23.

SEGMENTED INFORMATION

[a]

Magna is a global automotive supplier which has complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis, exterior, seating, powertrain, active driver assistance, vision, closure and roof systems. Magna also has electronic and software capabilities across many of these areas.

Magna’s success is directly dependent upon the levels of North American and European [and currently to a lesser extent on Asia and Rest of World] car and light truck production by its customers. OEM production volumes in each of North America and Europe may be impacted by a number of geographic factors, including general economic conditions, interest rates, consumer credit availability, fuel prices and availability, infrastructure, legislative changes, environmental emission and safety issues, and labour and/or trade relations.

Given the differences between the regions in which the Company operates, Magna’s operations are segmented on a geographic basis. The Company’s segments consist of North America, Europe, Asia and Rest of World. The Company maintains management teams in each of the Company’s two primary markets, North America and Europe. The role of the North American and European management teams is to manage Magna’s interests to ensure a coordinated effort across the Company’s different product capabilities. In addition to maintaining key customer, supplier and government contacts in their respective markets, the regional management teams centrally manage key aspects of the Company’s operations while permitting the divisions enough flexibility through Magna’s decentralized structure to foster an entrepreneurial environment.

Consistent with the above, the Company’s internal financial reporting separately segments key internal operating performance measures between North America, Europe, Asia and Rest of World for purposes of presentation to the chief operating decision maker to assist in the assessment of operating performance, the allocation of resources, and the long-term strategic direction and future global growth in the Company.

The Company’s chief operating decision maker uses Adjusted Earnings before Interest and Income Taxes [“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 is calculated by taking net income from operations and adding back income taxes, interest expense, net, and other (income) expense, net.

The accounting policies of each segment are the same as those set out under “Significant Accounting Policies” [note 1] and intersegment sales and transfers are accounted for at fair market value.

The following tables show segment information for the Company’s reporting segments and a reconciliation of Adjusted EBIT to the Company’s consolidated income before income taxes:

2017

Total
sales

External
sales

Depreciation
and
amortization

Adjusted
EBIT [ii]

Goodwill

Fixed
asset
additions

Fixed
assets,
net

North America

Canada

6,888

6,215

268

883

United States

9,989

9,742

301

1,593

Mexico

5,505

4,867

241

1,084

Eliminations

(1,477

)

—

North America

20,905

20,824

549

2,064

612

810

3,560

Europe

Western Europe

(excluding Great Britain)

12,371

11,949

624

2,443

Great Britain

597

595

162

Eastern Europe

2,674

2,379

199

728

Eliminations

(465

)

—

Europe

15,177

14,923

478

596

1,264

858

3,333

Asia

2,791

2,608

106

366

223

117

726

Rest of World

584

583

—

Corporate and Other [i]

(511

)

—

465

Total reportable segments

38,946

1,173

3,108

2,099

1,858

8,141

Current assets

11,220

Investments, intangible assets, goodwill, deferred tax assets and other assets

6,032

Consolidated total assets

25,393


	2016
	Total sales			External sales		Depreciation and amortization		Adjusted EBIT [ii]			Goodwill		Fixed asset additions		Fixed assets, net
North America
Canada	$	6,784		$	6,214								$	201	$	721
United States		10,226			9,857									400		1,573
Mexico		5,121			4,586									309		999
Eliminations		(1,387	)		—									—		—

North America		20,744			20,657	$	486	$	2,061		$	595		910		3,293

Europe
Western Europe (excluding Great Britain)		10,537			10,159									578		1,912
Great Britain		658			656									24		127
Eastern Europe		2,285			2,000									136		545
Eliminations		(400	)		—									—		—

Europe		13,080			12,815		431		543			1,116		738		2,584

Asia		2,674			2,502		103		266			212		97		679
Rest of World		465			464		13		(17	)		—		11		62
Corporate and Other [i]		(518	)		7		23		45			—		51		404

Total reportable segments	$	36,445		$	36,445	$	1,056	$	2,898		$	1,923	$	1,807	$	7,022
Current assets																10,163
Investments, intangible assets, goodwill, deferred tax assets and other assets																5,381

Consolidated total assets															$	22,566

[i]	Included in Corporate and Other Adjusted EBIT are intercompany fees charged to the automotive segments.

[ii]	The following table reconciles Net income from operations to Adjusted EBIT:


	2017		2016
Net Income from operations	$	2,255	$	2,074
Add (deduct):
Interest expense, net		70		88
Other expense, net		39		30
Income taxes		744		706

Adjusted EBIT	$	3,108	$	2,898

[b]	The following table aggregates external revenues by customer as follows:


	2017		2016
General Motors	$	6,854	$	7,207
Ford Motor Company		6,058		5,667
Fiat / Chrysler Group		5,502		5,349
Daimler AG		4,719		4,294
BMW		4,231		3,786
Volkswagen		4,025		3,758
Other		7,557		6,384

	$	38,946	$	36,445

[c]	The following table summarizes external revenues generated by automotive products and services:


	2017		2016
Body systems and chassis systems	$	9,744	$	9,157
Powertrain systems		6,773		6,489
Exterior systems		5,325		5,272
Seating systems		5,203		5,079
Tooling, engineering and other		3,397		3,078
Complete vehicle assembly		2,944		2,190
Vision and electronic systems		2,891		2,768
Closure systems		2,669		2,412

	$	38,946	$	36,445