Press Release - Magna Announces Third Quarter and Year to Date Results
Please click HERE for a PDF version of the release.
|
THREE MONTHS ENDED SEPTEMBER 30, |
NINE MONTHS ENDED SEPTEMBER 30, |
|||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| Sales | $ | 7,661 | $ | 8,247 | $ | 23,566 | $ | 25,613 | ||||||
| Adjusted EBIT(1) | $ | 565 | $ | 627 | $ | 1,873 | $ | 1,967 | ||||||
| Income from continuing operations before | ||||||||||||||
| income taxes | $ | 680 | $ | 611 | $ | 2,027 | $ | 1,909 | ||||||
| Net income from continuing operations | ||||||||||||||
| attributable to Magna International Inc. | $ | 470 | $ | 487 | $ | 1,463 | $ | 1,408 | ||||||
| Diluted earnings per share | ||||||||||||||
| from continuing operations | $ | 1.13 | $ | 1.14 | $ | 3.53 | $ | 3.21 | ||||||
| All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars. | ||||||||||||||
| (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 (income) expense, net. | ||||||||||||||
BASIS OF PRESENTATION
In the third quarter of 2015, we sold substantially all of our interiors operations (excluding our seating operations). 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 Press Release reflects the results of continuing operations, unless otherwise noted.
THREE MONTHS ENDED
We posted sales of
Excluding the impact of foreign currency translation, our complete vehicle assembly sales decreased 18% in the third quarter of 2015, compared to the third quarter of 2014. Complete vehicle assembly volumes decreased 28% to approximately 23,000 units.
During the third quarter of 2015, income from continuing operations
before income taxes was
For the third quarter of 2015, other (income) expense positively
impacted income from continuing operations before income taxes by
For the third quarter of 2014, other (income) expense negatively
impacted income from continuing operations before income taxes by
During the third quarter ended
NINE MONTHS ENDED
We posted sales of
During the nine months ended
Excluding the impact of foreign currency translation, our complete vehicle assembly sales decreased 12% in the first nine months of 2015, compared to the first nine months of 2014. Complete vehicle assembly volumes decreased 23% to approximately 79,000 units.
During the nine months ended
For the nine months ended
For the nine months ended
During the nine months ended
A more detailed discussion of our consolidated financial results for the
third quarter and nine months ended
DIVIDENDS
Yesterday, our Board of Directors declared a quarterly dividend of
OTHER MATTERS
Subject to approval by the
UPDATED 2015 OUTLOOK
The table below reflects our 2015 outlook and 2014 actual results, both from continuing operations:
| 2015 Outlook | 2014 Actual | ||||||
| Light Vehicle Production (Units) | |||||||
| North America | 17.4 million | 17.0 million | |||||
| Europe | 20.5 million | 20.1 million | |||||
| Production Sales | |||||||
| North America | $17.4 - $17.8 billion | $17.4 billion | |||||
| Europe | $7.0 - $7.3 billion | $8.8 billion | |||||
| Asia | $1.5 - $1.6 billion | $1.6 billion | |||||
| Rest of World | $0.4 - $0.5 billion | $0.7 billion | |||||
| Total Production Sales | $26.3 - $27.2 billion | $28.5 billion | |||||
| Complete Vehicle Assembly Sales | $2.3 - $2.5 billion | $3.2 billion | |||||
| Total Sales | $31.3 - $32.6 billion | $34.4 billion | |||||
| Operating Margin(1) | Approximately 7.7% | 7.7% | |||||
| Tax Rate(1) | Approximately 26% | 25.0% | |||||
| Capital Spending | Approximately $1.5 billion | $1.5 billion | |||||
| (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 285 manufacturing
operations and 83 product development, engineering and sales centres in
29 countries. We have over 125,000 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, 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
We will hold a conference call for interested analysts and shareholders
to discuss our third quarter results on
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
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
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
This MD&A should be read in conjunction with the unaudited interim
consolidated financial statements for the three months and nine months
ended
This MD&A has been prepared as at
OVERVIEW
We are a leading global automotive supplier with 285 manufacturing
operations and 83 product development, engineering and sales centres in
29 countries. We have over 125,000 employees focused on delivering
superior value to our customers through innovative products, processes
and World Class Manufacturing. Our product capabilities include
producing body, chassis, 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
HIGHLIGHTS
Basis of Presentation
In the third quarter of 2015, we sold substantially all of our interiors operations (excluding our seating operations). 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 4% to 4.3 million units and European light vehicle production increased 4% to 4.7 million units, each in the third quarter of 2015 compared to the third quarter of 2014.
We posted sales of
Our Adjusted EBIT(1) decreased 10% to
-
North America : Adjusted EBIT of$455 million for the third quarter of 2015 declined 4% compared to$475 million for the third quarter of 2014. Segment total sales increased 1% in the third quarter of 2015 compared to the third quarter of 2014.
-
Europe : Adjusted EBIT of$91 million for the third quarter of 2015 declined 15% or$16 million from the third quarter of 2014. Segment total sales declined 16% from the third quarter of 2014 to the third quarter of 2015.
-
Asia : Adjusted EBIT was$13 million in the third quarter of 2015, compared to$35 million for the third quarter of 2014. Segment total sales declined 11% in the third quarter of 2015 compared to the third quarter of 2014.
-
Rest of World: Our Adjusted EBIT loss of
$7 million for the third quarter of 2015 compared to an Adjusted EBIT loss of$6 million in the third quarter of 2014. Segment total sales declined 39% to$115 million for the third quarter of 2015 compared to the third 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 (income) expense, net.
Capital Structure
During the third quarter of 2015, we issued
During the third quarter of 2015, we purchased for cancellation 7.2
million Common Shares for cash consideration of
Lastly, subject to approval by the
FINANCIAL RESULTS SUMMARY
During the third quarter of 2015, we posted sales of
-
North American vehicle production increased 4% and our North American
production sales increased 2% to
$4.28 billion ; -
European vehicle production increased 4% but our European production
sales decreased 18% to
$1.70 billion ; -
Asian production sales decreased 12% to
$346 million ; -
Rest of World production sales decreased 38% to
$111 million ; -
Complete vehicle assembly volumes decreased 28% and sales decreased 32%
to
$522 million ; and -
Tooling, engineering and other sales increased 8% to
$705 million .
During the third quarter of 2015, we earned income from continuing
operations before income taxes of
-
operational inefficiencies at certain facilities, in particular at
certain body and chassis operations in
North America ; - the negative impact of foreign exchange translation from the weakening of foreign currencies, including the Canadian dollar and euro, each against the U.S. dollar;
- higher launch costs;
- lower recoveries associated with scrap steel;
-
insurance recoveries, during the third quarter of 2014, related to a
fire at a body and chassis facility in
North America ; - increased pre-operating costs incurred at new facilities; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by:
- incremental margin earned on new programs that launched during or subsequent to the third quarter of 2014;
-
lower warranty costs of
$21 million ; - decreased commodity costs;
-
the expiration, at the end of 2014, of our consulting agreements with
Frank Stronach ; - higher equity income; and
- productivity and efficiency improvements at certain facilities.
During the third quarter of 2015, net income attributable to
| For the three months ended September 30, | |||||||||||||||||||||
| 2015 | 2014 | ||||||||||||||||||||
| Net Income | Diluted | Net Income | Diluted | ||||||||||||||||||
| Attributable | Earnings | Attributable | Earnings | ||||||||||||||||||
| to Magna | per Share | to Magna | per Share | ||||||||||||||||||
| Other (income) expense, net | $ | (124) | $ | (0.30) | $ | 7 | $ | 0.01 | |||||||||||||
| Income tax effect | 56 | 0.14 | (1) | — | |||||||||||||||||
| $ | (68) | $ | (0.16) | $ | 6 | $ | 0.01 | ||||||||||||||
Excluding the
Excluding the
INDUSTRY TRENDS AND RISKS
Our operating results are 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.
Original equipment manufacturers ("OEMs") 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
RESULTS OF OPERATIONS
Average Foreign Exchange
| For the three months | For the nine months | |||||||||||||||||
| ended September 30, | ended September 30, | |||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||
| 1 Canadian dollar equals U.S. dollars | 0.766 | 0.919 | - 17% | 0.796 | 0.914 | - 13% | ||||||||||||
| 1 euro equals U.S. dollars | 1.113 | 1.326 | - 16% | 1.116 | 1.356 | - 18% | ||||||||||||
| 1 British pound equals U.S. dollars | 1.551 | 1.669 | - 7% | 1.534 | 1.669 | - 8% | ||||||||||||
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 nine months ended
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
Sales
| For the three months | ||||||||||||||
| ended September 30, | ||||||||||||||
| 2015 | 2014 | Change | ||||||||||||
| Vehicle Production Volumes (millions of units) | ||||||||||||||
| North America | 4.259 | 4.096 | + 4% | |||||||||||
| Europe | 4.676 | 4.485 | + 4% | |||||||||||
| Sales | ||||||||||||||
| External Production | ||||||||||||||
| North America | $ | 4,281 | $ | 4,204 | + 2% | |||||||||
| Europe | 1,696 | 2,060 | - 18% | |||||||||||
| Asia | 346 | 391 | - 12% | |||||||||||
| Rest of World | 111 | 179 | - 38% | |||||||||||
| Complete Vehicle Assembly | 522 | 763 | - 32% | |||||||||||
| Tooling, Engineering and Other | 705 | 650 | + 8% | |||||||||||
| Total Sales | $ | 7,661 | $ | 8,247 | - 7% | |||||||||
External Production Sales -
External production sales in
- the launch of new programs during or subsequent to the third quarter of 2014, including the:
- Lincoln MKX;
- Ford Mustang;
- Mercedes-Benz R-Class and GLE Coupe;
-
Chevrolet Colorado and
GMC Canyon ; - Ford Edge; and
- Honda HR-V; and
- higher production volumes on certain existing programs.
These factors were partially offset by:
-
a
$262 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 third quarter of 2014, which
negatively impacted sales by
$16 million ; - programs that ended production during or subsequent to the third quarter of 2014; and
- net customer price concessions subsequent to the third quarter of 2014.
External Production Sales -
External production sales in
-
a
$344 million decrease in reported U.S. dollar sales as a result of the weakening of foreign currencies against the U.S. dollar, including the euro, Russian ruble, Czech koruna and Polish zloty; - programs that ended production during or subsequent to the third quarter of 2014;
- lower production volumes on certain existing programs; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by the launch of new programs during or subsequent to the third quarter of 2014, including the:
- Skoda Superb;
-
BMW 2-Series; - Volkswagen Passat; and
- Volkswagen Touran.
External Production Sales -
External production sales in
- lower production volumes on certain existing programs;
-
a
$15 million decrease in reported U.S. dollar sales 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 third quarter of 2014; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by the launch of new programs during
or subsequent to the third quarter of 2014, primarily in
External Production Sales - Rest of World
External production sales in Rest of World decreased 38% or
-
a
$46 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 - lower production volumes on certain existing programs.
These factors were partially offset by:
-
the launch of new programs during or subsequent to the third quarter of
2014, primarily in
Brazil ; and - net customer price increases subsequent to the third quarter of 2014.
Complete Vehicle Assembly Sales
| For the three months | |||||||||||||||
| ended September 30, | |||||||||||||||
| 2015 | 2014 | Change | |||||||||||||
| Complete Vehicle Assembly Sales | $ 522 | $ 763 | - 32% | ||||||||||||
| Complete Vehicle Assembly Volumes (Units) | 23,176 | 32,204 | - 28% | ||||||||||||
Complete vehicle assembly sales decreased 32% or
The decrease in complete vehicle assembly sales is primarily as a result of:
- a decrease in assembly volumes for the MINI Countryman and MINI Paceman; and
-
a
$107 million decrease in reported U.S. dollar sales as a result of the weakening of the euro against the U.S. dollar.
Tooling, Engineering and Other Sales
Tooling, engineering and other sales increased 8% or
In the third quarter of 2015, the major programs for which we recorded tooling, engineering and other sales were the:
- Audi A4;
- Chevrolet Cruze;
- Chevrolet Equinox and GMC Terrain;
- GMC Acadia, Buick Enclave and Chevrolet Traverse;
-
Opel
Astra ; - Volkswagen Golf:
-
BMW 2-Series; - Volkswagen Touran; and
- Skoda Superb.
In the third quarter of 2014, the major programs for which we recorded tooling, engineering and other sales were the:
- BMW X6;
- Ford Mustang;
- Dodge Charger;
- MINI Countryman;
- Chevrolet Cruze;
- Volkswagen Golf;
- QOROS 3; and
- Mercedes-Benz M-Class.
The weakening of certain foreign currencies against the U.S. dollar,
including the euro and Canadian dollar had an unfavourable impact of
Cost of Goods Sold and Gross Margin
| For the three months | |||||||||||
| ended September 30, | |||||||||||
| 2015 | 2014 | ||||||||||
| Sales | $ | 7,661 | $ | 8,247 | |||||||
| Cost of goods sold | |||||||||||
| Material | 4,839 | 5,226 | |||||||||
| Direct labour | 507 | 510 | |||||||||
| Overhead | 1,247 | 1,339 | |||||||||
| 6,593 | 7,075 | ||||||||||
| Gross margin | $ | 1,068 | $ | 1,172 | |||||||
| Gross margin as a percentage of sales | 13.9% | 14.2% | |||||||||
Cost of goods sold decreased
- a decrease in reported U.S. dollar cost of goods sold as a result of the weakening of foreign currencies against the U.S. dollar, including the euro and Canadian dollar;
-
lower warranty costs of
$21 million ; - decreased commodity costs; and
- productivity and efficiency improvements at certain facilities.
These factors were partially offset by:
-
higher material, overhead and labour costs associated with the increase
in local currency sales, in particular in
North America ; -
operational inefficiencies at certain facilities, in particular at
certain body and chassis operations in
North America ; - higher launch costs;
- lower recoveries associated with scrap steel;
-
insurance recoveries, during the third quarter of 2014, related to a
fire at a body and chassis facility in
North America ; and - increased pre-operating costs incurred at new facilities.
Gross margin decreased
-
operational inefficiencies at certain facilities, in particular at
certain body and chassis operations in
North America ; - higher launch costs;
- lower recoveries associated with scrap steel;
- an increase in the proportion of tooling, engineering and other sales relative to total sales, that have low or no margins;
-
insurance recoveries, during the third quarter of 2014, related to a
fire at a body and chassis facility in
North America ; and - increased pre-operating costs incurred at new facilities.
These factors were partially offset 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;
- lower warranty costs;
- decreased commodity costs;
-
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 the weakening of the euro against the U.S. dollar; and - productivity and efficiency improvements at certain facilities.
Depreciation and Amortization
Depreciation and amortization costs decreased
Selling, General and Administrative ("SG&A")
SG&A expense as a percentage of sales was 4.7% for the third quarter of
2015 compared to 4.6% for the third quarter of 2014. SG&A expense
decreased
- the weakening of the Canadian dollar, euro, Russian ruble and Brazilian real, each against the U.S. dollar; and
-
the expiration, at the end of 2014, of our consulting agreements with
Frank Stronach .
These factors were partially offset by:
- higher consulting costs; and
-
a
$2 million net decrease in valuation gains in respect of asset-backed commercial paper ("ABCP").
Equity Income
Equity income increased
Other (Income) Expense, net
During the third quarter of 2015, we entered into a joint venture
arrangement for the manufacture and sale of roof and other accessories
for the Jeep market to OEM as well as aftermarket customers. We
contributed two manufacturing facilities and received a 49% interest in
the newly formed joint venture and cash proceeds of
During the second quarter of 2015, we sold our battery pack business to
During the three and nine months ended
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
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 September 30, | |||||||||||||||||||||||||
| Total Sales | Adjusted EBIT | ||||||||||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||||||
| North America | $ | 4,591 | $ | 4,541 | $ | 50 | $ | 455 | $ | 475 | $ | (20) | |||||||||||||
| Europe | 2,642 | 3,163 | (521) | 91 | 107 | (16) | |||||||||||||||||||
| Asia | 428 | 479 | (51) | 13 | 35 | (22) | |||||||||||||||||||
| Rest of World | 115 | 190 | (75) | (7) | (6) | (1) | |||||||||||||||||||
| Corporate and Other | (115) | (126) | 11 | 13 | 16 | (3) | |||||||||||||||||||
| Total reportable | |||||||||||||||||||||||||
| segments | $ | 7,661 | $ | 8,247 | $ | (586) | $ | 565 | $ | 627 | $ | (62) | |||||||||||||
Excluded from Adjusted EBIT for the three months ended
| For the three months | ||||||||||||||
| ended September 30, | ||||||||||||||
| 2015 | 2014 | |||||||||||||
| North America | ||||||||||||||
| Gain on sale | $ | (136) | $ | — | ||||||||||
| Europe | ||||||||||||||
| Restructuring | 12 | 7 | ||||||||||||
| $ | (124) | $ | 7 | |||||||||||
Adjusted EBIT in
- a decrease in reported U.S. dollar EBIT due to the weakening of the Canadian dollar against the U.S. dollar;
- lower recoveries associated with scrap steel;
- operational inefficiencies at certain facilities, in particular at certain body and chassis operations;
- higher launch costs;
-
insurance recoveries, during the third quarter of 2014, related to a
fire at a body and chassis facility in
North America ; - increased pre-operating costs incurred at new facilities;
- a greater amount of employee profit sharing; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by:
-
lower warranty costs of
$14 million ; - decreased commodity costs;
- lower affiliation fees paid to Corporate;
- margins earned on higher production sales;
- higher equity income; and
- productivity and efficiency improvements at certain facilities.
Adjusted EBIT in
- a decrease in reported U.S. dollar EBIT as a result of the weakening of foreign currencies against the U.S. dollar, including the euro and Czech koruna;
- operational inefficiencies at certain facilities;
- higher launch costs; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by:
- lower affiliation fees paid to Corporate;
-
lower warranty costs of
$6 million ; - decreased commodity costs;
- decreased pre-operating costs incurred at new facilities;
- productivity and efficiency improvements at certain facilities;
- a lower amount of employee profit sharing;
- lower incentive compensation; and
- higher equity income.
Adjusted EBIT in
- reduced margins due to lower production sales;
- increased pre-operating costs incurred at new facilities;
- lower equity income;
- higher launch costs; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by:
- a lower amount of employee profit sharing;
- lower affiliation fees paid to Corporate; and
-
lower warranty costs of
$1 million .
Rest of World
Adjusted EBIT in Rest of World decreased
- higher production costs, including inflationary increases, that we have not been fully successful in passing through to our customers; and
- higher incentive compensation.
These factors were partially offset by:
- 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;
- lower affiliation fees paid to Corporate; and
- net customer price increases subsequent to the third quarter of 2014.
Corporate and Other
Corporate and Other Adjusted EBIT decreased
- a decrease in affiliation fees earned from our divisions; 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
Interest Expense, net
Interest expense, net was
Income from Continuing Operations before Income Taxes
Income from continuing operations before income taxes increased
Income Taxes
| For the three months ended September 30, | |||||||||||||||||||
| 2015 | 2014 | ||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||
| Income taxes as reported | $ | 211 | 31.0 | $ | 125 | 20.5 | |||||||||||||
| Tax effect on Other Income and Other Expense | (56) | (3.1) | 1 | (0.1) | |||||||||||||||
| $ | 155 | 27.9 | $ | 126 | 20.4 | ||||||||||||||
Excluding Other Income and Other Expense, after tax, the effective income tax rate increased to 27.9% for the third quarter of 2015 compared to 20.4% for the third quarter of 2014 primarily as a result of lower favourable audit settlements and an increase in permanent items.
Income (loss) from Discontinued Operations, net of tax
Income (loss) from discontinued operations, net of tax reflects the results of our interiors operations which are classified as discontinued operations. During the third quarter of 2015, we sold these operations.
| Three months ended | |||||||||
| September 30, | |||||||||
| 2015 | 2014 | ||||||||
| Sales | $ | 453 | $ | 609 | |||||
| Costs and expenses | |||||||||
| Cost of goods sold | 436 | 598 | |||||||
| Depreciation and amortization | — | 10 | |||||||
| Selling, general and administrative | 4 | 24 | |||||||
| Equity income | (3) | (1) | |||||||
| Income (loss) from discontinued operations before income taxes | 16 | (22) | |||||||
| Income taxes | (51) | (5) | |||||||
| 67 | (17) | ||||||||
| Gain on divestiture of discontinued operations, net of tax | 52 | — | |||||||
| Income (loss) from discontinued operations, net of tax | $ | 119 | $ | (17) | |||||
Income (loss) from discontinued operations, net of tax increased
Loss from Continuing Operations Attributable to Non-Controlling Interests
Loss from continuing operations attributable to non-controlling
interests was
Net Income Attributable to
Net income attributable to
Earnings per Share (restated)
| For the three months | ||||||||||||
| ended September 30, | ||||||||||||
| 2015 | 2014 | Change | ||||||||||
| Basic earnings per Common Share | ||||||||||||
| Continuing operations | $ | 1.15 | $ | 1.15 | — | |||||||
| Attributable to Magna International Inc. | $ | 1.44 | $ | 1.11 | + 30% | |||||||
| Diluted earnings per Common Share | ||||||||||||
| Continuing operations | $ | 1.13 | $ | 1.14 | - 1% | |||||||
| Attributable to Magna International Inc. | $ | 1.42 | $ | 1.10 | + 29% | |||||||
| Weighted average number of Common Shares outstanding (millions) | ||||||||||||
| Basic | 408.5 | 422.4 | - 3% | |||||||||
| Diluted | 413.8 | 428.4 | - 3% | |||||||||
Diluted earnings per share from continuing operations decreased
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 third 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 September 30, | ||||||||||||
| 2015 | 2014 | Change | ||||||||||
| Net income from continuing operations | $ | 469 | $ | 486 | ||||||||
| Items not involving current cash flows | 94 | 262 | ||||||||||
| 563 | 748 | $ | (185) | |||||||||
| Changes in operating assets and liabilities | 33 | (17) | ||||||||||
| Cash provided from operating activities | $ | 596 | $ | 731 | $ | (135) | ||||||
Cash flow from operations before changes in operating assets and
liabilities decreased
| For the three months | ||||||||
| ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| Depreciation and amortization | $ | 197 | $ | 214 | ||||
| Amortization of other assets included in cost of goods sold | 32 | 35 | ||||||
| Deferred income taxes | 11 | 14 | ||||||
| Other non-cash charges | 9 | 10 | ||||||
| Equity income in excess of dividends received | (19) | (11) | ||||||
| Non-cash portion of Other Income | (136) | — | ||||||
| Items not involving current cash flows | $ | 94 | $ | 262 | ||||
Cash generated from operating assets and liabilities amounted to
| For the three months | ||||||||
| ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| Accounts receivable | $ | (116) | $ | 154 | ||||
| Inventories | (62) | (166) | ||||||
| Prepaid expenses and other | 3 | (2) | ||||||
| Accounts payable | 68 | (20) | ||||||
| Accrued salaries and wages | 125 | 70 | ||||||
| Other accrued liabilities | (13) | (41) | ||||||
| Income taxes payable/receivable | 28 | (12) | ||||||
| Changes in operating assets and liabilities | $ | 33 | $ | (17) | ||||
Higher accounts receivable relate primarily to higher tooling receivables. The increase in inventories was primarily due to increased production inventory to support launch activities. Higher account payable relate to timing of payments. The increase in accrued salaries and wages was primarily due to employee profit sharing.
Capital and Investment Spending
| For the three months | ||||||||||||
| ended September 30, | ||||||||||||
| 2015 | 2014 | Change | ||||||||||
| Fixed asset additions | $ | (360) | $ | (298) | ||||||||
| Investments and other assets | (74) | (51) | ||||||||||
| Fixed assets, investments and other assets additions | (434) | (349) | ||||||||||
| Proceeds from disposition | 11 | 76 | ||||||||||
| Sale of Interiors | 473 | — | ||||||||||
| Proceeds on disposal of facilities | 118 | — | ||||||||||
| Cash used in discontinued operations | (15) | (30) | ||||||||||
| Cash used for investment activities | $ | 153 | $ | (303) | $ | 456 | ||||||
Fixed assets, investments and other assets additions
In the third quarter of 2015, we invested
In the third quarter of 2015, we invested
Proceeds from disposition
In the third quarter of 2015, the
Proceeds on disposal of facilities
In the third quarter of 2015, we received
Financing
| For the three months | ||||||||||||
| ended September 30, | ||||||||||||
| 2015 | 2014 | Change | ||||||||||
| (Decrease) increase in bank indebtedness | $ | (41) | $ | 16 | ||||||||
| Issues of debt | 659 | 30 | ||||||||||
| Repayments of debt | (16) | (45) | ||||||||||
| Issues of Common Shares on exercise of stock options | 6 | 6 | ||||||||||
| Repurchase of Common Shares | (346) | (614) | ||||||||||
| Contributions by subsidiaries by non-controlling interests | 10 | — | ||||||||||
| Dividends paid | (91) | (79) | ||||||||||
| Cash used for financing activities | $ | 181 | $ | (686) | $ | 867 | ||||||
Issues of debt relate primarily to the issue of the
During the third quarter of 2015, we repurchased 7.2 million Common
Shares for aggregate cash consideration of
Cash dividends paid per Common Share were
Financing Resources
| As at | As at | ||||||||||||
| September 30, | December 31, | ||||||||||||
| 2015 | 2014 | Change | |||||||||||
| Liabilities | |||||||||||||
| Bank indebtedness | $ | 31 | $ | 30 | |||||||||
| Long-term debt due within one year | 158 | 183 | |||||||||||
| Long-term debt | 1,442 | 812 | |||||||||||
| 1,631 | 1,025 | ||||||||||||
| Non-controlling interests | 18 | 14 | |||||||||||
| Shareholders' equity | 8,845 | 8,659 | |||||||||||
| Total capitalization | $ | 10,494 | $ | 9,698 | $ | 796 | |||||||
Total capitalization increased by
The increase in liabilities relates primarily to the
The increase in shareholders' equity was primarily as a result of the
This factor was partially offset by:
-
the
$650 million net unrealized loss on translation of our net investment in operations whose functional currency is not the U.S. dollar; -
the
$351 million repurchase and cancellation of 7.2 million Common Shares under our normal course issuer bid in the first nine months of 2015; -
$270 million of dividends paid during the first nine months of 2015; and -
the
$190 million net unrealized loss on cash flow hedges.
Cash Resources
During the third quarter of 2015, our cash resources increased by
On
During the first quarter of 2014, we filed a short form base shelf
prospectus with the
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
| Common Shares | 404,380,164 | ||||||||||
| Stock options (i) | 8,563,750 | ||||||||||
| 412,943,914 |
(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 third 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 NINE MONTHS ENDED
Sales
| For the nine months | ||||||||||||||
| ended September 30, | ||||||||||||||
| 2015 | 2014 | Change | ||||||||||||
| Vehicle Production Volumes (millions of units) | ||||||||||||||
| North America | 12.907 | 12.626 | + 2% | |||||||||||
| Europe | 15.260 | 14.916 | + 2% | |||||||||||
| Sales | ||||||||||||||
| External Production | ||||||||||||||
| North America | $ | 13,089 | $ | 12,933 | + 1% | |||||||||
| Europe | 5,420 | 6,766 | - 20% | |||||||||||
| Asia | 1,139 | 1,148 | - 1% | |||||||||||
| Rest of World | 367 | 499 | - 26% | |||||||||||
| Complete Vehicle Assembly | 1,729 | 2,417 | - 28% | |||||||||||
| Tooling, Engineering and Other | 1,822 | 1,850 | - 2% | |||||||||||
| Total Sales | $ | 23,566 | $ | 25,613 | - 8% | |||||||||
External Production Sales -
External production sales in
- Ford Transit;
- Ford Mustang;
- GM full-size pickups and SUVs;
- Mercedes-Benz C-Class;
-
Chevrolet Colorado and
GMC Canyon ; and - Ford Edge.
This factor was partially offset by:
-
a
$598 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;
-
net divestitures subsequent to the third quarter of 2014, which
negatively impacted sales by
$66 million ; -
programs that ended production during or subsequent to the nine months
ended
September 30, 2014 ; and -
net customer price concessions subsequent to the nine months ended
September 30, 2014 .
External Production Sales -
External production sales in
-
a
$1.20 billion decrease in reported U.S. dollar sales as a result of the weakening of foreign currencies against the U.S. dollar, including the euro, Russian ruble, Czech koruna and Polish zloty; - lower production volumes on certain existing programs;
-
programs that ended production during or subsequent to the nine months
ended
September 30, 2014 ; and -
net customer price concessions subsequent to the nine months ended
September 30, 2014 .
These factors were partially offset by the launch of new programs during
or subsequent to the nine months ended
- Ford Transit;
- Volkswagen Passat;
-
BMW 2-Series; and - Citroën C4 Cactus.
External Production Sales -
External production sales in
- lower production volumes on certain existing programs;
-
a
$27 million decrease in reported U.S. dollar sales 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 nine months
ended
September 30, 2014 ; and -
net customer price concessions subsequent to the nine months ended
September 30, 2014 .
These factors were partially offset by the launch of new programs during
or subsequent to the third quarter of 2014, primarily in
External Production Sales - Rest of World
External production sales in Rest of World decreased 26% or
-
a
$112 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; - lower production volumes on certain existing programs; and
-
programs that ended production during or subsequent to the nine months
ended
September 30, 2014 .
These factors were partially offset by:
-
the launch of new programs during or subsequent to the third quarter of
2014, primarily in
Brazil ; and -
net customer price increases subsequent to the nine months ended
September 30, 2014 .
Complete Vehicle Assembly Sales
| For the nine months | ||||||||||||
| ended September 30, | ||||||||||||
| 2015 | 2014 | Change | ||||||||||
| Complete Vehicle Assembly Sales | $ | 1,729 | $ | 2,417 | - 28% | |||||||
| Complete Vehicle Assembly Volumes (Units) | 78,862 | 102,161 | - 23% | |||||||||
Complete vehicle assembly sales decreased 28% or
The decrease in complete vehicle assembly sales is primarily as a result of:
-
a
$402 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 2% or
In the nine months ended
- Ford F-Series and F-Series SuperDuty;
- GMC Acadia, Buick Enclave and Chevrolet Traverse;
- Chevrolet Cruze;
- Audi A4;
- MINI Countryman;
- Ford Edge;
- Skoda Fabia;
- Chevrolet Equinox and GMC Terrain; and
- Honda HR-V.
In the nine months ended
- MINI Countryman;
- Ford Mustang;
- Ford Transit;
- BMW X4;
- QOROS 3;
- Mercedes-Benz M-Class;
- Ford F-Series and F-Series SuperDuty; and
- Peugeot RCZ.
The weakening of certain foreign currencies against the U.S. dollar,
including the euro, Canadian dollar and Czech koruna had an unfavourable impact of
Segment Analysis
| For the nine months ended September 30, | |||||||||||||||||||||||||
| Total Sales | Adjusted EBIT | ||||||||||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||||||
| North America | $ | 13,925 | $ | 13,890 | $ | 35 | $ | 1,433 | $ | 1,466 | $ | (33) | |||||||||||||
| Europe | 8,234 | 10,154 | (1,920) | 339 | 386 | (47) | |||||||||||||||||||
| Asia | 1,357 | 1,401 | (44) | 86 | 103 | (17) | |||||||||||||||||||
| Rest of World | 373 | 519 | (146) | (19) | (30) | 11 | |||||||||||||||||||
| Corporate and Other | (323) | (351) | 28 | 34 | 42 | (8) | |||||||||||||||||||
| Total reportable | |||||||||||||||||||||||||
| segments | $ | 23,566 | $ | 25,613 | $ | (2,047) | $ | 1,873 | $ | 1,967 | $ | (94) | |||||||||||||
Excluded from Adjusted EBIT for the nine months ended
| For the nine months | ||||||||||||
| ended September 30, | ||||||||||||
| 2015 | 2014 | |||||||||||
| North America | ||||||||||||
| Gain on sale | $ | (136) | $ | — | ||||||||
| Europe | ||||||||||||
| Gain on sale | (57) | — | ||||||||||
| Restructuring | 12 | 40 | ||||||||||
| (45) | 40 | |||||||||||
| $ | (181) | $ | 40 | |||||||||
Adjusted EBIT in
- a decrease in reported U.S. dollar EBIT due to the weakening of the Canadian dollar against the U.S. dollar;
- lower recoveries associated with scrap steel;
- higher launch costs;
- operational inefficiencies at certain facilities, in particular at certain body and chassis operations;
- a greater amount of employee profit sharing; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by:
- lower affiliation fees paid to Corporate;
- decreased commodity costs;
- costs incurred, net of insurance recoveries, related to a fire at a body and chassis facility, during the second quarter of 2014;
- margins earned on higher production sales;
- higher equity income;
-
lower warranty costs of
$7 million ; and - productivity and efficiency improvements at certain facilities.
Adjusted EBIT in
- a decrease in reported U.S. dollar EBIT as a result of the weakening of foreign currencies against the U.S. dollar, including the euro, Czech koruna and Russian ruble;
- higher launch costs;
- operational inefficiencies at certain facilities;
- lower equity income; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by:
- lower affiliation fees paid to Corporate;
- decreased commodity costs;
-
lower warranty costs of
$9 million ; - productivity and efficiency improvements at certain facilities; and
- a lower amount of employee profit sharing.
Adjusted EBIT in
- increased pre-operating costs incurred at new facilities;
- higher launch costs;
- reduced margins due to lower production sales; and
- net customer price concessions subsequent to the third quarter of 2014.
These factors were partially offset by:
- a lower amount of employee profit sharing;
- lower affiliation fees paid to Corporate;
- decreased commodity costs; and
-
lower warranty costs of
$1 million .
Rest of World
Adjusted EBIT in Rest of World improved
- 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;
- lower affiliation fees paid to Corporate; and
- net customer price increases subsequent to the third 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;
- lower equity income;
- increased commodity costs; and
- higher incentive compensation.
Corporate and Other
Corporate and Other Adjusted EBIT decreased
- a decrease in affiliation fees earned from our divisions;
-
a
$4 million net decrease in valuation gains in respect of ABCP; - increased stock-based compensation; and
- a greater amount of employee profit sharing.
These factors were partially offset by the expiration, at the end of
2014, of our consulting agreements with
SUBSEQUENT EVENT
Normal Course Issuer Bid
Subject to approval by the TSX and the
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 three and nine months ended
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
CONTROLS AND PROCEDURES
There have been no changes in our internal controls over financial
reporting that occurred during the nine months ended
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: future purchases of Common Shares
under our NCIB; and future issuances of debt securities. 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;
our 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 and any proceedings that
may arise out of the internal global review initiated by us focused on
anti-trust risk; 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; our ability to successfully
identify, complete and integrate acquisitions or achieve anticipated
synergies; our ability to conduct appropriate due diligence on
acquisition targets; the consummation of the acquisition of the Getrag
group of companies (the "Getrag Transaction"); the satisfaction or
waiver of conditions to complete the Getrag Transaction, including
obtaining required regulatory approvals; warranty or indemnity
obligations in relation to pre-closing liabilities in connection with
the sale of substantially all of our interiors operations; an increase
in our risk profile as a result of completed acquisitions; risks of
conducting business in foreign markets, including
CONSOLIDATED STATEMENTS OF INCOME
[Unaudited]
[U.S. dollars in millions, except per share figures]
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||||||||
| Note | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
| Sales | $ | 7,661 | $ | 8,247 | $ | 23,566 | $ | 25,613 | ||||||||||||||
| Costs and expenses | ||||||||||||||||||||||
| Cost of goods sold | 6,593 | 7,075 | 20,223 | 21,975 | ||||||||||||||||||
| Depreciation and amortization | 197 | 214 | 589 | 631 | ||||||||||||||||||
| Selling, general and administrative | 12 | 358 | 382 | 1,036 | 1,192 | |||||||||||||||||
| Interest expense, net | 9 | 9 | 27 | 18 | ||||||||||||||||||
| Equity income | (52) | (51) | (155) | (152) | ||||||||||||||||||
| Other (income) expense, net | 3 | (124) | 7 | (181) | 40 | |||||||||||||||||
| Income from continuing operations before income taxes | 680 | 611 | 2,027 | 1,909 | ||||||||||||||||||
| Income taxes | 7 | 211 | 125 | 569 | 503 | |||||||||||||||||
| Net income from continuing operations | 469 | 486 | 1,458 | 1,406 | ||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | 2 | 119 | (17) | 74 | (35) | |||||||||||||||||
| Net income | 588 | 469 | 1,532 | 1,371 | ||||||||||||||||||
| Loss from continuing operations attributable to | ||||||||||||||||||||||
| non-controlling interests | 1 | 1 | 5 | 2 | ||||||||||||||||||
| Net income attributable to Magna International Inc. | $ | 589 | $ | 470 | $ | 1,537 | $ | 1,373 | ||||||||||||||
| Basic earnings per share (restated): | 1, 4 | |||||||||||||||||||||
| Continuing operations | $ | 1.15 | $ | 1.15 | $ | 3.58 | $ | 3.26 | ||||||||||||||
| Discontinued operations | 0.29 | (0.04) | 0.18 | (0.08) | ||||||||||||||||||
| Attributable to Magna International Inc. | $ | 1.44 | $ | 1.11 | $ | 3.76 | $ | 3.18 | ||||||||||||||
| Diluted earnings per share (restated): | 1, 4 | |||||||||||||||||||||
| Continuing operations | $ | 1.13 | $ | 1.14 | $ | 3.53 | $ | 3.21 | ||||||||||||||
| Discontinued operations | 0.29 | (0.04) | 0.18 | (0.08) | ||||||||||||||||||
| Attributable to Magna International Inc. | $ | 1.42 | $ | 1.10 | $ | 3.71 | $ | 3.13 | ||||||||||||||
| Cash dividends paid per Common Share (restated) | 1 | $ | 0.22 | $ | 0.19 | $ | 0.66 | $ | 0.57 | |||||||||||||
| Average number of Common Shares outstanding during | ||||||||||||||||||||||
| the period [in millions] (restated): | 1, 4 | |||||||||||||||||||||
| Basic | 408.5 | 422.4 | 409.2 | 432.0 | ||||||||||||||||||
| Diluted | 413.8 | 428.4 | 414.7 | 438.2 | ||||||||||||||||||
| See accompanying notes | ||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
[Unaudited]
[U.S. dollars in millions]
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||||||||
| Note | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
| Net income | $ | 588 | $ | 469 | $ | 1,532 | $ | 1,371 | ||||||||||||||
| Other comprehensive (loss) income, net of tax: | 14 | |||||||||||||||||||||
| Net unrealized loss on translation of net investment | ||||||||||||||||||||||
| in foreign operations | (275) | (346) | (650) | (358) | ||||||||||||||||||
| Net unrealized (loss) gain on available-for-sale investments | (2) | 1 | — | — | ||||||||||||||||||
| Net unrealized loss on cash flow hedges | (123) | (42) | (190) | (24) | ||||||||||||||||||
| Reclassification of net loss (gain) on cash flow hedges to | ||||||||||||||||||||||
| net income | 24 | (1) | 56 | 4 | ||||||||||||||||||
| Reclassification of net loss on investments to net income | 3 | — | 3 | — | ||||||||||||||||||
| Reclassification of net loss on pensions to net income | 2 | — | 5 | 3 | ||||||||||||||||||
| Pension and post retirement benefits | (1) | — | (2) | — | ||||||||||||||||||
| Other comprehensive loss | (372) | (388) | (778) | (375) | ||||||||||||||||||
| Comprehensive income | 216 | 81 | 754 | 996 | ||||||||||||||||||
| Comprehensive loss attributable to non-controlling interests | 1 | 1 | 5 | 2 | ||||||||||||||||||
| Comprehensive income attributable to | ||||||||||||||||||||||
| Magna International Inc. | $ | 217 | $ | 82 | $ | 759 | $ | 998 | ||||||||||||||
| See accompanying notes | ||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited]
[U.S. dollars in millions]
|
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||||||||
| Note | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Cash provided from (used for): | |||||||||||||||||||||
| OPERATING ACTIVITIES | |||||||||||||||||||||
| Net income from continuing operations | $ | 469 | $ | 486 | $ | 1,458 | $ | 1,406 | |||||||||||||
| Items not involving current cash flows | 5 | 94 | 262 | 445 | 759 | ||||||||||||||||
| 563 | 748 | 1,903 | 2,165 | ||||||||||||||||||
| Changes in operating assets and liabilities | 5 | 33 | (17) | (587) | (332) | ||||||||||||||||
| Cash provided from operating activities | 596 | 731 | 1,316 | 1,833 | |||||||||||||||||
| INVESTMENT ACTIVITIES | |||||||||||||||||||||
| Fixed asset additions | (360) | (298) | (987) | (863) | |||||||||||||||||
| Purchase of subsidiaries | — | — | (1) | — | |||||||||||||||||
| Increase in investments and other assets | (74) | (51) | (152) | (150) | |||||||||||||||||
| Proceeds from disposition | 11 | 76 | 50 | 126 | |||||||||||||||||
| Sale of Interiors | 2 | 473 | — | 473 | — | ||||||||||||||||
| Proceeds on disposal of facilities | 3 | 118 | — | 221 | — | ||||||||||||||||
| Cash used in discontinued operations | (15) | (30) | (56) | (93) | |||||||||||||||||
| Cash provided from (used for) investing activities | 153 | (303) | (452) | (980) | |||||||||||||||||
| FINANCING ACTIVITIES | |||||||||||||||||||||
| (Decrease) increase in bank indebtedness | (41) | 16 | 29 | 19 | |||||||||||||||||
| Issues of debt | 10 | 659 | 30 | 690 | 824 | ||||||||||||||||
| Repayments of debt | (16) | (45) | (70) | (130) | |||||||||||||||||
| Issue of Common Shares on exercise of stock options | 6 | 6 | 19 | 43 | |||||||||||||||||
| Repurchase of Common Shares | 13 | (346) | (614) | (351) | (1,429) | ||||||||||||||||
| Contributions by non-controlling interests of subsidiaries | 10 | — | 10 | — | |||||||||||||||||
| Dividends | (91) | (79) | (270) | (241) | |||||||||||||||||
| Cash provided from (used for) financing activities | 181 | (686) | 57 | (914) | |||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (78) | (60) | (155) | (54) | |||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | |||||||||||||||||||||
| during the period | 852 | (318) | 766 | (115) | |||||||||||||||||
| Cash and cash equivalents, beginning of period | 1,163 | 1,754 | 1,249 | 1,551 | |||||||||||||||||
| Cash and cash equivalents of continuing operations, | |||||||||||||||||||||
| end of period | $ | 2,015 | $ | 1,436 | $ | 2,015 | $ | 1,436 | |||||||||||||
| See accompanying notes | |||||||||||||||||||||
CONSOLIDATED BALANCE SHEETS
[Unaudited]
[U.S. dollars in millions]
|
As at September 30, |
As at December 31, |
|||||||||||||
| Note | 2015 | 2014 | ||||||||||||
| ASSETS | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | 5 | $ | 2,015 | $ | 1,249 | |||||||||
| Accounts receivable | 5,671 | 5,316 | ||||||||||||
| Inventories | 6 | 2,665 | 2,525 | |||||||||||
| Income taxes receivable | — | 13 | ||||||||||||
| Deferred tax assets | 190 | 181 | ||||||||||||
| Prepaid expenses and other | 243 | 150 | ||||||||||||
| Assets held for sale | 2 | — | 609 | |||||||||||
| 10,784 | 10,043 | |||||||||||||
| Investments | 15 | 440 | 379 | |||||||||||
| Fixed assets, net | 5,450 | 5,402 | ||||||||||||
| Goodwill | 1,251 | 1,337 | ||||||||||||
| Deferred tax assets | 166 | 139 | ||||||||||||
| Other assets | 8 | 502 | 526 | |||||||||||
| Noncurrent assets held for sale | 2 | — | 348 | |||||||||||
| $ | 18,593 | $ | 18,174 | |||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| Current liabilities | ||||||||||||||
| Bank indebtedness | $ | 31 | $ | 30 | ||||||||||
| Accounts payable | 4,681 | 4,765 | ||||||||||||
| Accrued salaries and wages | 747 | 686 | ||||||||||||
| Other accrued liabilities | 9 | 1,465 | 1,448 | |||||||||||
| Income taxes payable | 134 | — | ||||||||||||
| Deferred tax liabilities | 35 | 21 | ||||||||||||
| Long-term debt due within one year | 158 | 183 | ||||||||||||
| Liabilities held for sale | 2 | — | 514 | |||||||||||
| 7,251 | 7,647 | |||||||||||||
| Long-term debt | 10 | 1,442 | 812 | |||||||||||
| Long-term employee benefit liabilities | 11 | 525 | 559 | |||||||||||
| Other long-term liabilities | 350 | 278 | ||||||||||||
| Deferred tax liabilities | 7 | 162 | 171 | |||||||||||
| Long-term liabilities held for sale | 2 | — | 34 | |||||||||||
| 9,730 | 9,501 | |||||||||||||
| Shareholders' equity | ||||||||||||||
| Capital stock | ||||||||||||||
| Common Shares | ||||||||||||||
| [issued: 404,356,086; December 31, 2014 - 410,325,270 (restated)] | 1, 13 | 3,944 | 3,979 | |||||||||||
| Contributed surplus | 100 | 83 | ||||||||||||
| Retained earnings | 6,130 | 5,155 | ||||||||||||
| Accumulated other comprehensive loss | 14 | (1,329) | (558) | |||||||||||
| 8,845 | 8,659 | |||||||||||||
| Non-controlling interests | 18 | 14 | ||||||||||||
| 8,863 | 8,673 | |||||||||||||
| $ | 18,593 | $ | 18,174 | |||||||||||
| See accompanying notes | ||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
[Unaudited]
[U.S. dollars in millions]
| Common Shares | Contri- | Non- | ||||||||||||||||||||||||||||||
| Stated | buted | Retained | controlling | Total | ||||||||||||||||||||||||||||
| Note | Number | Value | Surplus | Earnings | AOCI (i) | Interests | Equity | |||||||||||||||||||||||||
| [in millions] | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2014 | 410.3 | $ | 3,979 | $ | 83 | $ | 5,155 | $ | (558) | $ | 14 | $ | 8,673 | |||||||||||||||||||
| Net income | 1,537 | (5) | 1,532 | |||||||||||||||||||||||||||||
| Other comprehensive loss | (778) | (778) | ||||||||||||||||||||||||||||||
| Shares issued on exercise of stock | ||||||||||||||||||||||||||||||||
| options | 1.2 | 25 | (6) | 19 | ||||||||||||||||||||||||||||
| Repurchase and cancellation under | ||||||||||||||||||||||||||||||||
| normal course issuer bid | 13 | (7.2) | (72) | (286) | 7 | (351) | ||||||||||||||||||||||||||
| Release of restricted stock | 5 | (5) | — | |||||||||||||||||||||||||||||
| Release of restricted stock units | 1 | (1) | — | |||||||||||||||||||||||||||||
| Stock-based compensation expense | 12 | 29 | 29 | |||||||||||||||||||||||||||||
| Reclassification of liability | 12 | 9 | 9 | |||||||||||||||||||||||||||||
| Dividends paid | 0.1 | 6 | (276) | (270) | ||||||||||||||||||||||||||||
| Balance, September 30, 2015 | 404.4 | $ | 3,944 | $ | 100 | $ | 6,130 | $ | (1,329) | $ | 18 | $ | 8,863 | |||||||||||||||||||
| Common Shares | Contri- | Non- | ||||||||||||||||||||||||||||||
| Stated | buted | Retained | controlling | Total | ||||||||||||||||||||||||||||
| Note | Number | Value | Surplus | Earnings | AOCI (i) | Interests | Equity | |||||||||||||||||||||||||
| [in millions | ||||||||||||||||||||||||||||||||
| (restated)] | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2013 | 442.3 | $ | 4,230 | $ | 69 | $ | 5,011 | $ | 313 | $ | 16 | $ | 9,639 | |||||||||||||||||||
| Net income | 1,373 | (2) | 1,371 | |||||||||||||||||||||||||||||
| Other comprehensive loss | (375) | (375) | ||||||||||||||||||||||||||||||
| Shares issued on exercise of stock | ||||||||||||||||||||||||||||||||
| options | 2.3 | 55 | (12) | 43 | ||||||||||||||||||||||||||||
| Repurchase and cancellation under | ||||||||||||||||||||||||||||||||
| normal course issuer bid | 13 | (28.2) | (272) | (1,132) | (25) | (1,429) | ||||||||||||||||||||||||||
| Release of restricted stock | 5 | (5) | — | |||||||||||||||||||||||||||||
| Release of restricted stock units | 1 | (1) | — | |||||||||||||||||||||||||||||
| Stock-based compensation expense | 12 | 30 | 30 | |||||||||||||||||||||||||||||
| Reclassification of liability | 12 | 7 | 7 | |||||||||||||||||||||||||||||
| Dividends paid | 0.2 | 7 | (248) | (241) | ||||||||||||||||||||||||||||
| Balance, September 30, 2014 | 416.6 | $ | 4,026 | $ | 88 | $ | 5,004 | $ | (87) | $ | 14 | $ | 9,045 | |||||||||||||||||||
| (i) AOCI is Accumulated Other Comprehensive Income. | ||||||||||||||||||||||||||||||||
| See accompanying notes | ||||||||||||||||||||||||||||||||
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
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
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
[b] Stock Split
On
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 third quarter of 2015, the Company sold substantially all of its interiors operations. 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
[e] Seasonality
The Company's businesses are generally not seasonal. However, the
Company's sales and profits are closely related to its automotive
customers' vehicle production schedules. The Company's largest North
American customers typically halt production for approximately two
weeks in July and one week in December. Additionally, many of the
Company's customers in
2. DISCONTINUED OPERATIONS
During the second quarter of 2015, the Company determined that its interiors business met the criteria to be classified as a discontinued operation as a result of entering into a definitive agreement for the sale of substantially all of its operations. Accordingly, the held for sale assets and liabilities of the disposed interiors operations were reclassified in the consolidated balance sheet to current or long-term assets or liabilities held for sale, as appropriate.
On
| August 31, | |||
| 2015 | |||
| Proceeds on disposal, net of transaction costs | $ | 556 | |
| Net assets disposed | 438 | ||
| 118 | |||
| Income taxes [includes $60 million recorded in the second quarter of 2015] | 66 | ||
| Gain on divestiture, net of tax | $ | 52 |
Consideration associated with the divestiture remains subject to further adjustments, primarily related to working capital. The Company does not anticipate significant continuing involvement with the disposed interiors operations subsequent to the close of the transaction.
The following table summarizes the carrying value of the major classes
of assets and liabilities of the discontinued operations which were
reflected as held for sale in the consolidated balance sheet at
| December 31, | |||
| 2014 | |||
| Cash and cash equivalents | $ | 4 | |
| Accounts receivable | 355 | ||
| Inventories | 232 | ||
| Income taxes receivable | 3 | ||
| Prepaid expenses and other | 10 | ||
| Deferred tax assets | 12 | ||
| Fixed assets, net | 263 | ||
| Goodwill | 12 | ||
| Investments | 40 | ||
| Other assets | 26 | ||
| Total assets of the discontinued operations classified as held for sale | $ | 957 | |
| December 31, | |||
| 2014 | |||
| Bank indebtedness | $ | 3 | |
| Accounts payable | 376 | ||
| Accrued salaries and wages | 44 | ||
| Other accrued liabilities | 91 | ||
| Long-term debt due within one year | 1 | ||
| Long-term employee benefit liabilities | 20 | ||
| Other long-term liabilities | 12 | ||
| Deferred tax liabilities | 1 | ||
| Total liabilities of the discontinued operations classified as held for sale | $ | 548 |
A reconciliation of the major classes of line items constituting income (loss) from discontinued operations, net of tax as presented in the statements of income is as follows:
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Sales | $ | 453 | $ | 609 | $ | 1,737 | $ | 1,752 | ||||||||
| Costs and expenses | ||||||||||||||||
| Cost of goods sold | 436 | 598 | 1,635 | 1,698 | ||||||||||||
| Depreciation and amortization | — | 10 | 13 | 33 | ||||||||||||
| Selling, general and administrative | 4 | 24 | 58 | 73 | ||||||||||||
| Equity income | (3) | (1) | (11) | (5) | ||||||||||||
| Income (loss) from discontinued operations | ||||||||||||||||
| before income taxes and gain on divestiture | 16 | (22) | 42 | (47) | ||||||||||||
| Income taxes [i] | (51) | (5) | 20 | (12) | ||||||||||||
| Income (loss) from discontinued operations | ||||||||||||||||
| before gain on divestiture | 67 | (17) | 22 | (35) | ||||||||||||
| Gain on divestiture of discontinued operations, net of tax [i] | 52 | — | 52 | — | ||||||||||||
| Income (loss) from discontinued operations, net of tax | $ | 119 | $ | (17) | $ | 74 | $ | (35) | ||||||||
| [i] | In the second quarter of 2015, income taxes included $60 million of deferred tax expense relating to timing differences that have become payable upon closing of the transaction and therefore are now included in the gain on divestiture of discontinued operations, net of tax. |
The interiors operations were previously included within all of the Company's reporting segments except for Rest of World.
3. OTHER (INCOME) EXPENSE, NET
| Nine months ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2015 | 2014 | |||||||||||||||
| Third Quarter | ||||||||||||||||
| Gain on disposal | [a] | $ | (136) | $ | — | |||||||||||
| Restructuring | [b] | 12 | 7 | |||||||||||||
| (124) | 7 | |||||||||||||||
| Second Quarter | ||||||||||||||||
| Gain on disposal | [a] | (57) | — | |||||||||||||
| Restructuring | [b] | — | 11 | |||||||||||||
| (57) | 11 | |||||||||||||||
| First Quarter | ||||||||||||||||
| Restructuring | [b] | — | 22 | |||||||||||||
| $ | (181) | $ | 40 | |||||||||||||
For the nine months ended
[a] Gain on disposal
During the third quarter of 2015, the Company entered into a joint
venture arrangement for the manufacture and sale of roof and other
accessories for the Jeep market to original equipment manufacturers as
well as aftermarket customers. The Company contributed two
manufacturing facilities and received a 49% interest in the newly
formed joint venture and cash proceeds of
During the second quarter of 2015, the company sold its battery pack
business to
[b] Restructuring
During the third quarter of 2015, the Company recorded net restructuring
charges of
For the nine months ended
[b] Restructuring
During the first, second and third quarters of 2014, the Company
recorded net restructuring charges of
4. EARNINGS PER SHARE
Earnings per share are computed as follows [restated [note 1]]:
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Income available to Common shareholders: | ||||||||||||||||
| Net income from continuing operations | $ | 469 | $ | 486 | $ | 1,458 | $ | 1,406 | ||||||||
| Loss from continuing operations attributable to | ||||||||||||||||
| non-controlling interests | 1 | 1 | 5 | 2 | ||||||||||||
| Net income attributable to Magna International Inc. from | 470 | 487 | 1,463 | 1,408 | ||||||||||||
| continuing operations | ||||||||||||||||
| Income (loss) from discontinued operations, net of tax | 119 | (17) | 74 | (35) | ||||||||||||
| Net income attributable to Magna International Inc. | $ | 589 | $ | 470 | $ | 1,537 | $ | 1,373 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 408.5 | 422.4 | 409.2 | 432.0 | ||||||||||||
| Adjustments | ||||||||||||||||
| Stock options and restricted stock [i] | 5.3 | 6.0 | 5.5 | 6.2 | ||||||||||||
| Diluted | 413.8 | 428.4 | 414.7 | 438.2 | ||||||||||||
| [i] |
For the three and nine months ended September 30, 2015, diluted earnings
per Common Share exclude 1.6 million and 0.7 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 | $ | 1.15 | $ | 1.15 | $ | 3.58 | $ | 3.26 | ||||||||
| Discontinued operations | 0.29 | (0.04) | 0.18 | (0.08) | ||||||||||||
| Attributable to Magna International Inc. | $ | 1.44 | $ | 1.11 | $ | 3.76 | $ | 3.18 | ||||||||
| Diluted: | ||||||||||||||||
| Continuing operations | $ | 1.13 | $ | 1.14 | $ | 3.53 | $ | 3.21 | ||||||||
| Discontinued operations | 0.29 | (0.04) | 0.18 | (0.08) | ||||||||||||
| Attributable to Magna International Inc. | $ | 1.42 | $ | 1.10 | $ | 3.71 | $ | 3.13 | ||||||||
5. DETAILS OF CASH FROM OPERATING ACTIVITIES
[a] Cash and cash equivalents:
| September 30, | December 31, | ||||||
| 2015 | 2014 | ||||||
| Bank term deposits, bankers' acceptances and government paper | $ | 1,759 | $ | 1,058 | |||
| Cash | 256 | 191 | |||||
| $ | 2,015 | $ | 1,249 |
[b] Items not involving current cash flows:
|
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Depreciation and amortization | $ | 197 | $ | 214 | $ | 589 | $ | 631 | |||||||
| Amortization of other assets included in cost of goods sold | 32 | 35 | 82 | 104 | |||||||||||
| Deferred income taxes | 11 | 14 | (5) | 43 | |||||||||||
| Other non-cash charges | 9 | 10 | 21 | 25 | |||||||||||
| Equity income in excess of dividends received | (19) | (11) | (49) | (44) | |||||||||||
| Non-cash portion of Other (income) expense, net [note 3] | (136) | — | (193) | — | |||||||||||
| $ | 94 | $ | 262 | $ | 445 | $ | 759 | ||||||||
[c] Changes in operating assets and liabilities:
|
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Accounts receivable | $ | (116) | $ | 154 | $ | (588) | $ | (698) | |||||||
| Inventories | (62) | (166) | (331) | (264) | |||||||||||
| Prepaid expenses and other | 3 | (2) | (9) | 1 | |||||||||||
| Accounts payable | 68 | (20) | 167 | 404 | |||||||||||
| Accrued salaries and wages | 125 | 70 | 70 | 57 | |||||||||||
| Other accrued liabilities | (13) | (41) | 27 | 100 | |||||||||||
| Income taxes payable | 28 | (12) | 77 | 68 | |||||||||||
| $ | 33 | $ | (17) | $ | (587) | $ | (332) | ||||||||
6. INVENTORIES
Inventories consist of:
| September 30, | December 31, | ||||||||||||||
| 2015 | 2014 | ||||||||||||||
| Raw materials and supplies | $ | 859 | $ | 846 | |||||||||||
| Work-in-process | 248 | 233 | |||||||||||||
| Finished goods | 284 | 338 | |||||||||||||
| Tooling and engineering | 1,274 | 1,108 | |||||||||||||
| $ | 2,665 | $ | 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
8. OTHER ASSETS
Other assets consist of:
| September 30, | December 31, | ||||||
| 2015 | 2014 | ||||||
|
Preproduction costs related to long-term supply agreements with contractual guarantee for reimbursement |
$ | 246 | $ | 243 | |||
| Long-term receivables | 87 | 85 | |||||
| Customer relationship intangibles | 83 | 108 | |||||
| Patents and licences, net | 29 | 32 | |||||
| Pension overfunded status | 13 | 13 | |||||
| Unrealized gain on cash flow hedges | 6 | 8 | |||||
| Other, net | 38 | 37 | |||||
| $ | 502 | $ | 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 | ||||||||||||
| Expense, net | 1 | 23 | ||||||||||||
| Settlements | (10) | (9) | ||||||||||||
| Foreign exchange and other | (5) | (5) | ||||||||||||
| Balance, September 30 | $ | 59 | $ | 88 |
10. LONG-TERM DEBT
[a] On
[b] On
11. LONG-TERM EMPLOYEE BENEFIT LIABILITIES
The Company recorded long-term employee benefit expenses as follows:
|
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Defined benefit pension plan and other | $ | 3 | $ | 2 | $ | 10 | $ | 9 | |||||||
| Termination and long service arrangements | 8 | 8 | 20 | 24 | |||||||||||
| Retirement medical benefit plan | — | 1 | 1 | 2 | |||||||||||
| $ | 11 | $ | 11 | $ | 31 | $ | 35 | ||||||||
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 - restated [note 1]]:
| 2015 | 2014 | |||||||||||||||||
| Options outstanding | Options outstanding | |||||||||||||||||
|
Number of options |
Exercise price (i) |
Number of options exercisable |
Number of options |
Exercise price (i) |
Number of options 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 | ||||||||||||
| Exercised | (600,834) | 14.22 | (600,833) | (342,102) | 19.27 | (342,102) | ||||||||||||
| Cancelled | (10,910) | 56.11 | — | — | — | — | ||||||||||||
| September 30 | 8,617,226 | 35.36 | 5,431,771 | 8,668,942 | 26.72 | 4,946,110 | ||||||||||||
(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:
| Nine months ended | |||||||||
| September 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 [note 1]] | $ | 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 - restated [note 1]]:
| 2015 | 2014 | |||||||||||||||
|
Number of shares |
Stated value |
Number of shares |
Stated value |
|||||||||||||
| Awarded and not released, beginning of year | 1,174,648 | $ | 20 | 1,460,952 | $ | 25 | ||||||||||
| Release of restricted stock | (286,312) | (4) | (286,304) | (5) | ||||||||||||
| Awarded and not released, March 31, June 30 and September 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 - restated [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 | ||||||||||||||||
| Granted | 72,317 | — | 10,953 | 83,270 | 71,314 | — | 9,684 | 80,998 | ||||||||||||||||
| Dividend equivalents | 347 | 281 | 1,491 | 2,119 | 342 | 262 | 977 | 1,581 | ||||||||||||||||
| Forfeitures | — | — | — | — | — | (820) | — | (820) | ||||||||||||||||
| Released | (25,861) | — | — | (25,861) | (25,460) | — | — | (25,460) | ||||||||||||||||
| Balance, September 30 | 1,231,241 | 62,752 | 339,818 | 1,633,811 | 1,506,462 | 78,314 | 290,936 | 1,875,712 | ||||||||||||||||
[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 September 30, |
Nine months ended September 30, |
||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Incentive Stock Option Plan | $ | 3 | $ | 4 | $ | 9 | $ | 11 | |||||||
| Long-term retention | 1 | 1 | 3 | 3 | |||||||||||
| Restricted stock unit | 4 | 5 | 16 | 17 | |||||||||||
| Total stock-based compensation expense | $ | 8 | $ | 10 | $ | 28 | $ | 31 | |||||||
13. COMMON SHARES
[a] The Company repurchased shares under normal course issuer bids as follows [restated [note1]]:
| 2015 | 2014 | |||||||||||||
|
Number of shares |
Cash consideration |
Number of shares |
Cash consideration |
|||||||||||
| First Quarter | — | $ | — | 5,420,000 | $ | 240 | ||||||||
| Second Quarter | — | — | 11,436,362 | 575 | ||||||||||
| Third Quarter | 7,246,514 | 346 | 11,308,844 | 614 | ||||||||||
| 7,246,514 | $ | 346 | 28,165,206 | $ | 1,429 | |||||||||
Refer to Subsequent Event Note 18 for more information regarding the Company's Normal Course Issuer Bids.
[b] The following table presents the maximum number of shares that would
be outstanding if all the dilutive instruments outstanding at
| Common Shares | 404,380,164 | |||||
| Stock options (i) | 8,563,750 | |||||
| 412,943,914 | ||||||
|
(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
The following is a continuity schedule of accumulated other comprehensive loss:
| 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 | ||||||
| Net unrealized loss | (275) | (346) | ||||||
| Repurchase of shares under normal course issuer bid | 7 | (10) | ||||||
| Balance, September 30 | (898) | 71 | ||||||
| Accumulated net unrealized loss 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 | ||||||
| Net unrealized loss | (123) | (42) | ||||||
| Reclassification of net loss (gain) to net income | 24 | (1) | ||||||
| Balance, September 30 | (247) | (40) | ||||||
| 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) | ||||||
| Net unrealized (loss) gain | (2) | 1 | ||||||
| Reclassification of net loss to net income | 3 | — | ||||||
| Balance, September 30 | (1) | (4) | ||||||
| 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) | ||||||
| Net unrealized loss | (1) | — | ||||||
| Reclassification of net loss to net income | 2 | — | ||||||
| Balance, September 30 | (183) | (114) | ||||||
| Total accumulated other comprehensive loss | $ | (1,329) | $ | (87) | ||||
| (i) | The amount of income tax benefit that has been netted in the accumulated net unrealized loss 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 loss to net income | (8) | (1) | ||||||
| Balance, June 30 | 57 | (3) | ||||||
| Net unrealized loss | 47 | 16 | ||||||
| Reclassifications of net (loss) gain to net income | (10) | 1 | ||||||
| Balance, September 30 | $ | 94 | $ | 14 | ||||
| (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 | ||||||
| Net unrealized gain | (1) | — | ||||||
| Reclassification of net loss to net income | (1) | (1) | ||||||
| Balance, September 30 | $ | 33 | $ | 13 |
The amount of other comprehensive loss that is expected to be
reclassified to net income over the next 12 months is
15. FINANCIAL INSTRUMENTS
[a] The Company's financial assets and financial liabilities consist of the following:
| September 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| Held for trading | |||||||||
| Cash and cash equivalents | $ | 2,015 | $ | 1,249 | |||||
| Investment in asset-backed commercial paper | 76 | 88 | |||||||
| Equity investments | 5 | — | |||||||
| $ | 2,096 | $ | 1,337 | ||||||
| Available-for-sale | |||||||||
| Equity investments | $ | — | $ | 5 | |||||
| Held to maturity investments | |||||||||
| Severance investments | $ | 3 | $ | 4 | |||||
| Loans and receivables | |||||||||
| Accounts receivable | $ | 5,671 | $ | 5,316 | |||||
| Long-term receivables included in other assets | 87 | 85 | |||||||
| $ | 5,758 | $ | 5,401 | ||||||
| Other financial liabilities | |||||||||
| Bank indebtedness | $ | 31 | $ | 30 | |||||
| Long-term debt (including portion due within one year) | 1,600 | 995 | |||||||
| Accounts payable | 4,681 | 4,765 | |||||||
| $ | 6,312 | $ | 5,790 | ||||||
| Derivatives designated as effective hedges, measured at fair value | |||||||||
| Foreign currency contracts | |||||||||
| Prepaid expenses | $ | 27 | $ | 21 | |||||
| Other assets | 6 | 8 | |||||||
| Other accrued liabilities | (187) | (90) | |||||||
| Other long-term liabilities | (141) | (80) | |||||||
| (295) | (141) | ||||||||
| Natural gas contracts | |||||||||
| Other accrued liabilities | (1) | (1) | |||||||
| $ | (296) | $ | (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 interim 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 interim consolidated balance sheets and the unrecognized impacts of master netting arrangements:
|
Gross amounts presented in Consolidated Balance Sheets |
Gross amounts not offset in Consolidated Balance Sheets |
Net amounts | ||||||||||
| September 30, 2015 | ||||||||||||
| Assets | $ | 33 | $ | 30 | $ | 3 | ||||||
| Liabilities | $ | (327) | $ | (35) | $ | (292) | ||||||
| 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
Term debt
The Company's term debt includes
Senior Notes
At
[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 the three and nine-month periods ended
[e] Interest rate risk
The Company is not exposed to significant interest rate risk on its monetary current assets and current liabilities due to the short-term maturity of these items. 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
| Buys | Sells | ||||||||||
| For Canadian dollars | |||||||||||
| U.S. dollar amount | 191 | 1,627 | |||||||||
| euro amount | 54 | 47 | |||||||||
| Korean won amount | 17,097 | — | |||||||||
| For U.S. dollars | |||||||||||
| Peso amount | 6,673 | 55 | |||||||||
| Korean won amount | 35,360 | — | |||||||||
| For euros | |||||||||||
| U.S. dollar amount | 185 | 327 | |||||||||
| British pounds amount | — | 25 | |||||||||
| Czech koruna amount | 3,840 | — | |||||||||
| Forward contracts mature at various dates through 2020. 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
-
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 inNorth America , other than throughMST Automotive Inc. , a company to be 77% owned by Magna and 23% owned byCentoco 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 inNorth America ;
-
a conspiracy by the Company, TRW and others to deprive
KS Centoco Ltd. of the benefits of such airbag technology inNorth America and to causeCentoco Holdings Limited to sell to TRW its interest inKS Centoco Ltd. in conjunction with the Company's sale to TRW of its interest inMST Automotive GmbH andTEMIC Bayern-Chemie Airbag GmbH ; and
- oppression by the defendants.
The plaintiffs are seeking, amongst other things, damages of
approximately
[b] In
In
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 September 30, 2015 |
Three months ended September 30, 2014 |
||||||||||||||||||||||||||||||||||
|
Total sales |
External sales |
Adjusted EBIT |
Fixed assets, net |
Total sales |
External sales |
Adjusted EBIT |
Fixed assets, net |
||||||||||||||||||||||||||||
| North America | |||||||||||||||||||||||||||||||||||
| Canada | $ | 1,538 | $ | 1,419 | $ | 620 | $ | 1,642 | $ | 1,530 | $ | 579 | |||||||||||||||||||||||
| United States | 2,318 | 2,225 | 1,332 | 2,222 | 2,100 | 1,085 | |||||||||||||||||||||||||||||
| Mexico | 1,030 | 921 | 707 | 961 | 881 | 577 | |||||||||||||||||||||||||||||
| Eliminations | (295) | — | — | (284) | — | — | |||||||||||||||||||||||||||||
| 4,591 | 4,565 | $ | 455 | 2,659 | 4,541 | 4,511 | $ | 475 | 2,241 | ||||||||||||||||||||||||||
| Europe | |||||||||||||||||||||||||||||||||||
| Western Europe excluding | |||||||||||||||||||||||||||||||||||
| Great Britain | 2,152 | 2,061 | 1,197 | 2,608 | 2,529 | 1,266 | |||||||||||||||||||||||||||||
| Great Britain | 80 | 79 | 47 | 88 | 89 | 36 | |||||||||||||||||||||||||||||
| Eastern Europe | 500 | 446 | 455 | 492 | 484 | 559 | |||||||||||||||||||||||||||||
| Eliminations | (90) | — | — | (25) | — | — | |||||||||||||||||||||||||||||
| 2,642 | 2,586 | 91 | 1,699 | 3,163 | 3,102 | 107 | 1,861 | ||||||||||||||||||||||||||||
| Asia | 428 | 392 | 13 | 647 | 479 | 441 | 35 | 634 | |||||||||||||||||||||||||||
| Rest of World | 115 | 114 | (7) | 56 | 190 | 190 | (6) | 90 | |||||||||||||||||||||||||||
| Corporate and Other | (115) | 4 | 13 | 389 | (126) | 3 | 16 | 325 | |||||||||||||||||||||||||||
| Total reportable segments | 7,661 | 7,661 | 565 | 5,450 | 8,247 | 8,247 | 627 | 5,151 | |||||||||||||||||||||||||||
| Other income (expense), net | 124 | (7) | |||||||||||||||||||||||||||||||||
| Interest expense, net | (9) | (9) | |||||||||||||||||||||||||||||||||
| $ | 7,661 | $ | 7,661 | $ | 680 | 5,450 | $ | 8,247 | $ | 8,247 | $ | 611 | 5,151 | ||||||||||||||||||||||
| Current assets | 10,784 | 10,445 | |||||||||||||||||||||||||||||||||
| Investments, goodwill, | |||||||||||||||||||||||||||||||||||
| deferred tax assets, and | |||||||||||||||||||||||||||||||||||
| other assets | 2,359 | 2,491 | |||||||||||||||||||||||||||||||||
| Noncurrent assets held for | |||||||||||||||||||||||||||||||||||
| sale | — | 376 | |||||||||||||||||||||||||||||||||
| Consolidated total assets | $ | 18,593 | $ | 18,463 | |||||||||||||||||||||||||||||||
|
Nine months ended September 30, 2015 |
Nine months ended September 30, 2014 |
||||||||||||||||||||||||||||||||||
|
Total sales |
External sales |
Adjusted EBIT |
Fixed assets, net |
Total sales |
External sales |
Adjusted EBIT |
Fixed assets, net |
||||||||||||||||||||||||||||
| North America | |||||||||||||||||||||||||||||||||||
| Canada | $ | 4,578 | $ | 4,237 | $ | 620 | $ | 5,040 | $ | 4,676 | $ | 579 | |||||||||||||||||||||||
| United States | 7,112 | 6,805 | 1,332 | 6,806 | 6,425 | 1,085 | |||||||||||||||||||||||||||||
| Mexico | 3,085 | 2,803 | 707 | 2,945 | 2,698 | 577 | |||||||||||||||||||||||||||||
| Eliminations | (850) | — | — | (901) | — | — | |||||||||||||||||||||||||||||
| 13,925 | 13,845 | $ | 1,433 | 2,659 | 13,890 | 13,799 | $ | 1,466 | 2,241 | ||||||||||||||||||||||||||
| Europe | |||||||||||||||||||||||||||||||||||
| Western Europe excluding | |||||||||||||||||||||||||||||||||||
| Great Britain | 6,653 | 6,434 | 1,197 | 8,400 | 8,183 | 1,266 | |||||||||||||||||||||||||||||
| Great Britain | 275 | 274 | 47 | 277 | 277 | 36 | |||||||||||||||||||||||||||||
| Eastern Europe | 1,548 | 1,373 | 455 | 1,707 | 1,532 | 559 | |||||||||||||||||||||||||||||
| Eliminations | (242) | — | — | (230) | — | — | |||||||||||||||||||||||||||||
| 8,234 | 8,081 | 339 | 1,699 | 10,154 | 9,992 | 386 | 1,861 | ||||||||||||||||||||||||||||
| Asia | 1,357 | 1,262 | 86 | 647 | 1,401 | 1,292 | 103 | 634 | |||||||||||||||||||||||||||
| Rest of World | 373 | 372 | (19) | 56 | 519 | 519 | (30) | 90 | |||||||||||||||||||||||||||
| Corporate and Other | (323) | 6 | 34 | 389 | (351) | 11 | 42 | 325 | |||||||||||||||||||||||||||
| Total reportable segments | 23,566 | 23,566 | 1,873 | 5,450 | 25,613 | 25,613 | 1,967 | 5,151 | |||||||||||||||||||||||||||
| Other income (expense), net | 181 | (40) | |||||||||||||||||||||||||||||||||
| Interest expense, net | (27) | (18) | |||||||||||||||||||||||||||||||||
| $ | 23,566 | $ | 23,566 | $ | 2,027 | 5,450 | $ | 25,613 | $ | 25,613 | $ | 1,909 | 5,151 | ||||||||||||||||||||||
| Current assets | 10,784 | 10,445 | |||||||||||||||||||||||||||||||||
| Investments, goodwill | |||||||||||||||||||||||||||||||||||
| deferred tax assets and | |||||||||||||||||||||||||||||||||||
| other assets | 2,359 | 2,491 | |||||||||||||||||||||||||||||||||
| Noncurrent assets held for | |||||||||||||||||||||||||||||||||||
| sale | — | 376 | |||||||||||||||||||||||||||||||||
| Consolidated total assets | $ | 18,593 | $ | 18,463 | |||||||||||||||||||||||||||||||
18. SUBSEQUENT EVENTS
Normal Course Issuer Bid
Subject to approval by the
SOURCE
Louis Tonelli, Vice-President, Investor Relations at 905-726-7035