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
2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
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) | [As Adjusted] | |||||||||||||||||||||||||||||||||||||||||||||
North American vehicle volumes (including Mexico) | 4.534 | 4.456 | 3.979 | 4.146 | 17.115 | 4.414 | 4.369 | 4.049 | 4.196 | 17.028 | 4.273 | |||||||||||||||||||||||||||||||||||
European vehicle volumes: | ||||||||||||||||||||||||||||||||||||||||||||||
Western Europe | 4.011 | 3.832 | 3.330 | 3.754 | 14.927 | 3.948 | 4.026 | 3.016 | 3.426 | 14.416 | 3.691 | |||||||||||||||||||||||||||||||||||
Eastern Europe | 1.887 | 1.969 | 1.642 | 1.958 | 7.456 | 1.970 | 2.076 | 1.708 | 2.086 | 7.840 | 2.042 | |||||||||||||||||||||||||||||||||||
Total Europe | 5.898 | 5.801 | 4.972 | 5.712 | 22.383 | 5.918 | 6.102 | 4.724 | 5.512 | 22.256 | 5.733 | |||||||||||||||||||||||||||||||||||
Asia volumes | 12.666 | 11.534 | 12.139 | 14.05 | 50.389 | 12.569 | 12.340 | 11.755 | 13.088 | 49.752 | 11.409 | |||||||||||||||||||||||||||||||||||
China volumes | 6.79 | 6.022 | 6.499 | 8.414 | 27.725 | 6.659 | 6.611 | 6.148 | 7.151 | 26.569 | 5.550 | |||||||||||||||||||||||||||||||||||
Magna Steyr vehicle assembly volumes | 0.008 | 0.021 | 0.022 | 0.027 | 0.078 | 0.041 | 0.033 | 0.034 | 0.037 | 0.145 | 0.046 | |||||||||||||||||||||||||||||||||||
AVERAGE FOREIGN EXCHANGE RATES | ||||||||||||||||||||||||||||||||||||||||||||||
1 Canadian dollar equals U.S. dollars | 0.756 | 0.744 | 0.798 | 0.787 | 0.771 | 0.790 | 0.775 | 0.765 | 0.756 | 0.772 | 0.752 | |||||||||||||||||||||||||||||||||||
1 Euro equals U.S. dollars | 1.066 | 1.101 | 1.175 | 1.178 | 1.130 | 1.229 | 1.193 | 1.163 | 1.141 | 1.182 | 1.135 | |||||||||||||||||||||||||||||||||||
1 Chinese renminbi equals U.S. dollars | 0.145 | 0.146 | 0.150 | 0.151 | 0.148 | 0.157 | 0.157 | 0.147 | 0.145 | 0.152 | 0.148 | |||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||||||||||||||||||||||||||
Sales | 8,900 | 9,140 | 8,864 | 9,684 | 36,588 | 10,792 | 10,280 | 9,618 | 10,137 | 40,827 | 10,591 | |||||||||||||||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||||||||||||||||||||
Cost of goods sold | 7,457 | 7,745 | 7,488 | 8,205 | 30,895 | 9,293 | 8,795 | 8,253 | 8,714 | 35,055 | 9,164 | |||||||||||||||||||||||||||||||||||
Selling, general and administrative | 416 | 409 | 406 | 437 | 1,668 | 396 | 434 | 403 | 431 | 1,664 | 421 | |||||||||||||||||||||||||||||||||||
Equity income | (67 | ) | (54 | ) | (45 | ) | (87 | ) | (253 | ) | (87 | ) | (72 | ) | (62 | ) | (56 | ) | (277 | ) | (35 | ) | ||||||||||||||||||||||||
EBITDA | 2 | 1,094 | 1,040 | 1,015 | 1,129 | 4,278 | 1,190 | 1,123 | 1,024 | 1,048 | 4,385 | 1,041 | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | 276 | 282 | 310 | 316 | 1,184 | 315 | 320 | 325 | 318 | 1,278 | 321 | |||||||||||||||||||||||||||||||||||
EBIT | 3 | 818 | 758 | 705 | 813 | 3,094 | 875 | 803 | 699 | 730 | 3,107 | 720 | ||||||||||||||||||||||||||||||||||
Interest expense, net | 19 | 11 | 20 | 20 | 70 | 21 | 23 | 23 | 26 | 93 | 31 | |||||||||||||||||||||||||||||||||||
Operating income | 2 | 799 | 747 | 685 | 793 | 3,024 | 854 | 780 | 676 | 704 | 3,014 | 689 | ||||||||||||||||||||||||||||||||||
Other expense (income), net | 2 | 6 | 3 | 2 | 28 | 39 | 3 | (39 | ) | 2 | 97 | 63 | (679 | ) | ||||||||||||||||||||||||||||||||
Income from operations before income taxes | 793 | 744 | 683 | 765 | 2,985 | 851 | 819 | 674 | 607 | 2,951 | 1,368 | |||||||||||||||||||||||||||||||||||
Income taxes | 206 | 183 | 162 | 190 | 741 | 182 | 183 | 114 | 140 | 619 | 267 | |||||||||||||||||||||||||||||||||||
Net income | 587 | 561 | 521 | 575 | 2,244 | 669 | 636 | 560 | 467 | 2,332 | 1,101 | |||||||||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (10 | ) | (13 | ) | (9 | ) | (16 | ) | (48 | ) | (9 | ) | (10 | ) | (6 | ) | (11 | ) | (36 | ) | 5 | |||||||||||||||||||||||||
Net income attributable to Magna International Inc. | 577 | 548 | 512 | 559 | 2,196 | 660 | 626 | 554 | 456 | 2,296 | 1,106 | |||||||||||||||||||||||||||||||||||
Adjusted net income attributable to Magna International Inc. | 2 | 583 | 551 | 514 | 571 | 2,219 | 663 | 590 | 535 | 542 | 2,330 | 531 | ||||||||||||||||||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||||||||||||||||||||||||
Diluted | $ | 1.51 | $ | 1.44 | $ | 1.38 | $ | 1.54 | $ | 5.87 | $ | 1.83 | $ | 1.77 | $ | 1.62 | $ | 1.37 | $ | 6.61 | $ | 3.39 | ||||||||||||||||||||||||
Adjusted Diluted | $ | 1.53 | $ | 1.45 | $ | 1.39 | $ | 1.58 | $ | 5.93 | $ | 1.84 | $ | 1.67 | $ | 1.56 | $ | 1.63 | $ | 6.71 | $ | 1.63 | ||||||||||||||||||||||||
Weighted average number of Common Shares outstanding during the year (in millions): | 383.4 | 379.5 | 370.4 | 362.3 | 373.9 | 359.9 | 354.1 | 343.0 | 333.2 | 347.5 | 326.3 | |||||||||||||||||||||||||||||||||||
PROFITABILITY RATIOS | ||||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative /Sales | 4.7 | % | 4.5 | % | 4.6 | % | 4.5 | % | 4.6 | % | 3.7 | % | 4.2 | % | 4.2 | % | 4.3 | % | 4.1 | % | 4.0 | % | ||||||||||||||||||||||||
EBITDA /Sales | 12.3 | % | 11.4 | % | 11.5 | % | 11.7 | % | 11.7 | % | 11.0 | % | 10.9 | % | 10.6 | % | 10.3 | % | 10.7 | % | 9.8 | % | ||||||||||||||||||||||||
EBIT /Sales | 9.2 | % | 8.3 | % | 8.0 | % | 8.4 | % | 8.5 | % | 8.1 | % | 7.8 | % | 7.3 | % | 7.2 | % | 7.6 | % | 6.8 | % | ||||||||||||||||||||||||
Operating income /Sales | 9.0 | % | 8.2 | % | 7.7 | % | 8.2 | % | 8.3 | % | 7.9 | % | 7.6 | % | 7.0 | % | 6.9 | % | 7.4 | % | 6.5 | % | ||||||||||||||||||||||||
Effective tax rate | ||||||||||||||||||||||||||||||||||||||||||||||
Reported | 26.0 | % | 24.6 | % | 23.7 | % | 24.8 | % | 24.8 | % | 21.4 | % | 22.3 | % | 16.9 | % | 23.1 | % | 21.0 | % | 19.5 | % | ||||||||||||||||||||||||
Excluding Other expense (income), net of taxes | 25.8 | % | 24.5 | % | 23.6 | % | 26.0 | % | 25.0 | % | 21.3 | % | 23.1 | % | 20.0 | % | 21.4 | % | 21.5 | % | 23.7 | % |
FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(United States dollars in millions) (Unaudited)
2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||
1st Q | 2nd Q | 3rd Q | 4th Q | 1st Q | 2nd Q | 3rd Q | 4th Q | 1st Q | ||||||||||||||||||||||||||||
ASSETS | [As Adjusted] | [Note 1] | ||||||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||||||||
Accounts receivable | 6,776 | 6,852 | 6,940 | 6,695 | 8,073 | 7,656 | 7,160 | 6,548 | 7,446 | |||||||||||||||||||||||||||
Inventories | 3,242 | 3,472 | 3,609 | 3,542 | 3,564 | 3,600 | 3,580 | 3,403 | 3,501 | |||||||||||||||||||||||||||
Prepaid expenses and other | 205 | 230 | 225 | 237 | 250 | 201 | 237 | 250 | 275 | |||||||||||||||||||||||||||
10,223 | 10,554 | 10,774 | 10,474 | 11,887 | 11,457 | 10,977 | 10,201 | 11,222 | ||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||||||||
Accounts payable and other accruals | 8,603 | 8,440 | 8,698 | 8,876 | 9,855 | 9,048 | 8,847 | 8,597 | 9,347 | |||||||||||||||||||||||||||
Working capital | 1,620 | 2,114 | 2,076 | 1,598 | 2,032 | 2,409 | 2,130 | 1,604 | 1,875 | |||||||||||||||||||||||||||
Investments | 1,844 | 1,828 | 1,934 | 2,079 | 2,132 | 2,320 | 2,337 | 2,189 | 2,408 | |||||||||||||||||||||||||||
Fixed assets, net | 7,130 | 7,462 | 7,741 | 8,176 | 8,204 | 8,026 | 7,743 | 8,095 | 7,958 | |||||||||||||||||||||||||||
Goodwill, other assets and intangible assets | 3,390 | 3,589 | 3,693 | 3,775 | 3,837 | 3,684 | 3,467 | 3,527 | 3,487 | |||||||||||||||||||||||||||
Operating lease right-of-use assets | – | – | – | – | – | – | – | – | 1,716 | |||||||||||||||||||||||||||
13,984 | 14,993 | 15,444 | 15,628 | 16,205 | 16,439 | 15,677 | 15,415 | 17,444 | ||||||||||||||||||||||||||||
Net assets held for sale | – | – | 568 | 541 | – | |||||||||||||||||||||||||||||||
Funds employed | 13,984 | 14,993 | 15,444 | 15,628 | 16,205 | 16,439 | 16,245 | 15,956 | 17,444 | |||||||||||||||||||||||||||
FINANCING | ||||||||||||||||||||||||||||||||||||
Straight debt: | ||||||||||||||||||||||||||||||||||||
Short-term borrowings | 488 | 868 | 457 | 259 | 262 | 1,123 | 1,291 | 1,098 | 335 | |||||||||||||||||||||||||||
Cash and cash equivalents | (831 | ) | (666 | ) | (783 | ) | (726 | ) | (769 | ) | (626 | ) | (884 | ) | (684 | ) | (925 | ) | ||||||||||||||||||
Long-term debt due within one year | 152 | 138 | 102 | 108 | 114 | 120 | 231 | 201 | 122 | |||||||||||||||||||||||||||
Current portion of operating lease liabilities | – | – | – | – | – | – | – | – | 176 | |||||||||||||||||||||||||||
Long-term debt | 2,394 | 2,427 | 3,175 | 3,195 | 3,220 | 3,115 | 3,112 | 3,084 | 3,062 | |||||||||||||||||||||||||||
Operating lease liabilities | – | – | – | – | – | – | – | – | 1,566 | |||||||||||||||||||||||||||
2,203 | 2,767 | 2,951 | 2,836 | 2,827 | 3,732 | 3,750 | 3,699 | 4,336 | ||||||||||||||||||||||||||||
Long-term employee benefit liabilities | 679 | 719 | 739 | 670 | 691 | 659 | 592 | 597 | 598 | |||||||||||||||||||||||||||
Other long-term liabilities | 291 | 290 | 248 | 326 | 340 | 314 | 291 | 400 | 396 | |||||||||||||||||||||||||||
Deferred tax liabilities, net | 16 | 16 | 46 | 84 | 54 | 86 | 107 | 101 | 167 | |||||||||||||||||||||||||||
986 | 1,025 | 1,033 | 1,080 | 1,085 | 1,059 | 990 | 1,098 | 1,161 | ||||||||||||||||||||||||||||
Shareholders' equity | 10,795 | 11,201 | 11,460 | 11,712 | 12,293 | 11,648 | 11,505 | 11,159 | 11,947 | |||||||||||||||||||||||||||
13,984 | 14,993 | 15,444 | 15,628 | 16,205 | 16,439 | 16,245 | 15,956 | 17,444 | ||||||||||||||||||||||||||||
ASSET UTILIZATION RATIOS | ||||||||||||||||||||||||||||||||||||
Days in accounts receivable | 68.5 | 67.5 | 70.5 | 62.2 | 67.3 | 67.0 | 67.0 | 58.1 | 63.3 | |||||||||||||||||||||||||||
Days in accounts payable | 103.8 | 98.1 | 104.5 | 97.4 | 95.4 | 92.6 | 96.5 | 88.8 | 91.8 | |||||||||||||||||||||||||||
Inventory turnover - cost of sales | 9.2 | 8.9 | 8.3 | 9.3 | 10.4 | 9.8 | 9.2 | 10.2 | 10.5 | |||||||||||||||||||||||||||
Working capital turnover | 22.0 | 17.3 | 17.1 | 24.2 | 21.2 | 17.1 | 18.1 | 25.3 | 22.6 | |||||||||||||||||||||||||||
Total asset turnover | 2.5 | 2.4 | 2.3 | 2.5 | 2.7 | 2.5 | 2.5 | 2.6 | 2.4 | |||||||||||||||||||||||||||
CAPITAL STRUCTURE | ||||||||||||||||||||||||||||||||||||
Straight debt | 15.8 | % | 18.5 | % | 19.1 | % | 18.1 | % | 17.4 | % | 22.7 | % | 23.1 | % | 23.2 | % | 24.9 | % | ||||||||||||||||||
Long-term employee benefit liabilities, other long-term liabilities & deferred tax liabilities, net | 7.0 | % | 6.8 | % | 6.7 | % | 6.9 | % | 6.6 | % | 6.4 | % | 6.1 | % | 6.9 | % | 6.7 | % | ||||||||||||||||||
Shareholders' equity | 77.2 | % | 74.7 | % | 74.2 | % | 74.9 | % | 75.9 | % | 70.9 | % | 70.8 | % | 69.9 | % | 68.5 | % | ||||||||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||
Debt to total capitalization | 21.9 | % | 23.5 | % | 24.6 | % | 23.3 | % | 22.6 | % | 27.2 | % | 28.7 | % | 28.2 | % | 30.6 | % | ||||||||||||||||||
ANNUALIZED RETURNS | ||||||||||||||||||||||||||||||||||||
Return on assets(EBIT/assets employed) | 23.4 | % | 20.2 | % | 18.3 | % | 20.8 | % | 21.6 | % | 19.5 | % | 17.8 | % | 18.9 | % | 16.5 | % | ||||||||||||||||||
Return on equity(Net income attributable to Magna International Inc. / Average shareholders' equity) | 22.0 | % | 19.9 | % | 18.1 | % | 19.3 | % | 22.0 | % | 20.9 | % | 19.1 | % | 16.1 | % | 38.3 | % | ||||||||||||||||||
Adjusted Return on equity(Adjusted Net income attributable to Magna International Inc. / Average shareholders' equity) | 22.2 | % | 20.0 | % | 18.2 | % | 19.7 | % | 22.1 | % | 19.7 | % | 18.5 | % | 19.1 | % | 18.4 | % | ||||||||||||||||||
Return on Invested Capital(Annualized after-tax operating profits / invested capital) | 17.6 | % | 15.7 | % | 14.1 | % | 15.2 | % | 17.2 | % | 16.0 | % | 14.2 | % | 12.0 | % | 27.0 | % |
FINANCIAL REVIEW OF MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States dollars in millions) (Unaudited)
2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||
[As Adjusted] | ||||||||||||||||||||||||||||||||||||||||||||||
Operating activities | ||||||||||||||||||||||||||||||||||||||||||||||
Net income | 587 | 561 | 521 | 575 | 2,244 | 669 | 636 | 560 | 467 | 2,332 | 1,101 | |||||||||||||||||||||||||||||||||||
Items not involving current cash flows | 274 | 373 | 352 | 316 | 1,315 | 363 | 303 | 339 | 534 | 1,539 | (213 | ) | ||||||||||||||||||||||||||||||||||
861 | 934 | 873 | 891 | 3,559 | 1,032 | 939 | 899 | 1,001 | 3,871 | 888 | ||||||||||||||||||||||||||||||||||||
Changes in operating assets and liabilities | (404 | ) | (376 | ) | 9 | 558 | (213 | ) | (455 | ) | (472 | ) | 177 | 597 | (153 | ) | (294 | ) | ||||||||||||||||||||||||||||
Cash provided from operating activities | 457 | 558 | 882 | 1,449 | 3,346 | 577 | 467 | 1,076 | 1,598 | 3,718 | 594 | |||||||||||||||||||||||||||||||||||
Investment activities | ||||||||||||||||||||||||||||||||||||||||||||||
Fixed asset additions | (323 | ) | (421 | ) | (380 | ) | (751 | ) | (1,875 | ) | (243 | ) | (379 | ) | (381 | ) | (647 | ) | (1,650 | ) | (251 | ) | ||||||||||||||||||||||||
Investment in Lyft, Inc. | – | – | – | – | – | – | (200 | ) | (20 | ) | – | (220 | ) | – | ||||||||||||||||||||||||||||||||
Increase in investments, other assets and intangible assets | (83 | ) | (143 | ) | (158 | ) | (267 | ) | (651 | ) | (114 | ) | (103 | ) | (114 | ) | (150 | ) | (481 | ) | (82 | ) | ||||||||||||||||||||||||
Proceeds from disposition | 142 | 14 | 71 | 105 | 332 | 29 | 48 | 76 | 70 | 223 | 86 | |||||||||||||||||||||||||||||||||||
Acquisitions | – | – | – | – | – | – | 4 | – | (152 | ) | (148 | ) | – | |||||||||||||||||||||||||||||||||
Proceeds on disposal of facilities | – | – | – | 49 | 49 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
Sale of Fluid Pressure & Controls Business ["FP&C"] | – | – | – | – | – | – | – | – | – | – | 1,129 | |||||||||||||||||||||||||||||||||||
Cash provided from (used for) investment activities | (264 | ) | (550 | ) | (467 | ) | (864 | ) | (2,145 | ) | (328 | ) | (630 | ) | (439 | ) | (879 | ) | (2,276 | ) | 882 | |||||||||||||||||||||||||
Financing activities | ||||||||||||||||||||||||||||||||||||||||||||||
Net issues (repayments) of debt | (145 | ) | 313 | 141 | (197 | ) | 112 | 3 | 886 | 262 | (284 | ) | 867 | (855 | ) | |||||||||||||||||||||||||||||||
Common Shares issued on exercise of stock options | 6 | 5 | 9 | 24 | 44 | 5 | 41 | 1 | 3 | 50 | 8 | |||||||||||||||||||||||||||||||||||
Repurchase of Common Shares | (100 | ) | (383 | ) | (422 | ) | (366 | ) | (1,271 | ) | (103 | ) | (729 | ) | (520 | ) | (479 | ) | (1,831 | ) | (284 | ) | ||||||||||||||||||||||||
Shares repurchased for tax withholdings on vesting of equity awards | – | – | – | (11 | ) | (11 | ) | – | (2 | ) | (4 | ) | (10 | ) | (16 | ) | (3 | ) | ||||||||||||||||||||||||||||
Contributions to subsidiaries by non-controlling interests | – | 10 | – | – | 10 | – | 4 | – | – | 4 | 2 | |||||||||||||||||||||||||||||||||||
Dividends paid to non-controlling interests | – | (7 | ) | (26 | ) | (5 | ) | (38 | ) | – | (30 | ) | – | (39 | ) | (69 | ) | – | ||||||||||||||||||||||||||||
Dividends paid | (105 | ) | (101 | ) | (99 | ) | (95 | ) | (400 | ) | (118 | ) | (115 | ) | (109 | ) | (106 | ) | (448 | ) | (119 | ) | ||||||||||||||||||||||||
Cash provided from (used for) financing activities | (344 | ) | (163 | ) | (397 | ) | (650 | ) | (1,554 | ) | (213 | ) | 55 | (370 | ) | (915 | ) | (1,443 | ) | (1,251 | ) | |||||||||||||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalents | 11 | 3 | 1 | 9 | 24 | 10 | (31 | ) | (10 | ) | (5 | ) | (36 | ) | 14 | |||||||||||||||||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash equivalents during the period | (140 | ) | (152 | ) | 19 | (56 | ) | (329 | ) | 46 | (139 | ) | 257 | (201 | ) | (37 | ) | 239 | ||||||||||||||||||||||||||||
Cash, cash equivalents and restricted cash equivalents, beginning of period | 4 | 1,168 | 1,028 | 876 | 895 | 1,168 | 839 | 885 | 746 | 1,003 | 839 | 802 | ||||||||||||||||||||||||||||||||||
Cash, cash equivalents and restricted cash equivalents, end of period | 1,028 | 876 | 895 | 839 | 839 | 885 | 746 | 1,003 | 802 | 802 | 1,041 |
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, 2018. | ||||||||||||||||||||
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, Gross margin as a percentage of sales, Adjusted EBIT and Adjusted EBIT as a percentage of sales, Return on Invested Capital and Return on Equity. 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: |
2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||||||||||
1st Q | 2nd Q | 3rd Q | 4th Q | TOTAL | 1st Q | 2nd Q | 3rd Q | 4th Q | TOTAL | 1st Q | ||||||||||||||||||||||||||||||||||
Gain on the sale of FP&C | – | – | – | – | – | – | – | – | – | – | (516 | ) | ||||||||||||||||||||||||||||||||
Unrealized gain on investment revaluation | – | – | – | – | – | – | (56 | ) | – | – | (56 | ) | (177 | ) | ||||||||||||||||||||||||||||||
Restructuring charges | 6 | 3 | 2 | 18 | 29 | 3 | 17 | 2 | 23 | 45 | 14 | |||||||||||||||||||||||||||||||||
Impairment charges | – | – | – | 81 | 81 | – | – | – | 74 | 74 | – | |||||||||||||||||||||||||||||||||
Gain on formation of a new venture | – | – | – | (45 | ) | (45 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
Gain on sale of investment | – | – | – | (26 | ) | (26 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
6 | 3 | 2 | 28 | 39 | 3 | (39 | ) | 2 | 97 | 63 | (679 | ) |
2017 | ||||||||||||||||||||
Q1 | In Power & Vision, the Company recorded $6 million of restructuring charges. | |||||||||||||||||||
Q2 | In Power & Vision, the Company recorded $3 million of restructuring charges. | |||||||||||||||||||
Q3 | In Power & Vision, the Company recorded $2 million of restructuring charges. | |||||||||||||||||||
Q4 | In Power & Vision, the Company recorded $3 million of restructuring charges, $17 million impairment charge on investment. In Body Exteriors & Structures, the Company recorded $64 million impairment charges of fixed assets and $15 million of restructuring charges. In Seating Systems, the Company recorded a gain of $45 million related to the formation of a new venture. In Corporate, the Company recorded a gain of $26 million on the sale of investment. | |||||||||||||||||||
2018 | ||||||||||||||||||||
Q1 | In Power & Vision, the Company recorded $3 million of restructuring charges. | |||||||||||||||||||
Q2 | In Power & Vision, the Company recorded $12 million of restructuring charges. In Body Exteriors & Structures, the Company recorded $5 million of restructuring charges. In accordance with the requirements of ASU 2016-01, the Company remeasured its private equity investments at fair value, resulting in a $56 million unrealized gain in Corporate. | |||||||||||||||||||
Q3 | In Power & Vision, the Company recorded $2 million of restructuring charges. | |||||||||||||||||||
Q4 | In Power & Vision, the Company recorded $60 million impairment charge on investment and $3 million of restructuring charges. In Body Exteriors & Structures, the Company recorded $14 million impairment charges of fixed assets and $20 million of restructuring charges. | |||||||||||||||||||
2019 | ||||||||||||||||||||
Q1 | In Power & Vision, the Company recorded a gain of $516 million related to the sale of FP&C. In Body Exteriors & Structures, the Company recorded $14 million of restructuring charges. In Corporate, the Company remeasured its private equity investments at fair value, resulting in a $177 million unrealized gain in Corporate. |
A reconciliation of Net income to Adjusted net income and Diluted earnings per share to Adjusted diluted earnings per share is as follows: | ||||||||||||||||||||
2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||||||||||
1st Q | 2nd Q | 3rd Q | 4th Q | TOTAL | 1st Q | 2nd Q | 3rd Q | 4th Q | TOTAL | 1st Q | ||||||||||||||||||||||||||||||||||
[As Adjusted] | ||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Magna International Inc. | 577 | 548 | 512 | 559 | 2,196 | 660 | 626 | 554 | 456 | 2,296 | 1,106 | |||||||||||||||||||||||||||||||||
Exclude: | ||||||||||||||||||||||||||||||||||||||||||||
Impairment charges | – | – | – | 81 | 81 | – | – | – | 71 | 71 | – | |||||||||||||||||||||||||||||||||
Restructuring charges | 6 | 3 | 2 | 14 | 25 | 3 | 17 | 2 | 21 | 43 | 14 | |||||||||||||||||||||||||||||||||
Unrealized gain on investment revaluation | – | – | – | – | – | – | (53 | ) | – | – | (53 | ) | (151 | ) | ||||||||||||||||||||||||||||||
Gain on the sale of FP&C | – | – | – | – | – | – | – | – | – | – | (438 | ) | ||||||||||||||||||||||||||||||||
Reassessment of deferred tax balances - FP&C [a] | – | – | – | – | – | – | – | (21 | ) | – | (21 | ) | – | |||||||||||||||||||||||||||||||
Gain on formation of a new venture | – | – | – | (34 | ) | (34 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
Gain on sale of investment | – | – | – | (26 | ) | (26 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
US tax reform | – | – | – | (23 | ) | (23 | ) | – | – | – | 11 | 11 | – | |||||||||||||||||||||||||||||||
Adjustment to tax valuation allowance [b] | – | – | – | – | – | – | – | – | (17 | ) | (17 | ) | – | |||||||||||||||||||||||||||||||
– | ||||||||||||||||||||||||||||||||||||||||||||
Adjusted net income attributable to Magna International Inc. | 583 | 551 | 514 | 571 | 2,219 | 663 | 590 | 535 | 542 | 2,330 | 531 | |||||||||||||||||||||||||||||||||
Diluted earnings per share | $ | 1.51 | $ | 1.44 | $ | 1.38 | $ | 1.54 | $ | 5.87 | $ | 1.83 | $ | 1.77 | $ | 1.62 | $ | 1.37 | $ | 6.61 | $ | 3.39 | ||||||||||||||||||||||
Exclude: | ||||||||||||||||||||||||||||||||||||||||||||
Impairment charges | – | – | – | 0.22 | 0.22 | – | – | – | 0.22 | 0.21 | – | |||||||||||||||||||||||||||||||||
Restructuring charges | 0.02 | 0.01 | 0.01 | 0.04 | 0.06 | 0.01 | 0.05 | – | 0.06 | 0.12 | 0.04 | |||||||||||||||||||||||||||||||||
Unrealized gain on investment revaluation | – | – | – | – | – | – | (0.15 | ) | – | – | (0.15 | ) | (0.46 | ) | ||||||||||||||||||||||||||||||
Gain on the sale of FP&C | – | – | – | – | – | – | – | – | – | – | (1.34 | ) | ||||||||||||||||||||||||||||||||
Reassessment of deferred tax balances - FP&C [a] | – | – | – | – | – | – | – | (0.06 | ) | – | (0.06 | ) | – | |||||||||||||||||||||||||||||||
Gain on formation of a new venture | – | – | – | (0.09 | ) | (0.09 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
Gain on sale of investment | – | – | – | (0.07 | ) | (0.07 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
US tax reform | – | – | – | (0.06 | ) | (0.06 | ) | – | – | – | 0.03 | 0.03 | – | |||||||||||||||||||||||||||||||
Adjustment to tax valuation allowance [b] | – | – | – | – | – | – | – | – | (0.05 | ) | (0.05 | ) | – | |||||||||||||||||||||||||||||||
Adjusted diluted earnings per share | $ | 1.53 | $ | 1.45 | $ | 1.39 | $ | 1.58 | $ | 5.93 | $ | 1.84 | $ | 1.67 | $ | 1.56 | $ | 1.63 | $ | 6.71 | $ | 1.63 |
[a] Reassessment of deferred tax balances relating to timing differences that will reverse upon closing of the sale of the global Fluid Pressure & Controls ("FP&C") business expected to occur in the first quarter of 2019.
[b] During the fourth quarter of 2018, the Company released $17 million of the valuation allowance in India.
Note 3: | SEGMENTED INFORMATION |
In December 2017, the Company announced a realignment of its management structure along product lines. As a result, beginning with the first quarter of 2018, the Company changed its segments to align with the way its business is now managed. Results for 2017 under the new reporting segments are as follows:
2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||||||||||
1st Q | 2nd Q | 3rd Q | 4th Q | TOTAL | 1st Q | 2nd Q | 3rd Q | 4th Q | TOTAL | 1st Q | ||||||||||||||||||||||||||||||||||
Body Exteriors & Structures Group | [As Adjusted - Note 1] | |||||||||||||||||||||||||||||||||||||||||||
Total sales | 4,167 | 4,109 | 4,004 | 4,333 | 16,613 | 4,619 | 4,551 | 4,180 | 4,177 | 17,527 | 4,308 | |||||||||||||||||||||||||||||||||
Adjusted EBIT | 349 | 337 | 306 | 354 | 1,346 | 343 | 388 | 326 | 356 | 1,413 | 363 | |||||||||||||||||||||||||||||||||
Adjusted EBIT as a percentage of total sales | 8.4 | % | 8.2 | % | 7.6 | % | 8.2 | % | 8.1 | % | 7.4 | % | 8.5 | % | 7.8 | % | 8.5 | % | 8.1 | % | 8.4 | % | ||||||||||||||||||||||
Power & Vision | ||||||||||||||||||||||||||||||||||||||||||||
Total sales | 2,963 | 2,892 | 2,830 | 2,944 | 11,629 | 3,190 | 3,197 | 2,947 | 2,987 | 12,321 | 3,083 | |||||||||||||||||||||||||||||||||
Adjusted EBIT | 328 | 266 | 267 | 322 | 1,183 | 359 | 299 | 259 | 254 | 1,171 | 216 | |||||||||||||||||||||||||||||||||
Adjusted EBIT as a percentage of total sales | 11.1 | % | 9.2 | % | 9.4 | % | 10.9 | % | 10.2 | % | 11.3 | % | 9.4 | % | 8.8 | % | 8.5 | % | 9.5 | % | 7.0 | % | ||||||||||||||||||||||
Seating Systems | ||||||||||||||||||||||||||||||||||||||||||||
Total sales | 1,335 | 1,367 | 1,217 | 1,305 | 5,224 | 1,470 | 1,424 | 1,219 | 1,435 | 5,548 | 1,433 | |||||||||||||||||||||||||||||||||
Adjusted EBIT | 116 | 117 | 95 | 106 | 434 | 130 | 117 | 69 | 110 | 426 | 94 | |||||||||||||||||||||||||||||||||
Adjusted EBIT as a percentage of total sales | 8.7 | % | 8.6 | % | 7.8 | % | 8.1 | % | 8.3 | % | 8.8 | % | 8.2 | % | 5.7 | % | 7.7 | % | 7.7 | % | 6.6 | % | ||||||||||||||||||||||
Complete Vehicles | ||||||||||||||||||||||||||||||||||||||||||||
Total sales | 527 | 869 | 938 | 1,213 | 3,547 | 1,660 | 1,280 | 1,391 | 1,687 | 6,018 | 1,928 | |||||||||||||||||||||||||||||||||
Adjusted EBIT | 6 | 15 | 17 | 28 | 66 | 19 | 1 | 24 | 24 | 68 | 28 | |||||||||||||||||||||||||||||||||
Adjusted EBIT as a percentage of total sales | 1.1 | % | 1.7 | % | 1.8 | % | 2.3 | % | 1.9 | % | 1.1 | % | 0.1 | % | 1.7 | % | 1.4 | % | 1.1 | % | 1.5 | % | ||||||||||||||||||||||
Corporate and other | ||||||||||||||||||||||||||||||||||||||||||||
Intercompany fees | (92 | ) | (97 | ) | (125 | ) | (111 | ) | (425 | ) | (147 | ) | (172 | ) | (119 | ) | (149 | ) | (587 | ) | (161 | ) | ||||||||||||||||||||||
Adjusted EBIT | 19 | 23 | 20 | 3 | 65 | 24 | (2 | ) | 21 | (14 | ) | 29 | 19 | |||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||||||||||||||
Total sales | 8,900 | 9,140 | 8,864 | 9,684 | 36,588 | 10,792 | 10,280 | 9,618 | 10,137 | 40,827 | 10,591 | |||||||||||||||||||||||||||||||||
Adjusted EBIT | 818 | 758 | 705 | 813 | 3,094 | 875 | 803 | 699 | 730 | 3,107 | 720 | |||||||||||||||||||||||||||||||||
Adjusted EBIT as a percentage of total sales | 9.2 | % | 8.3 | % | 8.0 | % | 8.4 | % | 8.5 | % | 8.1 | % | 7.8 | % | 7.3 | % | 7.2 | % | 7.6 | % | 6.8 | % |
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: | ||||||||||||||||||||
2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||
1st Q | 2nd Q | 3rd Q | 4th Q | 1st Q | 2nd Q | 3rd Q | 4th Q | 1st Q | ||||||||||||||||||||||||||||
Cash and cash equivalents | (831 | ) | (666 | ) | (783 | ) | (726 | ) | (769 | ) | (626 | ) | (884 | ) | (684 | ) | (925 | ) | ||||||||||||||||||
Restricted cash equivalents included in prepaid expenses | (197 | ) | (210 | ) | (112 | ) | (113 | ) | (116 | ) | (120 | ) | (119 | ) | (118 | ) | (116 | ) | ||||||||||||||||||
Total cash, cash equivalents and restricted cash equivalents | (1,028 | ) | (876 | ) | (895 | ) | (839 | ) | (885 | ) | (746 | ) | (1,003 | ) | (802 | ) | (1,041 | ) |
Note 5: | COMPARATIVE FIGURES | |||||||||||||||||||
Certain of the comparative figures have been reclassified to conform to the current period's method of presentation. |