SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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For the period ended March 31, 2000
AUTOLIV, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0378542
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
World Trade Center
Klarabergsviadukten 70 Box 70381
S-107 24 Stockholm, Sweden
(Address of principal executive offices)
Registrant's telephone number, including area code: 46 (8) 587 20 600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports); and (2) has been
subject to such filing requirements for the past 90 days.
Yes: X No:
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Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date: There were
approximately 102,3 million shares of Common Stock of Autoliv, Inc., par
value $1.00 per share, outstanding as of April 12, 2000.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
AUTOLIV, INC.
Consolidated Statement of Income (unaudited)
(dollars in millions except per share data)
Last 12
Quarter Jan. - March months
2000 1999 2000 Full Year
1999
Net sales
- - - - - Airbag products $ 778.7 $ 659.2 $ 2,834.4 $ 2,714.9
- - - - - Seat belt products 305.3 276.2 1,126.4 1,097.3
------ ------- --------- ---------
TOTAL NET SALES 1,084.0 935.4 3,960.8 3,812.2
Cost of sales (855.9) (744.2) (3,117.1) (3,005.4)
----- ------- --------- ---------
Gross profit 228.1 191.2 843.7 806.8
Selling, administration and general (49.2) (42.9) (183.1) (176.8)
expense
Research and development expenses (58.9) (48.9) (207.3) (197.3)
Amortization of intangibles, (15.9) (16.3) (63.7) (64.1)
primarily goodwill
Other income - net 0.2 0.3 (0.1) 0.0
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Operating income 104.3 83.4 389.5 368.6
Equity in earnings of 0.7 1.2 4.1 4.6
affiliates
Interest income 2.9 2.7 11.5 11.3
Interest expense (12.5) (14.4) (52.9) (54.8)
------- ------- --------- ---------
Income before income taxes 95.4 72.9 352.2 329.7
Income taxes (38.7) (29.4) (141.3) (132.0)
Minority interests in subsidiaries (1.3) 0.6 0.3 2.2
------- ------- --------- ---------
Net income 55.4 44.1 211.2 199.9
Net income per share - assuming 0.54 0.43 2.06 1.95
dilution
Number of shares used in computing 102.4 102.3 102.4 102.3
per share amount
Number of shares outstanding 102.3 102.3 102.3 102.3
See notes to consolidated financial statements
AUTOLIV, INC.
Consolidated Balance Sheet (unaudited)
(dollars in millions)
March 31, December 31,
2000 1999
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ASSETS
Cash and cash equivalents $ 101.9 $ 119.2
Receivables, less allowances 839.8 709.6
Inventories 272.5 274.0
Refundable and deferred income tax
benefit 41.5 35.8
Prepaids 50.7 42.9
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Total current assets 1,306.4 1,181.5
Property, plant and equipment, net 839.0 834.6
Investments and other receivables 40.0 34.7
Intangible assets, net (mainly
acquisition goodwill) 1,584.3 1,595.7
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TOTAL ASSETS 3,769.7 3,646.5
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LIABILITIES AND EQUITY
Short-term debt 297.1 244.5
Accounts payable 509.3 453.4
Accrued expenses 272.6 291.5
Other current liabilities 100.4 92.5
Income taxes 50.6 22.7
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Total current liabilities 1,230.0 1,104.6
Long-term debt 423.7 470.4
Other noncurrent liabilities 134.1 131.5
Minority interests in subsidiaries 19.8 9.0
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Total noncurrent liabilities
and minority interests 577.6 759.4
Common stock, par value $1 per share 102.3 102.3
Additional paid-in capital 1,941.5 1,941.5
Retained earnings (accumulated
deficit) and foreign currency
translation adjustments (81.7) (112.8)
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Total shareholders' equity 1,962.1 1,931.0
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TOTAL LIABILITIES AND EQUITY 3,769.7 3,646.5
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See notes to consolidated financial statement
AUTOLIV, INC.
Consolidated Statement of Cash Flows (unaudited)
(dollars in millions)
Quarter Jan. - March TWELWE MONTHS
ENDED
2000 1999 1999
OPERATING ACTIVITIES
Net Income $ 55.4 $ 44.1 $ 199.9
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 65.6 66.7 253.4
Deferred income taxes (2.6) 3.6 46.5
Undistributed earnings from affiliated
companies 0.7 2.1 4.6
Changes in operating assets and liabilities
Receivables and other assets (108.1) (50.3) (63.4)
Inventories 14.5 19.8 (16.1)
Accounts payable and accrued expenses 17.4 (11.8) 12.1
Income taxes 27.3 23.1 (0.9)
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Net cash provided by operating activities 70.2 97.4 436.1
INVESTING ACTIVITIES
Expenditure for property, plant and equipment (56.0) (66.9) (260.9)
Acquisition of businesses and
investments in affiliated companies (4.7) (24.8) (43.7)
Other 7.8 4.4 49.2
------ ------- ------
Net cash used for investing activities (53.0) (87.2) (255.4)
Cash flow before financing 17.2 10.1 180.7
FINANCING ACTIVITIES
Increase in short-term debt 17.9 13.7 42.7
(Decrease) in long-term liabilities (49.9) (31.8) (155.8)
Increase/(decrease) in minority interest 11.5 2.5 (5.5)
Dividends paid (11.3) (11.3) (45.0)
Other - net 0.6 (7.8) (8.4)
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Net cash (used for) provided by financing
activities (31.2) (34.7) (172.0)
Effect of exchange rate changes on cash (3.3) (4.6) (8.0)
<DECREASE> / INCREASE IN CASH AND
CASH EQUIVALENTS (17.3) (29.2) 0.7
Cash and cash equivalents at beginning of
period 119.2 118.5 118.5
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Cash and cash equivalents at end of period 101.9 89.4 119.2
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See notes to consolidated financial statements
Autoliv, Inc.
Notes to Consolidated Financial Statements
(unaudited)
March 31, 2000
1. Basis of Presentation
The accompanying interim unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management all adjustments considered necessary for a fair presentation
have been included in the financial statements. All such adjustments are
of a normal recurring nature.
Statements in this report that are not historical facts are forward-looking
statements, which involve risks and uncertainties that could affect the
actual results of Autoliv Inc. ("Autoliv" or the "Company"). A description
of the important factors that could cause Autoliv's actual results to
differ materially from the forward-looking statements contained in this
report may be found in Autoliv's reports filed with the
Securities and Exchange Commission.
2. Inventories
Inventories are stated at lower of cost (principally FIFO) or market. The
components of inventories were as follows:
(Dollars in millions) March 31, 2000 Dec. 31, 1999
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Finished products
and work in progress $112.1 mil. $119.7
Raw material 160.4 154.3
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272.5 274.0
3. Other recent developments
As of January 1, Japan's second largest steering wheel business was acquired
from Izumi and the option to increase Autoliv's interest in Norma to 51% was
exercised. Izumi makes Autoliv the only company with steering wheel plants in
North America, South America, Europe and Japan. Norma gives Autoliv an
unique market position in Eastern Europe and yet another alternative to move
production to low labor-cost countries.
Autoliv has as of April 1, acquired NSK's US seatbelt operations with sales
of approximately $70 million, and an 40% interest in NSK's Asian seat belt
operations. Autoliv has an option to acquire the remaining 60% in two steps
on April 1, 2002 and 2003. This business has sales of almost $250 million.
The acquisition will make Autoliv the global leader in seat belts.
Autoliv has commenced a tender offer worth $206 million for the shares in OEA,
Autoliv's main external supplier of initiators for airbag inflators. During
1999, OEA had sales of $250 million. The offer has cleared the anti-trust
approval in the US, one of the conditions for the offer. The Board of OEA
recommends the transaction. The planned integration of OEA is expected to have
a positive effect on Autoliv's earnings already one year after the merger.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 1999
Consolidated net sales grew by 16% to $1,084 million from $935 million.
Autoliv's sales (and global light vehicle production) have been favorably
impacted by approximately 5% more working days this year than during the same
period l999 (which will be reversed during the second and fourth quarters).
Acquisitions increased sales by 4%, while currency translation effects
reduced sales by 6%.
Adjusted for currency effects and acquisitions/divestitures, sales rose by 18%.
This compares favorably with global light vehicles production which is
estimated to have risen by less than 4%.The fact that Autoliv's revenues
increased faster than the vehicle production is a reflection of the strong
worldwide demand for safer cars, as well as of Autoliv's market share gains
within the automotive safety industry.
Autoliv's sales grew particularly fast in the U.S. (where it was led by a 50%
increase in seat belt sales), in Sweden (led by strong demand for the
Inflatable Curtain and anti-whiplash systems) and in Spain and Australia (due
to higher car production and export sales).
Sales of airbag products (incl. steering wheels) rose by 18% to $779 million
from $659 million. The decline in average selling prices has abated considerable
from prior years. Currency effects reduced sales by 5%. The acquisition of Izumi
increased sales by 4%. Consequently, the underlying increase was 19%. Sales
growth was partly driven by a three-fold increase in steering wheel sales to $68
million. More than a third of this increase was attributable to the Izumi
acquisition.
Sales of seat belt products (incl. seat sub-systems) grew by 10% to $305
million from $276 million. Currency effects reduced sales by 8%, while changes
in the corporate structure - i.e. mainly the consolidation of Norma AS -
increased seat belt sales by 2%. Consequently, underlying sales rose by 16%.
This organic growth is mainly due to market share gains in the U.S.,
introductions of Autoliv's anti-whiplash system in more car models and higher
light vehicle production.
Gross profit rose by 19% to $228 million from $191 million, improving gross
margin to 21.0% from 20.4%. The margin improvement reflects - besides higher
sales - the on-going moderation in the pricing pressure as well as the effects
of Autoliv's cost saving actions, such as transferring more than 1000 jobs to
low labor-cost countries during the last 12-month period and the introduction
of more cost-efficient inflators.
Operating income increased by 25% to $104 million from $83 million and
operating margin improved to 9.6% from 8.9%, despite a 20% increase in R&D
expenses following the strong order intake during the last few quarters. The
margin improvement was due to the above-mentioned action program, the price
pressure moderation and higher sales.
Net financial expenses declined by $2.0 million to $9.7 million as a result of
approximately $100 million lower average net debt. Income before taxes rose by
31% to $95 million from $73 million mainly as an effect of higher sales and
operating margin. The effective tax rate stood unchanged at 41%. Excluding
non-deductible goodwill amortization, the tax rate was 37%.
Net income improved by 25% to $55 million from $44 million or to 54 cents per
share from 43 cents.
If the current exchange rate between the US dollar and the Euro would prevail
for the rest of the year, Autoliv's sales and earnings will be negatively
affected by approximately 5% compared to the corresponding 9-month period
1999. DRI expects light vehicle production in North America and Europe to
remain unchanged compared to the period April-December 1999. The supply value
of safety products is expected to continue to grow faster than the global
vehicle production. The three acquisitions already concluded are expected to
add approximately 5% during the remainder of the year to Autoliv's organic
sales growth. The effect of the planned acquisition of OEA would be additional.
The number of employees increased by 2,000 during the quarter to 24,600.
Excluding acquisitions the increase was 200.
LIQUIDITY AND SOURCES OF CAPITAL
The operations generated $70 million in cash compared to $97 million during
the same quarter 1999. Capital expenditures amounted to $48 million and $63
million, respectively, and acquisitions to $5 million and $25 million. The net
cash flow after operating and investing activities improved by $7 million to
$17 million. Liquid funds declined by $17 million to $102 million. The most
important acquisitions was Izumi and the largest capital expenditures were
capacity expansions for the Inflatable Curtain.
As a result of the acquisitions and more working capital, net debt increased
by $23 million during the quarter to $619 million and the interest-bearing
debt by $6 million to $721 million.
The net-debt-to-equity ratio stood almost unchanged at 32%. Equity has been
negatively impacted by currency effects.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K dated February 25, 2000, as to
the acquisition of the seat belt operations of NSK.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Autoliv, Inc.
(Registrant)
Date: April 19, 2000 By: /s/ Hans Biorck
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Hans Biorck
Chief Financial Officer