Autoliv Financial Report October-December 1997
2 February 1998
Autoliv Financial Report October-December 1997
Net Income Maintained by Record Sales
STOCKHOLM, Feb. 2 -- Autoliv Inc. , a
worldwide leader in automotive safety, reported record sales of $856 million
and thereby virtually unchanged net income of $46.5 million for the three-
month period ended December 31, 1997, despite continuing pricing pressure and
a 6 percent negative effect due to a stronger U.S. dollar. Income before
taxes improved by 2% to $79.0 million compared to $77.3 million for the fourth
quarter 1996. Earnings per share were unchanged at 45 cents.
Sales for the full year 1997 increased by 2% to $3.3 billion, while income
before taxes, net income and earnings per share rose by 6% to $317.5 million,
$184.9 million and $1.81, respectively. The stronger US dollar is estimated
to have affected negatively sales by 6% and earnings to at least that extent.
Data for periods prior to May 1, 1997, when the company started its
operations, are included on a pro forma basis.
Sales
Posted consolidated net sales for the fourth quarter 1997 increased by 2%
to $856 million over the corresponding quarter 1996, while underlying sales
(excluding currency effects and acquisitions) rose by 6%. Since approximately
65% of business is outside North America, a major portion of sales have been
negatively effected by the stronger U.S. dollar
The production of light vehicles in Europe and the U.S. is estimated to
have grown by 8% during the quarter and by 4% during the full year.
Posted sales of airbag products (incl. seat sub-systems) grew by 12% to
$264 million, while sales excluding currency effects and acquisitions grew by
16%. The increase is mainly due to higher vehicle production and continued
strong demand for new products, such as pretensioners and load limiters.
Corporate acquisitions accounted for 9 percentage points of the reported
increase.
Posted net sales for the full year 1997 rose by 3% to $3,275 million over
sales during the previous year. Adjusted for currency translation effects and
corporate acquisitions, sales grew by about 6%. Posted sales of airbags
increased by 1% and for seat belts by 3%, while the underlying sales increases
were 4% and 11%, respectively. Deliveries of side-impact airbags have
increased sharply during the year. As a consequence, Autoliv currently ships
this product to 18 car manufacturers split between more than 60 different car
models.
Earnings
Net income for the full year 1997 rose on a comparable basis by 6% to $185
million, and earnings per share to $1.81, compared to $174 million and $1.69,
respectively, for the corresponding period 1996. Earnings before taxes rose
by 6% to $318 million from $301 million. The effect on earnings from the
strong US dollar is estimated to have been at least 6%.
The improvements are due to greater vertical integration and the
introduction of more cost-efficient components and designs, which has made it
possible to offset the price decline.
Tax rates remained almost unchanged at approximately 40% and 42%,
respectively, from previous year's three and twelve month periods. Excluding
non-deductible amortization, the tax rates were 35% and 38%, respectively.
Cash Flow and Balance Sheet
Cash provided by operations amounted to $440 million during the year, with
$158 million thereof generated during the fourth quarter. Capital
expenditures amounted to $216 million and $70 million, respectively, and
acquisitions of businesses amounted to $45 million and $41 million,
respectively.
Cash flow after operating and investing activities improved by 47 million
during the fourth quarter to $180 million for the full year, i.e. $1.76 per
share.
During 1997 net debt has been reduced by $58 million to $646 million at
the end of the year. In the fourth quarter, net debt increased by $28 million
mainly as a result of the acquisitions. Net debt to equity stood at 38% at
year-end, compared to 43% at the beginning of the year.
Restructuring Costs and Savings Potential
As indicated in the previous quarterly report, the goodwill adjustment for
the restructuring, etc. was adjusted and amounts to $99 million, net of income
tax, at year-end. The adjustment reflects estimates of restructuring costs,
revised pre-acquisition contingencies and liabilities as well as forward
contract losses.
The corresponding 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 increased by 2,500 during 1997 and by 1,100 since
the last quarter to 17,800 at year-end. Of the increase 70% is estimated to
come from continued integration and acquisitions.
Significant Events
* In order to enhance further Autoliv's vertical integration, Marling
Industries p.l.c., Autoliv's main supplier of seat belt webbing, was
acquired as of October 1.
* The U.S. operations have been organized in three groups: Autoliv North
America for development, production and sales to car manufacturers in
North America and Japan; Autoliv Inflators for coordination of the
Autoliv's global airbag inflator activities and Autoliv North American
Components for key components for the assembly companies.
* Autoliv has agreed to acquire the assets of Sensor Technology Ltd., a
Japanese airbag company, as of April 1, 1998.
* The remaining shares outstanding in Autoliv AB have been booked as a
liability and the number of shares in Autoliv Inc. adjusted
accordingly.
Dividend
A dividend of 11 cents per share will be paid on March 5 to Autoliv
stockholders of record as of February 5, 1998. E-date on the stock exchanges
will be February 3.
Report
This report has not been examined by the Company's auditors. The next
report will be published on April 21, 1998.
KEY RATIOS (UNAUDITED)
Fourth Quarter Oct.-Dec. Twelve Month Jan.-Dec.
1997 1996(A) 1997(B) 1996(A)
Earnings per share
(fully diluted)* $0.45 $0.45 $1.81 $1.69
Equity per share -- -- 16.66 15.75
Net debt, $ in millions -- -- 646 704
Net debt to equity, % -- -- 38 43
Gross margin, % 21.6 21.6 22.1 21.2
operating margin, % 10.6 10.8 10.9 10.8
Return on equity, %* -- -- 11 11
Return on capital
employed, %* -- -- 15 14
Return on total capital, %* -- -- 11 11
Number of employees at
period-end -- -- 17,800 15,300
Number of shares, fully
diluted (in millions) -- -- 102.3 102.9
*) On a comparable basis
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in millions, except per share data)
Quarter Oct.-Dec. Twelve Months Jan.-Dec.
1997 1996(A) 1997(B) 1996(A)
Net sales
- Airbag products $591.9 $602.7 $2,316.4 $2,287.3
- Seat belt products 264.4 235.3 940.4 917.1
Total net sales 856.3 838.0 3,256.8 3,204.4
Cost of sales -671.7 -657.0 -2,537.0 -2,523.9
Gross profit 184.6 181.0 719.8 680.5
Selling, general &
administrative expense -41.6 -38.9 -159.7 -145.4
Research & development -37.3 -34.5 -147.7 -133.5
Amortization of intangibles -16.2 -15.6 -59.6 -60.7
Other income, net 1.3 -1.2 3.2 4.7
Operating income 90.8 90.8 356.0 345.6
Equity in earnings of
affiliates 2.8 -0.9 10.3 3.0
Interest income 1.9 2.1 7.1 6.4
Interest expense -16.5 -14.7 -55.9 -54.5
Income before taxes 79.0 77.3 317.5 300.5
Income taxes -30.1 -30.7 -129.4 -126.0
Minority interests in
subsidiaries -2.4 -0.2 -3.2 -0.7
Net income before
one-time items 46.5 46.4 184.9 173.8
Earnings per share 0.45 0.45 1.81 1.69
Write-off of acquired R&D -- -- -732.3 --
Reported net income $46.5 $46.4 $-547.4 $173.8
A) Proforma
B) Whereof January-April is reported as proforma
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in millions)
Dec. 31 Dec. 31
1997 1996(A)
Assets
Cash & cash equivalents $152.0 $121.0
Accounts receivable 569.2 598.2
Inventories 197.8 172.2
Other current assets 55.2 48.2
Total current assets 974.2 939.6
Property, plant & equipment, net 727.2 692.7
Intangible assets, net (mainly goodwill) 1,694.5 1,593.0
Other assets 34.6 28.6
Total assets $3,430.5 $3,253.9
Liabilities and shareholders' equity
Short-term debt $186.2 $62.1
Accounts payable 385.3 360.7
Other current liabilities 428.0 344.5
Total current liabilities 999.5 767.3
Long-term debt 611.8 762.8
Other non-current liabilities 100.8 80.8
Minority interest in subsidiaries 14.4 22.0
Shareholders' equity 1,704.0 1,621.0
Total liabilities and
shareholders' equity $3,430.5 $3,253.9
A) Pro forma
B) Whereof goodwill $1,338 million, and acquired patent and patent-
supported technology $258 million from the merger
SELECTED CASH-FLOW ITEMS (UNAUDITED)
(Dollars in millions)
Twelve Months Jan.-Dec.
1997(A) 1996(B)
Net income $-547.4 $173.8
Write-off of acquired R&D 732.3 --
Depreciation and amortization 207.7 207.0
Deferred taxes and other -7.7 1.2
Change in working capital 55.6 -30.0
Net cash provided by operating activities 440.5 352.0
Capital expenditures -215.8 -269.6
Acquisitions of businesses -44.7 -68.6
Net cash after operating and
investing activities $180.0 $13.8
A) Whereof January-April is reported as proforma
B) Proforma
SOURCE Autoliv Inc.