AURORA, ON, Aug. 7, 2015 /PRNewswire/ - Magna
International Inc. (TSX: MG; NYSE: MGA) today reported
financial results for the second quarter ended June 30, 2015.
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THREE MONTHS ENDED
JUNE 30, |
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SIX MONTHS ENDED
JUNE 30, |
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2015 |
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2014 |
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2015 |
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2014 |
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| Sales |
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$ |
8,133 |
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$ |
8,911 |
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$ |
15,905 |
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$ |
17,366 |
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| Adjusted
EBIT(1) |
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$ |
677 |
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$ |
722 |
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$ |
1,308 |
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$ |
1,340 |
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| Income from continuing
operations before |
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income taxes |
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$ |
726 |
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$ |
704 |
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$ |
1,347 |
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$ |
1,298 |
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| Net income from
continuing operations |
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attributable to Magna
International Inc. |
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$ |
538 |
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$ |
519 |
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$ |
993 |
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$ |
921 |
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| Diluted earnings per
share |
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from continuing operations |
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$ |
1.29 |
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$ |
1.18 |
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$ |
2.39 |
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$ |
2.08 |
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All results are
reported in millions of U.S. dollars, except per share figures,
which are in U.S. dollars.
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| (1) |
Adjusted EBIT is the measure of
segment profit or loss as reported in the Company's attached
unaudited interim consolidated financial statements.
Adjusted EBIT represents income from operations before income
taxes; interest expense, net; and other expense, net. |
BASIS OF PRESENTATION
In the second quarter of 2015, we signed an
agreement to sell substantially all of our interiors operations to
Grupo Antolin, a leading global
supplier of automotive interior systems. The purchase price for the
operations, excluding certain assets, is approximately $525 million, subject to customary closing
adjustments. We will continue managing our seating operations which
are not included in this arrangement. The assets and liabilities,
and operating results for the previously reported interiors
operations are presented as discontinued operations, and have
therefore been excluded from continuing operations for all periods
presented in this press release.
THREE MONTHS ENDED JUNE 30, 2015
We posted sales of $8.1
billion for the second quarter ended June 30, 2015, a decrease of 9% from the second
quarter of 2014. The weakening of certain currencies against our
U.S. dollar reporting currency, in particular the euro and Canadian
dollar, had a significant negative impact on our reported sales for
the second quarter of 2015. Foreign currency translation
reduced our sales by approximately $890
million, as compared to the second quarter of 2014.
Excluding the impact of foreign currency translation, our sales
increased 1% in the second quarter of 2015, compared to the second
quarter of 2014. North American light vehicle production
increased 3% to 4.6 million units and European light vehicle
production increased marginally to 5.4 million units in the second
quarter of 2015, compared to the second quarter of 2014.
Excluding the impact of foreign currency
translation, our complete vehicle assembly sales decreased 8% in
the second quarter of 2015, compared to the second quarter of
2014. Complete vehicle assembly volumes decreased 17% to
approximately 28,500 units.
During the second quarter of 2015, income from
continuing operations before income taxes was $726 million, net income from continuing
operations was $538 million and
diluted earnings per share from continuing operations were
$1.29, increases of $22 million, $19
million and $0.11
respectively, each compared to the second quarter of 2014.
For the second quarter of 2015, other (income)
expense positively impacted income from continuing operations
before income taxes by $57 million,
net income from continuing operations attributable to Magna
International Inc. by $42 million,
and diluted earnings per share from continuing operations by
$0.10, respectively.
For the second quarter of 2014, other (income)
expense negatively impacted income from continuing operations
before income taxes by $11 million,
net income from continuing operations attributable to Magna
International Inc. by $10 million,
and diluted earnings per share from continuing operations by
$0.02, respectively.
During the second quarter ended June 30, 2015, we generated cash from operations
of $711 million before changes in
operating assets and liabilities, and invested $271 million in operating assets and liabilities.
Total investment activities for the second quarter of 2015 were
$402 million, including $361 million in fixed asset additions and
$41 million in investments and other
assets.
SIX MONTHS ENDED JUNE 30,
2015
We posted sales of $15.9
billion for the six months ended June
30, 2015, a decrease of 8% from the six months ended
June 30, 2014. The weakening of
certain currencies against our U.S. dollar reporting currency, in
particular the euro and Canadian dollar, had a significant negative
impact on our reported sales for the first six months of
2015. Foreign currency translation reduced our sales by
approximately $1.7 billion, as
compared to the first six months of 2014. Excluding the
impact of foreign currency translation, our sales increased 2% in
the first six months of 2015, compared to the first six months of
2014.
During the six months ended June 30, 2015, vehicle production increased 1% to
8.7 million units in North America
and increased 1% to 10.6 million units in Europe, each compared to the first six months
of 2014.
Excluding the impact of foreign currency
translation, our complete vehicle assembly sales decreased 10% in
the first six months of 2015, compared to the first six months of
2014. Complete vehicle assembly volumes decreased 20% to
approximately 56,000 units.
During the six months ended June 30, 2015, income from continuing operations
before income taxes was $1.4 billion,
net income from continuing operations was $993 million and diluted earnings per share from
continuing operations were $2.39,
increases of $49 million,
$72 million and $0.31, respectively, each compared to the first
six months of 2014.
For the six months ended June 30, 2015, other (income) expense positively
impacted income from continuing operations before income taxes by
$57 million, net income from
continuing operations attributable to Magna International Inc. by
$42 million, and diluted earnings per
share from continuing operations by $0.10, respectively.
For the six months ended June 30, 2014, other (income) expense negatively
impacted income from continuing operations before income taxes by
$33 million. In addition, for
the six months ended June 30, 2014,
other (income) expense and the impact of the Austrian tax reform
together negatively impacted net income from continuing operations
attributable to Magna International Inc. by $62 million, and diluted earnings per share from
continuing operations by $0.14,
respectively.
During the six months ended June 30, 2015, we generated cash from operations
before changes in operating assets and liabilities of $1.3 billion, and invested $620 million in operating assets and liabilities.
Total investment activities for the first six months of 2015 were
$706 million, including $627 million in fixed asset additions,
$78 million in investments and other
assets and $1 million to purchase
subsidiaries.
A more detailed discussion of our consolidated
financial results for the second quarter and six months ended
June 30, 2015 is contained in the
Management's Discussion and Analysis of Results of Operations and
Financial Position and the unaudited interim consolidated financial
statements and notes thereto, which are attached to this Press
Release.
DIVIDENDS
Yesterday, our Board of Directors declared a
quarterly dividend of $0.22 with
respect to our outstanding Common Shares for the quarter ended
June 30, 2015. This dividend is
payable on September 11, 2015 to
shareholders of record on August 28,
2015.
UPDATED 2015 OUTLOOK
The table below reflects our 2015 outlook and
2014 actual results, both from continuing operations:
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2015 Outlook |
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2014 Actual |
| Light Vehicle
Production (Units) |
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North America |
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17.4 million |
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17.0 million |
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Europe |
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20.3 million |
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20.1 million |
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| Production Sales |
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North America |
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$17.3 - $17.9 billion |
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$17.4 billion |
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Europe |
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$6.8 - $7.2 billion |
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$8.8 billion |
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Asia |
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$1.6 - $1.8 billion |
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$1.6 billion |
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Rest of World |
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$0.5 -
$0.6 billion |
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$0.7
billion |
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Total Production Sales |
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$26.2 - $27.5 billion |
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$28.5 billion |
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| Complete Vehicle
Assembly Sales |
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$2.2 - $2.5 billion |
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$3.2 billion |
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| Total Sales |
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$30.9 - $32.6 billion |
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$34.4 billion |
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| Operating
Margin(1) |
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Approximately 8% |
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7.7% |
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| Tax
Rate(1) |
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Approximately 26% |
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25.0% |
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| Capital Spending |
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$1.3 - $1.5 billion |
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$1.5 billion |
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| (1) Excluding other
(income) expense, net |
In this 2015 outlook, in addition to 2015 light
vehicle production, we have assumed no material acquisitions or
divestitures other than the divestiture of substantially all of our
interior operations as discussed above. In addition, we have
assumed that foreign exchange rates for the most common currencies
in which we conduct business relative to our U.S. dollar reporting
currency will approximate current rates.
ABOUT MAGNA
We are a leading global automotive supplier with
319 manufacturing operations and 85 product development,
engineering and sales centres in 29 countries. We have over
136,000 employees focused on delivering superior value to our
customers through innovative products and processes, and World
Class Manufacturing. Our product capabilities include
producing body, chassis, interior, exterior, seating, powertrain,
electronic, vision, closure and roof systems and modules, as well
as complete vehicle engineering and contract manufacturing.
Our Common Shares trade on the Toronto Stock Exchange (MG) and the
New York Stock Exchange (MGA). For further information about
Magna, visit our website at www.magna.com.
We will hold a conference call for interested
analysts and shareholders to discuss our second quarter results on
Friday, August 7, 2015 at
8:00 a.m. EDT. The conference call
will be chaired by Don Walker, Chief
Executive Officer. The number to use for this call is
1-800-743-9807. The number for overseas callers is 1-416-641-6701.
Please call in at least 10 minutes prior to the call. We will also
webcast the conference call at www.magna.com. The slide
presentation accompanying the conference call will be available on
our website Friday morning prior to the call.
FORWARD-LOOKING STATEMENTS
This press release contains statements that
constitute "forward-looking statements" or "forward-looking
information" within the meaning of applicable securities
legislation, including, but not limited to, statements relating to:
Magna's forecasts of light vehicle production in North America and Europe; expected consolidated sales, based on
such light vehicle production volumes; production sales, including
expected split by segment, in its North
America, Europe,
Asia and Rest of World segments
for 2015; complete vehicle assembly sales; consolidated operating
margin, effective income tax rate; fixed asset expenditures; and
statements relating to the sale of substantially all of our
Interiors operations to Grupo
Antolin (the "Grupo Transaction") . The forward-looking
information in this document is presented for the purpose of
providing information about management's current expectations and
plans and such information may not be appropriate for other
purposes. Forward-looking statements may include financial and
other projections, as well as statements regarding our future
plans, objectives or economic performance, or the assumptions
underlying any of the foregoing, and other statements that are not
recitations of historical fact. We use words such as "may",
"would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "forecast", "outlook",
"project", "estimate" and similar expressions suggesting future
outcomes or events to identify forward-looking statements. Any such
forward-looking statements are based on information currently
available to us, and are based on assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments, as
well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a
number of risks, assumptions and uncertainties, many of which are
beyond our control, and the effects of which can be difficult to
predict, including, without limitation: the impact of economic or
political conditions on consumer confidence, consumer demand for
vehicles and vehicle production; fluctuations in relative currency
values; restructuring, downsizing and/or other significant
non-recurring costs; continued underperformance of one or more of
our operating Divisions; our ability to successfully launch
material new or takeover business; shifts in market share away from
our top customers; inability to grow our business with OEMs; shifts
in market shares among vehicles or vehicle segments, or shifts away
from vehicles on which we have significant content; a prolonged
disruption in the supply of components to us from our suppliers;
shutdown of our or our customers' or sub-suppliers' production
facilities due to a labour disruption; scheduled shutdowns of our
customers' production facilities (typically in the third and fourth
quarters of each calendar year); our ability to successfully
compete with other automotive suppliers; reduction in outsourcing
by our customers or the loss of a material production or assembly
program; the termination or non-renewal by our customers of any
material production purchase order; impairment charges related to
goodwill and long-lived assets; exposure to, and ability to offset,
volatile commodities prices; risk of production disruptions
due to natural disasters or other catastrophic events; the security
and reliability of our IT systems; legal claims and/or regulatory
actions against us, including the ongoing antitrust investigations
being conducted by German and Brazilian authorities; changes in our
mix of earnings between jurisdictions with lower tax rates and
those with higher tax rates, as well as our ability to fully
benefit tax losses; other potential tax exposures; changes in
credit ratings assigned to us; the consummation of the Grupo
Transaction; the satisfaction or waiver of conditions to complete
the Grupo Transaction, including obtaining required regulatory
approvals; warranty or indemnity obligations to the purchaser in
the Grupo Transaction in relation to pre-closing liabilities; our
ability to successfully identify, complete and integrate
acquisitions or achieve anticipated synergies; our ability to
conduct appropriate due diligence on acquisition targets; risks of
conducting business in foreign markets, including China, India,
Russia, Eastern Europe, Thailand, Brazil, Argentina and other non-traditional markets
for us; ongoing pricing pressures, including our ability to offset
price concessions demanded by our customers; our ability to
consistently develop innovative products or processes; warranty and
recall costs; pension liabilities; changes in laws and governmental
regulations; costs associated with compliance with environmental
laws and regulations; liquidity risks as a result of an
unanticipated deterioration of economic conditions; our ability to
achieve future investment returns that equal or exceed past
returns; the unpredictability of, and fluctuation in, the
trading price of our Common Shares; and other factors set out in
our Annual Information Form filed with securities commissions in
Canada and our annual report on
Form 40-F filed with the United States Securities and Exchange
Commission, and subsequent filings. In evaluating forward-looking
statements, we caution readers not to place undue reliance on any
forward-looking statements and readers should specifically consider
the various factors which could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. Unless otherwise required by applicable securities
laws, we do not intend, nor do we undertake any obligation, to
update or revise any forward-looking statements to reflect
subsequent information, events, results or circumstances or
otherwise.
For further information about Magna, please
see our website at www.magna.com. Copies of financial data
and other publicly filed documents are available through the
internet on the Canadian Securities Administrators' System for
Electronic Document Analysis and Retrieval (SEDAR) which can be
accessed at www.sedar.com and on the United States
Securities and Exchange Commission's Electronic Data Gathering,
Analysis and Retrieval System (EDGAR) which can be accessed at
www.sec.gov
MAGNA INTERNATIONAL INC.
Management's Discussion and Analysis of Results of Operations
and Financial Position
Unless otherwise noted, all amounts in this Management's
Discussion and Analysis of Results of Operations and Financial
Position ("MD&A") are in U.S. dollars and all tabular amounts
are in millions of U.S. dollars, except per share figures, which
are in U.S. dollars. When we use the terms "we", "us", "our" or
"Magna", we are referring to Magna International Inc. and its
subsidiaries and jointly controlled entities, unless the context
otherwise requires.
This MD&A should be read in conjunction with
the unaudited interim consolidated financial statements for the
three months and six months ended June
30, 2015 included in this press release, and the
audited consolidated financial statements and MD&A for the year
ended December 31, 2014
included in our 2014 Annual Report to Shareholders.
This MD&A has been prepared as at
August 5, 2015.
OVERVIEW
We are a leading global automotive supplier with 319
manufacturing operations and 85 product development, engineering
and sales centres in 29 countries. We have over 136,000 employees
focused on delivering superior value to our customers through
innovative products, processes and World Class Manufacturing. Our
product capabilities include producing body, chassis, interior,
exterior, seating, powertrain, electronic, vision, closure and roof
systems and modules, as well as complete vehicle engineering and
contract manufacturing. Our common shares trade on the Toronto
Stock Exchange (MG) and the New York Stock Exchange (MGA). For
further information about Magna, visit our website at
www.magna.com.
HIGHLIGHTS
Basis of Presentation
In the second quarter of 2015, we signed an
agreement to sell substantially all of our interiors operations to
Grupo Antolin, a leading global
supplier of automotive interior systems. The purchase price for the
operations, excluding certain assets, is approximately $525 million, subject to customary closing
adjustments. We will continue managing our seating operations which
are not included in this arrangement. The assets and liabilities,
and operating results for the previously reported interiors
operations are presented as discontinued operations, and have
therefore been excluded from both continuing operations and segment
results for all periods presented in the attached financial
statements. This Management's Discussion and Analysis reflects the
results of continuing operations, unless otherwise noted.
Operations
North American light vehicle production
increased 3% to 4.5 million units and European light vehicle
production increased marginally to 5.3 million units, each in the
second quarter of 2015 compared to the second quarter of 2014.
We posted sales of $8.13
billion for the second quarter of 2015, a decrease of
$778 million or 9% from the second
quarter of 2014. The weakening of certain currencies against our
U.S. dollar reporting currency, in particular the euro and Canadian
dollar, once again had a significant impact on our reported sales
in the second quarter of 2015. Foreign exchange translation reduced
our sales in the second quarter of 2015 by approximately
$890 million, as compared to the
second quarter of 2014. Excluding the negative impact of foreign
currency translation, sales increased 1% in the second quarter of
2015, compared to the second quarter of 2014.
Our Adjusted EBIT(1) decreased 6% to
$677 million in the second quarter of
2015, compared to the second quarter of 2014.
- North America: Adjusted EBIT
of $525 million for the second
quarter of 2015 declined 3% compared to $539
million for the second quarter of 2014. Segment total sales
declined modestly in the second quarter of 2015 compared to the
second quarter of 2014.
- Europe: Adjusted EBIT of
$120 million for the second quarter
of 2015 declined 16% or $23 million
from the second quarter of 2014, while segment total sales declined
21% from the second quarter of 2014 to the second quarter of
2015.
- Asia: Adjusted EBIT was
$31 million in the second quarter of
2015, compared to $41 million for the
second quarter of 2014. Segment total sales declined modestly in
the second quarter of 2015 compared to the second quarter of
2014.
- Rest of World: Our Adjusted EBIT loss of $8 million for the second quarter of 2015
compared to an Adjusted EBIT loss of $11
million in the second quarter of 2014. Segment total sales
declined 26% to $125 million for the
second quarter of 2015 compared to the second quarter of 2014.
1 We believe Adjusted EBIT is the
most appropriate measure of operational profitability or loss for
our reporting segments. Adjusted EBIT represents income from
operations before income taxes; interest expense, net; and other
expense, net.
Investment
Subsequent to the second quarter of 2015, we
signed an agreement to acquire the Getrag Group of Companies
("Getrag"), one of the world's largest suppliers of transmissions.
Getrag has an 80-year history in transmissions and is a technology
leader, offering a range of transmission systems. The purchase
price for 100% of the equity of Getrag is approximately €1.75
billion. This represents an enterprise value of approximately €2.45
billion less proportionate net debt and proportionate pension
liabilities, which together are estimated to be approximately €700
million at closing. The purchase price is subject to working
capital and other customary purchase price adjustments. The
transaction is subject to customary closing conditions including
regulatory approval, and is expected to close near the end of
2015.
FINANCIAL RESULTS SUMMARY
During the second quarter of 2015, we posted sales of
$8.13 billion, a decrease of 9% from
the second quarter of 2014. This lower sales level was
substantially a result of a decrease in reported U.S. dollar sales
due to the weakening of foreign currencies against the U.S. dollar.
Comparing the second quarter of 2015 to 2014:
- North American vehicle production increased 3% and our North
American production sales increased 1% to $4.58 billion;
- European vehicle production increased marginally but our
European production sales decreased 23% to $1.83 billion;
- Asian production sales increased marginally to $390 million;
- Rest of World production sales decreased 23% to $125 million;
- Complete vehicle assembly volumes decreased 17% and sales
decreased 26% to $607 million;
and
- Tooling, engineering and other sales decreased 10% to
$599 million.
During the second quarter of 2015, we earned
income from continuing operations before income taxes of
$726 million compared to $704 million for the second quarter of 2014.
Excluding other (income) expense, net ("Other Income" or "Other
Expense"), as discussed in the "Other Income" section, income from
continuing operations before income taxes decreased $46 million primarily as a result of:
- the negative impact of foreign exchange translation from the
weakening of foreign currencies, including the euro and Canadian
dollar, against the U.S. dollar;
- lower recoveries associated with scrap steel;
- higher launch costs;
- operational inefficiencies at certain facilities;
- higher warranty costs of $3
million;
- higher incentive compensation;
- lower equity income;
- a $1 million net decrease in
valuation gains in respect of ABCP; and
- net customer price concessions subsequent to the second quarter
of 2014.
These factors were partially offset by:
- incremental margin earned on new programs that launched during
or subsequent to the second quarter of 2014;
- costs incurred related to a fire at a body and chassis facility
in North America, during the
second quarter of 2014;
- the expiration, at the end of 2014, of our consulting
agreements with Frank Stronach;
- decreased commodity costs;
- a lower amount of employee profit sharing; and
- productivity and efficiency improvements at certain
facilities.
During the second quarter of 2015, net income attributable to
Magna International Inc. from continuing operations was
$538 million, an increase of
$19 million compared to the second
quarter of 2014 and diluted earnings per share from continuing
operations increased $0.11 to
$1.29 for the second quarter of 2015
compared to the second quarter of 2014. Other Income and Other
Expense, after tax, as discussed in the "Other Income" section
impacted net income attributable to Magna International Inc. from
continuing operations and diluted earnings per share from
continuing operations as follows:
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For
the three months ended June 30, |
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2015 |
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2014 |
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Net Income |
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Diluted |
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Net Income |
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Diluted |
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Attributable |
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Earnings |
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Attributable |
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Earnings |
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to Magna |
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per Share |
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to Magna |
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per Share |
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| Other (income) expense |
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$ |
(57) |
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$ |
(0.14) |
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$ |
11 |
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$ |
0.02 |
| Income tax
effect |
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15 |
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0.04 |
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(1) |
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— |
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$ |
(42) |
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$ |
(0.10) |
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$ |
10 |
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$ |
0.02 |
Excluding the $42
million positive impact for the second quarter of 2015 and
the $10 million negative impact for
the second quarter of 2014, net income attributable to Magna
International Inc. from continuing operations for the second
quarter of 2015 decreased $33 million
compared to the second quarter of 2014.
Excluding the $0.10 per share positive impact for the second
quarter of 2015 and the $0.02 per
share negative impact for the second quarter of 2014, diluted
earnings per share from continuing operations decreased
$0.01, as a result of the decrease in
net income attributable to Magna International Inc. from continuing
operations partially offset by a decrease in the weighted average
number of diluted shares outstanding during the second quarter of
2015. The decrease in the weighted average number of diluted shares
outstanding was due to the purchase and cancellation of Common
Shares, during or subsequent to the second quarter of 2014,
pursuant to our normal course issuer bids.
INDUSTRY TRENDS AND RISKS
Our success is primarily dependent upon the
levels of North American and European car and light truck
production by our customers and the relative amount of content we
have on various programs. OEM production volumes in different
regions may be impacted by factors which may vary from one region
to the next, including but not limited to: general economic and
political conditions; consumer confidence levels; interest rates;
credit availability; energy and fuel prices; relative currency
values; commodities prices; international conflicts; labour
relations issues; regulatory requirements; trade agreements;
infrastructure; legislative changes; and environmental emissions
and safety standards. These factors together with other factors
affecting our performance such as: operational inefficiencies;
costs incurred to launch new or takeover business; price reduction
pressures from our customers; warranty and recall costs;
commodities and scrap prices; restructuring, downsizing and other
significant non-recurring costs; and the financial condition of our
supply base, are discussed in our Annual Information Form and
Annual Report on Form 40-F, each in respect of the year ended
December 31, 2014, and remain
substantially unchanged in respect of the second quarter ended
June 30, 2015.
RESULTS OF OPERATIONS
Average Foreign Exchange
| |
|
|
|
|
|
For the three months |
|
|
|
For the six months |
| |
|
|
|
|
|
ended
June 30, |
|
|
|
ended
June 30, |
| |
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
Change |
|
|
|
2015 |
|
|
|
2014 |
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 Canadian dollar equals U.S.
dollars |
|
|
|
|
|
0.813 |
|
|
|
0.917 |
|
|
- |
11% |
|
|
|
0.811 |
|
|
|
0.912 |
|
|
- |
11% |
| 1 euro equals U.S. dollars |
|
|
|
|
|
1.107 |
|
|
|
1.371 |
|
|
- |
19% |
|
|
|
1.118 |
|
|
|
1.371 |
|
|
- |
18% |
| 1 British pound equals U.S. dollars |
|
|
|
|
|
1.533 |
|
|
|
1.683 |
|
|
- |
9% |
|
|
|
1.525 |
|
|
|
1.669 |
|
|
- |
9% |
The preceding table reflects the average foreign
exchange rates between the most common currencies in which we
conduct business and our U.S. dollar reporting currency. The
changes in these foreign exchange rates for the three months and
six months ended June 30, 2015
impacted the reported U.S. dollar amounts of our sales, expenses
and income.
The results of operations whose functional
currency is not the U.S. dollar are translated into U.S. dollars
using the average exchange rates in the table above for the
relevant period. Throughout this MD&A, reference is made to the
impact of translation of foreign operations on reported U.S. dollar
amounts where relevant.
Our results can also be affected by the impact of movements in
exchange rates on foreign currency transactions (such as raw
material purchases or sales denominated in foreign currencies).
However, as a result of hedging programs employed by us, foreign
currency transactions in the current period have not been fully
impacted by movements in exchange rates. We record foreign currency
transactions at the hedged rate where applicable.
Finally, foreign exchange gains and losses on
revaluation and/or settlement of monetary items denominated in a
currency other than an operation's functional currency impact
reported results. These gains and losses are recorded in selling,
general and administrative expense.
RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED
JUNE 30, 2015
Sales
| |
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
| |
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
| |
|
|
|
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Vehicle Production
Volumes (millions of units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
North America |
|
|
|
|
|
|
4.546 |
|
|
|
|
4.412 |
|
|
|
+ |
3% |
| |
Europe |
|
|
|
|
|
|
5.347 |
|
|
|
|
5.325 |
|
|
|
|
— |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
External Production |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
North America |
|
|
|
|
|
$ |
4,583 |
|
|
|
$ |
4,519 |
|
|
|
+ |
1% |
| |
|
Europe |
|
|
|
|
|
|
1,829 |
|
|
|
|
2,360 |
|
|
|
- |
23% |
| |
|
Asia |
|
|
|
|
|
|
390 |
|
|
|
|
389 |
|
|
|
|
— |
| |
|
Rest of World |
|
|
|
|
|
|
125 |
|
|
|
|
163 |
|
|
|
- |
23% |
| |
Complete Vehicle
Assembly |
|
|
|
|
|
|
607 |
|
|
|
|
817 |
|
|
|
- |
26% |
| |
Tooling, Engineering and Other |
|
|
|
|
|
|
599 |
|
|
|
|
663 |
|
|
|
- |
10% |
| Total Sales |
|
|
|
|
|
$ |
8,133 |
|
|
|
$ |
8,911 |
|
|
|
- |
9% |
External Production Sales - North America
Reported external production sales in
North America increased 1% or
$64 million to $4.58 billion for the second quarter of 2015
compared to $4.52 billion for the
second quarter of 2014, primarily as a result of:
- the launch of new programs during or subsequent to the second
quarter of 2014, including the:
- Ford Transit;
- Ford Edge;
- Mercedes-Benz C-Class;
- Ford Mustang; and
- Chevrolet Colorado and GMC Canyon.
This factor was partially offset by:
- a $175 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of the Canadian dollar against the U.S. dollar;
- lower production volumes on certain existing programs;
- programs that ended production during or subsequent to the
second quarter of 2014;
- net divestitures subsequent to the second quarter of 2014,
which negatively impacted sales by $27
million; and
- net customer price concessions subsequent to the second quarter
of 2014.
External Production Sales - Europe
Reported external production sales in
Europe decreased 23% or
$531 million to $1.83 billion for the second quarter of 2015
compared to $2.36 billion for the
second quarter of 2014, primarily as a result of:
- a $444 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of foreign currencies against the U.S. dollar, including the euro
and Czech koruna;
- lower production volumes on certain existing programs;
- programs that ended production during or subsequent to the
second quarter of 2014; and
- net customer price concessions subsequent to the second quarter
of 2014.
These factors were partially offset by the
launch of new programs during or subsequent to the second quarter
of 2014.
External Production Sales - Asia
Reported external production sales in
Asia increased $1 million to $390
million for the second quarter of 2015 compared to
$389 million for the second quarter
of 2014, primarily as a result of the launch of new programs during
or subsequent to the second quarter of 2014, primarily in
China and India.
This factor was partially offset by:
- lower production volumes on certain existing programs;
- a $4 million decrease in reported
U.S. dollar sales primarily as a result of the weakening of foreign
currencies against the U.S. dollar, including the South Korean won;
and
- net customer price concessions subsequent to the second quarter
of 2014.
External Production Sales - Rest of
World
Reported external production sales in Rest of
World decreased 23% or $38 million to
$125 million for the second quarter
of 2015 compared to $163 million for
the second quarter of 2014, primarily as a result of:
- lower production volumes on certain existing programs; and
- a $40 million decrease in
reported U.S. dollar sales as a result of the weakening of foreign
currencies against the U.S. dollar, including the Brazilian
real.
These factors were partially offset by:
- the launch of new programs during or subsequent to the second
quarter of 2014, primarily in Brazil; and
- net customer price increases subsequent to the second quarter
of 2014.
Complete Vehicle Assembly Sales
| |
|
|
|
|
|
|
For the three
months |
|
|
|
|
|
| |
|
|
|
|
|
|
ended
June 30, |
|
|
|
|
|
| |
|
|
|
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Complete Vehicle Assembly Sales |
|
|
|
|
|
$ |
607 |
|
|
|
$ |
817 |
|
|
|
- |
26% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Complete Vehicle Assembly Volumes
(Units) |
|
|
|
|
|
|
28,343 |
|
|
|
|
34,299 |
|
|
|
- |
17% |
Reported complete vehicle assembly sales
decreased $210 million, to
$607 million for the second quarter
of 2015 compared to $817 million for
the second quarter of 2014 and assembly volumes decreased 17% or
5,956 units.
The decrease in complete vehicle assembly sales
is primarily as a result of:
- a $146 million decrease in
reported U.S. dollar sales as a result of the weakening of the euro
against the U.S. dollar; and
- a decrease in assembly volumes for the MINI Countryman.
These factors were partially offset by an
increase in assembly volumes for the Mercedes-Benz G-Class.
Tooling, Engineering and Other Sales
Reported tooling, engineering and other sales
decreased 10% or $64 million to
$599 million for the second quarter
of 2015 compared to $663 million for
the second quarter of 2014.
In the second quarter of 2015, the major
programs for which we recorded tooling, engineering and other sales
were the:
- Ford F-Series and F-Series SuperDuty;
- GMC Acadia, Buick Enclave and Chevrolet Traverse;
- Ford Edge;
- Honda Pilot;
- MINI Countryman;
- Lincoln MKX; and
- Chevrolet Cruze.
In the second quarter of 2014, the major
programs for which we recorded tooling, engineering and other sales
were the:
- BMW X4;
- MINI Countryman;
- Ford Transit;
- Mercedes-Benz M-Class;
- Lincoln MKC;
- Dodge Challenger;
- QOROS 3; and
- Acura TL.
The weakening of certain foreign currencies
against the U.S. dollar, including the euro and Canadian dollar had
an unfavourable impact of $80 million
on our reported tooling, engineering and other sales.
Cost of Goods Sold and Gross
Margin
| |
|
|
|
|
|
|
|
|
For the three months |
| |
|
|
|
|
|
|
|
|
ended
June 30, |
| |
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sales |
|
|
|
|
|
|
|
|
$ |
8,133 |
|
|
|
$ |
8,911 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Material |
|
|
|
|
|
|
|
|
|
5,124 |
|
|
|
|
5,664 |
| |
Direct labour |
|
|
|
|
|
|
|
|
|
541 |
|
|
|
|
555 |
| |
Overhead |
|
|
|
|
|
|
|
|
|
1,297 |
|
|
|
|
1,407 |
| |
|
|
|
|
|
|
|
|
|
6,962 |
|
|
|
|
7,626 |
| Gross margin |
|
|
|
|
|
|
|
|
$ |
1,171 |
|
|
|
$ |
1,285 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin as a
percentage of sales |
|
|
|
|
|
|
|
|
|
14.4% |
|
|
|
|
14.4% |
Reported cost of goods sold decreased
$664 million to $6.96 billion for the second quarter of 2015
compared to $7.63 billion for the
second quarter of 2014. Reported U.S. dollar cost of goods sold
decreased due to the weakening of foreign currencies against the
U.S. dollar, including the euro, Canadian dollar and Czech koruna.
Excluding the effect of foreign exchange translation, costs of
goods sold increased primarily as a result of:
- higher material, overhead and labour costs associated with the
increase in sales;
- lower recoveries associated with scrap steel;
- higher launch costs; and
- operational inefficiencies at certain facilities.
These factors were partially offset by:
- costs incurred related to a fire at a body and chassis facility
in North America, during the
second quarter of 2014;
- decreased commodity costs; and
- productivity and efficiency improvements at certain
facilities.
Gross margin decreased $114
million to $1.17 billion for
the second quarter of 2015 compared to $1.29
billion for the second quarter of 2014 and gross margin as a
percentage of sales was 14.4% for the second quarters of 2015 and
2014. Gross margin as a percentage of sales was positively impacted
by:
- a decrease in the proportion of complete vehicle assembly sales
relative to total sales, which have a higher material content than
our consolidated average;
- productivity and efficiency improvements at certain
facilities;
- costs incurred related to a fire at a body and chassis facility
in North America, during the
second quarter of 2014;
- a decrease in the proportion of sales earned in Europe relative to total sales, which have a
lower margin than our consolidated average, primarily due to
weakening of the euro against the U.S. dollar;
- decreased commodity costs; and
- a lower amount of employee profit sharing.
These factors were partially offset by:
- operational inefficiencies at certain facilities;
- lower recoveries associated with scrap steel;
- higher launch costs; and
- higher warranty costs.
Depreciation and Amortization
Depreciation and amortization costs decreased
$13 million to $198 million for the second quarter of 2015
compared to $211 million for the
second quarter of 2014. The lower depreciation and amortization was
primarily as a result of a decrease in reported U.S. dollar
depreciation and amortization largely as a result of the weakening
of the euro, Canadian dollar and Russian ruble, each against the
U.S. dollar partially offset by higher depreciation related to new
facilities.
Selling, General and Administrative
("SG&A")
SG&A expense as a percentage of sales was
4.3% for the second quarter of 2015 compared to 4.6% for the second
quarter of 2014. SG&A expense decreased $59 million to $348
million for the second quarter of 2015 compared to
$407 million for the second quarter
of 2014 primarily as a result of weakening of the euro, Canadian
dollar, Brazilian real and Russian ruble, each against the U.S.
dollar and the expiration, at the end of 2014, of our consulting
agreements with Frank Stronach
partially offset by higher incentive compensation.
Equity Income
Equity income decreased $3 million to $52
million for the second quarter of 2015 compared to
$55 million for the second quarter of
2014.
Other (Income) Expense, net
During the second quarter of 2015, we sold our
battery pack business to Samsung SDI for proceeds of approximately
$120 million, resulting in a gain of
$57 million ($42 million after tax).
During the second and first quarters of 2014, we
recorded net restructuring charges of $11
million and $22 million
($10 million and $20 million after tax), respectively, in
Europe at our exterior systems
operations.
Segment Analysis
Given the differences between the regions in
which we operate, our operations are segmented on a geographic
basis. Consistent with the above, our internal financial reporting
separately segments key internal operating performance measures
between North America,
Europe, Asia and Rest of World for purposes of
presentation to the chief operating decision maker to assist in the
assessment of operating performance, the allocation of resources,
and our long-term strategic direction and future global growth.
Our chief operating decision maker uses Adjusted
EBIT as the measure of segment profit or loss, since we believe
Adjusted EBIT is the most appropriate measure of operational
profitability or loss for our reporting segments. Adjusted EBIT
represents income from operations before income taxes; interest
expense, net; and other expense, net.
| |
|
|
|
|
|
For
the three months ended June 30, |
| |
|
|
|
|
|
Total
Sales |
|
|
Adjusted EBIT |
| |
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Change |
|
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| North America |
|
|
|
|
|
$ |
4,877 |
|
|
$ |
4,889 |
|
|
$ |
(12) |
|
|
$ |
|
525 |
|
|
$ |
|
539 |
|
|
$ |
(14) |
| Europe |
|
|
|
|
|
|
2,774 |
|
|
|
3,500 |
|
|
|
(726) |
|
|
|
|
120 |
|
|
|
|
143 |
|
|
|
(23) |
| Asia |
|
|
|
|
|
|
466 |
|
|
|
472 |
|
|
|
(6) |
|
|
|
|
31 |
|
|
|
|
41 |
|
|
|
(10) |
| Rest of World |
|
|
|
|
|
|
125 |
|
|
|
168 |
|
|
|
(43) |
|
|
|
|
(8) |
|
|
|
|
(11) |
|
|
|
3 |
| Corporate and Other |
|
|
|
|
|
|
(109) |
|
|
|
(118) |
|
|
|
9 |
|
|
|
|
9 |
|
|
|
|
10 |
|
|
|
(1) |
Total reportable
segments |
|
|
|
|
|
$ |
8,133 |
|
|
$ |
8,911 |
|
|
$ |
(778) |
|
|
$ |
|
677 |
|
|
$ |
|
722 |
|
|
$ |
(45) |
Excluded from Adjusted EBIT for the three months
ended June 30, 2015 and 2014 were the
following Other Income and Other Expense items, which have been
discussed in the "Other Income" section.
| |
|
|
|
|
|
|
|
|
|
|
For the three months |
| |
|
|
|
|
|
|
|
|
|
|
ended
June 30, |
| |
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gain on sale |
|
|
|
|
|
|
|
|
|
|
$ |
|
(57) |
|
|
$ |
|
— |
| |
Restructuring |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
11 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
$ |
|
(57) |
|
|
$ |
|
11 |
North
America
Reported Adjusted EBIT in North America decreased $14 million to $525
million for the second quarter of 2015 compared to
$539 million for the second
quarter of 2014. Reported U.S. dollar Adjusted EBIT was negatively
impacted by the weakening of the Canadian dollar against the U.S.
dollar. Excluding the effect of foreign exchange translation,
Adjusted EBIT increased primarily as a result of:
- costs incurred related to a fire at a body and chassis
facility, during the second quarter of 2014;
- lower affiliation fees paid to Corporate;
- margins earned on higher production sales;
- decreased commodity costs;
- a lower amount of employee profit sharing;
- decreased pre-operating costs incurred at new facilities;
and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- lower recoveries associated with scrap steel;
- higher launch costs;
- operational inefficiencies at certain facilities;
- higher warranty costs of $4
million; and
- net customer price concessions subsequent to the second quarter
of 2014.
Europe
Reported Adjusted EBIT in Europe decreased $23
million to $120 million for
the second quarter of 2015 compared to $143 million for the second quarter of 2014.
Reported U.S. dollar Adjusted EBIT was negatively impacted by the
weakening of foreign currencies against the U.S. dollar, including
the euro and Czech koruna. Excluding the effect of foreign exchange
translation, Adjusted EBIT increased primarily as a result of:
- productivity and efficiency improvements at certain
facilities;
- lower affiliation fees paid to Corporate;
- decreased commodity costs;
- a lower amount of employee profit sharing; and
- lower warranty costs of $1
million.
These factors were partially offset by:
- higher launch costs;
- operational inefficiencies at certain facilities;
- lower equity income;
- increased pre-operating costs incurred at new facilities;
and
- net customer price concessions subsequent to the second quarter
of 2014.
Asia
Adjusted EBIT in Asia decreased $10
million to $31 million for the
second quarter of 2015 compared to $41
million for the second quarter of 2014 primarily as a result
of:
- increased pre-operating costs incurred at new facilities;
- higher launch costs; and
- net customer price concessions subsequent to the second quarter
of 2014.
These factors were partially offset by:
- margins earned on higher production sales, including margins
earned on the launch of new facilities and new programs;
- higher equity income; and
- lower affiliation fees paid to Corporate.
Rest of World
Adjusted EBIT in Rest of World increased
$3 million to a loss of $8 million for the second quarter of 2015
compared to a loss of $11 million for
the second quarter of 2014 primarily as a result of:
- productivity and efficiency improvements at certain
facilities;
- a decrease in reported U.S. dollar EBIT loss due to the
weakening of the Brazilian real against the U.S. dollar; and
- net customer price increases subsequent to the second quarter
of 2014.
These factors were partially offset by higher
production costs, including inflationary increases, that we have
not been fully successful in passing through to our customers.
Corporate and Other
Corporate and Other Adjusted EBIT decreased
$1 million to $9 million for the second quarter of 2015
compared to $10 million for the
second quarter of 2014 primarily as a result of:
- a decrease in affiliation fees earned from our divisions;
- a greater amount of employee profit sharing;
- higher incentive compensation; and
- a $1 million net decrease in
valuation gains in respect of ABCP.
These factors were partially offset by the
expiration, at the end of 2014, of our consulting agreements with
Frank Stronach.
Interest Expense, net
During the second quarter of 2015, we recorded
net interest expense of $8 million
compared to $7 million for the second
quarter of 2014. The $1 million
increase is primarily as a result of incremental interest expense
on the $750 million 3.625% fixed rate
Senior Notes issued during the second quarter of 2014 (the "Senior
Notes").
Income from Continuing Operations before
Income Taxes
Income from continuing operations before income
taxes increased $22 million to
$726 million for the second quarter
of 2015 compared to $704 million for
the second quarter of 2014. Excluding Other Income and Other
Expense, discussed in the "Other Income" section, income from
continuing operations before income taxes for the second quarter of
2015 decreased $46 million. The
decrease in income from continuing operations before income taxes
is the result of the decrease in Adjusted EBIT and the increase in
net interest expense, as discussed above.
Income Taxes
| |
|
|
|
|
|
For
the three months ended June 30, |
| |
|
|
|
|
|
2015 |
|
|
|
2014 |
| |
|
|
|
|
|
|
|
$ |
|
|
|
% |
|
|
|
|
|
$ |
|
|
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income taxes as
reported |
|
|
|
|
|
$ |
|
191 |
|
|
|
26.3 |
|
|
|
$ |
|
185 |
|
|
|
26.3 |
| Tax effect on Other Income and
Other Expense |
|
|
|
|
|
|
|
(15) |
|
|
|
— |
|
|
|
|
|
1 |
|
|
|
(0.3) |
| |
|
|
|
|
|
$ |
|
176 |
|
|
|
26.3 |
|
|
|
$ |
|
186 |
|
|
|
26.0 |
Excluding Other Income and Other Expense, after
tax, the effective income tax rate increased to 26.3% for the
second quarter of 2015 compared to 26.0% for the second quarter of
2014 primarily as a result of a change in the mix of earnings
whereby proportionately more income was earned in jurisdictions
with higher income tax rates.
Loss from Discontinued Operations, net of
tax
Loss income from discontinued operations, net of
tax reflects the results of our interiors operations which have
been reclassified to discontinued operations as a result of the
agreement, during the second quarter of 2015, for the sale of this
business.
| |
|
|
|
Three months ended |
| |
|
|
|
June
30, |
| |
|
|
|
|
2015 |
|
|
|
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
|
$ |
695 |
|
|
|
$ |
|
593 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
| |
Cost of goods sold |
|
|
|
|
653 |
|
|
|
|
|
569 |
| |
Depreciation and
amortization |
|
|
|
|
2 |
|
|
|
|
|
12 |
| |
Selling, general and
administrative |
|
|
|
|
29 |
|
|
|
|
|
26 |
| |
Equity income |
|
|
|
|
(4) |
|
|
|
|
|
(2) |
| Income (loss) from
discontinued operations before income
taxes |
|
|
|
|
15 |
|
|
|
|
|
(12) |
| Income
taxes |
|
|
|
|
70 |
|
|
|
|
|
(3) |
| Loss from discontinued operations, net
of tax |
|
|
|
$ |
(55) |
|
|
|
$ |
|
(9) |
Loss from discontinued operations, net of tax
increased $46 million to $55 million for the second quarter of 2015
compared to $9 million for the second
quarter of 2014 primarily as a result of increased income taxes,
including $60 million of deferred tax
expense relating to timing differences that will become payable
upon closing of the transaction partially offset by productivity
and efficiency improvements at certain facilities, particularly in
North America and lower
depreciation costs.
Loss from Continuing Operations Attributable
to Non-Controlling Interests
Loss from continuing operations attributable to
non-controlling interests was $3
million for the second quarter of 2015 and $nil for the
second quarter of 2014.
Net Income Attributable to Magna
International Inc.
Net income attributable to Magna International
Inc. of $483 million for the second
quarter of 2015 decreased $27 million
compared to the second quarter of 2014. Excluding Other Income and
Other Expense, after tax, as discussed in the "Other Income"
section, net income attributable to Magna International Inc.
decreased $79 million primarily as a
result of the decrease in net income from continuing operations
before income taxes and the increase in the loss from discontinued
operations, net of tax, partially offset by lower income taxes, as
discussed above.
Earnings per Share (restated)
| |
|
|
|
For the three
months |
|
|
|
|
| |
|
|
|
ended
June 30, |
|
|
|
|
| |
|
|
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Continuing operations |
|
|
|
$ |
|
1.31 |
|
|
$ |
|
1.20 |
|
|
+ |
9% |
| |
Attributable to Magna International
Inc. |
|
|
|
$ |
|
1.18 |
|
|
$ |
|
1.18 |
|
|
|
— |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Continuing operations |
|
|
|
$ |
|
1.29 |
|
|
$ |
|
1.18 |
|
|
+ |
9% |
| |
Attributable to Magna International
Inc. |
|
|
|
$ |
|
1.16 |
|
|
$ |
|
1.16 |
|
|
|
— |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average
number of Common Shares outstanding (millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
|
|
|
409.8 |
|
|
|
|
433.2 |
|
|
- |
5% |
| |
Diluted |
|
|
|
|
|
415.4 |
|
|
|
|
439.2 |
|
|
- |
5% |
Diluted earnings per share from continuing
operations increased $0.11 to
$1.29 for the second quarter of 2015
compared to $1.18 for the second
quarter of 2014. Other Income and Other Expense, after tax,
positively impacted diluted earnings per share from continuing
operations by $0.10 in the second
quarter of 2015 and negatively impacted diluted earnings per share
from continuing operations by $0.02
in the second quarter of 2014 as discussed in the "Other Income"
section. Excluding the $0.10 per
share positive impact for the second quarter of 2015 and the
$0.02 per share negative impact for
the second quarter of 2014, diluted earnings per share from
continuing operations decreased $0.01, as a result of the decrease in net income
attributable to Magna International Inc. from continuing operations
partially offset by a decrease in the weighted average number of
diluted shares outstanding during the second quarter of 2015.
The decrease in the weighted average number of
diluted shares outstanding was due to the purchase and cancellation
of Common Shares, during or subsequent to the second quarter of
2014, pursuant to our normal course issuer bids.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flow from Operations
| |
|
|
|
|
|
For the three
months |
|
|
|
|
| |
|
|
|
|
|
ended
June 30, |
|
|
|
|
| |
|
|
|
|
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from continuing operations |
|
|
|
|
|
$ |
|
535 |
|
|
$ |
|
519 |
|
|
|
|
| Items not involving current cash flows |
|
|
|
|
|
|
|
176 |
|
|
|
|
227 |
|
|
|
|
| |
|
|
|
|
|
|
|
711 |
|
|
|
|
746 |
|
|
$ |
(35) |
| Changes in operating assets and
liabilities |
|
|
|
|
|
|
|
(271) |
|
|
|
|
(136) |
|
|
|
|
| Cash provided from operating activities |
|
|
|
|
|
$ |
|
440 |
|
|
$ |
|
610 |
|
|
$ |
(170) |
Cash flow from operations before changes in operating assets and
liabilities decreased $35 million to
$711 million for the second quarter
of 2015 compared to $746 million for
the second quarter of 2014. The decrease in cash flow from
operations was due to a $51 million
decrease in items not involving current cash flows partially offset
by a $16 million increase in net
income from continuing operations. Items not involving current cash
flows are comprised of the following:
| |
|
|
|
For the three
months |
| |
|
|
|
ended
June 30, |
| |
|
|
|
|
|
2015 |
|
|
|
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and
amortization |
|
|
|
$ |
|
198 |
|
|
|
$ |
|
211 |
| Amortization of other assets included in cost of
goods sold |
|
|
|
|
|
27 |
|
|
|
|
|
40 |
| Deferred income taxes |
|
|
|
|
|
11 |
|
|
|
|
|
(11) |
| Other non-cash
charges |
|
|
|
|
|
9 |
|
|
|
|
|
9 |
| Equity income in excess of dividends
received |
|
|
|
|
|
(12) |
|
|
|
|
|
(22) |
| Non-cash portion of Other
Income |
|
|
|
|
|
(57) |
|
|
|
|
|
— |
| Items not involving current cash
flows |
|
|
|
$ |
|
176 |
|
|
|
$ |
|
227 |
Cash invested in operating assets and
liabilities amounted to $271 million
for the second quarter of 2015 compared to $136 million for the second quarter of 2014. The
change in operating assets and liabilities is comprised of the
following sources (and uses) of cash:
| |
|
|
|
|
|
|
For the three
months |
| |
|
|
|
|
|
|
ended
June 30, |
| |
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
|
|
|
|
$ |
|
5 |
|
|
|
$ |
|
(52) |
| Inventories |
|
|
|
|
|
|
|
|
(143) |
|
|
|
|
|
(81) |
| Prepaid expenses and
other |
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
(7) |
| Accounts
payable |
|
|
|
|
|
|
|
|
(15) |
|
|
|
|
|
108 |
| Accrued salaries and wages |
|
|
|
|
|
|
|
|
(119) |
|
|
|
|
|
(107) |
| Other accrued
liabilities |
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
(20) |
| Income taxes
payable/receivable |
|
|
|
|
|
|
|
|
(3) |
|
|
|
|
|
23 |
| Changes in operating assets and
liabilities |
|
|
|
|
|
|
$ |
|
(271) |
|
|
|
$ |
|
(136) |
The increase in inventories was primarily due to
increased tooling inventory to support upcoming launches. The
decrease in accrued salaries and wages was primarily due to
employee profit sharing payments.
Capital and Investment
Spending
| |
|
|
|
|
For the three
months |
|
|
|
|
| |
|
|
|
|
ended
June 30, |
|
|
|
|
| |
|
|
|
|
|
|
2015 |
|
|
|
|
|
2014 |
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed asset additions |
|
|
|
|
$ |
|
(361) |
|
|
|
$ |
|
(362) |
|
|
|
|
| Investments and other assets |
|
|
|
|
|
|
(41) |
|
|
|
|
|
(48) |
|
|
|
|
| Fixed assets, investments and other assets
additions |
|
|
|
|
|
|
(402) |
|
|
|
|
|
(410) |
|
|
|
|
| Proceeds from disposition |
|
|
|
|
|
|
118 |
|
|
|
|
|
16 |
|
|
|
|
| Cash used in discontinued
operations |
|
|
|
|
|
|
(9) |
|
|
|
|
|
(36) |
|
|
|
|
| Cash used for investment activities |
|
|
|
|
$ |
|
(293) |
|
|
|
$ |
|
(430) |
|
|
$ |
137 |
Fixed assets, investments and other assets additions
In the second quarter of 2015, we invested
$361 million in fixed assets.
While investments were made to refurbish or replace assets consumed
in the normal course of business and for productivity improvements,
a large portion of the investment in the second quarter of 2015 was
for manufacturing equipment for programs that will be launching
subsequent to the second quarter of 2015.
In the second quarter of 2015, we invested
$41 million in other assets related
primarily to fully reimbursable tooling and engineering costs for
programs that launched during the second quarter of 2015 or will be
launching subsequent to the second quarter of 2015.
Proceeds from disposition
In the second quarter of 2015, the $118 million of proceeds include cash related to
the sale of our battery pack business to Samsung SDI.
Financing
| |
|
|
|
|
For the three
months |
|
|
|
|
| |
|
|
|
|
ended
June 30, |
|
|
|
|
| |
|
|
|
|
|
|
2015 |
|
|
|
|
|
2014 |
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Increase in bank indebtedness |
|
|
|
|
$ |
|
1 |
|
|
|
$ |
|
— |
|
|
|
|
| Issues of debt |
|
|
|
|
|
|
16 |
|
|
|
|
|
763 |
|
|
|
|
| Issues of Common Shares on exercise of stock
options |
|
|
|
|
|
|
7 |
|
|
|
|
|
12 |
|
|
|
|
| Repayments of debt |
|
|
|
|
|
|
(11) |
|
|
|
|
|
(15) |
|
|
|
|
| Repurchase of Common
Shares |
|
|
|
|
|
|
(5) |
|
|
|
|
|
(575) |
|
|
|
|
| Dividends paid |
|
|
|
|
|
|
(90) |
|
|
|
|
|
(79) |
|
|
|
|
| Cash used for financing activities |
|
|
|
|
$ |
|
(82) |
|
|
|
$ |
|
106 |
|
|
$ |
(188) |
Cash dividends paid per Common Share were
$0.22 for the second quarter of 2015,
for a total of $90 million.
Financing Resources
| |
|
|
|
|
|
|
|
As at |
|
|
|
|
As at |
|
|
|
|
|
| |
|
|
|
|
|
|
|
June 30, |
|
|
|
December 31, |
|
|
|
|
|
| |
|
|
|
|
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Bank indebtedness |
|
|
|
|
|
|
$ |
77 |
|
|
|
$ |
30 |
|
|
|
|
|
| |
Long-term debt due within one
year |
|
|
|
|
|
|
|
167 |
|
|
|
|
183 |
|
|
|
|
|
| |
Long-term debt |
|
|
|
|
|
|
|
796 |
|
|
|
|
812 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
1,040 |
|
|
|
|
1,025 |
|
|
|
|
|
| Non-controlling
interests |
|
|
|
|
|
|
|
10 |
|
|
|
|
14 |
|
|
|
|
|
| Shareholders'
equity |
|
|
|
|
|
|
|
9,050 |
|
|
|
|
8,659 |
|
|
|
|
|
| Total capitalization |
|
|
|
|
|
|
$ |
10,100 |
|
|
|
$ |
9,698 |
|
|
|
$ |
402 |
Total capitalization increased by $402 million to $10.10
billion at June 30, 2015
compared to $9.70 billion at
December 31, 2014,
primarily as a result of a $391
million increase in shareholders' equity and a $15 million increase in liabilities.
The increase in shareholders' equity was
primarily as a result of the $948
million of net income earned in the first six months of
2015.
These factors were partially offset by:
- the $375 million net unrealized
loss on translation of our net investment in operations whose
functional currency is not the U.S. dollar;
- $179 million of dividends paid
during the first six months of 2015; and
- the $67 million net unrealized
loss on cash flow hedges.
Cash Resources
During the second quarter of 2015, our cash
resources increased by $64 million to $1.16
billion as a result of the cash provided from operating
activities partially offset by cash used for investing and
financing activities, as discussed above. In addition to our cash
resources at June 30, 2015, we had
term and operating lines of credit totalling $2.52 billion of which $2.21 billion was unused and available.
On April 24, 2015,
our $2.25 billion revolving credit
facility maturing June 20, 2019 was
extended to June 22, 2020. The
facility includes a $200 million
Asian tranche, a $50 million Mexican
tranche and a tranche for Canada,
U.S. and Europe, which is fully
transferable between jurisdictions and can be drawn in U.S.
dollars, Canadian dollars or euros.
Maximum Number of Shares Issuable
The following table presents the maximum number
of shares that would be outstanding if all of the outstanding
options at August 5, 2015 were
exercised:
| Common Shares |
410,979,525 |
| Stock options (i) |
9,220,638 |
| |
420,200,163 |
(i) Options to purchase Common Shares are
exercisable by the holder in accordance with the vesting provisions
and upon
payment of the exercise price as may be determined from time to
time pursuant to our stock option plans. |
Contractual Obligations and Off-Balance Sheet
Financing
There have been no material changes with respect
to the contractual obligations requiring annual payments during the
second quarter of 2015 that are outside the ordinary course of our
business. Refer to our MD&A included in our 2014 Annual
Report.
RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2015
Sales
| |
|
|
|
|
For the six months |
|
|
|
|
|
| |
|
|
|
|
ended June 30, |
|
|
|
|
|
| |
|
|
|
|
|
2015 |
|
|
|
|
2014 |
|
|
|
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Vehicle Production Volumes
(millions of units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
North America |
|
|
|
|
|
8.656 |
|
|
|
|
8.530 |
|
|
|
+ |
1% |
| |
Europe |
|
|
|
|
|
10.574 |
|
|
|
|
10.444 |
|
|
|
+ |
1% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
External Production |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
North America |
|
|
|
|
$ |
8,808 |
|
|
|
$ |
8,729 |
|
|
|
+ |
1% |
| |
|
Europe |
|
|
|
|
|
3,724 |
|
|
|
|
4,706 |
|
|
|
- |
21% |
| |
|
Asia |
|
|
|
|
|
793 |
|
|
|
|
757 |
|
|
|
+ |
5% |
| |
|
Rest of World |
|
|
|
|
|
256 |
|
|
|
|
320 |
|
|
|
- |
20% |
| |
Complete Vehicle
Assembly |
|
|
|
|
|
1,207 |
|
|
|
|
1,654 |
|
|
|
- |
27% |
| |
Tooling, Engineering and
Other |
|
|
|
|
|
1,117 |
|
|
|
|
1,200 |
|
|
|
- |
7% |
| Total Sales |
|
|
|
|
$ |
15,905 |
|
|
|
$ |
17,366 |
|
|
|
- |
8% |
External Production Sales - North America
External production sales in North America increased 1% or $79 million to $8.81
billion for the six months ended June 30, 2015 compared to $8.73 billion for the six months ended
June 30, 2014 primarily as a result
of:
- the launch of new programs during or subsequent to the six
months ended June 30, 2014, including
the:
- Ford Transit;
- GM full-size pickups and SUVs;
- Ford Mustang;
- Chrysler 200; and
- Mercedes-Benz C-Class.
This factor was partially offset by:
- lower production volumes on certain existing programs;
- a $336 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of the Canadian dollar against the U.S. dollar;
- net divestitures subsequent to the second quarter of 2014,
which negatively impacted sales by $50
million;
- programs that ended production during or subsequent to the six
months ended June 30, 2014; and
- net customer price concessions subsequent to the six months
ended June 30, 2014.
External Production Sales - Europe
External production sales in Europe decreased 21% or $982 million to $3.72
billion for the six months ended June
30, 2015 compared to $4.71
billion for the six months ended June
30, 2014 primarily as a result of:
- a $872 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of foreign currencies against the U.S. dollar, including the euro,
Russian ruble and Czech koruna;
- lower production volumes on certain existing programs;
- programs that ended production during or subsequent to the six
months ended June 30, 2014; and
- net customer price concessions subsequent to the six months
ended June 30, 2014.
These factors were partially offset by the
launch of new programs during or subsequent to the six months ended
June 30, 2014, including the Ford
Transit.
External Production Sales - Asia
External production sales in Asia increased 5% or $36 million to $793
million for the six months ended June 30, 2015 compared to $757 million for the six months ended
June 30, 2014 primarily as a result
of the launch of new programs during or subsequent to the six
months ended June 30, 2014, primarily
in China and India.
This factor was partially offset by:
- lower production volumes on certain existing programs;
- a $12 million decrease in
reported U.S. dollar sales primarily as a result of the weakening
of foreign currencies against the U.S. dollar, including the
Chinese renminbi and South Korean won;
- programs that ended production during or subsequent to the six
months ended June 30, 2014; and
- net customer price concessions subsequent to the second quarter
of 2014.
External Production Sales - Rest of
World
External production sales in Rest of World
decreased 20% or $64 million to
$256 million for the six months ended
June 30, 2015 compared to
$320 million for the six months ended
June 30, 2014 primarily as a result
of:
- lower production volumes on certain existing programs;
- a $66 million decrease in
reported U.S. dollar sales as a result of the weakening of foreign
currencies against the U.S. dollar, including the Brazilian real;
and
- programs that ended production during or subsequent to the six
months ended June 30, 2014.
These factors were partially offset by:
- the launch of new programs during or subsequent to the second
quarter of 2014, primarily in Brazil; and
- net customer price increases subsequent to the six months ended
June 30, 2014.
Complete Vehicle Assembly Sales
| |
For the six months |
|
|
|
| |
ended
June 30, |
|
|
|
| |
|
2015 |
|
2014 |
|
|
Change |
| Complete Vehicle Assembly Sales |
$ |
1,207 |
$ |
1,654 |
|
- |
27% |
| Complete Vehicle Assembly Volumes
(Units) |
|
55,686 |
|
69,957 |
|
- |
20% |
Complete vehicle assembly sales decreased 27%,
or $447 million, to $1.21 billion for the six months ended
June 30, 2015 compared to
$1.65 billion for the six months
ended June 30, 2014 and assembly
volumes decreased 20% or 14,271 units.
The decrease in complete vehicle assembly sales
is primarily as a result of:
- a $276 million decrease in
reported U.S. dollar sales as a result of the weakening of the euro
against the U.S. dollar; and
- a decrease in assembly volumes for the MINI Countryman.
These factors were partially offset by an
increase in assembly volumes for the Mercedes-Benz G-Class.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales decreased
7% or $83 million to $1.12 billion for the six months ended
June 30, 2015 compared to
$1.20 billion for the six months
ended June 30, 2014.
In the six months ended June 30, 2015, the major programs for which we
recorded tooling, engineering and other sales were the:
- Ford F-Series and F-Series SuperDuty;
- GMC Acadia, Buick Enclave and Chevrolet Traverse;
- Ford Edge;
- MINI Countryman;
- Skoda Fabia;
- Honda HR-V and Vezel; and
- Honda Pilot.
In the six months ended June 30, 2014, the major programs for which we
recorded tooling, engineering and other sales were the:
- BMW X4;
- MINI Countryman;
- Ford Transit;
- QOROS 3;
- Mercedes-Benz M-Class;
- Ford Mustang;
- Honda Fit;
- Peugeot RCZ; and
- Chrysler 200.
The weakening of certain foreign currencies
against the U.S. dollar, including the euro, Canadian dollar
and Czech koruna had an unfavourable impact of $153 million on our reported tooling, engineering
and other sales.
Segment Analysis
| |
|
|
For
the six months ended June 30, |
| |
|
Total
Sales |
|
|
Adjusted EBIT |
| |
|
|
2015 |
|
2014 |
|
Change |
|
|
|
2015 |
|
2014 |
|
Change |
| North America |
|
$ |
9,334 |
$ |
9,349 |
$ |
(15) |
|
|
$ |
978 |
$ |
991 |
$ |
(13) |
| Europe |
|
|
5,592 |
|
6,991 |
|
(1,399) |
|
|
|
248 |
|
279 |
|
(31) |
| Asia |
|
|
929 |
|
922 |
|
7 |
|
|
|
73 |
|
68 |
|
5 |
| Rest of World |
|
|
258 |
|
329 |
|
(71) |
|
|
|
(12) |
|
(24) |
|
12 |
| Corporate and Other |
|
|
(208) |
|
(225) |
|
17 |
|
|
|
21 |
|
26 |
|
(5) |
| Total reportable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
segments |
|
$ |
15,905 |
$ |
17,366 |
$ |
(1,461) |
|
|
$ |
1,308 |
$ |
1,340 |
$ |
(32) |
Excluded from Adjusted EBIT for the six months
ended June 30, 2015 and 2014 were the
following Other Income and Other Expense items, which have been
discussed in the "Other Income" section.
| |
|
For the six months |
| |
|
ended
June 30, |
| |
|
|
2015 |
|
2014 |
| Europe |
|
|
|
|
|
| |
Gain on sale |
|
$ |
(57) |
$ |
— |
| |
Restructuring |
|
|
— |
|
33 |
| |
|
$ |
(57) |
$ |
33 |
North
America
Adjusted EBIT in North
America decreased $13 million
to $978 million for the six months
ended June 30, 2015 compared to
$991 million for the six months
ended June 30, 2014. Reported U.S.
dollar Adjusted EBIT was negatively impacted by the weakening of
the Canadian dollar against the U.S. dollar. Excluding the effect
of foreign exchange translation, Adjusted EBIT increased primarily
as a result of:
- costs incurred related to a fire at a body and chassis
facility, during the second quarter of 2014;
- lower affiliation fees paid to Corporate;
- margins earned on higher production sales;
- higher equity income;
- decreased commodity costs;
- decreased pre-operating costs incurred at new facilities;
- decreased stock-based compensation; and
- productivity and efficiency improvements at certain
facilities.
These factors were partially offset by:
- lower recoveries associated with scrap steel;
- higher launch costs;
- higher warranty costs of $8
million;
- operational inefficiencies at certain facilities; and
- net customer price concessions subsequent to the second quarter
of 2014.
Europe
Adjusted EBIT in Europe decreased $31
million to $248 million for
the six months ended June 30, 2015
compared to $279 million for the
six months ended June 30, 2014.
Reported U.S. dollar Adjusted EBIT was negatively impacted by the
weakening of foreign currencies against the U.S. dollar, including
the euro, Czech koruna and Russian ruble. Excluding the effect of
foreign exchange translation, Adjusted EBIT increased primarily as
a result of:
- productivity and efficiency improvements at certain
facilities;
- lower affiliation fees paid to Corporate;
- decreased commodity costs; and
- lower warranty costs of $4
million.
These factors were partially offset by:
- higher launch costs;
- lower equity income;
- operational inefficiencies at certain facilities;
- increased pre-operating costs incurred at new facilities;
and
- net customer price concessions subsequent to the second quarter
of 2014.
Asia
Adjusted EBIT in Asia increased $5
million to $73 million for the
six months ended June 30, 2015
compared to $68 million for the six
months ended June 30, 2014 primarily
as a result of:
- margins earned on higher production sales, including margins
earned on the launch of new facilities and new programs;
- higher equity income;
- a lower amount of employee profit sharing; and
- lower affiliation fees paid to Corporate.
These factors were partially offset by:
- increased pre-operating costs incurred at new facilities;
- higher launch costs; and
- net customer price concessions subsequent to the second quarter
of 2014.
Rest of World
Rest of World Adjusted EBIT improved
$12 million to a loss of $12 million for the six months ended June 30, 2015 compared to a loss of $24 million for the six months ended June 30, 2014 primarily as a result of:
- productivity and efficiency improvements at certain
facilities;
- a decrease in reported U.S. dollar EBIT loss due to the
weakening of the Brazilian real against the U.S. dollar; and
- net customer price increases subsequent to the second quarter
of 2014.
These factors were partially offset by higher
production costs, including inflationary increases, that we have
not been fully successful in passing through to our customers.
Corporate and Other
Corporate and Other Adjusted EBIT decreased
$5 million to $21 million for the six months ended June 30, 2015 compared to $26 million for the six months ended June 30, 2014 primarily as a result of:
- a decrease in affiliation fees earned from our divisions;
- increased stock-based compensation;
- a greater amount of employee profit sharing; and
- a $2 million net decrease in
valuation gains in respect of ABCP.
These factors were partially offset by the
expiration, at the end of 2014, of our consulting agreements with
Frank Stronach.
SUBSEQUENT EVENT
Subsequent to the second quarter of 2015, we signed an agreement
to acquire the Getrag Group of Companies, one of the world's
largest suppliers of transmissions. Getrag has an 80-year history
in transmissions and is a technology leader, offering a range of
transmission systems. The purchase price for 100% of the equity of
Getrag is approximately €1.75 billion. This represents an
enterprise value of approximately €2.45 billion less proportionate
net debt and proportionate pension liabilities, which together are
estimated to be approximately €700 million at closing. The
purchase price is subject to working capital and other customary
purchase price adjustments. The transaction is subject to customary
closing conditions including regulatory approval, and is expected
to close near the end of 2015.
COMMITMENTS AND CONTINGENCIES
From time to time, we may be contingently liable for litigation,
legal and/or regulatory actions and proceedings and other
claims.
Refer to note 16 of our unaudited interim
consolidated financial statements for the six months ended
June 30, 2015, which describes these
claims.
For a discussion of risk factors relating to
legal and other claims/actions against us, refer to "Item 3.
Description of the Business - Risk Factors" in our Annual
Information Form and Annual Report on Form 40-F, each in respect of
the year ended December 31, 2014.
CONTROLS AND PROCEDURES
There have been no changes in our internal controls over
financial reporting that occurred during the six months ended
June 30, 2015 that have materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
FORWARD-LOOKING STATEMENTS
The previous discussion contains statements that constitute
"forward-looking statements" or "forward-looking information"
within the meaning of applicable securities legislation, including,
but not limited to, statements relating to: the acquisition of the
Getrag group of companies (the "Getrag Transaction"); and the sale
of substantially all of our interiors operations to Grupo Antolin (the "Grupo Transaction"). The
forward-looking information in this document is presented for the
purpose of providing information about management's current
expectations and plans and such information may not be appropriate
for other purposes. Forward-looking statements may include
financial and other projections, as well as statements regarding
our future plans, objectives or economic performance, or the
assumptions underlying any of the foregoing, and other statements
that are not recitations of historical fact. We use words such as
"may", "would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "forecast", "outlook",
"project", "estimate" and similar expressions suggesting future
outcomes or events to identify forward-looking statements. Any such
forward-looking statements are based on information currently
available to us, and are based on assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments, as
well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a
number of risks, assumptions and uncertainties, many of which are
beyond our control, and the effects of which can be difficult to
predict, including, without limitation: the impact of economic or
political conditions on consumer confidence, consumer demand for
vehicles and vehicle production; fluctuations in relative currency
values; restructuring, downsizing and/or other significant
non-recurring costs; continued underperformance of one or more of
our operating Divisions; our ability to successfully launch
material new or takeover business; shifts in market share away from
our top customers; inability to grow our business with OEMs; shifts
in market shares among vehicles or vehicle segments, or shifts away
from vehicles on which we have significant content; a prolonged
disruption in the supply of components to us from our suppliers;
shutdown of our or our customers' or sub-suppliers' production
facilities due to a labour disruption; scheduled shutdowns of our
customers' production facilities (typically in the third and fourth
quarters of each calendar year); our ability to successfully
compete with other automotive suppliers; reduction in outsourcing
by our customers or the loss of a material production or assembly
program; the termination or non-renewal by our customers of any
material production purchase order; impairment charges related to
goodwill and long-lived assets; exposure to, and ability to offset,
volatile commodities prices; risk of production disruptions
due to natural disasters or other catastrophic events; the security
and reliability of our IT systems; legal claims and/or regulatory
actions against us, including the ongoing antitrust investigations
being conducted by German and Brazilian authorities; changes in our
mix of earnings between jurisdictions with lower tax rates and
those with higher tax rates, as well as our ability to fully
benefit tax losses; other potential tax exposures; changes in
credit ratings assigned to us; the consummation of the Getrag
Transaction and the Grupo Transaction; the satisfaction or waiver
of conditions to complete the Getrag Transaction and the Grupo
Transaction, including obtaining required regulatory approvals;
warranty or indemnity obligations to the purchaser in the Grupo
Transaction in relation to pre-closing liabilities; our ability to
successfully identify, complete and integrate acquisitions or
achieve anticipated synergies; our ability to conduct appropriate
due diligence on acquisition targets; risks of conducting business
in foreign markets, including China, India,
Russia, Eastern Europe, Thailand, Brazil, Argentina and other non-traditional markets
for us; ongoing pricing pressures, including our ability to offset
price concessions demanded by our customers; our ability to
consistently develop innovative products or processes; warranty and
recall costs; pension liabilities; changes in laws and governmental
regulations; costs associated with compliance with environmental
laws and regulations; liquidity risks as a result of an
unanticipated deterioration of economic conditions; our ability to
achieve future investment returns that equal or exceed past
returns; the unpredictability of, and fluctuation in, the
trading price of our Common Shares; and other factors set out in
our Annual Information Form filed with securities commissions in
Canada and our annual report on
Form 40-F filed with the United States Securities and Exchange
Commission, and subsequent filings. In evaluating forward looking
statements, we caution readers not to place undue reliance on any
forward-looking statements and readers should specifically consider
the various factors which could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. Unless otherwise required by applicable securities
laws, we do not intend, nor do we undertake any obligation, to
update or revise any forward-looking statements to reflect
subsequent information, events, results or circumstances or
otherwise.
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME
[Unaudited]
[U.S. dollars in millions, except per share figures]
| |
|
|
|
Three months ended |
|
Six months ended |
| |
|
|
|
June
30, |
|
June
30, |
| |
|
Note |
|
|
2015 |
|
2014 |
|
|
2015 |
|
2014 |
| Sales |
|
|
|
$ |
8,133 |
$ |
8,911 |
|
$ |
15,905 |
$ |
17,366 |
| Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cost of goods sold |
|
|
|
|
6,962 |
|
7,626 |
|
|
13,630 |
|
14,900 |
| |
Depreciation and
amortization |
|
|
|
|
198 |
|
211 |
|
|
392 |
|
417 |
| |
Selling, general and
administrative |
|
12 |
|
|
348 |
|
407 |
|
|
678 |
|
810 |
| |
Interest expense, net |
|
|
|
|
8 |
|
7 |
|
|
18 |
|
9 |
| |
Equity income |
|
|
|
|
(52) |
|
(55) |
|
|
(103) |
|
(101) |
| |
Other (income) expense, net |
|
3 |
|
|
(57) |
|
11 |
|
|
(57) |
|
33 |
| Income from continuing operations
before income taxes |
|
|
|
|
726 |
|
704 |
|
|
1,347 |
|
1,298 |
| Income taxes |
|
7 |
|
|
191 |
|
185 |
|
|
358 |
|
378 |
| Net income from continuing
operations |
|
|
|
|
535 |
|
519 |
|
|
989 |
|
920 |
| Loss from discontinued operations, net
of tax |
|
2 |
|
|
(55) |
|
(9) |
|
|
(45) |
|
(18) |
| Net
income |
|
|
|
|
480 |
|
510 |
|
|
944 |
|
902 |
| Loss from continuing operations
attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
| |
non-controlling
interests |
|
|
|
|
3 |
|
— |
|
|
4 |
|
1 |
| Net income attributable to Magna
International Inc. |
|
|
|
$ |
483 |
$ |
510 |
|
$ |
948 |
$ |
903 |
| Basic earnings per share (restated -
see note 1): |
|
4 |
|
|
|
|
|
|
|
|
|
|
| |
Continuing operations |
|
|
|
$ |
1.31 |
$ |
1.20 |
|
$ |
2.42 |
$ |
2.11 |
| |
Discontinued
operations |
|
|
|
|
(0.13) |
|
(0.02) |
|
|
(0.11) |
|
(0.04) |
| |
Attributable to Magna International
Inc. |
|
|
|
$ |
1.18 |
$ |
1.18 |
|
$ |
2.31 |
$ |
2.07 |
| Diluted earnings per share
(restated): |
|
4 |
|
|
|
|
|
|
|
|
|
|
| |
Continuing operations |
|
|
|
$ |
1.29 |
$ |
1.18 |
|
$ |
2.39 |
$ |
2.08 |
| |
Discontinued
operations |
|
|
|
|
(0.13) |
|
(0.02) |
|
|
(0.11) |
|
(0.04) |
| |
Attributable to Magna International
Inc. |
|
|
|
$ |
1.16 |
$ |
1.16 |
|
$ |
2.28 |
$ |
2.04 |
| Cash dividends paid per Common Share
(restated) |
|
|
|
$ |
0.22 |
$ |
0.19 |
|
$ |
0.44 |
$ |
0.38 |
| Average number of Common Shares
outstanding during |
|
|
|
|
|
|
|
|
|
|
|
|
| |
the period [in millions]
(restated): |
|
4 |
|
|
|
|
|
|
|
|
|
|
| |
|
Basic |
|
|
|
|
409.8 |
|
433.2 |
|
|
409.6 |
|
436.9 |
| |
|
Diluted |
|
|
|
|
415.4 |
|
439.2 |
|
|
415.2 |
|
443.1 |
| See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
[Unaudited]
[U.S. dollars in millions]
| |
|
|
Three
months ended
June 30, |
|
Six
months ended
June 30, |
| |
Note |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| Net income |
|
|
$ |
480 |
|
$ |
510 |
|
$ |
944 |
|
$ |
902 |
| Other comprehensive income (loss), net
of tax: |
14 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net unrealized gain (loss) on translation of net
investment in foreign operations |
|
|
|
63 |
|
|
100 |
|
|
(375) |
|
|
(12) |
| |
Net unrealized gain (loss) on available-for-sale
investments |
|
|
|
1 |
|
|
— |
|
|
2 |
|
|
(1) |
| |
Net unrealized (loss) gain on cash flow
hedges |
|
|
|
(2) |
|
|
49 |
|
|
(67) |
|
|
18 |
| |
Reclassification of net loss on cash flow hedges
to net income |
|
|
|
21 |
|
|
6 |
|
|
32 |
|
|
5 |
| |
Reclassification of net loss on pensions to net
income |
|
|
|
2 |
|
|
2 |
|
|
3 |
|
|
3 |
| |
Pension and post retirement benefits |
|
|
|
— |
|
|
— |
|
|
(1) |
|
|
— |
| Other comprehensive income
(loss) |
|
|
|
85 |
|
|
157 |
|
|
(406) |
|
|
13 |
| Comprehensive income |
|
|
|
565 |
|
|
667 |
|
|
538 |
|
|
915 |
| Comprehensive loss attributable to
non-controlling interests |
|
|
|
3 |
|
|
— |
|
|
4 |
|
|
1 |
| Comprehensive income attributable
to Magna International Inc. |
|
|
$ |
568 |
|
$ |
667 |
|
$ |
542 |
|
$ |
916 |
| See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited]
[U.S. dollars in millions]
| |
|
|
Three
months ended
June 30, |
|
Six
months ended
June 30, |
| |
Note |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| Cash provided from (used for): |
|
|
|
|
|
|
|
|
|
|
|
|
|
| OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from continuing
operations |
|
|
$ |
535 |
|
$ |
519 |
|
$ |
989 |
|
$ |
920 |
| Items not involving current cash flows |
5 |
|
|
176 |
|
|
227 |
|
|
351 |
|
|
497 |
| |
|
|
|
711 |
|
|
746 |
|
|
1,340 |
|
|
1,417 |
| Changes in operating assets and
liabilities |
5 |
|
|
(271) |
|
|
(136) |
|
|
(620) |
|
|
(315) |
| Cash provided from operating
activities |
|
|
|
440 |
|
|
610 |
|
|
720 |
|
|
1,102 |
| INVESTMENT ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed asset additions |
|
|
|
(361) |
|
|
(362) |
|
|
(627) |
|
|
(565) |
| Purchase of subsidiaries |
|
|
|
— |
|
|
— |
|
|
(1) |
|
|
— |
| Increase in investments and other
assets |
|
|
|
(41) |
|
|
(48) |
|
|
(78) |
|
|
(99) |
| Proceeds from disposition |
|
|
|
15 |
|
|
16 |
|
|
39 |
|
|
50 |
| Proceeds on disposal of battery pack
business |
3 |
|
|
103 |
|
|
— |
|
|
103 |
|
|
— |
| Cash used in discontinued
operations |
|
|
|
(9) |
|
|
(36) |
|
|
(41) |
|
|
(63) |
| Cash used for investing
activities |
|
|
|
(293) |
|
|
(430) |
|
|
(605) |
|
|
(677) |
| FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Increase in bank indebtedness |
|
|
|
1 |
|
|
— |
|
|
70 |
|
|
3 |
| Issues of debt |
10 |
|
|
16 |
|
|
763 |
|
|
31 |
|
|
794 |
| Repayments of debt |
|
|
|
(11) |
|
|
(15) |
|
|
(54) |
|
|
(85) |
| Issue of Common Shares on exercise of stock
options |
|
|
|
7 |
|
|
12 |
|
|
13 |
|
|
37 |
| Repurchase of Common Shares |
13 |
|
|
(5) |
|
|
(575) |
|
|
(5) |
|
|
(815) |
| Dividends |
|
|
|
(90) |
|
|
(79) |
|
|
(179) |
|
|
(162) |
| Cash (used for) provided from financing
activities |
|
|
|
(82) |
|
|
106 |
|
|
(124) |
|
|
(228) |
| Effect of exchange rate changes on cash and cash
equivalents |
|
|
|
(1) |
|
|
30 |
|
|
(77) |
|
|
6 |
| Net increase (decrease) in cash and cash
equivalents during the period |
|
|
|
64 |
|
|
316 |
|
|
(86) |
|
|
203 |
| Cash and cash equivalents, beginning of
period |
|
|
|
1,099 |
|
|
1,438 |
|
|
1,249 |
|
|
1,551 |
| Cash and cash equivalents of continuing
operations, end of period |
|
|
$ |
1,163 |
|
$ |
1,754 |
|
$ |
1,163 |
|
$ |
1,754 |
| See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
[Unaudited]
[U.S. dollars in millions]
| |
Note |
|
As at
June 30,
2015 |
|
As at
December 31,
2014 |
| |
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
| Cash and cash
equivalents |
5 |
|
$ |
1,163 |
|
$ |
1,249 |
| Accounts receivable |
|
|
|
5,574 |
|
|
5,316 |
| Inventories |
6 |
|
|
2,676 |
|
|
2,525 |
| Income taxes receivable |
|
|
|
— |
|
|
13 |
| Deferred tax assets |
|
|
|
180 |
|
|
181 |
| Prepaid expenses and
other |
|
|
|
162 |
|
|
150 |
| Assets held for sale |
2 |
|
|
1,096 |
|
|
609 |
| |
|
|
|
10,851 |
|
|
10,043 |
| |
|
|
|
|
|
|
|
| Investments |
15 |
|
|
403 |
|
|
379 |
| Fixed assets, net |
|
|
|
5,406 |
|
|
5,402 |
| Goodwill |
|
|
|
1,272 |
|
|
1,337 |
| Deferred tax assets |
|
|
|
145 |
|
|
139 |
| Other assets |
8 |
|
|
490 |
|
|
526 |
| Noncurrent assets held for
sale |
2 |
|
|
— |
|
|
348 |
| |
|
|
$ |
18,567 |
|
$ |
18,174 |
| |
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
| Bank indebtedness |
|
|
$ |
77 |
|
$ |
30 |
| Accounts payable |
|
|
|
4,691 |
|
|
4,765 |
| Accrued salaries and
wages |
|
|
|
637 |
|
|
686 |
| Other accrued liabilities |
9 |
|
|
1,447 |
|
|
1,448 |
| Income taxes payable |
|
|
|
8 |
|
|
— |
| Deferred tax
liabilities |
|
|
|
78 |
|
|
21 |
| Long-term debt due within one
year |
|
|
|
167 |
|
|
183 |
| Liabilities held for
sale |
2 |
|
|
624 |
|
|
514 |
| |
|
|
|
7,729 |
|
|
7,647 |
| Long-term debt |
10 |
|
|
796 |
|
|
812 |
| Long-term employee benefit
liabilities |
11 |
|
|
524 |
|
|
559 |
| Other long-term liabilities |
|
|
|
304 |
|
|
278 |
| Deferred tax
liabilities |
7 |
|
|
154 |
|
|
171 |
| Long-term liabilities held for
sale |
2 |
|
|
— |
|
|
34 |
| |
|
|
|
9,507 |
|
|
9,501 |
| |
|
|
|
|
|
|
|
| Shareholders' equity |
|
|
|
|
|
|
|
| Capital stock |
|
|
|
|
|
|
|
| |
Common Shares |
|
|
|
|
|
|
|
| |
|
[issued: 410,974,525; December 31, 2014 -
410,325,270 (restated)] |
13 |
|
|
4,006 |
|
|
3,979 |
| Contributed surplus |
|
|
|
94 |
|
|
83 |
| Retained earnings |
|
|
|
5,914 |
|
|
5,155 |
| Accumulated other comprehensive
loss |
14 |
|
|
(964) |
|
|
(558) |
| |
|
|
|
9,050 |
|
|
8,659 |
| |
|
|
|
|
|
|
|
| Non-controlling interests |
|
|
|
10 |
|
|
14 |
| |
|
|
|
9,060 |
|
|
8,673 |
| |
|
|
$ |
18,567 |
|
$ |
18,174 |
| See accompanying notes |
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
[Unaudited]
[U.S. dollars in
millions]
| |
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
| |
Note |
|
Number |
|
Stated
Value |
|
Contri-
buted
Surplus |
|
Retained
Earnings |
|
AOCI
(i) |
|
Non-
controlling
Interest |
|
Total
Equity |
| |
|
|
[in millions] |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2014 |
|
|
410.3 |
|
$ |
3,979 |
|
$ |
83 |
|
$ |
5,155 |
|
$ |
(558) |
|
$ |
14 |
|
$ |
8,673 |
| Net income |
|
|
|
|
|
|
|
|
|
|
|
948 |
|
|
|
|
|
(4) |
|
|
944 |
| Other comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(406) |
|
|
|
|
|
(406) |
| Shares issued on exercise of stock
options |
|
|
0.6 |
|
|
17 |
|
|
(4) |
|
|
|
|
|
|
|
|
|
|
|
13 |
| Exempt share purchase |
|
|
|
|
|
(1) |
|
|
|
|
|
(4) |
|
|
|
|
|
|
|
|
(5) |
| Release of restricted stock |
|
|
|
|
|
5 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
— |
| Stock-based compensation
expense |
12 |
|
|
|
|
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
20 |
| Dividends paid |
|
|
0.1 |
|
|
6 |
|
|
|
|
|
(185) |
|
|
|
|
|
|
|
|
(179) |
| Balance, June 30, 2015 |
|
|
411.0 |
|
$ |
4,006 |
|
$ |
94 |
|
$ |
5,914 |
|
$ |
(964) |
|
$ |
10 |
|
$ |
9,060 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
| |
Note |
|
Number |
|
Stated
Value |
|
Contri-
buted
Surplus |
|
Retained
Earnings |
|
AOCI
(i) |
|
Non-
controlling
Interest |
|
Total
Equity |
| |
|
|
[in millions
(restated)] |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2013 |
|
|
442.3 |
|
$ |
4,230 |
|
$ |
69 |
|
$ |
5,011 |
|
$ |
313 |
|
$ |
16 |
|
$ |
9,639 |
| Net income |
|
|
|
|
|
|
|
|
|
|
|
903 |
|
|
|
|
|
(1) |
|
|
902 |
| Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 |
|
|
|
|
|
13 |
| Issues of shares by subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares issued on exercise of stock
options |
|
|
2.0 |
|
|
47 |
|
|
(10) |
|
|
|
|
|
|
|
|
|
|
|
37 |
| Repurchase and cancellation under
normal course issuer bid |
12 |
|
(16.9) |
|
|
(162) |
|
|
|
|
|
(638) |
|
|
(15) |
|
|
|
|
|
(815) |
| Release of restricted stock |
|
|
|
|
|
5 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
— |
| Stock-based compensation expense |
11 |
|
|
|
|
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
20 |
| Reclassification from liability |
11 |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
7 |
| Dividends paid |
|
|
0.1 |
|
|
5 |
|
|
|
|
|
(167) |
|
|
|
|
|
|
|
|
(162) |
| Balance, June 30, 2014 |
|
|
427.5 |
|
$ |
4,125 |
|
$ |
81 |
|
$ |
5,109 |
|
$ |
311 |
|
$ |
15 |
|
$ |
9,641 |
| (i) AOCI is
Accumulated Other Comprehensive Income. |
| See accompanying notes |
MAGNA INTERNATIONAL INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
[Unaudited]
[All amounts in U.S. dollars and all tabular amounts in millions
unless otherwise noted]
1. SIGNIFICANT ACCOUNTING POLICIES
[a] Basis of Presentation
The unaudited interim consolidated financial
statements of Magna International Inc. and its subsidiaries
[collectively "Magna" or the "Company"] have been prepared in U.S.
dollars following U.S. generally accepted accounting principles
["GAAP"] and the accounting policies as set out in note 1 to the
annual consolidated financial statements for the year ended
December 31, 2014.
The unaudited interim consolidated financial
statements do not conform in all respects to the requirements of
GAAP for annual financial statements. Accordingly, these unaudited
interim consolidated financial statements should be read in
conjunction with the December 31,
2014 audited consolidated financial statements and notes
included in the Company's 2014 Annual Report.
The unaudited interim consolidated financial
statements reflect all adjustments, which consist only of normal
and recurring adjustments, necessary to present fairly the
financial position at June 30, 2015
and the results of operations, changes in equity and cash flows for
the three and six-month periods ended June
30, 2015 and 2014.
[b] Stock Split
On March 25, 2015,
the Company completed a two-for-one stock split, which was
implemented by way of a stock dividend, whereby shareholders
received an additional Common Share for each Common Share held. All
equity-based compensation plans or arrangements were adjusted to
reflect the issuance of additional Common Shares.
Accordingly, all of the Company's issued and
outstanding Common Shares, incentive stock options, and restricted
and deferred stock units have been restated for all periods
presented to reflect the stock split. In addition, earnings per
Common Share, Cash dividends paid per Common Share, weighted
average exercise price for stock options and the weighted average
fair value of options granted have been restated for all periods
presented to reflect the stock split.
[c] Discontinued Operations
The Company reports financial results for
discontinued operations separately from continuing operations to
distinguish the financial impact of disposal transactions from
ongoing operations. Discontinued operations reporting only occurs
when the disposal of a component or a group of components of the
Company represents a strategic shift that will have a major impact
on the Company's operations and financial results. In the
second quarter of 2015, the Company announced the signing of an
agreement to sell substantially all of its interiors operations to
Grupo Antolin. Accordingly, the
assets and liabilities, operating results and operating cash flows
for the previously reported interiors operations are presented as
discontinued operations separate from the Company's continuing
operations. Prior period financial information has been
reclassified to present the interiors operations as a discontinued
operation, and has therefore been excluded from both continuing
operations and segment results in these interim consolidated
financial statements and the notes to the interim consolidated
financial statements, unless otherwise noted. Refer to Note 2
Discontinued Operations for further information regarding the
Company's discontinued operations.
[d] Future Accounting Standard
Revenue Recognition
In May 2014, the
FASB issued ASU No. 2014-09, Revenue from Contracts with Customers:
Topic 606 (ASU 2014-09), to supersede nearly all existing revenue
recognition guidance under GAAP. The core principle of ASU 2014-09
is to recognize revenues when promised goods or services are
transferred to customers in an amount that reflects the
consideration that is expected to be received for those goods or
services. In July 2015, the FASB
deferred the effective date to annual reporting periods beginning
after December 15, 2017 [including
interim reporting periods within those periods]. ASU 2014-09 may be
adopted using either of two methods: [i] retrospective to each
prior reporting period presented with the option to elect certain
practical expedients as defined within ASU 2014-09; or [ii]
retrospective with the cumulative effect of initially applying ASU
2014-09 recognized at the date of initial application and providing
certain additional disclosures as defined per ASU 2014-09. The
Company is currently evaluating the impact of its pending adoption
of ASU 2014-09 on its consolidated financial statements.
2. DISCONTINUED OPERATIONS
In the second quarter of 2015, the Company
entered into an agreement for the sale of substantially all of its
interiors operations ["the disposed interiors operations"] to
Grupo Antolin. The purchase price
for such disposed interiors operations, excluding certain assets,
is approximately $525 million,
subject to customary closing adjustments. The transaction is
expected to close in the third quarter of 2015. The Company
does not anticipate significant continuing involvement with the
disposed interiors operations subsequent to the close of the
transaction.
The Company determined that the assets and
liabilities of the disposed interiors operations met the criteria
to be classified as held for sale as of June
30, 2015. Accordingly, the held for sale assets and
liabilities of the disposed interiors operations were reclassified
in the consolidated balance sheet at June
30, 2015 to current assets held for sale or current
liabilities held for sale, respectively, as the sale of such assets
and liabilities is expected within one year, and to current or
long-term assets or liabilities held for sale, as appropriate, for
prior periods.
The following table summarizes the carrying
value of the major classes of assets and liabilities of the
discontinued operations which were classified as held for sale as
of June 30, 2015:
| |
|
|
June 30,
2015 |
|
|
|
December 31,
2014 |
| |
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
35 |
|
|
$ |
4 |
| Accounts receivable |
|
|
446 |
|
|
|
355 |
| Inventories |
|
|
240 |
|
|
|
232 |
| Income taxes receivable |
|
|
— |
|
|
|
3 |
| Prepaid expenses and other |
|
|
11 |
|
|
|
10 |
| Deferred tax assets |
|
|
16 |
|
|
|
12 |
| Fixed assets, net |
|
|
273 |
|
|
|
263 |
| Goodwill |
|
|
12 |
|
|
|
12 |
| Investments |
|
|
41 |
|
|
|
40 |
| Other assets |
|
|
22 |
|
|
|
26 |
| Total assets of the discontinued operations
classified as held for sale |
|
$ |
1,096 |
|
|
$ |
957 |
| |
|
|
|
|
|
|
|
| Bank indebtedness |
|
|
$ 8 |
|
|
|
$ 3 |
| Accounts payable |
|
|
413 |
|
|
|
376 |
| Accrued salaries and wages |
|
|
48 |
|
|
|
44 |
| Other accrued liabilities |
|
|
116 |
|
|
|
91 |
| Income taxes payable |
|
|
7 |
|
|
|
— |
| Long-term debt due within one year |
|
|
1 |
|
|
|
1 |
| Long-term employee benefit liabilities |
|
|
19 |
|
|
|
20 |
| Other long-term liabilities |
|
|
12 |
|
|
|
12 |
| Deferred tax liabilities |
|
|
— |
|
|
|
1 |
| Total liabilities of the discontinued operations
classified as held for sale |
|
$ |
624 |
|
|
$ |
548 |
Since the estimated purchase price of the
disposed interiors operations less costs to sell exceeded the
carrying value of such operations as at June
30, 2015, no adjustments to the long-lived assets were
necessary.
A reconciliation of the major classes of line items constituting
loss from discontinued operations, net of tax as presented in the
statements of income is as follows:
| |
|
Three months ended
June 30, |
|
Six months ended
June 30, |
| |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Sales |
|
$ |
695 |
|
$ |
593 |
|
$ |
1,284 |
|
$ |
1,143 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cost of goods sold |
|
|
653 |
|
|
569 |
|
|
1,199 |
|
|
1,100 |
| |
Depreciation and amortization |
|
|
2 |
|
|
12 |
|
|
13 |
|
|
23 |
| |
Selling, general and
administrative |
|
|
29 |
|
|
26 |
|
|
54 |
|
|
49 |
| |
Equity income |
|
|
(4) |
|
|
(2) |
|
|
(8) |
|
|
(4) |
| Income (loss) from discontinued
operations before income taxes |
|
|
15 |
|
|
(12) |
|
|
26 |
|
|
(25) |
| Income taxes [i] |
|
|
70 |
|
|
(3) |
|
|
71 |
|
|
(7) |
| Loss from discontinued operations, net
of tax |
|
$ |
(55) |
|
$ |
(9) |
|
$ |
(45) |
|
$ |
(18) |
[i] Income taxes include $60 million of deferred tax expense relating to
timing differences that will become payable upon closing of the
transaction.
The interiors operations were previously
included within all of the Company's reporting segments except for
Rest of World.
3. OTHER (INCOME) EXPENSE, NET
| |
|
|
Six months ended
June 30, |
| |
|
|
2015 |
|
2014 |
| |
|
|
|
|
|
|
|
|
| Second Quarter |
|
|
|
|
|
|
|
| |
Gain on disposal |
[a] |
|
$ |
(57) |
|
$ |
— |
| |
Restructuring |
[b] |
|
|
— |
|
|
11 |
| |
|
|
|
|
|
|
|
|
| First Quarter |
|
|
|
|
|
|
|
| |
Restructuring |
[b] |
|
|
— |
|
|
22 |
| |
|
|
|
|
|
|
|
|
| |
|
|
$ |
(57) |
|
$ |
33 |
For the six months ended June 30,
2015:
[a] Gain on disposal
During the second quarter of 2015, the company
sold its battery pack business to Samsung SDI for gross proceeds of
approximately $120 million, resulting
in a gain of $57 million
[$42 million after tax].
For the six months ended June 30,
2014:
[b] Restructuring
During the second and first quarters of 2014,
the Company recorded net restructuring charges of $11 million and $22
million [$10 million and
$20 million after tax], respectively,
in Europe at its exterior systems
operations.
4. EARNINGS PER SHARE
Earnings per share are computed as follows and have been
restated to reflect the effect of the Stock Split
[note1]:
| |
|
Three months ended
June 30 |
Six months ended
June 30 |
| |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
| Income available to
Common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from
continuing operations |
|
$ |
535 |
|
$ |
519 |
|
$ |
989 |
|
$ |
920 |
| Loss from continuing operations attributable
to |
|
|
|
|
|
|
|
|
|
|
|
|
| |
non-controlling
interests |
|
|
3 |
|
|
— |
|
|
4 |
|
|
1 |
| Net income attributable to Magna International Inc.
from |
|
|
|
|
|
|
|
|
|
|
|
|
| |
continuing operations |
|
|
538 |
|
|
519 |
|
|
993 |
|
|
921 |
| Loss from discontinued
operations |
|
|
(55) |
|
|
(9) |
|
|
(45) |
|
|
(18) |
| Net income
attributable to Magna International Inc. |
|
$ |
483 |
|
$ |
510 |
|
$ |
948 |
|
$ |
903 |
| Weighted average
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
409.8 |
|
|
433.2 |
|
|
409.6 |
|
|
436.9 |
| |
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Stock options and restricted stock
[i] |
|
|
5.6 |
|
|
6.0 |
|
|
5.6 |
|
|
6.2 |
|
Diluted |
|
|
415.4 |
|
|
439.2 |
|
|
415.2 |
|
|
443.1 |
| |
|
| [i] |
For the six months ended June 30, 2014, diluted
earnings per Common Share exclude 0.1 million
Common Shares issuable under the Company's Incentive Stock Option
Plan because these options
were not "in-the-money". |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per Common
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Continuing
operations |
|
$ |
1.31 |
|
$ |
1.20 |
|
$ |
2.42 |
|
$ |
2.11 |
| |
Discontinued
operations |
|
|
(0.13) |
|
|
(0.02) |
|
|
(0.11) |
|
|
(0.04) |
| |
Attributable to Magna
International Inc. |
|
$ |
1.18 |
|
$ |
1.18 |
|
$ |
2.31 |
|
$ |
2.07 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Continuing
operations |
|
$ |
1.29 |
|
$ |
1.18 |
|
$ |
2.39 |
|
$ |
2.08 |
| |
Discontinued
operations |
|
|
(0.13) |
|
|
(0.02) |
|
|
(0.11) |
|
|
(0.04) |
| |
Attributable to Magna
International Inc. |
|
$ |
1.16 |
|
$ |
1.16 |
|
$ |
2.28 |
|
$ |
2.04 |
5. DETAILS OF CASH FROM OPERATING ACTIVITIES
[a] Cash and cash equivalents:
| |
|
|
June 30,
2015 |
|
|
December 31,
2014 |
| |
|
|
|
|
|
|
| Bank term deposits, bankers' acceptances and
government paper |
|
$ |
1,058 |
|
$ |
1,058 |
| Cash |
|
|
105 |
|
|
191 |
| |
|
$ |
1,163 |
|
$ |
1,249 |
[b] Items not involving current cash
flows:
| |
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
| |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
$ |
198 |
|
$ |
211 |
|
$ |
392 |
|
$ |
417 |
| Amortization of other assets included in cost of
goods sold |
|
|
27 |
|
|
40 |
|
|
50 |
|
|
69 |
| Deferred income taxes |
|
|
11 |
|
|
(11) |
|
|
(16) |
|
|
29 |
| Other non-cash charges |
|
|
9 |
|
|
9 |
|
|
12 |
|
|
15 |
| Equity income in excess of dividends received |
|
|
(12) |
|
|
(22) |
|
|
(30) |
|
|
(33) |
| Non-cash portion of Other Income [note
3] |
|
|
(57) |
|
|
— |
|
|
(57) |
|
|
— |
| |
|
$ |
176 |
|
$ |
227 |
|
$ |
351 |
|
$ |
497 |
[c] Changes in operating assets and
liabilities:
| |
Three months ended
June 30, |
|
Six
months ended
June 30, |
| |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts receivable |
|
$ |
5 |
|
$ |
(52) |
|
$ |
(472) |
|
$ |
(852) |
| Inventories |
|
|
(143) |
|
|
(81) |
|
|
(269) |
|
|
(98) |
| Prepaid expenses and other |
|
|
2 |
|
|
(7) |
|
|
(12) |
|
|
3 |
| Accounts payable |
|
|
(15) |
|
|
108 |
|
|
99 |
|
|
424 |
| Accrued salaries and wages |
|
|
(119) |
|
|
(107) |
|
|
(55) |
|
|
(13) |
| Other accrued liabilities |
|
|
2 |
|
|
(20) |
|
|
40 |
|
|
141 |
| Income taxes payable |
|
|
(3) |
|
|
23 |
|
|
49 |
|
|
80 |
| |
|
$ |
(271) |
|
$ |
(136) |
|
$ |
(620) |
|
$ |
(315) |
6. INVENTORIES
Inventories consist of:
| |
|
|
|
|
June 30, |
|
December 31, |
| |
|
|
|
|
2015 |
|
2014 |
| |
|
|
|
|
|
|
|
| Raw materials and supplies |
|
|
|
|
$ |
838 |
|
$ |
846 |
| Work-in-process |
|
|
|
|
|
240 |
|
|
233 |
| Finished goods |
|
|
|
|
|
296 |
|
|
338 |
| Tooling and engineering |
|
|
|
|
|
1,302 |
|
|
1,108 |
| |
|
|
|
|
$ |
2,676 |
|
$ |
2,525 |
Tooling and engineering inventory represents
costs incurred on tooling and engineering services contracts in
excess of billed and unbilled amounts included in accounts
receivable.
7. INCOME TAXES
During the first quarter of 2014, the Austrian
government enacted legislation abolishing the utilization of
foreign losses, where the foreign subsidiary is not a member of the
European Union. Furthermore, any foreign losses used by Austrian
entities arising in those non European Union subsidiaries are
subject to recapture in Austria.
As a consequence of this change, the Company recorded a charge to
tax expense of $32 million.
8. OTHER ASSETS
Other assets consist of:
| |
|
June 30, |
|
December 31, |
| |
|
2015 |
|
2014 |
| |
|
|
|
|
| Preproduction costs related to
long-term supply agreements with |
|
|
|
|
|
|
| |
contractual guarantee for
reimbursement |
|
$ |
240 |
|
$ |
243 |
| Customer relationship intangibles |
|
|
89 |
|
|
108 |
| Long-term receivables |
|
|
77 |
|
|
85 |
| Patents and licences, net |
|
|
30 |
|
|
32 |
| Pension overfunded status |
|
|
13 |
|
|
13 |
| Unrealized gain on cash flow
hedges |
|
|
9 |
|
|
8 |
| Other, net |
|
|
32 |
|
|
37 |
| |
|
$ |
490 |
|
$ |
526 |
9. WARRANTY
The following is a continuity of the Company's
warranty accruals:
| |
|
|
|
|
|
2015 |
|
|
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Balance, beginning of period |
|
|
|
|
$ |
80 |
|
|
|
$ |
81 |
| Expense, net |
|
|
|
|
|
8 |
|
|
|
|
7 |
| Settlements |
|
|
|
|
|
(10) |
|
|
|
|
(7) |
| Foreign exchange and other |
|
|
|
|
|
(6) |
|
|
|
|
— |
| Balance, March 31 |
|
|
|
|
|
72 |
|
|
|
|
81 |
| Expense, net |
|
|
|
|
|
10 |
|
|
|
|
7 |
| Settlements |
|
|
|
|
|
(10) |
|
|
|
|
(8) |
| Foreign exchange and other |
|
|
|
|
|
1 |
|
|
|
|
(1) |
| Balance, June 30 |
|
|
|
|
$ |
73 |
|
|
|
$ |
79 |
10. LONG-TERM DEBT
On April 24, 2015,
the Company's $2.25 billion revolving
credit facility maturing June 20,
2019 was extended to June 22,
2020. The facility includes a $200
million Asian tranche, a $50
million Mexican tranche and a tranche for Canada, U.S. and Europe, which is fully transferable between
jurisdictions and can be drawn in U.S. dollars, Canadian dollars or
euros.
11. LONG-TERM EMPLOYEE BENEFIT LIABILITIES
The Company recorded long-term employee benefit
expenses as follows:
| |
Three months
ended |
|
Six months
ended |
| |
June 30, |
|
June 30, |
| |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Defined benefit pension plan and
other |
|
$ |
3 |
|
$ |
4 |
|
$ |
7 |
|
$ |
7 |
| Termination and long service
arrangements |
|
|
5 |
|
|
7 |
|
|
12 |
|
|
16 |
| Retirement medical benefit
plan |
|
|
1 |
|
|
1 |
|
|
1 |
|
|
1 |
| |
|
$ |
9 |
|
$ |
12 |
|
$ |
20 |
|
$ |
24 |
12. STOCK-BASED COMPENSATION
[a] Incentive Stock Option Plan
The following is a continuity schedule of
options outstanding [number of options in the table below are
expressed in whole numbers] and has been restated to reflect the
effect of the Stock Split [note 1]:
| |
2015 |
|
2014 |
| |
Options outstanding |
|
|
Options outstanding |
|
| |
|
|
Number |
|
|
|
Number |
| |
Number |
Exercise |
of options |
|
Number |
Exercise |
of options |
| |
of options |
price (i) |
exercisable |
|
of options |
price (i) |
exercisable |
| |
|
|
|
|
|
|
|
| Beginning of period |
8,314,658 |
27.03 |
4,614,488 |
|
9,516,216 |
20.91 |
5,694,218 |
| Granted |
1,614,336 |
68.24 |
— |
|
1,502,600 |
53.36 |
— |
| Exercised |
(239,362) |
29.49 |
(239,362) |
|
(1,360,704) |
19.75 |
(1,360,704) |
| Cancelled |
(103,332) |
34.30 |
— |
|
(33,998) |
26.10 |
(12,000) |
| Vested |
— |
— |
1,965,904 |
|
— |
— |
1,558,768 |
| March 31 |
9,586,300 |
33.83 |
6,341,030 |
|
9,624,114 |
26.12 |
5,880,282 |
| Exercised |
(308,424) |
26.33 |
(308,424) |
|
(592,070) |
20.99 |
(592,070) |
| Cancelled |
(48,906) |
46.96 |
(2) |
|
(21,000) |
36.93 |
— |
| June 30 |
9,228,970 |
34.01 |
6,032,604 |
|
9,011,044 |
26.43 |
5,288,212 |
(i) The
exercise price noted above represents the weighted average exercise
price in Canadian dollars.
The weighted average assumptions used in
measuring the fair value of stock options granted are as
follows:
| |
Six months
ended |
| |
June 30, |
| |
|
|
2015 |
|
|
2014 |
| |
|
|
|
|
|
|
| Risk free interest rate |
|
|
0.97% |
|
|
1.60% |
| Expected dividend yield |
|
|
2.00% |
|
|
2.00% |
| Expected volatility |
|
|
26% |
|
|
29% |
| Expected time until exercise |
|
|
4.6 years |
|
|
4.5 years |
| Weighted average fair value of options granted in
period [Cdn$] (restated) |
|
$ |
12.84 |
|
$ |
11.47 |
[b] Long-term retention program
The following is a continuity of the stock that
has not been released to executives and is reflected as a reduction
in the stated value of the Company's Common Shares [number of
Common Shares in the table below are expressed in whole
numbers]. The number of shares have been restated to reflect
the effect of the Stock Split [note 1]:
| |
2015 |
|
|
2014 |
| |
|
|
Number |
|
|
Stated |
|
|
Number |
|
|
Stated |
| |
|
|
of shares |
|
|
value |
|
|
of shares |
|
|
value |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Awarded and not released, beginning of
period |
|
|
1,174,648 |
|
$ |
20 |
|
|
1,460,952 |
|
$ |
25 |
| Release of restricted stock |
|
|
(286,312) |
|
|
(4) |
|
|
(286,304) |
|
|
(5) |
| Awarded and not released, March 31 and June
30 |
|
|
888,336 |
|
$ |
16 |
|
|
1,174,648 |
|
$ |
20 |
[c] Restricted stock unit
program
The following is a continuity schedule of
restricted stock unit programs outstanding [number of stock units
in the table below are expressed in whole numbers] and has been
restated to reflect the effect of the Stock Split [note
1]:
| |
2015 |
|
2014 |
| |
Equity |
Liability |
Equity |
|
|
Equity |
Liability |
Equity |
|
| |
classified |
classified |
classified |
|
|
classified |
classified |
classified |
|
| |
RSUs |
RSUs |
DSUs |
Total |
|
RSUs |
RSUs |
DSUs |
Total |
| |
|
|
|
|
|
|
|
|
|
| Balance, beginning of period |
985,278 |
46,052 |
303,261 |
1,334,591 |
|
1,263,709 |
60,238 |
254,894 |
1,578,841 |
| Granted |
120,958 |
15,922 |
12,112 |
148,992 |
|
101,619 |
16,050 |
12,630 |
130,299 |
| Dividend equivalents |
424 |
262 |
1,009 |
1,695 |
|
505 |
306 |
1,058 |
1,869 |
| Released |
(16,518) |
— |
— |
(16,518) |
|
(16,518) |
— |
— |
(16,518) |
| Balance, March 31 |
1,090,142 |
62,236 |
316,382 |
1,468,760 |
|
1,349,315 |
76,594 |
268,582 |
1,694,491 |
| Granted |
93,821 |
— |
9,793 |
103,614 |
|
110,484 |
2,000 |
10,714 |
123,198 |
| Dividend equivalents |
475 |
235 |
1,199 |
1,909 |
|
467 |
278 |
979 |
1,724 |
| Balance, June 30 |
1,184,438 |
62,471 |
327,374 |
1,574,283 |
|
1,460,266 |
78,872 |
280,275 |
1,819,413 |
[d] Compensation expense related to
stock-based compensation
Stock-based compensation expense recorded in
selling, general and administrative expenses related to the above
programs is as follows:
| |
|
Three months ended |
|
|
Six months
ended |
| |
|
June 30, |
|
|
June 30, |
| |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Incentive Stock Option Plan |
|
$ |
3 |
|
$ |
3 |
|
$ |
6 |
|
$ |
7 |
| Long-term retention |
|
|
1 |
|
|
1 |
|
|
2 |
|
|
2 |
| Restricted stock unit |
|
|
6 |
|
|
5 |
|
|
12 |
|
|
10 |
| Total stock-based compensation expense |
|
$ |
10 |
|
$ |
9 |
|
$ |
20 |
|
$ |
19 |
13. COMMON SHARES
[a] During the second and first quarters of
2014, the Company repurchased 11,436,362 shares and 5,240,000
respectively, under normal course issuer bids for cash
consideration of $575 million and
$240 million, respectively [restated
to reflect the effect of the Stock Split [note1]].
[b] The following table presents the
maximum number of shares that would be outstanding if all the
dilutive instruments outstanding at August
5, 2015 were exercised or converted:
| Common Shares |
|
|
410,979,525 |
| Stock options
(i) |
|
|
9,220,638 |
| |
|
|
420,200,163 |
(i) Options to purchase Common
Shares are exercisable by the holder in accordance with the vesting
provisions and
upon payment of the exercise price as may be determined from
time to time pursuant to the Company's stock option plans. |
14. ACCUMULATED OTHER COMPREHENSIVE (LOSS)
INCOME
The following is a continuity schedule of
accumulated other comprehensive (loss) income:
| |
|
|
2015 |
|
2014 |
| |
|
|
|
|
|
Accumulated net unrealized (loss) gain
on translation of net investment in foreign
operations |
|
|
|
|
|
|
| |
Balance, beginning of period |
|
$ |
(255) |
|
$ |
454 |
| |
Net unrealized loss |
|
|
(438) |
|
|
(112) |
| |
Repurchase of shares under normal course issuer
bid |
|
|
— |
|
|
(4) |
| |
Balance, March 31 |
|
|
(693) |
|
|
338 |
| |
Net unrealized gain |
|
|
63 |
|
|
100 |
| |
Repurchase of shares under normal course issuer
bid |
|
|
— |
|
|
(11) |
| |
Balance, June 30 |
|
|
(630) |
|
|
427 |
| |
|
|
|
|
|
|
|
| Accumulated net unrealized (loss) gain
on cash flow hedges (i) |
|
|
|
|
|
|
| |
Balance, beginning of period |
|
|
(113) |
|
|
(20) |
| |
Net unrealized loss |
|
|
(65) |
|
|
(31) |
| |
Reclassification of net loss (gain) to net
income |
|
|
11 |
|
|
(1) |
| |
Balance, March 31 |
|
|
(167) |
|
|
(52) |
| |
Net unrealized (loss) gain |
|
|
(2) |
|
|
49 |
| |
Reclassification of net loss to net income |
|
|
21 |
|
|
6 |
| |
Balance, June 30 |
|
|
(148) |
|
|
3 |
| |
|
|
2015 |
|
|
2014 |
| |
|
|
|
|
|
|
|
| Accumulated net unrealized loss on pensions
(ii) |
|
|
|
|
|
|
| |
Balance, beginning of period |
|
|
(186) |
|
|
(117) |
| |
Net unrealized loss |
|
|
(1) |
|
|
— |
| |
Reclassification of net loss to net
income |
|
|
1 |
|
|
1 |
| |
Balance, March 31 |
|
|
(186) |
|
|
(116) |
| |
Reclassification of net loss to net
income |
|
|
2 |
|
|
2 |
| |
Balance, June 30 |
|
|
(184) |
|
|
(114) |
| |
|
|
|
|
|
|
|
| Accumulated net unrealized loss on
available-for-sale investments |
|
|
|
|
|
|
| |
Balance, beginning of period |
|
|
(4) |
|
|
(4) |
| |
Net unrealized gain (loss) |
|
|
1 |
|
|
(1) |
| |
Balance, March 31 |
|
|
(3) |
|
|
(5) |
| |
Net unrealized gain |
|
|
1 |
|
|
— |
| |
Balance, June 30 |
|
|
(2) |
|
|
(5) |
| |
|
|
|
|
|
|
|
| Total accumulated other comprehensive
(loss) income |
|
$ |
(964) |
|
$ |
311 |
| |
|
| (i) |
The amount of income tax benefit (obligation) that has been
netted in the accumulated net unrealized (loss) gain on cash
flow
hedges is as follows: |
| |
| |
|
|
|
2015 |
|
|
|
2014 |
| |
|
|
|
|
|
|
|
|
| Balance, beginning of
period |
|
|
$ |
44 |
|
|
$ |
5 |
| Net unrealized loss
|
|
|
|
27 |
|
|
|
10 |
| Reclassifications of
net (loss) gain to net income |
|
|
|
(5) |
|
|
|
1 |
| Balance, March
31 |
|
|
|
66 |
|
|
|
16 |
| Net unrealized gain
|
|
|
|
(1) |
|
|
|
(18) |
| Reclassifications of
net gain to net income |
|
|
|
(8) |
|
|
|
(1) |
| Balance, June
30 |
|
|
$ |
57 |
|
|
$ |
(3) |
| |
| (ii) |
The amount of income tax benefit that has been
netted in the accumulated net unrealized loss on pensions is as
follows: |
| |
|
| |
|
|
|
2015 |
|
|
|
2014 |
| |
|
|
|
|
|
|
|
|
| Balance, beginning of
period |
|
|
$ |
36 |
|
|
$ |
14 |
| Reclassification of
net loss to net income |
|
|
|
— |
|
|
|
— |
| Balance, March
31 |
|
|
|
36 |
|
|
|
14 |
| Reclassification of
net loss to net income |
|
|
|
(1) |
|
|
|
— |
| Balance, June
30 |
|
|
$ |
35 |
|
|
$ |
14 |
The amount of other comprehensive income that is
expected to be reclassified to net income over the next 12 months
is $80 million [net of income taxes
of $31 million].
15. FINANCIAL INSTRUMENTS
[a] The Company's financial assets and
financial liabilities consist of the following:
| |
|
June 30, |
|
December 31, |
| |
|
2015 |
|
2014 |
| |
|
|
|
|
| Held for trading |
|
|
|
|
|
|
| |
Cash and cash equivalents |
|
$ |
1,163 |
|
$ |
1,249 |
| |
Investment in asset-backed commercial
paper |
|
|
83 |
|
|
88 |
| |
|
$ |
1,246 |
|
$ |
1,337 |
| |
|
|
|
|
|
|
| Held to maturity investments |
|
|
|
|
|
|
| |
Severance investments |
|
$ |
4 |
|
$ |
4 |
| |
|
|
|
|
|
|
| Available-for-sale |
|
|
|
|
|
|
| |
Equity investments |
|
$ |
6 |
|
$ |
5 |
| |
|
|
|
|
|
|
| Loans and receivables |
|
|
|
|
|
|
| |
Accounts receivable |
|
$ |
5,574 |
|
$ |
5,316 |
| |
Long-term receivables included in
other assets |
|
|
77 |
|
|
85 |
| |
|
$ |
5,651 |
|
$ |
5,401 |
| |
|
|
|
|
|
|
| Other financial liabilities |
|
|
|
|
|
|
| |
Bank indebtedness |
|
$ |
77 |
|
$ |
30 |
| |
Long-term debt (including portion due
within one year) |
|
|
963 |
|
|
995 |
| |
Accounts payable |
|
|
4,691 |
|
|
4,765 |
| |
|
$ |
5,731 |
|
$ |
5,790 |
| |
|
|
|
|
|
|
Derivatives designated as effective
hedges, measured at fair value
|
|
|
|
|
|
|
| |
Foreign currency contracts |
|
|
|
|
|
|
| |
|
Prepaid expenses |
|
$ |
24 |
|
$ |
21 |
| |
|
Other assets |
|
|
9 |
|
|
8 |
| |
|
Other accrued liabilities |
|
|
(125) |
|
|
(90) |
| |
|
Other long-term liabilities |
|
|
(93) |
|
|
(80) |
| |
|
|
(185) |
|
|
(141) |
| Natural gas contracts |
|
|
|
|
|
|
| |
Other accrued liabilities |
|
|
(1) |
|
|
(1) |
| |
|
$ |
(186) |
|
$ |
(142) |
[b] Derivatives designated as effective
hedges, measured at fair value
The Company presents derivatives that are
designated as effective hedges at gross fair values in the
Consolidated Balance Sheets. However, master netting and other
similar arrangements allow net settlements under certain
conditions. The following table shows the Company's derivative
foreign currency contracts at gross fair value as reflected in the
Consolidated Balance Sheets and the unrecognized impacts of master
netting arrangements:
| |
|
Gross |
|
Gross |
|
|
|
| |
|
amounts |
|
amounts |
|
|
|
| |
|
presented |
|
not offset |
|
|
|
| |
|
in consolidated |
|
in consolidated |
|
|
|
| |
|
balance sheets |
|
balance sheets |
|
Net amounts |
| |
|
|
|
|
|
|
|
|
|
| June 30, 2015 |
|
|
|
|
|
|
|
|
|
| |
Assets |
|
$ |
32 |
|
$ |
32 |
|
$ |
— |
| |
Liabilities |
|
$ |
(218) |
|
$ |
(32) |
|
$ |
(186) |
| |
|
|
|
|
|
|
|
|
|
| December 31, 2014 |
|
|
|
|
|
|
|
|
|
| |
Assets |
|
$ |
30 |
|
$ |
28 |
|
$ |
2 |
| |
Liabilities |
|
$ |
(174) |
|
$ |
(28) |
|
$ |
(146) |
[c] Fair value
The Company determined the estimated fair values
of its financial instruments based on valuation methodologies it
believes are appropriate; however, considerable judgment is
required to develop these estimates. Accordingly, these estimated
fair values are not necessarily indicative of the amounts the
Company could realize in a current market exchange. The estimated
fair value amounts can be materially affected by the use of
different assumptions or methodologies. The methods and assumptions
used to estimate the fair value of financial instruments are
described below:
Cash and cash equivalents, accounts
receivable, bank indebtedness and accounts payable.
Due to the short period to maturity of the
instruments, the carrying values as presented in the interim
consolidated balance sheets are reasonable estimates of fair
values.
Investments
At June 30, 2015,
the Company held Canadian third party asset-backed commercial paper
["ABCP"] with a face value of Cdn$107
million [December 31, 2014 -
Cdn$107 million]. The carrying value and estimated fair value of
this investment was Cdn$103 million
[December 31, 2014 - Cdn$102 million]. As fair value information is
not readily determinable for the Company's investment in ABCP, the
fair value was based on a valuation technique estimating the fair
value from the perspective of a market participant.
At June 30, 2015,
the Company held available-for-sale investments in publicly traded
companies. The carrying value and fair value of these investments
was $6 million, which was based on
the closing share price of the investments on June 30, 2015.
Term debt
The Company's term debt includes $167 million due within one year. Due to the
short period to maturity of this debt, the carrying value as
presented in the interim consolidated balance sheets is a
reasonable estimate of its fair value.
Senior Notes
At June 30, 2015,
the total estimated fair value of the Senior Notes was
approximately $732 million,
determined primarily using active market prices, categorized as
Level 1 inputs within the ASC 820 fair value hierarchy.
[d] Credit risk
The Company's financial assets that are exposed
to credit risk consist primarily of cash and cash equivalents,
accounts receivable, held to maturity investments, and foreign
exchange forward contracts with positive fair values.
The Company's held for trading investments
include an investment in ABCP. Given the continuing uncertainties
regarding the value of the underlying assets, the amount and timing
over cash flows and the risk of collateral calls in the event that
spreads widened considerably, the Company could be exposed to
further losses on its investment.
Cash and cash equivalents, which consists of
short-term investments, are only invested in governments, bank term
deposits and bank commercial paper with an investment grade credit
rating. Credit risk is further reduced by limiting the amount which
is invested in certain governments or any major financial
institution.
The Company is also exposed to credit risk from
the potential default by any of its counterparties on its foreign
exchange forward contracts. The Company mitigates this credit risk
by dealing with counterparties who are major financial institutions
that the Company anticipates will satisfy their obligations under
the contracts.
In the normal course of business, the Company is
exposed to credit risk from its customers, substantially all of
which are in the automotive industry and are subject to credit
risks associated with the automotive industry. For both the three
and six-month periods ended June 30,
2015, sales to the Company's six largest customers
represented 83% of the Company's total sales, and substantially all
of the Company's sales are to customers in which it has ongoing
contractual relationships.
[e] Interest rate risk
The Company is not exposed to significant
interest rate risk due to the short-term maturity of its monetary
current assets and current liabilities. In particular, the amount
of interest income earned on the Company's cash and cash
equivalents is impacted more by the investment decisions made and
the demands to have available cash on hand, than by movements in
the interest rates over a given period.
In addition, the Company is not exposed to
interest rate risk on its term debt and Senior Notes as the
interest rates on these instruments are fixed.
[f] Currency risk and foreign
exchange contracts
At June 30, 2015,
the Company had outstanding foreign exchange forward contracts
representing commitments to buy and sell various foreign
currencies. Significant commitments are as follows:
| |
|
|
|
|
|
Buys |
|
|
|
|
Sells |
| |
|
|
|
|
|
|
|
|
|
|
|
| For Canadian
dollars |
|
|
|
|
|
|
|
|
|
|
|
| |
U.S. amount |
|
|
|
|
|
225 |
|
|
|
|
1,580 |
| |
euro amount |
|
|
|
|
|
60 |
|
|
|
|
8 |
| |
Korean won
amount |
|
|
|
|
|
21,306 |
|
|
|
|
— |
| |
|
|
|
|
|
|
|
|
|
|
|
| For U.S. dollars |
|
|
|
|
|
|
|
|
|
|
|
| |
Peso amount |
|
|
|
|
|
7,440 |
|
|
|
|
27 |
| |
Korean won
amount |
|
|
|
|
|
30,917 |
|
|
|
|
— |
| |
|
|
|
|
|
|
|
|
|
|
|
| For euros |
|
|
|
|
|
|
|
|
|
|
|
| |
U.S. amount |
|
|
|
|
|
191 |
|
|
|
|
378 |
| |
GBP amount |
|
|
|
|
|
4 |
|
|
|
|
29 |
| |
Czech Koruna amount |
|
|
|
|
|
5,090 |
|
|
|
|
— |
| |
Polish Zlotys
amount |
|
|
|
|
|
235 |
|
|
|
|
— |
Forward contracts mature at various dates
through 2019. Foreign currency exposures are reviewed
quarterly.
16. CONTINGENCIES
From time to time, the Company may become
involved in regulatory proceedings, or become liable for legal,
contractual and other claims by various parties, including
customers, suppliers, former employees, class action plaintiffs and
others. On an ongoing basis, the Company attempts to assess the
likelihood of any adverse judgments or outcomes to these
proceedings or claims, together with potential ranges of probable
costs and losses. A determination of the provision required, if
any, for these contingencies is made after analysis of each
individual issue. The required provision may change in the future
due to new developments in each matter or changes in approach such
as a change in settlement strategy in dealing with these
matters.
[a] In November
1997, the Company and two of its subsidiaries were sued by
KS Centoco Ltd., an Ontario-based
steering wheel manufacturer in which the Company has a 23% equity
interest, and by Centoco Holdings Limited, the owner of the
remaining 77% equity interest in KS Centoco Ltd. In March 1999, the plaintiffs were granted leave to
make substantial amendments to the original statement of claim in
order to add several new defendants and claim additional remedies
and, in February 2006, the plaintiffs
further amended their claim to add an additional remedy. The
amended statement of claim alleges, among other things:
- breach of fiduciary duty by the Company and two of its
subsidiaries;
- breach by the Company of its binding letter of intent with KS
Centoco Ltd., including its covenant not to have any interest,
directly or indirectly, in any entity that carries on the airbag
business in North America, other
than through MST Automotive Inc., a company to be 77% owned by
Magna and 23% owned by Centoco Holdings Limited;
- the plaintiff's exclusive entitlement to certain airbag
technologies in North America
pursuant to an exclusive licence agreement, together with an
accounting of all revenues and profits resulting from the alleged
use by the Company, TRW Inc. ["TRW"] and other unrelated third
party automotive supplier defendants of such technology in
North America;
- a conspiracy by the Company, TRW and others to deprive KS
Centoco Ltd. of the benefits of such airbag technology in
North America and to cause Centoco
Holdings Limited to sell to TRW its interest in KS Centoco Ltd. in
conjunction with the Company's sale to TRW of its interest in MST
Automotive GmbH and TEMIC Bayern-Chemie Airbag GmbH; and
- oppression by the defendants.
The plaintiffs are seeking, amongst other
things, damages of approximately Cdn$3.5
billion. Document production, completion of undertakings and
examinations for discovery are substantially complete, although
limited additional examinations for discovery may occur. A trial is
not expected to commence until 2017, at the earliest. The Company
believes it has valid defences to the plaintiffs' claims and
therefore intends to continue to vigorously defend this case.
Notwithstanding the amount of time which has transpired since the
claim was filed, these legal proceedings remain at an early stage
and, accordingly, it is not possible to predict their outcome.
[b] In September
2013, representatives of the Bundeskartellamt, the German
Federal Cartel Office, attended at one of the Company's operating
divisions in Germany to obtain
information in connection with an ongoing antitrust investigation
relating to suppliers of automotive textile coverings and
components, particularly trunk linings.
In September 2014,
the Conselho Administrativo de Defesa Economica, Brazil's Federal competition authority,
attended at one of the Company's operating divisions in
Brazil to obtain information in
connection with an ongoing antitrust investigation relating to
suppliers of automotive door latches and related products.
Proceedings of this nature can often continue
for several years. Where wrongful conduct is found, the relevant
antitrust authority can, depending on the jurisdiction, initiate
administrative or criminal legal proceedings and impose
administrative or criminal fines or penalties taking into account
several mitigating and aggravating factors. In the case of
the German Federal Cartel Office, administrative fines are tied to
the level of affected sales and the consolidated sales of the group
of companies to which the offending entity belongs. At this time,
management is unable to predict the duration or outcome of the
German and Brazilian investigations, including whether any
operating divisions of the Company will be found liable for any
violation of law or the extent or magnitude of any liability, if
found to be liable.
The Company's policy is to comply with all
applicable laws, including antitrust and competition laws. The
Company has initiated a global review focused on antitrust risk led
by a team of external counsel. If any antitrust violation is found
as a result of the above-referenced investigations or otherwise,
Magna could be subject to fines, penalties and civil,
administrative or criminal legal proceedings that could have a
material adverse effect on Magna's profitability in the year in
which any such fine or penalty is imposed or the outcome of any
such proceeding is determined. Additionally, Magna could be subject
to other consequences, including reputational damage, which could
have a material adverse effect on the Company.
[c] In certain circumstances, the Company
is at risk for warranty costs including product liability and
recall costs. Due to the nature of the costs, the Company makes its
best estimate of the expected future costs [note 9];
however, the ultimate amount of such costs could be materially
different. The Company continues to experience increased customer
pressure to assume greater warranty responsibility. Currently,
under most customer agreements, the Company only accounts for
existing or probable claims. Under certain complete vehicle
engineering and assembly contracts, the Company records an estimate
of future warranty-related costs based on the terms of the specific
customer agreements, and the specific customer's warranty
experience.
17. SEGMENTED INFORMATION
The Company's chief operating decision maker
uses Adjusted EBIT as the measure of segment profit or loss, since
management believes Adjusted EBIT is the most appropriate measure
of operational profitability or loss for its reporting segments.
Adjusted EBIT represents income from continuing operations before
income taxes; interest expense, net; and other (income) expense,
net.
The following tables show segment information
for the Company's reporting segments and a reconciliation of
Adjusted EBIT to the Company's consolidated income from continuing
operations before income taxes:
| |
|
|
Three months ended
June 30, 2015 |
|
|
Three months ended
June 30, 2014 |
| |
|
|
Total
sales |
|
|
External
sales |
|
|
Adjusted
EBIT |
|
|
Fixed
assets,
net |
|
|
Total
sales |
|
|
External
sales |
|
|
Adjusted
EBIT |
|
|
Fixed
assets,
net |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Canada |
|
$ |
1,576 |
|
$ |
1,458 |
|
|
|
|
$ |
649 |
|
$ |
1,794 |
|
$ |
1,659 |
|
|
|
|
$ |
596 |
| |
United States |
|
|
2,535 |
|
|
2,426 |
|
|
|
|
|
1,291 |
|
|
2,396 |
|
|
2,260 |
|
|
|
|
|
1,079 |
| |
Mexico |
|
|
1,054 |
|
|
965 |
|
|
|
|
|
668 |
|
|
1,024 |
|
|
937 |
|
|
|
|
|
584 |
| |
Eliminations |
|
|
(288) |
|
|
— |
|
|
|
|
|
— |
|
|
(325) |
|
|
— |
|
|
|
|
|
— |
| |
|
|
4,877 |
|
|
4,849 |
|
$ |
525 |
|
|
2,608 |
|
|
4,889 |
|
|
4,856 |
|
$ |
539 |
|
|
2,259 |
| Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Western Europe (excluding Great
Britain) |
|
|
2,248 |
|
|
2,183 |
|
|
|
|
|
1,185 |
|
|
2,879 |
|
|
2,804 |
|
|
|
|
|
1,331 |
| |
Great
Britain |
|
|
102 |
|
|
102 |
|
|
|
|
|
43 |
|
|
97 |
|
|
97 |
|
|
|
|
|
38 |
| |
Eastern
Europe |
|
|
498 |
|
|
438 |
|
|
|
|
|
467 |
|
|
626 |
|
|
545 |
|
|
|
|
|
619 |
| |
Eliminations |
|
|
(74) |
|
|
— |
|
|
|
|
|
— |
|
|
(102) |
|
|
— |
|
|
|
|
|
— |
| |
|
|
2,774 |
|
|
2,723 |
|
|
120 |
|
|
1,695 |
|
|
3,500 |
|
|
3,446 |
|
|
143 |
|
|
1,988 |
| Asia |
|
|
466 |
|
|
434 |
|
|
31 |
|
|
664 |
|
|
472 |
|
|
437 |
|
|
41 |
|
|
610 |
| Rest of
World |
|
|
125 |
|
|
125 |
|
|
(8) |
|
|
69 |
|
|
168 |
|
|
169 |
|
|
(11) |
|
|
103 |
| Corporate and
Other |
|
|
(109) |
|
|
2 |
|
|
9 |
|
|
370 |
|
|
(118) |
|
|
3 |
|
|
10 |
|
|
360 |
| Total reportable
segments |
|
|
8,133 |
|
|
8,133 |
|
|
677 |
|
|
5,406 |
|
|
8,911 |
|
|
8,911 |
|
|
722 |
|
|
5,320 |
| Other income
(expense), net |
|
|
|
|
|
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
|
(11) |
|
|
|
| Interest expense,
net |
|
|
|
|
|
|
|
|
(8) |
|
|
|
|
|
|
|
|
|
|
|
(7) |
|
|
|
| |
|
$ |
8,133 |
|
$ |
8,133 |
|
$ |
726 |
|
|
5,406 |
|
$ |
8,911 |
|
$ |
8,911 |
|
$ |
704 |
|
|
5,320 |
| Current
assets |
|
|
|
|
|
|
|
|
|
|
|
10,851 |
|
|
|
|
|
|
|
|
|
|
|
11,100 |
| Investments, goodwill,
deferred tax assets, and other
assets |
|
|
|
|
|
|
|
|
|
|
|
2,310 |
|
|
|
|
|
|
|
|
|
|
|
2,558 |
| Noncurrent assets held
for sale |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
383 |
| Consolidated total
assets |
|
|
|
|
|
|
|
|
|
|
$ |
18,567 |
|
|
|
|
|
|
|
|
|
|
$ |
19,361 |
| |
|
|
|
|
|
|
|
| |
|
|
Six months ended
June 30, 2015 |
|
|
Six months ended
June 30, 2014 |
| |
|
|
Total
sales |
|
|
External
sales |
|
|
Adjusted
EBIT |
|
|
Fixed
assets,
net |
|
|
Total
sales |
|
|
External
sales |
|
|
Adjusted
EBIT |
|
|
Fixed
assets,
net |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Canada |
|
$ |
3,040 |
|
$ |
2,818 |
|
|
|
|
$ |
649 |
|
$ |
3,398 |
|
$ |
3,146 |
|
|
|
|
$ |
596 |
| |
United States |
|
|
4,794 |
|
|
4,580 |
|
|
|
|
|
1,291 |
|
|
4,584 |
|
|
4,325 |
|
|
|
|
|
1,079 |
| |
Mexico |
|
|
2,055 |
|
|
1,882 |
|
|
|
|
|
668 |
|
|
1,984 |
|
|
1,817 |
|
|
|
|
|
584 |
| |
Eliminations |
|
|
(555) |
|
|
— |
|
|
|
|
|
— |
|
|
(617) |
|
|
— |
|
|
|
|
|
— |
| |
|
|
9,334 |
|
|
9,280 |
|
$ |
978 |
|
|
2,608 |
|
|
9,349 |
|
|
9,288 |
|
$ |
991 |
|
|
2,259 |
| Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Western Europe (excluding Great
Britain) |
|
|
4,501 |
|
|
4,373 |
|
|
|
|
|
1,185 |
|
|
5,792 |
|
|
5,654 |
|
|
|
|
|
1,331 |
| |
Great
Britain |
|
|
195 |
|
|
195 |
|
|
|
|
|
43 |
|
|
189 |
|
|
188 |
|
|
|
|
|
38 |
| |
Eastern
Europe |
|
|
1,048 |
|
|
927 |
|
|
|
|
|
467 |
|
|
1,215 |
|
|
1,048 |
|
|
|
|
|
619 |
| |
Eliminations |
|
|
(152) |
|
|
— |
|
|
|
|
|
— |
|
|
(205) |
|
|
— |
|
|
|
|
|
— |
| |
|
|
5,592 |
|
|
5,495 |
|
|
248 |
|
|
1,695 |
|
|
6,991 |
|
|
6,890 |
|
|
279 |
|
|
1,988 |
| Asia |
|
|
929 |
|
|
870 |
|
|
73 |
|
|
664 |
|
|
922 |
|
|
851 |
|
|
68 |
|
|
610 |
| Rest of
World |
|
|
258 |
|
|
258 |
|
|
(12) |
|
|
69 |
|
|
329 |
|
|
329 |
|
|
(24) |
|
|
103 |
| Corporate and
Other |
|
|
(208) |
|
|
2 |
|
|
21 |
|
|
370 |
|
|
(225) |
|
|
8 |
|
|
26 |
|
|
360 |
| Total reportable
segments |
|
|
15,905 |
|
|
15,905 |
|
|
1,308 |
|
|
5,406 |
|
|
17,366 |
|
|
17,366 |
|
|
1,340 |
|
|
5,320 |
| Other income
(expense), net |
|
|
|
|
|
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
|
(33) |
|
|
|
| Interest expense,
net |
|
|
|
|
|
|
|
|
(18) |
|
|
|
|
|
|
|
|
|
|
|
(9) |
|
|
|
| |
|
$ |
15,905 |
|
$ |
15,905 |
|
$ |
1,347 |
|
|
5,406 |
|
$ |
17,366 |
|
$ |
17,366 |
|
$ |
1,298 |
|
|
5,320 |
| Current
assets |
|
|
|
|
|
|
|
|
|
|
|
10,851 |
|
|
|
|
|
|
|
|
|
|
|
11,100 |
| Investments, goodwill
deferred tax assets and other
assets |
|
|
|
|
|
|
|
|
|
|
|
2,310 |
|
|
|
|
|
|
|
|
|
|
|
2,558 |
| Noncurrent assets held
for sale |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
383 |
| Consolidated total
assets |
|
|
|
|
|
|
|
|
|
|
$ |
18,567 |
|
|
|
|
|
|
|
|
|
|
$ |
19,361 |
18. SUBSEQUENT EVENT
Subsequent to the second quarter of 2015, the
Company signed an agreement to acquire the Getrag Group of
Companies ["Getrag"]. The purchase price for 100% of the
equity of Getrag is approximately €1.75 billion, subject to working
capital and other customary purchase price adjustments. The
transaction is subject to customary closing conditions including
regulatory approval, and is expected to close near the end of
2015.
SOURCE Magna International Inc.