAAP measure) of
airbag products
(including steering wheels) was mainly
driven by inflatable curtains in Europe and Japan as well as steering wheels and driver airbags in Europe.
The organic sales growth (non-U.S. GAAP
measure) in
seatbelt products
was
a result of strong sales growth in Europe, partly offset by lower sales in North America and South Korea. The trend of higher sales for more advanced and higher value-added seatbelt systems continued
globally.
Organic sales (non-U.S. GAAP measure) for
passive safety electronics products
(mainly airbag control modules and remote sensing units)
grew significantly in China and Europe. The strong organic sales growth (non-U.S. GAAP measure) for
active safety products
(automotive radars, night vision systems, cameras with driver assist systems and positioning systems) was driven by
sales of radar and vision systems. In particular, radar related products contributed primarily as a result of Mercedes increased demand for driving assistance products. Sales of vision systems to BMW also contributed.
Brake control systems
is added for the first time as a result of the start of operations for Autoliv-Nissin Brake Systems, a joint venture with Nissin
Kogyo of Japan. Sales were in line with our expectations from the beginning of the quarter.
Sales by Region
Change vs. same quarter last year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
(MUSD)
|
|
|
Reported
(U.S. GAAP)
|
|
|
Acquisitions/
Divestitures
|
|
|
Currency
effects
1)
|
|
|
Organic
change
2)
|
|
Asia
|
|
$
|
868.5
|
|
|
|
14.6
|
%
|
|
|
11.8
|
%
|
|
|
(1.7)
|
%
|
|
|
4.5
|
%
|
Whereof:
|
|
China
|
|
$
|
410.7
|
|
|
|
12.3
|
%
|
|
|
10.1
|
%
|
|
|
(5.2)
|
%
|
|
|
7.4
|
%
|
|
|
Japan
|
|
$
|
229.9
|
|
|
|
49.2
|
%
|
|
|
34.0
|
%
|
|
|
12.6
|
%
|
|
|
2.6
|
%
|
|
|
Rest of Asia
|
|
$
|
227.9
|
|
|
|
(4.3)
|
%
|
|
|
|
|
|
|
(5.6)
|
%
|
|
|
1.3
|
%
|
Americas
|
|
$
|
875.4
|
|
|
|
6.5
|
%
|
|
|
6.9
|
%
|
|
|
(3.9)
|
%
|
|
|
3.5
|
%
|
Europe
|
|
$
|
834.6
|
|
|
|
17.3
|
%
|
|
|
|
|
|
|
1.2
|
%
|
|
|
16.1
|
%
|
Global
|
|
$
|
2,578.5
|
|
|
|
12.5
|
%
|
|
|
6.4
|
%
|
|
|
(1.6)
|
%
|
|
|
7.7
|
%
|
1)
|
Effects from currency translations.
|
2)
|
Non-U.S. GAAP measure, see reconciliation table below.
|
Reconciliation of the change in
Organic sales to U.S. GAAP financial measure
Components of net sales increase (decrease)
Three months ended June 30, 2016
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
Japan
|
|
|
RoA
|
|
|
Americas
|
|
|
Europe
|
|
|
Total
|
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
Organic change
|
|
|
7.4
|
|
|
$
|
26.9
|
|
|
|
2.6
|
|
|
$
|
4.0
|
|
|
|
1.3
|
|
|
$
|
3.2
|
|
|
|
3.5
|
|
|
$
|
28.6
|
|
|
|
16.1
|
|
|
$
|
114.4
|
|
|
|
7.7
|
|
|
$
|
177.1
|
|
Currency effects
1)
|
|
|
(5.2
|
)
|
|
|
(18.9
|
)
|
|
|
12.6
|
|
|
|
19.4
|
|
|
|
(5.6
|
)
|
|
|
(13.5
|
)
|
|
|
(3.9
|
)
|
|
|
(32.1
|
)
|
|
|
1.2
|
|
|
|
8.5
|
|
|
|
(1.6
|
)
|
|
|
(36.6
|
)
|
Acquisitions/divestitures
|
|
|
10.1
|
|
|
|
37.1
|
|
|
|
34.0
|
|
|
|
52.4
|
|
|
|
|
|
|
|
|
|
|
|
6.9
|
|
|
|
57.0
|
|
|
|
|
|
|
|
|
|
|
|
6.4
|
|
|
|
146.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported change
|
|
|
12.3
|
|
|
$
|
45.1
|
|
|
|
49.2
|
|
|
$
|
75.8
|
|
|
|
(4.3
|
)
|
|
$
|
(10.3
|
)
|
|
|
6.5
|
|
|
$
|
53.5
|
|
|
|
17.3
|
|
|
$
|
122.9
|
|
|
|
12.5
|
|
|
$
|
287.0
|
|
1)
|
Effects from currency translations.
|
The organic sales growth (non-U.S. GAAP measure, see reconciliation table
above) of close to 8% in the quarter was mainly a result of strong growth in Europe, where organic sales (non-U.S. GAAP measure, see reconciliation table above) grew by more than 16%. This was a result of a combination of high content on well
performing models and the ramp up of new launches.
Sales from Autolivs companies in
China
grew organically (non-U.S. GAAP measure, see
reconciliation table above) by more than 7% in the quarter. The growth was primarily driven by global OEMs, particularly models from Hyundai/Kia.
26
Organic sales (non-U.S. GAAP measure, see reconciliation table above) from Autolivs companies in
Japan
increased by close to 3% in the quarter. The sales increase was mainly due to positive model transitions and ramp ups with models from Toyota. Models from Honda and Nissan also contributed to the growth.
Organic sales (non-U.S. GAAP measure, see reconciliation table above) from Autolivs companies in the
Rest of Asia (RoA)
grew by more than 1% in
the quarter. This was primarily driven by recent launches from Hyundai and Suzuki in India and Thailand with sales increases driven by models from Mitsubishi. The growth was partly offset by lower sales in South Korea, primarily driven by lower than
expected LVP.
For Autolivs companies in the
Americas
,
the sales development was mixed for the quarter. In North America, the organic
sales growth (non-U.S. GAAP measure, see reconciliation table above) of almost 4% was mainly driven by sales increases for models from Honda, Mercedes and Ford, particularly the F-Series. Sales of active safety products and replacement inflators
also contributed to the growth. Sales in South America (Brazil) declined by close to 2%, while the LVP declined by more than 15%. Autolivs strong performance in South America compared to the LVP was mainly due to the ramp up of models from
Fiat.
The strong organic sales growth (non-U.S. GAAP measure, see reconciliation table above) of more than 16% in the quarter from Autolivs
companies in
Europe
was driven by sales increases for a number of OEMs, positive product mix and strong growth for active safety products. Primary drivers were models from Hyundai/Kia, Renault and Mercedes.
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions, except per share data)
|
|
Three months ended
June 30, 2016
|
|
|
Three months ended
June 30, 2015
|
|
|
Change
|
|
Net Sales
|
|
$
|
2,578.5
|
|
|
$
|
2,291.5
|
|
|
|
12.5
|
%
|
Gross profit
|
|
$
|
526.5
|
|
|
$
|
460.0
|
|
|
|
14.5
|
%
|
% of sales
|
|
|
20.4
|
%
|
|
|
20.1
|
%
|
|
|
0.3
|
pp
|
S,G&A
|
|
$
|
(120.3
|
)
|
|
$
|
(101.2
|
)
|
|
|
18.9
|
%
|
% of sales
|
|
|
(4.7
|
)%
|
|
|
(4.4
|
)%
|
|
|
(0.3
|
)pp
|
R,D&E net
|
|
$
|
(176.4
|
)
|
|
$
|
(140.3
|
)
|
|
|
25.7
|
%
|
% of sales
|
|
|
(6.8
|
)%
|
|
|
(6.1
|
)%
|
|
|
(0.7
|
)pp
|
Operating income
|
|
$
|
212.7
|
|
|
$
|
208.7
|
|
|
|
1.9
|
%
|
% of sales
|
|
|
8.2
|
%
|
|
|
9.1
|
%
|
|
|
(0.9
|
)pp
|
Income before taxes
|
|
$
|
200.4
|
|
|
$
|
194.5
|
|
|
|
3.0
|
%
|
Tax rate
|
|
|
25.9
|
%
|
|
|
29.7
|
%
|
|
|
(3.8
|
)pp
|
Net income
|
|
$
|
148.4
|
|
|
$
|
136.8
|
|
|
|
8.5
|
%
|
Net income attributable to controlling interest
|
|
$
|
148.4
|
|
|
$
|
136.7
|
|
|
|
8.6
|
%
|
Earnings per share, diluted
1)
|
|
$
|
1.68
|
|
|
$
|
1.55
|
|
|
|
8.4
|
%
|
1)
|
Assuming dilution and net of treasury shares.
|
The gross profit for the second quarter of 2016 was $67 million
higher than in the same quarter of 2015, primarily as a result of higher organic sales. The gross margin improved by 0.3pp to 20.4%, from 20.1% in the same quarter of 2015, mainly as a result of higher organic sales, favorable currency effects, and
raw material savings. These positive effects were partly offset by costs related to the investments for capacity and growth.
Operating income increased
by $4 million to $213 million, or 8.2% of sales, compared to 9.1% of sales in the same quarter of 2015. The decrease in operating margin was primarily related to increases in investments for growth.
Selling, General and Administrative (S,G&A) expenses increased by $19 million.
Research, Development & Engineering (R,D&E) expenses, net, in support of future growth, increased by $36 million compared to the same quarter in the
prior year.
Costs of $4 million related to capacity alignments and $4 million related to antitrust matters reduced operating margin by 0.4pp in the
second quarter, a similar level to the same quarter of 2015.
Income before taxes increased by $6 million. Income attributable to controlling interest was
$148 million, an increase of $12 million from the second quarter of 2015.
27
The effective tax rate in the second quarter of 2016 was 25.9% compared to 29.7% in the same quarter of 2015.
Discrete items, net decreased the tax rate in the quarter by 1.2pp. In the second quarter of 2015, discrete tax items, net had a favorable impact of 4.3pp, primarily related to the resolution of a prior year tax refund claim.
Earnings per share (EPS) was $1.68 compared to $1.55 for the same period one year ago. The EPS was positively affected by 16 cents from a lower underlying tax
rate and 3 cents by higher operating income. These positive effects were partly offset by 6 cents from discrete tax items.
The weighted average number of
shares outstanding assuming dilution was 88.4 million compared to 88.3 million in the second quarter of 2015.
SIX MONTHS ENDED JUNE 30, 2016 COMPARED
WITH SIX MONTHS ENDED JUNE 30, 2015
Market overview
Light Vehicle Production Development
Year over year
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
Japan
|
|
|
RoA
|
|
|
Americas
|
|
|
Europe
|
|
|
Total
|
|
LVP
1)
|
|
|
5.6
|
%
|
|
|
(2.5
|
)%
|
|
|
0.4
|
%
|
|
|
(1.1
|
)%
|
|
|
4.5
|
%
|
|
|
2.2
|
%
|
1)
|
Source: IHS July 15, 2016.
|
For the first six months of 2016, global LVP is estimated
by IHS to have increased by more than 2% compared to the first six months of 2015. This was less than 1pp lower than IHSs expectation from the beginning of the year.
In
China
, which accounts for around 16% of Autolivs sales, LVP grew by less than 6%, a decrease of less than 1pp compared to the January 2016
estimate.
In
Japan
,
which accounts for around 9% of Autolivs sales, LVP declined by close to 3%, over 3pp worse compared to the
January 2016 estimate.
In the
RoA
, which accounts for 9% of Autolivs sales,
LVP increased by less than 1%, in line with the
expectation from the beginning of 2016.
In the
Americas
, which makes up around one third of Autolivs sales, LVP decreased by more than 1%, a
decrease of close to 3pp compared to IHSs growth expectation of close to 2% from the beginning of the year. In North America, the increase was close to 3% compared to the more than 5% expected at the beginning of the year. In South America,
the decrease was more than 21%, 5pp worse than the January 2016 estimate.
In
Europe
, where Autoliv currently generates around one third of its
sales, LVP grew by close to 5% which was close to 2pp better than IHSs estimate in January 2016. In Western Europe, LVP grew by 7%, more than 2pp better than estimated at the beginning of the year. In Eastern Europe, LVP decreased by close to
1%, in line with the January 2016 estimate.
Consolidated Sales
The Company has substantial operations outside the U.S. and at the present time approximately 73% of its sales are denominated in currencies other than the
U.S. dollar. This makes the Company and its performance in regions outside the U.S. sensitive to changes in U.S. dollar exchange rates when translated. The measure Organic sales presents the increase or decrease in the Companys
overall U.S. dollar net sales on a comparative basis, allowing separate discussion of the impacts of acquisitions/divestments and exchange rate fluctuations and our ongoing core operations and results. The tabular reconciliation below presents the
change in Organic sales reconciled to the change in the total net sales as can be derived from our unaudited financial statements.
For the
first six months of 2016 consolidated sales increased to $5,009 million from $4,466 million for the same period in 2015. Excluding negative currency effects of close to 3% and acquisition effects from ANBS of close to 4%, the organic sales growth
(non-U.S. GAAP measure, see reconciliation table below) was more than 11%. All parts of the Company, except South America and South Korea, showed organic sales growth for the first six months (non-U.S. GAAP measure).
28
Sales by Product
Year over year change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (MUSD)
|
|
|
Reported
(U.S. GAAP)
|
|
|
Acquisitions/
Divestures
|
|
|
Currency
effects
1)
|
|
|
Organic
change
3)
|
|
Airbags
2)
|
|
$
|
2,639.4
|
|
|
|
7.9
|
%
|
|
|
|
|
|
|
(2.7
|
)%
|
|
|
10.6
|
%
|
Seatbelts
2)
|
|
|
1,345.9
|
|
|
|
2.2
|
%
|
|
|
|
|
|
|
(3.5
|
)%
|
|
|
5.7
|
%
|
Passive Safety Electronics
|
|
|
513.4
|
|
|
|
15.5
|
%
|
|
|
|
|
|
|
(1.3
|
)%
|
|
|
16.8
|
%
|
Active Safety
|
|
|
376.4
|
|
|
|
45.6
|
%
|
|
|
11.4
|
%
|
|
|
0.2
|
%
|
|
|
34.0
|
%
|
Brake Control Systems
|
|
|
133.4
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,008.5
|
|
|
|
12.2
|
%
|
|
|
3.6
|
%
|
|
|
(2.5
|
)%
|
|
|
11.1
|
%
|
1)
|
Effects from currency translations. 2) Including Corporate and other sales.
|
3)
|
Non-U.S. GAAP measure, see reconciliation table below.
|
Reconciliation of the change in
Organic sales to U.S. GAAP financial measure
Components of net sales increase (decrease)
Six months ended June 30, 2016
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Airbag
Products
2)
|
|
|
Seatbelt Products
2)
|
|
|
Passive Safety
Electronics
|
|
|
Active
Safety
|
|
|
Break
Control
|
|
|
Total
|
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
Organic change
|
|
|
10.6
|
|
|
$
|
259.4
|
|
|
|
5.7
|
|
|
$
|
74.8
|
|
|
|
16.8
|
|
|
$
|
74.8
|
|
|
|
34.0
|
|
|
$
|
88.0
|
|
|
|
|
|
|
|
|
|
|
|
11.1
|
|
|
$
|
497.0
|
|
Currency effects
1)
|
|
|
(2.7
|
)
|
|
|
(65.1
|
)
|
|
|
(3.5
|
)
|
|
|
(46.3
|
)
|
|
|
(1.3
|
)
|
|
|
(6.0
|
)
|
|
|
0.2
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
(2.5
|
)
|
|
|
(116.8
|
)
|
Acquisitions/divestitures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.4
|
|
|
|
29.3
|
|
|
|
100.0
|
|
|
|
133.4
|
|
|
|
3.6
|
|
|
|
162.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported change
|
|
|
7.9
|
|
|
$
|
194.3
|
|
|
|
2.2
|
|
|
$
|
28.5
|
|
|
|
15.5
|
|
|
$
|
68.8
|
|
|
|
45.6
|
|
|
$
|
117.9
|
|
|
|
100.0
|
|
|
$
|
133.4
|
|
|
|
12.2
|
|
|
$
|
542.9
|
|
1)
|
Effects from currency translations. 2) Including Corporate and other sales.
|
Sales of
airbag products
(including steering wheels) were favorably impacted by higher sales of inflatable curtains, replacement inflators, and steering wheels.
Sales of
seatbelt products
were particularly strong in Europe. The global trend towards more advanced and higher value-added seatbelt systems continued globally.
The growth in organic sales (non-U.S. GAAP measure) for
passive safety electronics products
(mainly airbag control modules and remote sensing units)
was due to growth across all regions, particularly in China and North America.
The strong increase in sales of
active safety products
(automotive
radars, night vision systems, cameras with driver assist systems and positioning systems) resulted from growth particularly for radar related products primarily as a result of Mercedes increased demand for driving assistance. Sales of vision
systems to BMW also contributed.
Brake control systems
is added for the first time as a result of the start of operations of Autoliv-Nissin Brake
Systems. Sales of $133 million were in line with our expectations from the beginning of the quarter.
Sales by Region
Year over year change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
(MUSD)
|
|
|
Reported
(U.S. GAAP)
|
|
|
Acquisitions/
Divestitures
|
|
|
Currency
effects
1)
|
|
|
Organic
change
2)
|
|
Asia
|
|
$
|
1,680.4
|
|
|
|
13.6
|
%
|
|
|
6.0
|
%
|
|
|
(2.7)
|
%
|
|
|
10.3
|
%
|
Whereof:
|
|
China
|
|
$
|
807.1
|
|
|
|
12.1
|
%
|
|
|
5.1
|
%
|
|
|
(4.8)
|
%
|
|
|
11.8
|
%
|
|
|
Japan
|
|
$
|
428.1
|
|
|
|
39.6
|
%
|
|
|
17.1
|
%
|
|
|
8.2
|
%
|
|
|
14.3
|
%
|
|
|
Rest of Asia
|
|
$
|
445.2
|
|
|
|
(1.7)
|
%
|
|
|
|
|
|
|
(6.8)
|
%
|
|
|
5.1
|
%
|
Americas
|
|
$
|
1,702.3
|
|
|
|
8.4
|
%
|
|
|
4.7
|
%
|
|
|
(4.3)
|
%
|
|
|
8.0
|
%
|
Europe
|
|
$
|
1,625.8
|
|
|
|
14.8
|
%
|
|
|
|
|
|
|
(0.7)
|
%
|
|
|
15.5
|
%
|
Global
|
|
$
|
5,008.5
|
|
|
|
12.2
|
%
|
|
|
3.6
|
%
|
|
|
(2.5)
|
%
|
|
|
11.1
|
%
|
1)
|
Effects from currency translations.
|
2)
|
Non-U.S. GAAP measure, see reconciliation table below.
|
29
Reconciliation of the change in Organic sales to U.S. GAAP financial measure
Components of net sales increase (decrease)
Six months ended June 30, 2016
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
Japan
|
|
|
RoA
|
|
|
Americas
|
|
|
Europe
|
|
|
Total
|
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
Organic change
|
|
|
11.8
|
|
|
$
|
85.1
|
|
|
|
14.3
|
|
|
$
|
43.9
|
|
|
|
5.1
|
|
|
$
|
23.1
|
|
|
|
8.0
|
|
|
$
|
126.0
|
|
|
|
15.5
|
|
|
$
|
218.9
|
|
|
|
11.1
|
|
|
$
|
497.0
|
|
Currency effects
1)
|
|
|
(4.8
|
)
|
|
|
(35.2
|
)
|
|
|
8.2
|
|
|
|
25.1
|
|
|
|
(6.8
|
)
|
|
|
(30.9
|
)
|
|
|
(4.3
|
)
|
|
|
(66.8
|
)
|
|
|
(0.7
|
)
|
|
|
(9.0
|
)
|
|
|
(2.5
|
)
|
|
|
(116.8
|
)
|
Acquisitions/divestitures
|
|
|
5.1
|
|
|
|
37.1
|
|
|
|
17.1
|
|
|
|
52.4
|
|
|
|
|
|
|
|
|
|
|
|
4.7
|
|
|
|
73.2
|
|
|
|
|
|
|
|
|
|
|
|
3.6
|
|
|
|
162.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported change
|
|
|
12.1
|
|
|
$
|
87.0
|
|
|
|
39.6
|
|
|
$
|
121.4
|
|
|
|
(1.7
|
)
|
|
$
|
(7.8
|
)
|
|
|
8.4
|
|
|
$
|
132.4
|
|
|
|
14.8
|
|
|
$
|
209.9
|
|
|
|
12.2
|
|
|
$
|
542.9
|
|
1)
|
Effects from currency translations.
|
For the first six months of 2016, sales in the Americas represent 34% of
total sales, Asia (China, Japan, RoA) 34%, and Europe 32%. Sales continue to be balanced across the regions. Growth was particularly strong in Europe.
Sales from Autolivs companies in
China
increased organically (non-U.S. GAAP measure) by close to 12%, particularly driven by Asian and local
OEMs.
Organic sales (non-U.S. GAAP measure, see reconciliation table above) from Autolivs companies in
Japan
increased by more than 14% in
the first six months. The increase was primarily driven by models from Toyota and Honda as well as the sales of replacement inflators.
Organic sales
(non-U.S. GAAP measure, see reconciliation table above) from Autolivs companies in the
RoA
grew by more than 5%. The growth was primarily driven by strong sales growth in India and Thailand.
Organic sales (non-U.S. GAAP measure, see reconciliation table above) from Autolivs companies in the
Americas
increased by 8% and
were
positively impacted by sales growth to non-US OEMs in North America, mainly models from Honda and Mercedes. Sales of replacement inflators also contributed.
Organic sales (non-U.S. GAAP measure, see reconciliation table above) from Autolivs companies in
Europe
increased strongly by close to 16%.
Models from Hyundai, Renault, Mercedes, BMW and VW were the strongest growth contributors.
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions, except per share data)
|
|
Six months ended
June 30, 2016
|
|
|
Six months ended
June 30, 2015
|
|
|
Change
|
|
Net Sales
|
|
$
|
5,008.5
|
|
|
$
|
4,465.6
|
|
|
|
12.2
|
%
|
Gross profit
|
|
$
|
1,027.5
|
|
|
$
|
883.4
|
|
|
|
16.3
|
%
|
% of sales
|
|
|
20.5
|
%
|
|
|
19.8
|
%
|
|
|
0.7
|
pp
|
S,G&A
|
|
$
|
(233.4
|
)
|
|
$
|
(201.8
|
)
|
|
|
15.7
|
%
|
% of sales
|
|
|
(4.7
|
)%
|
|
|
(4.5
|
)%
|
|
|
(0.2
|
)pp
|
R,D&E net
|
|
$
|
(335.2
|
)
|
|
$
|
(266.8
|
)
|
|
|
25.6
|
%
|
% of sales
|
|
|
(6.7
|
)%
|
|
|
(6.0
|
)%
|
|
|
(0.7
|
)pp
|
Operating income
|
|
$
|
417.9
|
|
|
$
|
288.7
|
|
|
|
44.8
|
%
|
% of sales
|
|
|
8.3
|
%
|
|
|
6.5
|
%
|
|
|
1.8
|
pp
|
Income before taxes
|
|
$
|
390.7
|
|
|
$
|
259.0
|
|
|
|
50.8
|
%
|
Tax rate
|
|
|
27.8
|
%
|
|
|
33.4
|
%
|
|
|
(5.6
|
)pp
|
Net income
|
|
$
|
281.9
|
|
|
$
|
172.5
|
|
|
|
63.4
|
%
|
Net income attributable to controlling interest
|
|
$
|
281.6
|
|
|
$
|
172.4
|
|
|
|
63.3
|
%
|
Earnings per share, diluted
1)
|
|
$
|
3.19
|
|
|
$
|
1.95
|
|
|
|
63.6
|
%
|
1)
|
Assuming dilution and net of treasury shares.
|
30
Gross profit for the first six months of 2016 increased by $144 million, primarily as a result of the higher
organic sales. Gross margin increased by 0.7pp compared to the same period in 2015, mainly as a result of higher organic sales, favorable currency effects and raw material savings.
Operating income increased by $129 million to $418 million. Operating margin was 8.3% for the first half of the year, an increase of 1.8pp compared to the
same period in the prior year. In 2015 the operating margin was affected by high costs related to the ongoing capacity alignment and for settlements of antitrust related matters.
Selling, General and Administrative (S,G&A) expenses increased by $32 million.
R,D&E expenses, net increased by $68 million compared to the same period in the prior year.
Income before taxes increased by $132 million to $391 million, $3 million more than the increase in operating income.
Net income attributable to controlling interest amounted to $282 million compared to $172 million for the first six months of 2015. Income tax expense was
$109 million compared to $87 million in the same period of 2015. The effective tax rate was 27.8% compared to 33.4% for the same six month period last year. The tax rate was favorably impacted by the geographical mix of earnings compared to the
previous year.
EPS amounted to $3.19, assuming dilution, compared to $1.95 for the same period of 2015. EPS assuming dilution was positively affected by
lower capacity alignment and legal costs by 87 cents, higher operating income by 30 cents and 29 cents by lower underlying tax rate. These positive effects were partly offset by negative currency translation effects of 6 cents.
The weighted average number of shares outstanding assuming dilution was unchanged at
88.4 million compared to the full year 2015.
LIQUIDITY AND SOURCES OF CAPITAL
Cash flow from
operations in the second quarter of 2016 amounted to $103 million compared to $154 million in the same quarter of 2015. The decrease was primarily related to timing differences in payments of accounts receivable.
Cash flow from operations less net cash used in investing activities during the second quarter 2016 was negative $28 million compared to positive $39 million
during the same quarter of 2015, a difference of $67 million. During the second quarter of 2016 capital expenditures, net, of $130 million were $33 million more than depreciation and amortization expense in the quarter and $21 million more than
capital expenditures during the second quarter of 2015.
Operations in the first six months of 2016 generated $303 million in cash. Cash from operations
less net cash used in investing activities was negative $146 million. This compares to $238 million and negative $8 million, respectively, for the same period in 2015.
During the first six months of 2016 capital expenditures net, amounted to $221 million and depreciation and amortization totaled $182 million compared to $237
million and $150 million, respectively, for the same period in 2015.
The Company uses the non-U.S. GAAP measure Operating working capital, as
defined in the table below, in its communications with investors and for managements review of the development of the working capital cash generation from operations. The reconciling items used to derive this measure are, by contrast, managed
as part of the Companys overall cash and debt management, but they are not part of the responsibilities of day-to-day operations management.
Reconciliation of Operating working capital to U.S. GAAP financial measure
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
Total current assets
|
|
$
|
4,122.5
|
|
|
$
|
4,038.3
|
|
Total current liabilities
|
|
|
(2,467.8
|
)
|
|
|
(2,226.4
|
)
|
|
|
|
|
|
|
|
|
|
Working capital
|
|
|
1,654.7
|
|
|
|
1,811.9
|
|
Cash and cash equivalents
|
|
|
(1,113.1
|
)
|
|
|
(1,333.5
|
)
|
Short-term debt
|
|
|
95.4
|
|
|
|
39.6
|
|
Derivative (asset) and liability, current
|
|
|
(3.0
|
)
|
|
|
2.4
|
|
Dividends payable
|
|
|
51.2
|
|
|
|
49.3
|
|
|
|
|
|
|
|
|
|
|
Operating working capital
|
|
$
|
685.2
|
|
|
$
|
569.7
|
|
31
During the quarter working capital decreased to 17% of sales from 20% on June 30, 2015 and operating working
capital (non-U.S. GAAP measure, see reconciliation table above) was unchanged at 7.1% of sales compared to June 30, 2015. The Company targets that operating working capital in relation to the last 12-month sales should not exceed 10%.
Accounts receivable increased in relation to sales to 75 days outstanding from 74 days outstanding on March 31, 2016 and from 72 days outstanding on June 30,
2015. Days inventory outstanding was 30 days, down from 32 days March 31, 2016 and from 31 days on June 30, 2015.
As part of efficiently managing the
Companys overall cost of funds, we routinely enter into debt-related derivatives (DRD) as part of our debt management. Creditors and credit rating agencies use net debt adjusted for DRD in their analyses of the Companys debt.
DRD are fair value adjustments to the carrying value of the underlying debt. Included in the DRD is also the unamortized fair value adjustment related to a discontinued fair value hedge which will be amortized over the remaining life of the debt. By
adjusting for DRD, the total financial liability of net debt is disclosed without grossing debt up with currency or interest fair values.
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net debt to U.S. GAAP financial measure
(Dollars in millions)
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
Short-term debt
|
|
$
|
95.4
|
|
|
$
|
28.8
|
|
|
$
|
39.6
|
|
Long-term debt
|
|
|
1,460.0
|
|
|
|
1,499.4
|
|
|
|
1,499.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
1,555.4
|
|
|
|
1,528.2
|
|
|
|
1,539.0
|
|
Cash and cash equivalents
|
|
|
(1,113.1
|
)
|
|
|
(1,161.6
|
)
|
|
|
(1,333.5
|
)
|
Debt-related derivatives
|
|
|
(4.5
|
)
|
|
|
(4.7
|
)
|
|
|
(3.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt
|
|
$
|
437.8
|
|
|
$
|
361.9
|
|
|
$
|
201.6
|
|
The Companys gross interest-bearing debt increased by $27 million during the quarter to $1,555 million at June 30, 2016
and its net debt position (non-U.S. GAAP measure, see reconciliation table above) increased by $76 million during the quarter to $438 million at June 30, 2016.
Autolivs gross interest bearing debt increased by $16 million to $1,555 million compared to December 31, 2015 and its net debt (non-U.S. GAAP measure,
see reconciliation table above) increased by $236 million to $438 million compared to December 31, 2015.
|
|
|
|
|
|
|
|
|
Calculation of Leverage ratio
(Dollars in millions)
|
|
|
|
|
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
Net debt
1)
|
|
$
|
437.8
|
|
|
$
|
201.6
|
|
Pension liabilities
|
|
|
216.4
|
|
|
|
197.0
|
|
|
|
|
|
|
|
|
|
|
Debt per the Policy
|
|
$
|
654.2
|
|
|
$
|
398.6
|
|
Income before income taxes
2)
|
|
$
|
807.4
|
|
|
$
|
675.7
|
|
Plus: Interest expense, net
2,3)
|
|
|
58.4
|
|
|
|
62.4
|
|
Depreciation and amortization of intangibles
2,4)
|
|
|
351.4
|
|
|
|
319.1
|
|
|
|
|
|
|
|
|
|
|
EBITDA per the Policy
|
|
$
|
1,217.2
|
|
|
$
|
1,057.2
|
|
Leverage ratio
|
|
|
0.5
|
|
|
|
0.4
|
|
1)
|
Net debt is short- and long-term debt and debt-related derivatives less cash and cash equivalents.
|
3)
|
Interest expense, net is interest expense including cost for extinguishment of debt, if any, less interest income.
|
4)
|
Including impairment write-offs, if any.
|
32
Autolivs policy is to maintain a leverage ratio (non-U.S. GAAP measure, see calculation above) commensurate
with a strong investment grade credit rating. The Company measures its leverage ratio as net debt (non-U.S. GAAP measure, see reconciliation table above) adjusted for pension liabilities in relation to EBITDA (earnings before interest taxes
depreciation and amortization). The long-term target is to maintain a leverage ratio of around 1x within a range of 0.5x to 1.5x. As of June 30, 2016 the Company had a leverage ratio of 0.5x.
For the first six months, total equity increased by $484 million to $3,952 million compared to the same period in 2015 due to $282 million from net income,
$255 million from the recognition of a minority interest in ANBS and $39 million from positive currency effects and $9 million from common stock incentives. These effects were partly offset by $104 million for dividends.
Total parent shareholders equity was $3,677 million corresponding to $41.69 per share.
Headcount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
March 31, 2016
|
|
|
June 30, 2015
|
|
Headcount
|
|
|
67,465
|
|
|
|
66,633
|
|
|
|
62,018
|
|
Whereof: Direct workers in manufacturing
|
|
|
69
|
%
|
|
|
69
|
%
|
|
|
72
|
%
|
Best Cost Countries
|
|
|
74
|
%
|
|
|
74
|
%
|
|
|
74
|
%
|
Temporary personnel
|
|
|
11
|
%
|
|
|
11
|
%
|
|
|
15
|
%
|
Compared to March 31, 2016 total headcount (permanent employees and temporary personnel) increased by more than 800 people.
This was primarily driven by the organic sales growth (non-U.S. GAAP measure) and the continued hiring of engineers, primarily to our active safety business.
SEGMENT DATA
The Company reports its results under two
segments, Passive Safety and Electronics. Passive Safety includes Autolivs airbag and seatbelt businesses, while Electronics integrates all of Autolivs electronics resources and expertise in passive safety electronics, active safety and
brake control systems in one organization. Corporate sales and income, capital expenditures and depreciation and amortization for the reportable segments can be found in Note 15 Segment Information to our unaudited condensed consolidated financial
statements in this Quarterly Report on Form 10-Q.
Passive Safety
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
Three months ended
June 30, 2016
|
|
|
Three months ended
June 30, 2015
|
|
|
Change
|
|
|
Organic
change
1)
|
|
Segment sales
|
|
$
|
1,996.1
|
|
|
$
|
1,925.3
|
|
|
|
3.7
|
%
|
|
|
5.6
|
%
|
Segment operating income
|
|
$
|
206.8
|
|
|
$
|
195.7
|
|
|
|
5.7
|
%
|
|
|
|
|
Segment operating margin
|
|
|
10.4
|
%
|
|
|
10.2
|
%
|
|
|
0.2pp
|
|
|
|
|
|
1)
|
Non-U.S. GAAP measure, see reconciliation table below.
|
During the second quarter of 2016 consolidated sales
increased by close to 4% to $1,996 million compared to $1,925 million in the same quarter of 2015. Excluding negative currency translation effects of $37 million, the organic sales growth (non-U.S. GAAP measure, see reconciliation table below) was
close to 6%. All areas except South America and South Korea showed organic growth in the quarter. The higher operating margin was primarily a result of benefits from the higher organic sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
Six months ended
June 30, 2016
|
|
|
Six months ended
June 30, 2015
|
|
|
Change
|
|
|
Organic
change
1)
|
|
Segment sales
|
|
$
|
3,984.8
|
|
|
$
|
3,755.7
|
|
|
|
6.1
|
%
|
|
|
9.1
|
%
|
Segment operating income
|
|
$
|
398.4
|
|
|
$
|
258.9
|
|
|
|
53.9
|
%
|
|
|
|
|
Segment operating margin
|
|
|
10.0
|
%
|
|
|
6.9
|
%
|
|
|
3.1pp
|
|
|
|
|
|
1)
|
Non-U.S. GAAP measure, see reconciliation table below.
|
33
During the first six months of 2016 consolidated sales increased by more than 6% to $3,985 million compared to
$3,756 million in the same period of 2015. Excluding negative currency translation effects of $111 million, the organic sales growth (non-U.S. GAAP measure, see reconciliation table below) was more than 9%. The organic sales growth (non-U.S. GAAP
measure) was primarily driven by higher sales in Europe, North America and Japan. In the first six months of 2015 the reported operating margin for the segment was negatively affected by the antitrust related settlement costs and restructuring
costs, primarily related to the on-going European capacity alignment program.
Electronics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
Three months ended
June 30, 2016
|
|
|
Three months ended
June 30, 2015
|
|
|
Change
|
|
|
Organic
change
1)
|
|
Segment sales
|
|
$
|
597.8
|
|
|
$
|
377.1
|
|
|
|
58.5
|
%
|
|
|
18.5
|
%
|
Segment operating income
|
|
$
|
14.9
|
|
|
$
|
11.9
|
|
|
|
25.2
|
%
|
|
|
|
|
Segment operating margin
|
|
|
2.5
|
%
|
|
|
3.2
|
%
|
|
|
(0.7)pp
|
|
|
|
|
|
1)
|
Non-U.S. GAAP measure, see reconciliation table below.
|
During the second quarter of 2016 consolidated sales
were significantly higher compared to the same quarter of 2015. The organic sales growth (non-U.S. GAAP measure, see reconciliation table below) in Electronics was close to 19%. The consolidated sales growth was mainly affected by $133 million from
the ANBS joint venture. The lower operating margin was mainly a result of higher R,D&E costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
Six months ended
June 30, 2016
|
|
|
Six months ended
June 30, 2015
|
|
|
Change
|
|
|
Organic
change
1)
|
|
Segment sales
|
|
$
|
1,054.2
|
|
|
$
|
728.3
|
|
|
|
44.7
|
%
|
|
|
22.6
|
%
|
Segment operating income
|
|
$
|
26.7
|
|
|
$
|
20.9
|
|
|
|
27.8
|
%
|
|
|
|
|
Segment operating margin
|
|
|
2.5
|
%
|
|
|
2.9
|
%
|
|
|
(0.4)pp
|
|
|
|
|
|
1)
|
Non-U.S. GAAP measure, see reconciliation table below.
|
During the first six months of 2016 consolidated sales
increased by close to 45% compared to the same period of 2015. Excluding acquisition effects from ANBS and MACOM of $167 million and negative currency translation effects of $5 million, the organic sales growth (non-U.S. GAAP measure, see
reconciliation table below) was close to 23%. The lower operating margin was mainly a result of higher R,D&E costs in support of recent contract wins and future growth.
Reconciliation of the change in Organic sales to U.S. GAAP financial measure
Components of net sales increase (decrease)
Three months ended June 30, 2016
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passive Safety
|
|
|
Electronics
|
|
|
Other and
eliminations
|
|
|
Total
|
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
$
|
|
|
%
|
|
|
$
|
|
Organic change
|
|
|
5.6
|
|
|
$
|
107.8
|
|
|
|
18.5
|
|
|
$
|
69.8
|
|
|
$
|
(0.5
|
)
|
|
|
7.7
|
|
|
$
|
177.1
|
|
Currency effects
1)
|
|
|
(1.9
|
)
|
|
|
(37.0
|
)
|
|
|
0.1
|
|
|
|
0.5
|
|
|
|
(0.1
|
)
|
|
|
(1.6
|
)
|
|
|
(36.6
|
)
|
Acquisitions/divestitures
|
|
|
|
|
|
|
|
|
|
|
39.9
|
|
|
|
150.4
|
|
|
|
(3.9
|
)
|
|
|
6.4
|
|
|
|
146.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported change
|
|
|
3.7
|
|
|
$
|
70.8
|
|
|
|
58.5
|
|
|
$
|
220.7
|
|
|
$
|
(4.5
|
)
|
|
|
12.5
|
|
|
$
|
287.0
|
|
1)
|
Effects from currency translations.
|
Reconciliation of the change in Organic
sales to U.S. GAAP financial measure
Components of net sales increase (decrease)
Six months ended June 30, 2016
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passive Safety
|
|
|
Electronics
|
|
|
Other and
eliminations
|
|
|
Total
|
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
$
|
|
|
%
|
|
|
$
|
|
Organic change
|
|
|
9.1
|
|
|
$
|
340.5
|
|
|
|
22.6
|
|
|
$
|
164.6
|
|
|
$
|
(8.1
|
)
|
|
|
11.1
|
|
|
$
|
497.0
|
|
Currency effects
1)
|
|
|
(3.0
|
)
|
|
|
(111.4
|
)
|
|
|
(0.8
|
)
|
|
|
(5.3
|
)
|
|
|
(0.1
|
)
|
|
|
(2.5
|
)
|
|
|
(116.8
|
)
|
Acquisitions/divestitures
|
|
|
|
|
|
|
|
|
|
|
22.9
|
|
|
|
166.6
|
|
|
|
(3.9
|
)
|
|
|
3.6
|
|
|
|
162.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported change
|
|
|
6.1
|
|
|
$
|
229.1
|
|
|
|
44.7
|
|
|
$
|
325.9
|
|
|
$
|
(12.1
|
)
|
|
|
12.2
|
|
|
$
|
542.9
|
|
1)
|
Effects from currency translations.
|
34
Headcount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
|
June 30,
2015
|
|
Headcount Passive Safety segment
|
|
|
60,767
|
|
|
|
60,153
|
|
|
|
59,861
|
|
|
|
58,112
|
|
Headcount Electronics segment
|
|
|
6,335
|
|
|
|
6,124
|
|
|
|
4,080
|
|
|
|
3,770
|
|
The headcount increase in Passive Safety was primarily related to higher organic growth (non-U.S. GAAP measure). In
Electronics the increase was primarily related to the continued hiring of engineers in our active safety business.
The headcount increase from December
31, 2015 was mainly due to integration of ANBS into the Electronics segment. Hiring of engineers in our active safety business and to our passive safety business also contributed to the increase.
Outlook
Mainly based on our customer call-offs we expect
organic sales for the third quarter of 2016 to grow by around 6% compared to the same quarter of 2015. Sales from recent M&A activities (ANBS and MACOM) are expected to have a positive effect of around 6%. Currency translations are expected to
have a negative effect of less than 1%, resulting in a consolidated sales growth of around 12%. The adjusted operating margin, excluding costs for capacity alignments and antitrust related matters, is expected to be around 7.5%.
The indication for the full year is for an organic sales growth of around 7%. Sales from recent M&A activities (ANBS and MACOM) are expected to have a
positive effect of around 5%. Currency translations are expected to have a negative effect of more than 1%, resulting in a consolidated sales growth of more than 10%. The adjusted operating margin, excluding costs for capacity alignments and
antitrust related matters, is expected to be more than 8.5%. This includes expected integration and purchase accounting related costs for the joint venture with Nissin Kogyo (ANBS) of $20-30 million, as well as costs related to stronger than
expected mid-term growth.
Since 2015 Autoliv has agreements with several OEMs for new supply capacity for replacement airbag inflators. Based on customer
agreements and its own expectations, the Company now expects deliveries of up to 30 million units during the period 2015 to 2018. It is still too early in this evolving situation to be able to determine final delivery volumes.
The projected tax rate, excluding any discrete items, for the full year 2016, is currently expected to be around 29% and is subject to change due to any
discrete or nonrecurring events that may occur.
Operational cash flow for the full year is expected to remain strong and to be around $0.8 billion
excluding any discrete items. Capital expenditures in support of our growth strategy are expected to be in a range of 5-6% of sales, including capital expenditures for additional capacity for replacement inflators.
The forward looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. Autoliv has not provided a U.S. GAAP reconciliation of these
measures because items that impact these measures, such as costs related to antitrust matters and capacity alignment, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and
Autoliv is unable to determine the probable significance of the unavailable information.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on its financial
position, results of operations or cash flows.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
As of June 30, 2016, the Companys future contractual obligations have not changed materially from the amounts reported in the Companys Annual
Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 19, 2016.
OTHER RECENT EVENTS
Launches in the Second Quarter 2016
Hondas new
Clarity
Driver airbag with steering wheel, passenger airbag, side airbag and knee airbag.
35
Mercedes new GLC Coupé
Active seatbelts with pretensioners, radar system, ADAS ECU and stereo/mono vision system.
Volvos new S90
Driver airbag with steering wheel,
inflatable curtains, active seatbelts with pretensioners and safety electronics.
GMCs new Acadia
Seatbelts with pretensioners and safety electronics.
Mazdas new 3/Axela
Driver airbag with steering
wheel, passenger airbag, side airbag, inflatable curtains and safety electronics.
VWs new Tiguan
Active seatbelts with pretensioners, passenger airbag and side airbag.
Renaults new Scenic
Driver airbag with steering
wheel, inflatable curtains, side airbag, seatbelts with pretensioners and safety electronics.
Hondas new Ridgeline
Side airbag, inflatable curtains, seatbelts with pretensioners, brake control system and radar system.
Mercedes new C-Class Cabriolet
Active seatbelts
with pretensioners, radar system, ADAS ECU and stereo/mono vision system.
Other Events
On June 29, 2016, the Company announced that it is cooperating with Toyota Motor Corp. in its recall of approximately 1.4 million vehicles equipped with a
certain model of the Companys side curtain airbag (the Toyota Recall). Toyota has informed the Company that there have been seven reported incidents where a side curtain airbag has partially inflated without a deployment signal
from the airbag control unit. The incidents have all occurred in parked, unoccupied vehicles and no personal injuries have been reported. The root cause analysis of the issue is ongoing. However, at this point in time, the Company believes that a
compromised manufacturing process at a sub-supplier may be a contributing factor and, as no incidents have been reported in vehicles produced by other OEMs with the same inflator produced during the same period as those recalled by Toyota, that
vehicle-specific characteristics may also contribute to the issue. The sub-suppliers manufacturing process was changed in January 2012, and the vehicles now recalled by Toyota represent more than half of all inflators of the relevant type
manufactured before the sub-supplier process was changed.
As previously disclosed in our Quarterly Report on Form 10-Q for the period ended March 31,
2016, the Company determined pursuant to ASC 450 that a loss with respect to the Toyota Recall is reasonably possible. If the Company is obligated to indemnify Toyota for the costs associated with the Toyota Recall, the Company expects that its
insurance will generally cover such costs and liabilities and estimates that the Companys loss, net of expected insurance recoveries, would be less than $20 million. However, the ultimate costs of the Toyota Recall could be materially
different. The main variables affecting the ultimate cost for the Company are: the determination of proportionate responsibility (if any) among Toyota, the Company, and any relevant sub-suppliers; the ultimate number of vehicles repaired; the cost
of repair per vehicle; and the actual recoveries from sub-suppliers and insurers. The Companys insurance policies generally include coverage of the costs of a recall, although costs related to replacement parts are generally not covered. For
additional information, see Note 12 Contingent Liabilities to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q.
On
July 15, Autoliv announced that it had refinanced its existing $1.1 billion multi-currency revolving credit facility agreement with a group of 14 banks. The facility has a five-year maturity, with extension options for up to two more years.
Autoliv has decided to separate its Communications and Investor Relations functions and has appointed Anders Trapp, currently analyst with Swedish bank SEB,
as its Head of Investor Relations reporting to CFO Mats Backman. Thomas Jönsson will continue in his role as Group Vice President Communications and Ray Pekar as VP Investor Relations, Americas & Corporate Business Development. Anders will
start with Autoliv in the later part of Q3, 2016.
Dividend
On May 10, 2016, the Company declared a quarterly dividend to shareholders of 58 cents per share for the third quarter of 2016 with the following payment
schedule:
|
|
|
|
|
|
|
Ex-date (common stock)
|
|
August 16, 2016
|
|
|
|
|
Ex-date (SDRs)
|
|
August 17, 2016
|
|
|
|
|
Record Date
|
|
August 18, 2016
|
|
|
|
|
Payment Date
|
|
September 1, 2016
|
|
|
|
|
Next Report
Autoliv
intends to publish the quarterly earnings report for the third quarter of 2016 on Thursday, October 27, 2016.
36