UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2022

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934   For the transition period from  to

Commission File No.: 001-12933

AUTOLIV, INC.

(Exact name of registrant as specified in its charter)

Delaware	51-0378542
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Klarabergsviadukten 70, Section B7
Box 70381,
Stockholm, Sweden	SE-107 24
(Address of principal executive offices)	(Zip Code)

+46 8 587 20 600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (par value $1.00 per share)	ALV	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes: ☒ No: ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes: ☒ No: ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes: ☐ No: ☒

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of July 18, 2022, there were 87,089,697 shares of common stock of Autoliv, Inc., par value $1.00 per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities, events or developments that Autoliv, Inc. (“Autoliv,” the “Company” or “we”) or its management believes or anticipates may occur in the future. All forward-looking statements are based upon our current expectations, various assumptions and/or data available from third parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements.

In some cases, you can identify these statements by forward-looking words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “may,” “likely,” “might,” “would,” “should,” “could,” or the negative of these terms and other comparable terminology, although not all forward-looking statements contain such words.

Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of reasons, including without limitation: general economic conditions, including inflation; the impacts of the coronavirus (COVID-19) pandemic on the Company’s financial condition, business operations, operating costs, liquidity, competition and the global economy; disruptions and impacts relating to the ongoing conflict between Russia and Ukraine; changes in light vehicle production; fluctuation in vehicle production schedules for which the Company is a supplier; global supply chain disruptions, including port, transportation and distribution delays or interruptions; supply chain disruptions and component shortages impacting the Company or the automotive industry; changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignment: restructuring and cost reduction and efficiency initiatives and the market reaction thereto; loss of business from increased competition; higher raw material, fuel and energy costs; changes in consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer bankruptcies, consolidations or restructuring or divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; component shortages; market acceptance of our new products; costs or difficulties related to the integration of any new or acquired businesses and technologies; continued uncertainty in pricing negotiations with customers; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; our ability to be awarded new business; product liability, warranty and recall claims and investigations and other litigation, civil judgements or financial penalties and customer reactions thereto; higher expenses for our pension and other postretirement benefits, including higher funding needs for our pension plans; work stoppages or other labor issues; possible adverse results of pending or future litigation or infringement claims and the availability of insurance with respect to such matters; our ability to protect our intellectual property rights; negative impacts of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business; tax assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; our ability to meet our sustainability targets, goals and commitments; political conditions; dependence on and relationships with customers and suppliers; and other risks and uncertainties identified in Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, Item 1A “Risk Factors” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022.

For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update publicly or revise any forward-looking statements in light of new information or future events, except as required by law.

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INDEX
PART I - FINANCIAL INFORMATION		4
ITEM 1. FINANCIAL STATEMENTS		4
1.	Basis of Presentation	9
2.	New Accounting Standards	9
3.	Fair Value Measurements	10
4.	Income Taxes	12
5.	Inventories	13
6.	Restructuring	13
7.	Product-Related Liabilities	13
8.	Retirement Plans	14
9.	Contingent Liabilities	15
10.	Stock Incentive Plan	17
11.	Earnings Per Share	17
12.	Related Party Transactions	18
13.	Revenue Disaggregation	18
14.	Subsequent Events	18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		32
ITEM 4. CONTROLS AND PROCEDURES		32
PART II - OTHER INFORMATION		33
ITEM 1. LEGAL PROCEEDINGS		33
ITEM 1A. RISK FACTORS		33
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		33
ITEM 3. DEFAULTS UPON SENIOR SECURITIES		34
ITEM 4. MINE SAFETY DISCLOSURES		34
ITEM 5. OTHER INFORMATION		34
ITEM 6. EXHIBITS		35

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in millions, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net sales	$	2,081		$	2,022		$	4,206		$	4,265
Cost of sales		(1,755	)		(1,638	)		(3,591	)		(3,422	)
Gross profit		326			384			614			843
Selling, general and administrative expenses		(112	)		(111	)		(227	)		(219	)
Research, development and engineering expenses, net		(112	)		(107	)		(219	)		(213	)
Amortization of intangibles		(0	)		(3	)		(2	)		(5	)
Other income (expense), net1)		22			0			92			(4	)
Operating income		124			164			258			401
Income from equity method investment		1			0			2			2
Interest income		1			2			2			2
Interest expense		(13	)		(16	)		(26	)		(32	)
Other non-operating items, net		5			2			1			(4	)
Income before income taxes		117			152			237			370
Income tax expense		(38	)		(48	)		(74	)		(108	)
Net income		79			105			163			262
Less: Net income attributable to non-controlling interest		0			0			1			1
Net income attributable to controlling interest	$	79		$	104		$	162		$	261
Net earnings per share – basic2)	$	0.91		$	1.19		$	1.86		$	2.98
Net earnings per share – diluted2)	$	0.91		$	1.19		$	1.85		$	2.98
Weighted average number of shares outstanding, net of    treasury shares (in millions)		87.2			87.4			87.2			87.4
Weighted average number of shares outstanding,    assuming dilution and net of treasury    shares (in millions)		87.3			87.7			87.4			87.7
Cash dividend per share – declared	$	0.64		$	0.62		$	1.28		$	0.62
Cash dividend per share – paid	$	0.64		$	0.62		$	1.28		$	0.62

1) The three months period ending June 30, 2022, includes a gain of $21 million from a patent litigation settlement. The six months period ending June 30, 2022, includes a gain on sale of property of $80 million in Japan in March 2022 and a gain of $21 million from a patent litigation settlement in June 2022.

2) Participating share awards with the right to receive dividend equivalents are (under the two-class method) excluded from the earnings per share calculation

(see Note 11 to the unaudited condensed consolidated financial statements).

See Notes to the unaudited Condensed Consolidated Financial Statements.

4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net income	$	79		$	105		$	163		$	262
Other comprehensive (loss) income before tax:
Change in cumulative translation adjustments		(121	)		37			(115	)		(27	)
Net change in unrealized components of defined benefit plans		3			1			15			3
Other comprehensive (loss) income, before tax		(118	)		38			(100	)		(24	)
Tax effect allocated to other comprehensive loss		(1	)		(0	)		(5	)		(1	)
Other comprehensive (loss) income, net of tax		(118	)		38			(104	)		(25	)
Comprehensive income		(40	)		143			58			237
Less: Comprehensive income attributable to    non-controlling interest		(1	)		1			(0	)		1
Comprehensive (loss) income attributable to    controlling interest	$	(40	)	$	142		$	58		$	236

See Notes to the unaudited Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in millions)

	As of
	June 30, 2022			December 31, 2021
Assets
Cash and cash equivalents	$	327		$	969
Receivables, net		1,779			1,699
Inventories, net		903			777
Prepaid expenses and accrued income		195			164
Other current assets		81			65
Total current assets		3,285			3,675
Property, plant and equipment, net		1,806			1,855
Operating lease right-of-use assets		120			132
Goodwill		1,373			1,387
Intangible assets, net		6			8
Other non-current assets		439			481
Total assets		7,030			7,537
Liabilities and equity
Short-term debt		559			346
Accounts payable		1,303			1,144
Accrued expenses		944			996
Operating lease liabilities - current		37			38
Other current liabilities		218			297
Total current liabilities		3,061			2,821
Long-term debt		1,060			1,662
Pension liability		155			197
Operating lease liabilities - non-current		83			94
Other non-current liabilities		113			115
Total non-current liabilities		1,410			2,067
Common stock		102			103
Additional paid-in capital		1,319			1,329
Retained earnings		2,762			2,742
Accumulated other comprehensive loss		(512	)		(408	)
Treasury stock		(1,128	)		(1,133	)
Total controlling interest's equity		2,544			2,633
Non-controlling interest		15			15
Total equity		2,558			2,648
Total liabilities and equity	$	7,030		$	7,537

See Notes to the unaudited condensed consolidated financial statements.

6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in millions)

	Six Months Ended June 30,
	2022			2021
Operating activities
Net income	$	163		$	262
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		186			199
Gain on divestiture of property		(80	)		—
Deferred income taxes		17			3
Other, net		(9	)		(1	)
Net change in operating assets and liabilities		(257	)		(214	)
Net cash provided by operating activities		19			249
Investing activities
Expenditures for property, plant and equipment		(254	)		(191	)
Proceeds from sale of property, plant and equipment		98			1
Net cash used in investing activities		(156	)		(189	)
Financing activities
Net decrease in short-term debt		(277	)		(291	)
Increase in long-term debt		0			14
Decrease in long-term debt		(33	)		0
Dividends paid		(112	)		(54	)
Stock repurchased		(40	)		—
Common stock options exercised		0			2
Net cash used in financing activities		(462	)		(329	)
Effect of exchange rate changes on cash and cash equivalents		(43	)		(16	)
Decrease in cash and cash equivalents		(642	)		(285	)
Cash and cash equivalents at beginning of period		969			1,178
Cash and cash equivalents at end of period	$	327		$	893

See Notes to unaudited condensed consolidated financial statements.

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CONSOLIDATED STATEMENTS OF TOTAL EQUITY (UNAUDITED) (Dollars in millions)

	Common stock			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Treasury stock			Total controlling interest's equity			Non- controlling interest			Total equity
Balances at December 31, 2021	$	103		$	1,329		$	2,742		$	(408	)	$	(1,133	)	$	2,633		$	15		$	2,648
Comprehensive Income:
Net income								83									83			0			83
Foreign currency translation    adjustment											6						6			0			6
Pension liability											8						8						8
Total Comprehensive Income		—			—			83			14			—			97			0			98
Stock repurchased and retired		(0	)		(4	)		(13	)								(18	)					(18	)
Stock-based compensation														2			2						2
Cash Dividends								(56	)								(56	)					(56	)
Balances at March 31, 2022	$	103		$	1,325		$	2,755		$	(393	)	$	(1,131	)	$	2,659		$	15		$	2,674
Comprehensive Income:
Net income								79									79			0			79
Foreign currency translation    adjustment											(121	)					(121	)		(1	)		(122	)
Pension liability											3						3						3
Total Comprehensive Income		—			—			79			(119	)		—			(40	)		(1	)		(40	)
Stock repurchased and retired		(0	)		(6	)		(16