EX-99 2 exh_99.htm EXHIBIT 99

Exhibit 99

 

FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC. 
(United States dollars in millions, except per share figures) (Unaudited)
Prepared in accordance with U.S. GAAP  

 

                                 
        2018   2019   2020
    Note   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q
VEHICLE VOLUME STATISTICS (in millions)                
North American vehicle volumes (including Mexico)       4.414 4.368 4.048 4.211 17.041   4.250 4.268 3.925 3.910 16.353   3.688
                                 
European vehicle volumes:                                
Western Europe       3.939 4.005 2.997 3.388 14.329   3.720 3.615 3.002 3.289 13.626   2.862
Eastern Europe       1.974 2.070 1.695 2.065 7.804   2.017 2.069 1.678 1.998 7.762   1.793
Total Europe       5.913 6.075 4.692 5.453 22.133   5.737 5.684 4.680 5.287 21.388   4.655
                                 
Asia volumes       12.559 12.327 11.702 12.896 49.484   11.963 11.274 11.101 13.277 47.615   7.613
                                 
China volumes       6.663 6.614 6.111 7.001 26.389   6.039 5.492 5.663 7.520 24.714   3.369
                                 
Magna Steyr vehicle assembly volumes       0.041 0.033 0.034 0.037 0.145   0.046 0.043 0.035 0.034 0.158   0.031
                                 
AVERAGE FOREIGN EXCHANGE RATES                                
1 Canadian dollar equals U.S. dollars       0.790 0.775 0.765 0.756 0.771   0.752 0.748 0.757 0.758 0.754   0.745
1 Euro equals U.S. dollars       1.229 1.193 1.163 1.141 1.181   1.135 1.124 1.112 1.107 1.119   1.102
1 Chinese renminbi equals U.S. dollars       0.157 0.157 0.147 0.145 0.151   0.148 0.147 0.142 0.142 0.145   0.143
                                 
CONSOLIDATED STATEMENTS OF INCOME (LOSS)                                
Sales       10,792      10,280        9,618      10,137 40,827   10,591      10,126        9,319        9,395 39,431   8,657
                                 
Costs and expenses:                                
Cost of goods sold       9,293        8,795        8,253        8,714 35,055   9,164        8,710        8,063        8,085 34,022   7,567
Selling, general and administrative        396           434           403           431 1,664   421           453           400           423 1,697   381
Equity income       (87)            (72)            (62)            (56) (277)   (35)            (48)            (37)            (58) (178)   (30)
                                 
EBITDA   2   1,190        1,123        1,024        1,048 4,385   1,041        1,011           893           945 3,890   739
Depreciation and amortization       315           320           325           318 1,278   321           334           335           355 1,345   336
EBIT   3   875           803           699           730 3,107   720           677           558           590 2,545   403
Interest expense, net       21             23             23             26 93   31             14             18             19 82   17
                                 
Operating income    2   854 780 676 704 3,014   689 663 540 571 2,463   386
Other expense (income), net   2   3 (39) 2 97 63   (679) 68 859 (8) 240   -
Income (loss) from operations before income taxes                 851           819           674           607        2,951          1,368           595          (319)           579        2,223             386
Income taxes       182           183           114           140 619   267           145             45           134 591   134
                                 
Net income (loss)       669           636           560           467 2,332   1,101           450          (364)           445 1,632   252
(Income) loss attributable to non-controlling interests   2   (9)            (10)              (6)            (11) (36)   5               2           131              (5) 133   9
Net income (loss) attributable to Magna International Inc.       660 626 554 456 2,296   1,106 452 (233) 440 1,765   261
                                 
                                 
Adjusted net income attributable to Magna International Inc.   2   663 590 535 542 2,330   531 509 438 433 1,911   261
                                 
Diluted earnings (loss) per share:                                
Diluted        $      1.83  $      1.77  $      1.62  $      1.37  $      6.61    $      3.39  $      1.42  $     (0.75)  $      1.43  $      5.59    $      0.86
Adjusted Diluted        $      1.84  $      1.67  $      1.56  $      1.63  $      6.71    $      1.63  $      1.59  $      1.41  $      1.41  $      6.05    $      0.86
                                 
Weighted average number of Common Shares outstanding during the year (in millions):       359.9 354.1 343.0 333.2 347.5   326.3 319.5 310.7 306.3 315.8   302.7
                                 
PROFITABILITY RATIOS                                
Selling, general and administrative /Sales       3.7% 4.2% 4.2% 4.3% 4.1%   4.0% 4.5% 4.3% 4.5% 4.3%   4.4%
EBITDA /Sales       11.0% 10.9% 10.6% 10.3% 10.7%   9.8% 10.0% 9.6% 10.1% 9.9%   8.5%
EBIT /Sales       8.1% 7.8% 7.3% 7.2% 7.6%   6.8% 6.7% 6.0% 6.3% 6.5%   4.7%
Operating income /Sales       7.9% 7.6% 7.0% 6.9% 7.4%   6.5% 6.5% 5.8% 6.1% 6.2%   4.5%
Effective tax rate                                
Reported       21.4% 22.3% 16.9% 23.1% 21.0%   19.5% 24.4% -14.1% 23.1% 26.6%   34.7%
Excluding Other expense (income), net of taxes       21.3% 23.1% 20.0% 21.4% 21.5%   23.7% 23.5% 19.6% 23.3% 22.7%   34.7%

 

 

 Page 1 of 6 

 

 

FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(United States dollars in millions) (Unaudited)

 

        2018     2019     2020
    Note   1st Q 2nd Q 3rd Q 4th Q     1st Q 2nd Q 3rd Q 4th Q     1st Q
ASSETS             [Note 1]            
Current assets:                                
Accounts receivable       8,073        7,656        7,160        6,548     7,446        7,204        7,068        5,927     5,684
Inventories       3,564        3,600        3,580        3,403     3,501        3,521        3,457        3,304     3,531
Prepaid expenses and other       250           201           237           250     275           278           211           238     234
             11,887      11,457      10,977      10,201          11,222      11,003      10,736        9,469            9,449
Current liabilities:                                
Accounts payable and other accruals       9,855        9,048        8,847        8,597     9,347        9,048        8,757        8,198     8,381
                                 
Working capital        2,032        2,409        2,130        1,604     1,875        1,955        1,979        1,271     1,068
Investments              2,132        2,320        2,337        2,189            2,408        2,334        1,430        1,210            1,336
Fixed assets, net              8,204        8,026        7,743        8,095            7,958        8,109        7,943        8,260            7,948
Goodwill, other assets and intangible assets       3,837        3,684        3,467        3,527     3,487        3,593        3,461        3,456     3,340
Operating lease right-of-use assets                     -                 -                 -                 -              1,716        1,744        1,702        1,811            1,788
             16,205      16,439      15,677      15,415          17,444      17,735      16,515      16,008          15,480
Net assets held for sale                      -                 -             568           541                   -                 -                 -                 -                     -  
Funds employed            16,205      16,439      16,245      15,956          17,444      17,735      16,515      16,008          15,480
FINANCING                                
Straight debt:                                
Cash and cash equivalents       (769)          (626)          (884)          (684)     (925)          (563)          (769)       (1,276)     (1,146)
Short-term borrowings       262        1,123        1,291        1,098     335           199           436                -     -
Long-term debt due within one year       114           120           231           201     122           112           104           106     93
Long-term debt       3,220        3,115        3,112        3,084     3,062        3,071        3,021        3,062     3,021
Current portion of operating lease liabilities       -                -                -                -     176           214           218           225     218
Operating lease liabilities       -                -                -                -            1,566        1,544        1,527        1,601            1,586
               2,827        3,732        3,750        3,699            4,336        4,577        4,537        3,718            3,772
Long-term employee benefit liabilities       691           659           592           597     598           606           584           677     659
Other long-term liabilities       340           314           291           400     396           404           388           371     420
Deferred tax liabilities, net       54             86           107           101     167           196           133           111     87
               1,085        1,059           990        1,098            1,161        1,206        1,105        1,159            1,166
Shareholders' equity       12,293      11,648      11,505      11,159     11,947      11,952      10,873      11,131     10,542
             16,205      16,439      16,245      15,956          17,444      17,735      16,515      16,008          15,480
                                          
                                 
                                 
ASSET UTILIZATION RATIOS                                
Days in accounts receivable       67.3 67.0 67.0 58.1     63.3 64.0 68.3 56.8     59.1
Days in accounts payable       95.4 92.6 96.5 88.8     91.8 93.5 97.7 91.3     99.7
Inventory turnover - cost of sales       10.4 9.8 9.2 10.2     10.5 9.9 9.3 9.8     8.6
Working capital turnover        21.2 17.1 18.1 25.3     22.6 20.7 18.8 29.6     32.4
Total asset turnover        2.7 2.5 2.5 2.6     2.4 2.3 2.3 2.3     2.2
                                 
CAPITAL STRUCTURE                                
Straight debt       17.4% 22.7% 23.1% 23.2%     24.9% 25.8% 27.5% 23.2%     24.4%
Long-term employee benefit liabilities, other long-term liabilities & deferred tax liabilities, net       6.6% 6.4% 6.1% 6.9%     6.6% 6.8% 6.7% 7.2%     7.5%
Shareholders' equity        75.9% 70.9% 70.8% 69.9%     68.5% 67.4% 65.8% 69.5%     68.1%
        100.0% 100.0% 100.0% 100.0%     100.0% 100.0% 100.0% 100.0%     100.0%
                                 
Debt to total capitalization        22.6% 27.2% 28.7% 28.2%     30.6% 30.1% 32.8% 31.0%     31.8%
                                 
Adjusted Debt to Adjusted EBITDA   2   1.18x 1.32x 1.37x 1.32x     1.18x 1.18x 1.26x 1.23x     1.30x
ANNUALIZED RETURNS                                
Return on assets (EBIT/assets employed)       21.6% 19.5% 17.8% 18.9%     16.5% 15.3% 13.5% 14.7%     10.4%
Return on equity (Net income attributable to Magna International Inc. / Average shareholders' equity)       22.0% 20.9% 19.1% 16.1%     38.3% 15.1% -8.2% 16.0%     9.6%
Adjusted Return on equity (Adjusted Net income attributable to Magna International Inc. / Average shareholders' equity)       22.1% 19.7% 18.5% 19.1%     18.4% 17.0% 15.4% 15.7%     9.6%

 

 Page 2 of 6 

 

 

FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States dollars in millions) (Unaudited)

 

                                 
        2018   2019   2020
Cash provided from (used for):   Note   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q
                 
Operating activities                                
Net income (loss)                 669           636           560           467        2,332          1,101           450          (364)           445        1,632             252
Items not involving current cash flows                 363           303           339           534        1,539            (213)           470        1,210           509        1,976             363
               1,032           939           899        1,001        3,871             888           920           846           954        3,608             615
Changes in operating assets and liabilities                (455)          (472)           177           597          (153)            (294)               -              (96)           742           352               24
                                 
Cash provided from operating activities                 577           467        1,076        1,598        3,718             594           920           750        1,696        3,960             639
                                     
Investment activities                                    
Fixed asset additions                 (243)          (379)          (381)          (647)       (1,650)            (251)          (328)          (349)          (513)       (1,441)            (203)
Increase in investments, other assets and intangible assets                (109)          (103)          (114)          (150)          (476)              (77)          (102)            (83)          (122)          (384)              (93)
Proceeds from disposition                   29             48             76             70           223               86             26             57             16           185               23
Proceeds from sale of (Investment in) Lyft, Inc.                     -            (200)            (20)               -            (220)                 -                 -               10           221           231                 -  
Increase in private equity investments                    (5)               -                 -                 -                (5)                (5)              (5)               -                 -              (10)            (100)
Acquisitions                     -                 4               -            (152)          (148)                 -            (152)               -                 5          (147)                (7)
Sale of Fluid Pressure & Controls Business ["FP&C"]                     -                 -                 -                 -                 -            1,129               -                 3               -          1,132                 -  
                                     
Cash provided from (used for) investment activities                (328)          (630)          (439)          (879)       (2,276)             882          (561)          (362)          (393)          (434)            (380)
                                     
Financing activities                                    
Net issues (repayments) of debt                     3           886           262          (284)           867            (855)          (187)           251          (435)       (1,226)                (6)
Common Shares issued on exercise of stock options                     5             41               1               3             50                 8               6             19             11             44                 1
Repurchase of Common Shares                (103)          (729)          (520)          (479)       (1,831)            (284)          (409)          (342)          (254)       (1,289)            (201)
Shares repurchased for tax withholdings on vesting of equity awards                     -                (2)              (4)            (10)            (16)                (3)              (2)               -                (4)              (9)              (10)
Contributions to subsidiaries by non-controlling interests                     -                 4               -                 -                 4                 2               -                 2               -                 4                 -  
Dividends paid to non-controlling interests                     -              (30)               -              (39)            (69)                 -              (13)               -                (9)            (22)                (3)
Dividends paid                (118)          (115)          (109)          (106)          (448)            (119)          (110)          (109)          (111)          (449)            (121)
                                     
Cash (used for) provided from financing activities                (213)             55          (370)          (915)       (1,443)         (1,251)          (715)          (179)          (802)       (2,947)            (340)
Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalents                   10            (31)            (10)              (5)            (36)               14              (4)              (9)             10             11              (52)
Net increase (decrease) in cash, cash equivalents and restricted cash equivalents during the period                   46          (139)           257          (201)            (37)             239          (360)           200           511           590            (133)
Cash, cash equivalents and restricted cash equivalents, beginning of period   4             839           885           746        1,003           839             802        1,041           681           881           802          1,392
Cash, cash equivalents and restricted cash equivalents, end of period                 885           746        1,003           802           802          1,041           681           881        1,392        1,392          1,259

 

 Page 3 of 6 

 

 

FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC.
(United States dollars in millions, except per share figures) (Unaudited)

 

    This Analyst should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019.  
           
Note 1:    LEASES ADOPTION      
    On January 1, 2019, the Company adopted ASC 842, Leases using the modified retrospective transition approach, without restatement of comparative periods' financial information. The adoption requires the Company to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets.  
       
Note 2:   NON-GAAP MEASURES    
    The Company presents Operating income, EBIT (Earnings before interest and taxes) and EBITDA (Earnings before interest, taxes and depreciation and amortization) before Other expense (income),net.  The Company also presents Adjusted Net Income (Net Income before Other expense (income),net , net of tax and excluding significant income tax valuation allowance adjustments), Adjusted Diluted Earnings per Share, Adjusted EBIT and Adjusted EBIT as a percentage of sales, Return on Invested Capital and Return on Equity. The Company calculates Adjusted Debt as total debt adjusted to include pension and lease liabilities and Adjusted EBITDA as earnings before, interest, net, taxes, depreciation and amortization adjusted to add back interest income, certain pension costs and operating lease expense. The Company presents these financial figures because such measures are widely used by analysts and investors in evaluating the operating performance of the Company.  However, such measures do not have any standardized meaning under U.S. generally accepted accounting principles and may not be comparable to the calculation of similar measures by other companies.

Other expense (income), net consists of:		  
       
          2018   2019   2020  
          1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q  
                                     
                                     
    Impairment charges [a]   - - - 74 74   - - 727 - 727   -  
    Restructuring charges [b]   3 17 2 23 45   14 7 7 3 31   -  
    Net (gains) losses on investments [c]   - (56) - - (56)   (177) 67 127 (11) 6   -  
    Gain on the sale of business [d]   - - - - -   (516) (6) (2) - (524)   -  
                                     
          3            (39)               2             97             63   (679)             68           859              (8)           240   -  
                                     
  [a] Impairment charges  
    In Power & Vision, during the third quarter of 2019, the Company recorded $700 million impairment on its equity accounted investment.  Additionally, the Company recorded asset impairment charges of $27 million in the Company's Power & Vision segment.

During the fourth quarter of 2018, the Company recorded $14 million of impairment charges for fixed assets in Body Exteriors & Structures, and the Company recorded a $60 million impairment charge on its equity accounted investment in Power & Vision.
                                   
  [b] Restructuring charges                                
          2018   2019   2020  
          1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q  
               
                                     
    Power & Vision     3 12 2 3 20   - - - - -   -  
    Body Exteriors & Structures     - 5 - 20 25   14 7 7 3 31   -  
              3             17               2             23             45   14               7               7               3 31   -  
                                   
  [c] Net (gains) losses on investments                                
    In Corporate, during the first, second, third and fourth quarters of 2019, the Company recorded gains of $177 million, net losses of $67 million, net losses of $127 million, and net gains of $11 million respectively, substantially related to the revaluation of its investment in Lyft, Inc.

In Corporate, during the second quarter of 2018, the Company remeasured its private equity investments at fair value resulting in a $56 million gain, of which $46 million related to its investment in Lyft, Inc. 
     
  [d] Gain on the sale of business  
    In Power & Vision, during the first quarter of 2019, the Company recorded a gain on the sale of its Fluid Pressure & Controls ["FP&C"] business of $516 million. In the second and third quarters of 2019, the Company recorded an increase in the gain on sale of $6 million and $2 million, respectively, as a result of finalizing the proceeds relating to working capital.   

 

 

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    The following table reconciles Net (loss) income attributable to Magna International Inc. to Adjusted net income attributable to Magna International Inc.:          
                                       
              2018   2019   2020
              1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q
                       
                                       
    Net income (loss) attributable to Magna International Inc.   660           626           554           456        2,296   1,106           452          (233)           440        1,765   261
      Exclude:                               
        Impairment charges [f]     -                -                - 71             71   -                -           557 -           557   -
        Restructuring charges     3 17 2 21             43   14 7 7 3             31   -
        Net (gains) losses on investments     - (53) - -            (53)   (151) 57 109 (10)               5   -
        Gain on the sale of business     - - - -                -   (438) (7) (2) -          (447)   -
        US tax reform     - - - 11             11   - - - -                -   -
        Reassessment of deferred tax balances - FP&C [g] - - (21) -            (21)   - - - -                -   -
        Adjustment to tax valuation allowance in India    - - - (17)            (17)   - - - -                -   -
                                      -
    Adjusted net income attributable to Magna International Inc. 663           590           535           542        2,330   531           509           438           433        1,911   261
                                       
                                       
    Diluted earnings (loss) per share      $      1.83  $      1.77  $      1.62  $      1.37  $      6.61    $      3.39  $      1.42  $     (0.75)  $      1.43  $      5.59    $      0.86
      Exclude:                              
        Impairment charges [f]     -               -                 -            0.22 0.21   -               -            1.80               -   1.76   -
        Restructuring charges     0.01          0.05               -            0.06 0.12   0.04          0.02          0.02          0.01 0.10   -
        Net (gains) losses on investments     -         (0.15)               -                 -   (0.15)   (0.46)          0.17          0.35         (0.03) 0.02   -
        Gain on the sale of business     -               -                 -                 -   -   (1.34)         (0.02)         (0.01)               -   (1.42)   -
        US tax reform     -               -                 -            0.03 0.03   -               -                 -                 -   -   -
        Reassessment of deferred tax balances - FP&C [g] -               -           (0.06)               -   (0.06)   -               -                 -                 -   -   -
        Adjustment to tax valuation allowance in India   -               -                 -           (0.05) (0.05)   -               -                 -                 -   -   -
                                       
    Adjusted diluted earnings per share       $      1.84  $      1.67  $      1.56  $      1.63  $      6.71    $      1.63  $      1.59  $      1.41  $      1.41  $      6.05    $      0.86
                                 
  [f] Impairment charges                              
    Impairment charges relating to the Company's equity accounted investment, include $127 million attributable to non-controlling interest.
     
  [g] Reassessment of deferred tax balances - FP&C    
    Reassessment of deferred tax balances relating to timing differences that reversed on closing of the sale of the global FP&C business.

 

 

 

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Note 3:   SEGMENTED INFORMATION
     
              2018   2019   2020
              1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q 2nd Q 3rd Q 4th Q TOTAL   1st Q
    Body Exteriors & Structures Group              
      Sales     4,619 4,551 4,180 4,177 17,527   4,308 4,243 3,984 3,923 16,458   3,676
      Adjusted EBIT     343 388 326 356 1,413   363 341 306 289 1,299   199
      Adjusted EBIT as a percentage of sales     7.4% 8.5% 7.8% 8.5% 8.1%   8.4% 8.0% 7.7% 7.4% 7.9%   5.4%
                                       
    Power & Vision                              
      Sales     3,190 3,197 2,947 2,987 12,321   3,083 2,808 2,696 2,725 11,312   2,523
      Adjusted EBIT     359 299 259 254 1,171   216 201 167 163 747   135
      Adjusted EBIT as a percentage of sales     11.3% 9.4% 8.8% 8.5% 9.5%   7.0% 7.2% 6.2% 6.0% 6.6%   5.4%
                                       
    Seating Systems                              
      Sales     1,470 1,424 1,219 1,435 5,548   1,433 1,452 1,266 1,426 5,577   1,261
      Adjusted EBIT     130 117 69 110 426   94 83 56 79 312   40
      Adjusted EBIT as a percentage of sales     8.8% 8.2% 5.7% 7.7% 7.7%   6.6% 5.7% 4.4% 5.5% 5.6%   3.2%
                                       
    Complete Vehicles                              
      Sales     1,660 1,280 1,391 1,687 6,018   1,928 1,802 1,516 1,461 6,707   1,321
      Adjusted EBIT     19 1 24 24 68   28 43 29 44 144   50
      Adjusted EBIT as a percentage of sales     1.1% 0.1% 1.7% 1.4% 1.1%   1.5% 2.4% 1.9% 3.0% 2.1%   3.8%
                                       
    Corporate and other                              
      Intercompany fees     (147) (172) (119) (149) (587)   (161) (179) (143) (140) (623)   (124)
      Adjusted EBIT     24 (2) 21 (14) 29   19 9 0 15 43   (21)
                                     
    Total                                
      Sales     10,792 10,280 9,618 10,137 40,827   10,591 10,126 9,319 9,395 39,431   8,657
      Adjusted EBIT     875 803 699 730 3,107   720 677 558 590 2,545   403
      Adjusted EBIT as a percentage of sales     8.1% 7.8% 7.3% 7.2% 7.6%   6.8% 6.7% 6.0% 6.3% 6.5%   4.7%
                                       
Note 4:   CASH, CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS
                                       
    A reconciliation of Cash and cash equivalents and Restricted cash equivalents (included in prepaid expenses) to Total cash, cash equivalents and restricted cash equivalents is as follows:
                                       
              2018     2019     2020
              1st Q 2nd Q 3rd Q 4th Q     1st Q 2nd Q 3rd Q 4th Q     1st Q
                                       
    Cash and cash equivalents     (769) (626) (884) (684)     (925) (563) (769) (1,276)     (1,146)
    Restricted cash equivalents included in prepaid expenses            (116)          (120)          (119)          (118)     (116) (118) (112) (116)     (113)
    Total cash, cash equivalents and restricted cash equivalents   (885) (746) (1,003) (802)     (1,041) (681) (881) (1,392)     (1,259)

 

 

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