Autoliv Releases Financial Report July-September 1997
22 October 1997
Autoliv Releases Financial Report July-September 1997
Strong Dollar Reduced Sales - Net Income Maintained
STOCKHOLM, Sweden, Oct. 22 -- Autoliv Inc.
, a worldwide leader in automotive safety, reported a
maintained earnings per share of 34 cents and net income of $34.9 million for
the three month period ended September 30, 1997, despite a 7 percent negative
effect on sales from the stronger U.S. dollar. In addition, earnings have
been effected by the introduction of several lower margin contracts following
the model year shift in July. The negative effects have been offset, however,
by higher vertical integration and the introduction of more cost-efficient
components and designs.
Income before taxes amounted to $61.5 million compared to $62.4 million
for the third quarter 1996.
Data before May 1, when the company was founded, are included on a pro
forma basis.
Sales
Posted consolidated net sales for the third quarter 1997 declined by 2% to
$717 million over the corresponding quarter 1996, mainly due to a stronger
U.S. dollar and a continued price decline on airbags (65% of sales are outside
the U.S.). Excluding the currency translation effects, sales grew by about
5%. Sales have been negatively effected by supplier problems mainly due to a
large number of production start-ups for new car models. The production of
light vehicles in Europe and the U.S. is estimated to have grown by 1%.
Posted sales of airbag products (incl. steering wheels) declined by 1% to
$516 million, while sales adjusted for currency effects, grew by 4%.
Side-impact airbag sales grew particularly fast.
Posted sales of seat belt products (incl. seat sub-systems) decreased by
4% to $201 million, while the sales excluding currency effects grew by 9%.
The improvements are due to continued strong sales of the new seat belt
products such as pretentioners and load limiters.
Posted net sales for the nine-month period ended September 30 rose by 1%
to $2.4 billion over the corresponding period 1996. Adjusted for currency
translation effects and corporate acquisitions, sales grew by about 6%.
Posted sales for airbags increased by 2% and decreased for seat belts by 1%,
while sales excluding currency effects and acquisitions grew for both product
segments by 5% and 10% respectively.
Earnings
Net income for the nine-month period rose on a comparable basis by 9% to
$138 million and earnings per share to $1.35, compared to $127 million and
$1.24, respectively, for the corresponding period 1996. Earnings before taxes
rose by 7% to $239 million from $223 million.
The tax rates remained almost unchanged at approximately 45% and 43%,
respectively, from previous year's third quarter and the nine-month period.
Excluding non-deductible amortization, the tax rate is 39%.
Cash Flow & Balance Sheet
Cash provided by operations amounted to $283 million during the nine-month
period, whereof $62 million were generated during the third quarter. Capital
expenditures amounted to $146 million and $43 million, respectively.
Cash flow after operating and investing activities improved by $20 million
during the third quarter to $133 million in the nine-month period, or to $1.29
per share.
As of September 30, 1997, net debt was $618 million, a decrease by $86
million since the beginning of the year and by $7 million since the second
quarter. Net debt to equity stood at 37% compared to 43% at the beginning of
the year.
Restructuring Costs and Savings Potential
Based on an on-going assessment, goodwill is expected to increase by
approximately $75 million, net of income tax, in the next quarter and the
annual goodwill amortization to grow by approximately $2 million or $0.02 per
share. This adjustment will reflect estimates of restructuring costs, revised
pre-acquisition contingencies and liabilities as well as forward contract
losses.
The cost savings from the merger are calculated to amount to approximately
$100 million annually, when fully realized in 1999. In addition to these cost
reductions, the merger is expected to generate top-line synergies by better
sales of, for instance, seat belts and steering wheels and by better
penetration of new markets than without the merger.
Employees
The number of employees has increased by 1,900 since September 30, 1996,
to 16,700. Of the increase approximately 70% is due to continued integration
and acquisitions.
Significant Events
* Shipments of seat belt pretensioners started to Cadillac.
* In order to enhance Autoliv's vertical integration, a tender offer has
been made for the outstanding shares of Marling Industries p.l.c.,
Autoliv's main supplier of seat belt webbing. As of October 21, 97.3%
of the Marling shares have been tendered, and a compulsory redemption
proceedings will start shortly.
* Autoliv's Smart Airbag System has been presented, which uses both
Autoliv's Gentle Airbag System and a new ultrasonic Occupant Position
Detection System to prevent unwanted deployment of the passenger airbag.
* Autoliv's holdings in the joint ventures in South Africa and Romania
have been increased to 49% and 80% respectively.
* Construction has commenced of a seat belt and airbag plant in Brazil to
meet the growing demand Autoliv has experienced in Brazil for its
products.
* As a start 15 top executives have become participants in a newly
established long-term incentive plan whereby their compensation will
depend partly on the price development of the Autoliv stock.
* A steering wheel plant will be built in Columbia, Indiana. The new
orders Autoliv has received since the start in 1996 with integrated
steering wheels correspond to 10% of the purchase value in the United
States of the North American car manufacturers for steering wheels.
* A contract has been won from Fiat in Italy, the only major car
manufacturer that has not been an Autoliv customer.
Dividend
A dividend of 11 cents per share will be paid on December 4 to Autoliv
stockholders of record as of November 6, 1997. Ex-date on the stock exchanges
will be November 4.
Report
This report has not been examined by the company's auditors. The next
report will be published on January 30, 1998.
KEY RATIOS (UNAUDITED)
Three Months Nine Months Twelve months
July-Sept Jan-Sept
1997 1996(A) 1997(B) 1996(A) 1996(A)
Earnings per share
(fully diluted)* $0.34 $0.34 $1.35 $1.24 $1.69
Equity per share -- -- 16.39 NA 15.75
Net debt, $ in millions -- -- 618 NA 704
Net debt to equity, % -- -- 37 NA 43
Gross margin % 21.7 21.1 22.3 21.1 21.2
Operating margin % 9.8 10.0 11.0 10.8 10.8
Return on equity%* -- -- 11 11 ** 11
Return on capital
employed, %* -- -- 15 14 ** 14
Return on total
capital, %* -- -- 11 11 ** 11
Number of employees at
period-end -- -- 16,700 14,800 15,300
Number of shares,
fully diluted
(in millions) -- -- 102.9 102.9 102.9
*) on a comparable basis
**) Calculated for full year 1996
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in millions, except per share data)
Quarter July-September Nine Months Jan-Sept Twelve Months
1997 1996(A) 1997(B) 1996(A) 1996(A)
Net sales
Airbag products $516.1 $519.6 $1,724.5 $1,684.6 $2,287.3
Seat belt products 200.7 209.9 676.0 681.8 917.1
Total net sales 716.8 729.5 2,400.5 2,366.4 3,204.4
Cost of Sales -561.4 -575.4 -1,865.3 -1,866.9 -2,523.9
Gross profit 155.4 154.1 535.2 499.5 680.5
Selling, general &
administrative expense -37.1 -35.2 -118.0 -106.5 -145.4
Research & development -36.2 -31.3 -110.4 -99.0 -133.5
Amortization of
intangibles -14.0 -15.4 -43.5 -45.1 -60.7
Other income, net 2.4 0.5 1.9 5.9 4.7
Operating income 70.5 72.7 265.2 254.8 345.6
Equity in earnings
of affiliates 2.6 1.9 7.5 3.9 3.0
Interest income 1.3 1.1 5.3 4.3 6.4
Interest expense -12.9 -13.3 -39.5 -39.8 -54.5
Income before taxes 61.5 62.4 238.5 223.2 300.5
Income taxes -26.7 -27.2 -99.3 -95.3 -126.0
Minority interests in
subsidiaries 0.1 -0.2 -0.8 -0.5 -0.7
Net Income before
one-time items 34.9 35.0 138.4 127.4 173.8
Earnings per share 0.34 0.34 1.35 1.24 1.69
Write-off of
acquired R&D -- -- -732.3 -- --
Reported net income $34.9 $35.0 $-593.9 $127.4 $173.8
(A) pro forma
(B) Whereof January-April is reported as pro forma
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in millions)
Sept. 30 Dec. 31
Assets 1997 1996(A)
Cash & cash equivalents $153.5 $121.0
Accounts receivable 581.0 598.2
Inventories 166.1 172.2
Other current assets 74.5 48.2
Total current assets 975.1 939.6
Property, Plant & equipment, net 689.9 692.7
Intangible assets, net (mainly goodwill) $1,559.8(B) $1,593.0
Other assets 32.5 28.6
Total assets $3,257.3 $3,253.9
Liabilities and shareholders' equity
Short-term debt $98.5 $62.1
Accounts payable 294.9 360.7
Other current liabilities 412.6 344.5
Total current liabilities 806.0 767.3
Long-term debt 672.8 762.8
Other non-current liabilities 75.9 80.8
Minority interest in subsidiaries 16.4 22.0
Shareholders' equity 1,686.2 1,621.0
Total liabilities and shareholders' equity $3,257.3 $3,253.9
(A) Pro forma
(B) Whereof goodwill $1,249 million, and acquired patent and patent-
supported technology $259 million from the merger
SELECTED CASH-FLOW ITEMS (UNAUDITED)
(Dollars in millions)
Nine Months Jan.-Sept. Twelve Months
1997(A) 1996(B) 1996(B)
Net income $-593.9 $127.4 $173.8
Write-off of acquired R&D 732.3 -- --
Depreciation and amortization 154.7 152.6 207.0
Deferred taxes and other -10.7 0.9 1.2
Change in working capital 0.8 -23.7 -30.0
Net cash provided by operating
activities 283.2 257.2 352.0
Capital expenditures -146.1 -186.8 -269.6
Acquisitions of businesses -3.9 -67.9 -68.6
Net cash after operating and
investing activities $133.2 $2.5 $13.8
(A) Whereof January - April is reported as pro forma
(B) Pro forma
Autoliv Inc.
P.0. Box 70381, S-107 24 STOCKHOLM
Visiting address: World Trade Center, Klarabergsviadukten 70, Section C
Internet: http://www.afv.se/bolagsinfo/autoliv
Tel: 46-8-402-0600 Fax: 46-8-24-44-79-24-44-93
SOURCE Autoliv Inc.