Autoliv Inc. Announces Financial Report July - September 1998; Improvement Continues
23 October 1998
Autoliv Inc. Announces Financial Report July - September 1998; Improvement Continues
STOCKHOLM, Sweden, Oct. 23 -- Autoliv Inc. , a
worldwide leader in automotive safety systems, reported a 12 percent increase
in sales to $804 million for the three-month period ended September 30, 1998,
and a 8 percent improvement in earnings per share to $.37, despite continued
severe pricing pressure on airbags, lower vehicle production and the strike at
General Motors.
Sales were boosted by a record number of product launches, exceptionally
strong demand for the company's side-impact airbags and a 25 percent increase
in seat belt sales. Autoliv therefore estimates that it has further
strengthened its global market share, both in airbags and seat belts.
Income before taxes rose by 4 percent to $64 million from $62 million
during the corresponding quarter 1997 and net income by 8 percent to
$38 million from $35 million.
Sales
Consolidated net sales for the third quarter 1998 rose by 12% to
$804 million from $717 million for the corresponding quarter 1997. The
underlying sales increase (i.e. excluding currency effects and acquisitions)
was 9%. The strike at General Motors is estimated to have negatively affected
sales for the quarter by about 3%.
The production of light vehicles is estimated to have grown by 6% in
Europe, while that production in North America and Japan is estimated to have
fallen by 3% and 9%, respectively. The average weighted decline was
approximately 2%.
Sales of airbag products (incl. steering wheels) grew by 7% to
$554 million, while sales adjusted for currency effects and corporate
acquisitions rose by 5%. The pricing pressure has continued to be severe,
especially in the U.S. Unit sales grew, however, significantly faster,
particularly for side and passenger airbags.
Sales of seat belt products (incl. seat sub-systems) grew by 25% to
$251 million, while sales excluding currency effects and acquisitions grew by
20%. The significant increase is due to new products, higher vehicle
production for some important customers and new contracts. The latest
pretensioner generation ("The Roto-Pretensioner") introduced last year has
made it possible not only to increase sales of pretensioners but also to win
sales for complete belt systems where this new innovative feature is an
integrated part of the retractor.
Net sales for the nine-month period rose to $2,520 million by 5% over the
corresponding period 1997. Sales for airbags increased by 1% and sales for
seat belts by 16%. The net of the translation effects from currency exchange
rates and from corporate acquisitions was not significant.
Earnings
The Company's net income for the third quarter increased by 8% to
$38 million mainly as a result of higher sales. The record number of product
launches (more than 100 in the new model year started mid this year) and the
exceptionally strong demand for many new Autoliv products have led to extra
costs for start-ups, overtime, premium freights, etc. and therefore to
somewhat lower margins. Gross margin declined from 21.7% to 20.3% and
operating margin from 9.8% to 9.2%. The GM strike has also had a negative
effect on margins.
For the nine-month period ended September 30, net income and earnings per
share decreased by 5% to $131 million and $1.28, respectively, principally due
to the decline in the first quarter and to higher R&D expenditures to take
advantage of Autoliv's many business opportunities, not least in new areas
such as pre- and post-crash systems. During the nine-month period, R&D
expenditures rose by 14% compared to the sales increase of 5%.
The effective tax rate was 42% for the quarter and 41% for the nine-month
period, compared to 45% and 43%, respectively, for the corresponding periods
1997. Excluding non- deductible amortization, the tax rate was 36%.
Cash Flow and Balance Sheet
Cash generated by operations during the quarter amounted to $24 million,
after an increase in working capital of $70 million to $122 million. Of the
cash, $76 million was used for capital expenditures and $3 million for
acquisitions of businesses, compared to $43 million and $0 million,
respectively, during the third quarter 1997. The substantial increase in
capital expenditures reflects the need for more manufacturing capacity
following the strong demand for Autoliv's new products.
Net debt increased by $64 million to $717 million during the quarter and
increased during the nine-month period by $71 million. At the end of the
quarter, net debt to total equity stood at 40% compared to 38% at the
beginning of the year.
Employees
The number of employees increased by almost 300 during the quarter to
19,500. Almost the entire increase is estimated to have come from continued
vertical integration and acquisitions.
Significant Events
-- Autoliv has started the construction of a plant for sewn airbag
cushions and seat belts in Olawa, Poland.
-- Autoliv has announced plans to build a crash test facility at a
recently acquired site in Tsukuba, Japan. The facility
will be one of the most sophisticated crash labs of its kind.
-- Autoliv has acquired the remaining 51% of the shares in
the South African joint venture Autoflug SA and increased its
holding in Autoliv Thailand from 50% to 85%.
-- Production of steering wheels has begun in the United States at
a new facility in Indiana. Autoliv has orders corresponding to almost
10% of the steering wheel demand from U.S. automobile manufacturers.
-- Professor Walter Kunerth, Stuttgart, Germany, has been
appointed new Board Member for a regular three-year term expiring
at the Annual Stockholders' Meeting in 2001.
-- The National Highway Traffic and Safety Administration in the U.S.
has issued a New Proposal for Rule Making, which will upgrade the U.S.
safety standard to require the phase-in of advanced airbag systems between
model year 2003 and 2006. NHTSA is also proposing many more crash tests.
The proposal would lead to substantially higher delivery value per vehicle
of safety products.
Dividend
A dividend of 11 cents per share will be paid on December 3 to Autoliv
stockholders of record as of November 5, 1998. Ex-date on the stock exchanges
will be November 3.
Report
This report has not been examined by the Company's auditors. The next
quarterly report will be published on January 28.
AUTOLIV INC.
KEY RATIOS (UNAUDITED)
Quarter July - Sept Nine-Months Jan. - Sept Full yr
1998 1997 1998 1997(1) 1997(1)
Earnings per
share(basic
and diluted) $0.37 $0.34 $1.28 $1.35 $1.81
Equity per share 17.70 16.50 16.67
Net debt, $
in millions 717 618 646
Net debt to
equity, % 40 37 38
Gross margin, % 20.3 21.7 21.4 22.3 22.1
Operating
margin, % 9.2 9.8 9.9 11.0 10.9
Return on
equity, %(*) 10 11 11
Return on
capital employed, %(*) 14 15 15
Return on
total capital, %(*) 10 11 11
Number of employees
at period-end 19,500 16,700 17,800
Number of shares,
diluted (in millions) 102.2 102.2 102.2
(*) On a comparable basis
AUTOLIV INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in millions, except per share data)
Quarter July - Sept. Nine Months Jan. - Sept. Twelve
Months
1998 1997 1998 1997(1) 1997(1)
Net sales
- Airbag
products $553.9 $516.1 $1,737.4 $1,724.5 $2,316.4
- Seat belt
products 250.5 200.7 782.8 676.0 940.4
Total net sales 804.4 716.8 2,520.2 2,400.5 3,256.8
Cost of sales -641.5 -561.4 -1,981.5 -1,865.3 -2,537.0
Gross profit 162.9 155.4 538.7 535.2 719.8
Selling, general &
administrative
expense -36.1 -37.1 -114.6 -113.0(2) -154.7(2)
Research &
development -40.2 -36.2 -131.8 -115.4(2) -152.7(2)
Amortization
of intangibles -15.2 -14.0 -45.7 -43.5 -59.6
Other income, net 2.7 2.4 3.5 1.9 3.2
Operating income 74.1 70.5 250.1 265.2 356.0
Equity in
earnings
of affiliates 0.9 2.6 5.1 7.5 10.3
Interest income 1.7 1.3 6.4 5.3 7.1
Interest
expense -12.7 -12.9 -42.6 -39.5 -55.9
Income before
taxes 64.0 61.5 219.0 238.5 317.5
Income taxes -26.2 -26.7 -88.0 -99.3 -129.4
Minority interests
in subsidiaries -- 0.1 -0.1 -0.8 -3.2
Net income before
one-time items 37.8 34.9 130.9 138.4 184.9
Earnings per
share 0.37 0.34 1.28 1.35 1.81
Write-off of
acquired R&D -- -- -- -732.3(3) -732.3(3)
Reported net
income $37.8 $34.9 $130.9 $-593.9 $-547.4
(1) Whereof January-April is reported as pro forma.
(2) Pro forma numbers reclassified.
(3) In the audited financial statements for Autoliv, Inc (Autoliv AB and
subsidiaries for period on and prior to April 30, 1997 and Autoliv Inc.
for May 1 to December 31, 1997) is the Write-off of acquired R&D shown as
operating expense and a loss per share of $6.70 is reported.
CONSOLIDATED BALANCE SHEET(UNAUDITED)
(Dollars in millions)
Sept. 30 Sept. 30 Dec. 31
1998 1997 1997
Assets
Cash & cash equivalents $139.4 $153.5 $152.0
Accounts receivable 668.3 581.0 569.2
Inventories 247.8 166.1 197.8
Other current assets 77.8 74.5 55.2
Total current assets 1,133.3 975.1 974.2
Property, plant &
equipment, net 831.5 689.9 727.2
Intangible assets, net
(mainly goodwill) 1,648.1(1) 1,559.8 1,694.5
Other assets 22.2 32.5 34.6
Total assets 3,635.1 $3,257,3 $3,430.5
Liabilities and
shareholders' equity
Short-term debt 184.6 $98.5 $186.2
Accounts payable 390.6 294.9 385.3
Other current liabilities 480.9 412.6 428.0
Total current liabilities 1,056.1 806.0 999.5
Long-term debt 671.5 672.8 611.8
Other non-current liabilities 84.9 75.9 100.8
Minority interest in
subsidiaries 13.6 16.4 14.4
Shareholders' equity 1,809.0 1,686.2 1,704.0
Total liabilities
and shareholders' equity $3,635.1 $3,257.3 $3,430.5
1)Whereof goodwill $1,313 million, and acquired patent and
patent-supported technology $244 million from the merger
AUTOLIV INC.
SELECTED CASH-FLOW ITEMS (UNAUDITED)
(Dollars in millions)
Quarter July - Sept. Nine Months Jan. - Sept. Twelve
Months
1998 1997 1998 1997(1) 1997(1)
Net income $37.8 $34.9 $130.9 $-593.9 $-547.4
Write-off of
acquired R&D -- -- -- 732.3 732.3
Depreciation
and amortization57.6 44.2 167.6 154.7 207.7
Deferred taxes
and other -1.1 -7.2 -1.9 -10.7 -7.7
Change in
working
capital -70.2 -9.5 -116.1 0.8 55.6
Net cash
provided
by operating
activities 24.1 62.4 180.5 283.2 440.5
Capital
expenditures -76.1 -42.7 -197.5 -146.1 -215.8
Acquisition
of businesses -2.6 -- -12.8 -3.9 -44.7
Net cash
after operating
& investing $-54.6 $19.7 $-29.8 $133.2 $180.0
activities
(1) Whereof January-April is reported as pro forma