0000950170-23-033756.txt : 20230721 0000950170-23-033756.hdr.sgml : 20230721 20230721091137 ACCESSION NUMBER: 0000950170-23-033756 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 73 CONFORMED PERIOD OF REPORT: 20230630 FILED AS OF DATE: 20230721 DATE AS OF CHANGE: 20230721 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOLIV INC CENTRAL INDEX KEY: 0001034670 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 510378542 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12933 FILM NUMBER: 231101218 BUSINESS ADDRESS: STREET 1: 3350 AIRPORT RD CITY: OGDEN STATE: UT ZIP: 84405 BUSINESS PHONE: 8016299800 MAIL ADDRESS: STREET 1: BOX 70381 STREET 2: SE 107 24 STOCKHOLM CITY: SWEDEN STATE: V7 10-Q 1 alv-20230630.htm 10-Q 10-Q
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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, 2023

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 13, 2023, there were 85,376,775 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; 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 specific to the automotive industry or the Company; disruptions and impacts relating to the ongoing war between Russia and Ukraine; changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignments: restructuring, 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 and other 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, 2022 filed with the SEC on February 16, 2023.

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.

2


 

 

INDEX

 

 

 

 

PART I - FINANCIAL INFORMATION

4

 

 

 

ITEM 1. FINANCIAL STATEMENTS

4

 

 

 

1.

Basis of Presentation

9

2.

New Accounting Standards

10

3.

Fair Value Measurements

11

4.

Income Taxes

14

5.

Inventories

14

6.

Restructuring

15

7.

Product-Related Liabilities

15

8.

Retirement Plans

16

9.

Contingent Liabilities

17

10.

Stock Incentive Plan

19

11.

Earnings Per Share

19

12.

Revenue Disaggregation

20

13.

Subsequent Events

20

 

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

21

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

35

ITEM 4. CONTROLS AND PROCEDURES

35

PART II - OTHER INFORMATION

36

ITEM 1. LEGAL PROCEEDINGS

36

ITEM 1A. RISK FACTORS

36

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

36

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

36

ITEM 4. MINE SAFETY DISCLOSURES

36

ITEM 5. OTHER INFORMATION

36

ITEM 6. EXHIBITS

37

 

3


 

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,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net sales

 

$

2,635

 

 

$

2,081

 

 

$

5,127

 

 

$

4,206

 

Cost of sales

 

 

(2,188

)

 

 

(1,755

)

 

 

(4,301

)

 

 

(3,591

)

Gross profit

 

 

447

 

 

 

326

 

 

 

826

 

 

 

614

 

Selling, general and administrative expenses

 

 

(129

)

 

 

(112

)

 

 

(261

)

 

 

(227

)

Research, development and engineering expenses, net

 

 

(120

)

 

 

(112

)

 

 

(237

)

 

 

(219

)

Amortization of intangibles

 

 

(0

)

 

 

(0

)

 

 

(1

)

 

 

(2

)

Other income (expense), net1)

 

 

(103

)

 

 

22

 

 

 

(107

)

 

 

92

 

Operating income

 

 

94

 

 

 

124

 

 

 

221

 

 

 

258

 

Income from equity method investment

 

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Interest income

 

 

6

 

 

 

1

 

 

 

8

 

 

 

2

 

Interest expense

 

 

(25

)

 

 

(13

)

 

 

(45

)

 

 

(26

)

Other non-operating items, net

 

 

7

 

 

 

5

 

 

 

5

 

 

 

1

 

Income before income taxes

 

 

83

 

 

 

117

 

 

 

191

 

 

 

237

 

Income tax expense

 

 

(30

)

 

 

(38

)

 

 

(64

)

 

 

(74

)

Net income2)

 

 

53

 

 

 

79

 

 

 

127

 

 

 

163

 

Less: Net income attributable to non-controlling interest

 

 

0

 

 

 

0

 

 

 

1

 

 

 

1

 

Net income attributable to controlling interest

 

$

53

 

 

$

79

 

 

$

127

 

 

$

162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share – basic

 

$

0.61

 

 

$

0.91

 

 

$

1.48

 

 

$

1.86

 

Net earnings per share – diluted

 

$

0.61

 

 

$

0.91

 

 

$

1.47

 

 

$

1.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, net of
   treasury shares (in millions)

 

 

85.6

 

 

 

87.2

 

 

 

85.9

 

 

 

87.2

 

Weighted average number of shares outstanding,
   assuming dilution and net of treasury
   shares (in millions)

 

 

85.8

 

 

 

87.3

 

 

 

86.0

 

 

 

87.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividend per share – declared

 

$

0.66

 

 

$

0.64

 

 

$

1.32

 

 

$

1.28

 

Cash dividend per share – paid

 

$

0.66

 

 

$

0.64

 

 

$

1.32

 

 

$

1.28

 

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 the first quarter of 2022 and a gain of $21 million from a patent litigation settlement in the second quarter of 2022.

2) For the three months period ended June 30, 2023 and June 30, 2022, the aggregate transaction gain (loss) included in net income for the period were $(10) million and $(9) million, respectively. For the six months period ended June 30, 2023 and June 30, 2022, the aggregate transaction gain (loss) included in net income for the period were $(15) million and $(15) million, respectively.

 

 

 

 

 

 

 

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,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

53

 

 

$

79

 

 

$

127

 

 

$

163

 

Other comprehensive income before tax:

 

 

 

 

 

 

 

 

 

 

 

 

Change in cumulative translation adjustments

 

 

(46

)

 

 

(121

)

 

 

(10

)

 

 

(115

)

Net change in unrealized components of defined benefit plans

 

 

5

 

 

 

3

 

 

 

5

 

 

 

15

 

Other comprehensive income, before tax

 

 

(40

)

 

 

(118

)

 

 

(5

)

 

 

(100

)

Tax effect allocated to other comprehensive income

 

 

(1

)

 

 

(1

)

 

 

(1

)

 

 

(5

)

Other comprehensive income, net of tax

 

 

(41

)

 

 

(118

)

 

 

(6

)

 

 

(104

)

Comprehensive income

 

 

12

 

 

 

(40

)

 

 

122

 

 

 

58

 

Less: Comprehensive income attributable to
   non-controlling interest

 

 

(0

)

 

 

(1

)

 

 

0

 

 

 

(0

)

Comprehensive income attributable to
   controlling interest

 

$

12

 

 

$

(40

)

 

$

121

 

 

$

58

 

 

 

See Notes to the unaudited Condensed Consolidated Financial Statements.

5


 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in millions)

 

 

 

As of

 

 

 

June 30, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

475

 

 

$

594

 

Receivables, net

 

 

2,189

 

 

 

1,907

 

Inventories, net

 

 

947

 

 

 

969

 

Prepaid expenses and accrued income

 

 

166

 

 

 

160

 

Other current assets

 

 

120

 

 

 

84

 

Total current assets

 

 

3,898

 

 

 

3,714

 

Property, plant and equipment, net

 

 

2,047

 

 

 

1,960

 

Operating lease right-of-use assets

 

 

149

 

 

 

160

 

Goodwill

 

 

1,375

 

 

 

1,375

 

Intangible assets, net

 

 

6

 

 

 

7

 

Other non-current assets

 

 

484

 

 

 

502

 

Total assets

 

 

7,959

 

 

 

7,717

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

Short-term debt

 

 

481

 

 

 

711

 

Accounts payable

 

 

1,844

 

 

 

1,693

 

Accrued expenses

 

 

1,122

 

 

 

915

 

Operating lease liabilities - current

 

 

35

 

 

 

39

 

Other current liabilities

 

 

274

 

 

 

283

 

Total current liabilities

 

 

3,756

 

 

 

3,642

 

Long-term debt

 

 

1,290

 

 

 

1,054

 

Pension liability

 

 

152

 

 

 

154

 

Operating lease liabilities - non-current

 

 

113

 

 

 

119

 

Other non-current liabilities

 

 

91

 

 

 

121

 

Total non-current liabilities

 

 

1,645

 

 

 

1,450

 

Common stock

 

 

90

 

 

 

91

 

Additional paid-in capital

 

 

1,096

 

 

 

1,113

 

Retained earnings

 

 

2,260

 

 

 

2,310

 

Accumulated other comprehensive loss

 

 

(527

)

 

 

(522

)

Treasury stock

 

 

(374

)

 

 

(379

)

Total controlling interest's equity

 

 

2,545

 

 

 

2,613

 

Non-controlling interest

 

 

13

 

 

 

13

 

Total equity

 

 

2,557

 

 

 

2,626

 

Total liabilities and equity

 

$

7,959

 

 

$

7,717

 

 

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,

 

 

 

2023

 

 

2022

 

Operating activities

 

 

 

 

 

 

Net income

 

$

127

 

 

$

163

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

186

 

 

 

186

 

Gain on divestiture of property

 

 

 

 

 

(80

)

Other, net

 

 

(8

)

 

 

7

 

Net change in operating assets and liabilities

 

 

28

 

 

 

(257

)

Net cash provided by operating activities

 

 

334

 

 

 

19

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Expenditures for property, plant and equipment

 

 

(268

)

 

 

(254

)

Proceeds from sale of property, plant and equipment

 

 

1

 

 

 

98

 

Net cash used in investing activities

 

 

(267

)

 

 

(156

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Net increase (decrease) in short-term debt

 

 

5

 

 

 

(277

)

Proceeds from long-term debt

 

 

556

 

 

 

269

 

Repayment of long-term debt

 

 

(533

)

 

 

(302

)

Dividends paid

 

 

(113

)

 

 

(112

)

Stock repurchased

 

 

(82

)

 

 

(40

)

Common stock options exercised

 

 

0

 

 

 

0

 

Dividend paid to non-controlling interest

 

 

(1

)

 

 

 

Net cash used in financing activities

 

 

(168

)

 

 

(462

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(17

)

 

 

(43

)

Net decrease in cash and cash equivalents

 

 

(119

)

 

 

(642

)

Cash and cash equivalents at beginning of period

 

 

594

 

 

 

969

 

Cash and cash equivalents at end of period

 

$

475

 

 

$

327

 

 

See Notes to unaudited Condensed Consolidated Financial Statements.

7


 

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, 2022

$

91

 

 

$

1,113

 

 

$

2,310

 

 

$

(522

)

 

$

(379

)

 

$

2,613

 

 

$

13

 

 

$

2,626

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

74

 

 

 

 

 

 

 

 

 

74

 

 

 

0

 

 

 

74

 

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

36

 

 

 

 

 

 

36

 

 

 

0

 

 

 

36

 

Pension liability

 

 

 

 

 

 

 

 

 

 

(0

)

 

 

 

 

 

(0

)

 

 

 

 

 

(0

)

Total Comprehensive Income

 

 

 

 

 

 

 

74

 

 

 

35

 

 

 

 

 

 

110

 

 

 

0

 

 

 

110

 

Stock repurchased and retired

 

(0

)

 

 

(9

)

 

 

(33

)

 

 

 

 

 

 

 

 

(42

)

 

 

 

 

 

(42

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

 

 

 

 

 

3

 

Cash dividends declared

 

 

 

 

 

 

 

(57

)

 

 

 

 

 

 

 

 

(57

)

 

 

 

 

 

(57

)

Balances at March 31, 2023

$

91

 

 

$

1,105

 

 

$

2,295

 

 

$

(487

)

 

$

(376

)

 

$

2,627

 

 

$

14

 

 

$

2,641

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

53

 

 

 

 

 

 

 

 

 

53

 

 

 

0

 

 

 

53

 

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

(45

)

 

 

 

 

 

(45

)

 

 

(1

)

 

 

(46

)

Pension liability

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Total Comprehensive Income

 

 

 

 

 

 

 

53

 

 

 

(41

)

 

 

 

 

 

12

 

 

 

(0

)

 

 

12

 

Stock repurchased and retired

 

(0

)

 

 

(9

)

 

 

(31

)