Washington, D.C. 20549

For the quarterly period ended September 30, 2020
Commission File No.: 001-38471

Veoneer, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
Klarabergsviadukten 70, Section C6 
Box 13089 
Stockholm Sweden
(Address of principal executive offices)
SE- 103 02
(Zip Code)
+46 8 527 762 00
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $1.00 par valueVNENew 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 October 16, 2020, there were 111,594,984 shares of common stock of Veoneer, Inc., par value $1.00 per share, outstanding.
Exhibit index located on page 43

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including without limitation, statements regarding management’s examination of historical operating trends and data, estimates of future sales (including estimates related to order intake), operating margin, cash flow, RD&E spend, taxes or other future operating performance or financial results, are 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. We have based these forward-looking statements on our current expectations and assumptions and/or data available from third parties about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs.
New risks and uncertainties arise from time to time, and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Factors that could cause actual results to differ materially from these forward-looking statements include, without limitation, the following: general economic conditions; the cyclical nature of automotive sales and production; the impact of the coronavirus pandemic (COVID-19) on the Company’s financial condition, business operations and liquidity; the impact of COVID-19 on our customers and their production and product launch schedules; the impact of COVID-19 on our suppliers and availability of components for our products; our ability to complete the transaction contemplated by the non-binding agreement with Qualcomm Technologies, which is subject to the negotiation and documentation of a definitive agreement; changes in general industry and market conditions or regional growth or decline; further decreases in light vehicle production; our ability to achieve the intended benefits from our separation from our former parent; our ability to be awarded new business or loss of business from increased competition; higher than anticipated costs and use of resources related to developing new technologies; higher raw material, energy and commodity costs; component shortages; changes in customer and consumer preferences for end products; market acceptance of our new products; dependence on and relationships with customers and suppliers; our ability to share RD&E costs with our customers; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; costs or difficulties related to the integration of any new or acquired businesses and technologies; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; product liability, warranty and recall claims and investigations and other litigation and customer reactions thereto; higher expenses for our pension and other post-retirement benefits, including higher funding needs for our pension plans; work stoppages or other labor issues; possible adverse results of future litigation, regulatory actions or investigations or infringement claims; our ability to protect our intellectual property rights; tax assessments by governmental authorities and changes in our tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; political conditions; and other risks and uncertainties identified in Part I Item 2 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A -“Risk Factors” and in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission ("SEC") on February 21, 2020.

For any forward-looking statements contained in this Quarterly Report on Form 10-Q 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 revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Veoneer, Inc.
Table of Contents


Part I – Financial Information
Item 1 – Condensed Consolidated Financial Statements
Veoneer, Inc.
Condensed Consolidated Statements of Operations (Unaudited)

  Three Months Ended September 30Nine Months Ended September 30
Net salesNote 3$371 $462 $918 $1,446 
Cost of sales (317)(389)(808)(1,211)
Gross profit 54 73 110 235 
Selling, general and administrative expenses (43)(45)(124)(148)
Research, development and engineering expenses, net (124)(144)(299)(459)
Amortization of intangibles (1)(6)(4)(17)
Other income, net 11  27 1 
Operating loss (103)(122)(290)(388)
Loss on divestiture and assets impairment charge, net
Note 5, 10(24) (91) 
Loss from equity method investmentNote 10(1)(16)(39)(50)
Interest income 1 7 8 14 
Interest expense (5)(5)(15)(7)
Other non-operating items, net    1 
Loss before income taxesNote 16(132)(136)(427)(430)
Income tax (expense) benefitNote 8 (3)(26)1 
Net loss (132)(139)(453)(429)
Less: Net income (loss) attributable to non-controlling interest  (6)1 (26)
Net loss attributable to controlling interest $(132)$(133)$(454)$(403)
Net loss per share - basic and dilutedNote 15$(1.18)$(1.20)$(4.07)$(4.10)
Weighted average number of shares outstanding (in millions) 111.59 111.40 111.55 98.32 
Weighted average number of shares outstanding, assuming dilution (in millions) 111.59 111.40 111.55 98.32 
See notes to the unaudited condensed consolidated financial statements.


Veoneer, Inc.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
 Three Months Ended September 30Nine Months Ended September 30
Net loss$(132)$(139)$(453)$(429)
Other comprehensive loss, before tax:
Change in cumulative translation adjustment15 (27)15 (40)
Other comprehensive income (loss), before tax15 (27)15 (40)
Other comprehensive income (loss), net of tax15 (27)15 (40)
Comprehensive loss(117)(166)(438)(469)
Less: Comprehensive income (loss) attributable to non-controlling interest (7)2 (26)
Comprehensive loss attributable to controlling interest$(117)$(159)$(440)$(443)
See notes to the unaudited condensed consolidated financial statements.

Veoneer, Inc.
Condensed Consolidated Balance Sheets
September 30, 2020December 31, 2019
Cash and cash equivalents $846 $859 
Receivables, net 245 253 
Inventories, netNote 9124 144 
Related party receivablesNote 176 11 
Prepaid expenses and other contract assets  32 47 
Other current assets 20 18 
Assets held for saleNote 5 317 
Total current assets 1,273 1,649 
Property, plant and equipment, net 413 473 
Operating lease right-of-use assets86 100 
Equity method investmentNote 10129 87 
Goodwill314 290 
Intangible assets, net22 17 
Deferred tax assets 6 7 
Investments9 9 
Other non-current assets 27 111 
Total assets $2,279 $2,743 
Liabilities and equity   
Accounts payable $223 $233 
Related party payablesNote 171 3 
Accrued expensesNote 11230 192 
Income tax payable 28 7 
Related party short-term debtNote 1714 1 
Other current liabilities 51 37 
Liabilities held for saleNote 5 118 
Total current liabilities 547 591 
4.00% Convertible Senior Notes due 2024
Note 6167 160 
Related party long-term debtNote 17103  
Pension liabilityNote 1218 17 
Deferred tax liabilities 10 13 
Operating lease non-current liabilities68 82 
Finance lease non-current liabilities42 33 
Other non-current liabilities 26 29 
Total non-current liabilities 434 334 
Common stock (par value $1.00, 325 million shares authorized, 111 million shares issued and outstanding as of September 30, 2020 and December 31, 2019)
 111 111 
Additional paid-in capital 2,349 2,343 
Accumulated deficit(1135)(681)
Accumulated other comprehensive loss (27)(44)
Total equity 1,298 1,729 
Non-controlling interest  89 
Total equity and non-controlling interest 1,298 1,818 
Total liabilities, equity and non-controlling interest $2,279 $2,743 
See notes to the unaudited condensed consolidated financial statements.

Veoneer, Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
Nine months ended September 30, 2020
 Equity attributable to
 Common StockAdditional Paid In CapitalAccumulated DeficitAccumulated Other
Comprehensive Loss
Balance at beginning of period$111 $2,343 $(681)$(44)$89 $1,818 
Net loss— — (454)— 1 (453)
Foreign currency translation— — — 14 15 
     Stock based compensation expense— 6 — — — 6 
     Business divestitures— — — 3 (91)(88)
Balance at end of period$111 $2,349 $(1,135)$(27)$ $1,298 

Nine months ended September 30, 2019
 Equity attributable to
 Common StockAdditional Paid In CapitalAccumulated DeficitAccumulated Other
Comprehensive Loss
Balance at beginning of period$87 $1,938 $(181)$(19)$101 $1,927 
Comprehensive Income (Loss):
Net loss— — (403)— (26)(429)
Foreign currency translation— — — (40) (40)
Stock based compensation expense— 5 —  — 5 
Issuance of common stock24 379 — — — 403 
Purchase of minority interest— (14)— — 14  
Equity component of issuance of convertible notes, net (Note 6)— 35— — — 35 
Balance at end of period$111 $2,343 $(584)$(59)$89 $1,900 


Veoneer, Inc.
Condensed Consolidated Statements of Cash Flow (Unaudited)
 Nine Months Ended September 30
Operating activities  
Net loss$(453)$(429)
Depreciation and amortization73 90 
Gain on divestitures(77) 
Assets impairment charge168  
Undistributed loss from equity method investments39 50 
Stock-based compensation6 5 
Deferred income taxes(3)(7)
Other, net3 (7)
Change in operating assets and liabilities:
Receivables, gross36 48 
Accrued expenses45 42 
Related party receivables and payables, net4 37 
Accounts payable(8)(18)
Prepaid expenses and other contract assets 14 (10)
Inventories, gross15 1 
Income taxes20  
Other current assets and liabilities, net3 (23)
Net cash used in operating activities(115)(221)
Investing activities  
Proceeds from divestitures198  
Capital expenditures(70)(168)
Equity method investment10 (32)
Short-term investments mature into cash 5 
Long term investments(1)(3)
Proceeds from sale of property, plant and equipment10  
Acquisition of intangible assets(10) 
Acquisition of business net of cash acquired
Net cash provided by (used in) investing activities104 (198)
Financing activities  
Issuance of common stock
Dividend paid to non-controlling interest(5) 
(Payments for) proceeds from long-term debt(1)206 
(Payments for) Proceeds from short-term debt
Net increase in related party short-term debt 1 
Net cash (used in) provided by financing activities(8)634 
Effect of exchange rate changes on cash and cash equivalents6 (17)
Increase (decrease) in cash and cash equivalents(13)198 
Cash and cash equivalents at beginning of period859 864 
Cash and cash equivalents at end of period$846 $1,062 
See notes to the unaudited condensed consolidated financial statements.

Veoneer, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1. Basis of Presentation
On June 29, 2018 (the “Distribution Date”), Veoneer, Inc. (“Veoneer” or “the Company”) became an independent, publicly-traded company as a result of the distribution by Autoliv, Inc. (“Autoliv” or “Former Parent”) of 100 percent of the outstanding common stock of Veoneer to the stockholders of Autoliv (the “Spin-Off”). Each Autoliv stockholder and holder of Autoliv’s Swedish Depository Receipts (SDRs) of record as of certain specified dates received one share of Veoneer common stock or one Veoneer SDR, respectively, for every one share of Autoliv common stock or Autoliv SDR. The Spin-Off was completed on June 29, 2018 in a tax free transaction pursuant to Section 355 of the U.S. Internal Revenue Code.
On July 2, 2018, Veoneer common stock began regular trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “VNE” and Veoneer SDRs began trading on Nasdaq Stockholm under the symbol “VNE-SDB”. Agreements entered into between Veoneer and Autoliv in connection with the Spin-Off govern the relationship between the parties following the Spin-Off and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided on a temporary basis between the parties.
The Company has two operating segments, Electronics and Brake Systems. Electronics includes all electronics resources and expertise, Restraint Control Systems and Active Safety products, and Brake Systems provides brake control and actuation systems. The Asian business of the Brake Systems segment was sold on February 3, 2020 and the majority of the Brake Systems business in North America was sold on August 10, 2020. The remaining Brake Systems business is no longer a reportable segment due to immateriality.
The accompanying unaudited condensed consolidated financial statements for Veoneer do not include all of the information and notes required by the accounting principles generally accepted in the U.S. (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to Veoneer’s Audited Consolidated Financial Statements for the year ended December 31, 2019 and corresponding notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.
Certain amounts in the unaudited condensed consolidated financial statements and associated notes may not reconcile due to rounding. All percentages have been calculated using unrounded amounts.
Follow-on Offerings
On May 28, 2019, the Company completed follow-on public offerings of 24,000,000 shares of common stock and $207 million aggregate principal amount of 4.00% Convertible Senior Notes due 2024 (the “Notes”) (including $27 million aggregate principal amount pursuant to the underwriters’ over-allotment option to purchase additional notes). The public offering price for the Company's common stock offering was $17.50 per share. The Company received net proceeds of approximately $403 million from the common stock offering and approximately $200 million from the Notes offering, in each case after deducting the underwriting discounts and issuance costs directly attributable to each offering.
Divestiture of Veoneer Nissin Brake System ("VNBS")
On October 30, 2019, Veoneer signed definitive agreements to sell its 51% ownership in Veoneer Nissin Brake Japan ("VNBJ") and Veoneer Nissin Brake China ("VNBZ") entities that comprise VNBS to its joint venture partner Nissin-Kogyo Co., Ltd. (“Nissin Kogyo”), and Honda Motor Co., Ltd. The aggregate purchase price was $176 million. The divestiture of VNBJ and VNBZ was structured as two separate transactions each of which was completed on February 3, 2020, and the VNBS joint venture was terminated. See Note 5 "Divestiture and held for sale" for additional information.
Divestiture of Veoneer Brake Systems ("VBS")
On August 10, 2020 Veoneer signed a definitive agreement to sell the majority of the Brake Systems business in North America to ZF Friedrichshafen AG ("ZF"). The aggregate purchase price was $1. In connection with the transaction, the Company received approximately $22 million from ZF for VBS operational cost reimbursement. See Note 5 "Divestiture and held for sale" for additional information.


Note 2. Summary of Significant Accounting Policies
A summary of significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.
Other Income, Net
On March 30, 2020, Veoneer commenced arbitration against Nissin Kogyo regarding a dispute arising out of a Share Purchase Agreement (“SPA”) dated September 2015. On June 30, 2020, Veoneer agreed to settle the proceedings, along with any and all legal claims arising out of or relating to the SPA dispute, for $20 million. The cash settlement was received by the Company on June 30, 2020 and is reported among Other income, net in the unaudited Condensed Consolidated Statements of Operations.
Research, development and engineering
In early 2019, as a result of multiple factors, including general market conditions, numerous customer change requests, and challenges involved in developing new technologies for various customer programs, Veoneer launched a broad initiative to have its customers contribute more to the cost of developing these programs. The Company began to approach customers to negotiate or renegotiate new or existing agreements to provide for more favorable cost sharing terms. As part of this initiative, Veoneer approached a certain customer to adjust the terms of existing award agreements. On May 20, 2020, the Company entered into an adjustment agreement with such customer and received a lump sum settlement of $65 million for past research, development and engineering costs and implementation of change requests, and $11 million for software specific future development.
During the second quarter of 2020, the Company received a total of $76 million from the adjustment agreement. According to the Company’s accounting policies, research, development and most engineering expenses are expensed as incurred. These expenses are reported net of expense reimbursements from contracts to further customize existing products for specific customers.
For the nine months ended September 30, 2020, the Company recognized a total reimbursement from customers of $82 million for past completed engineering services as a reduction of research, development and engineering costs on the unaudited Condensed Consolidated Statement of Operations.
In addition, as of September 30, 2020, the Company recognized $15 million from the adjustment agreement as deferred income reported among Other current liabilities in the unaudited Condensed Consolidated Balance Sheet. The deferred amount will be recognized in a systematic way and in proportion to the completion of the future engineering services related to the adjustment agreement as reimbursement from customers.
Accounting for credit losses
The Company has evaluated the available adoption options of common credit loss methods that are acceptable as per FASB Accounting Standards Codification Topic 326, Credit Losses. The Company adopted the available Loss-rate method where the impairment is calculated using an estimated loss rate and multiplying it by the asset’s amortized cost at the balance sheet date. This method appropriately reflects the Company´s risk pattern in relation to its accounts receivables.
The key components of the Company’s Loss-rate model are as follows:
A list of the Company's customers credit rating and credit default risk rate from Bloomberg.
Actual write-offs or reversals of previous write-offs of accounts receivables.
Evaluation of other unusual facts and circumstances which could impact the credit loss rate, such as risk of bankruptcy or potential collectability issues.
The Company’s credit loss model includes the Company’s customer list. The customer list captures the existing customers. The list is put into a Bloomberg data query to generate customers short-term credit rating. The credit default risk rate is used to calculate the credit loss rate or estimated loss rate.
For customers that do not have credit default risk rate, management uses the six-month LIBOR rate as a credit rating and a credit default risk rate. Management believes that the six-month LIBOR rate adequately reflects the short-term nature of the Company’s trade receivables and is also in line with the Company’s invoice payment terms.

Concentration of Credit Risk
A substantial majority of the Company’s trade receivables are derived from sales to OEMs. For the three and nine months ended September 30, 2020 the Company’s four largest customers accounted for 55% and 57% of net sales, respectively and for the three and nine months ended September 30, 2019, the Company’s four largest customers accounted for 61% and 59% of net sales, respectively. Additionally, as of September 30, 2020 and December 31, 2019, these four largest customers accounted for 41% and 39%, respectively, of the Company’s accounts receivables. The Company believes that the receivable balances from these largest customers do not represent a significant credit risk based on past collection experience. The Company has adopted credit policies and standards intended to accommodate industry growth and inherent risk. The Company believes that credit risks are moderated by the financial stability of the Company’s major customers.
New Accounting Standards
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.
The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s condensed consolidated financial statements.
Adoption of New Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. ASU 2016-13 is effective for public business entities for annual periods beginning after December 15, 2019, and earlier adoption is permitted for annual periods beginning after December 15, 2018. The Company adopted ASU 2016-13 effective January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance. The adoption of ASU 2016-13 did not have a material impact on the Company's condensed consolidated financial statements.
In November 2018, the FASB issued ASU 2018-18 Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606, which (1) clarifies that certain transactions between collaborative arrangement participants should be accounted for under ASC Topic 606, Revenue from Contracts with Customers (Topic 606), when the collaborative arrangement participant is a customer in the context of a unit of account, (2) adds unit-of-account guidance in Topic 808 to align with Topic 606 when an entity is assessing whether the collaborative arrangement, or a part of the arrangement, is within the scope of Topic 606, (3) precludes presenting transactions together with revenue when those transactions involve collaborative arrangement participants that are not directly related to third parties and are not customers. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-18 did not have a material impact on the Company's condensed consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. ASU 2018-13 requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-13 did not have a material impact on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 affects any entity that enters into a lease, with some specified scope exceptions. For public business entities, the amendments in ASU 2016-02 are effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016-02 in the annual period beginning January 1, 2019. The Company applied the modified retrospective transition method and elected the transition option to use the effective date January 1, 2019,

as the date of initial application. The Company did not adjust its comparative period financial statements for effects of ASU 2016-02, and has not made the new required lease disclosures for periods before the effective date. The Company has recognized its cumulative effect transition adjustment as of the effective date. In addition, the Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, have allowed the Company to carry forward the historical lease classification. The adoption of the new standard resulted in recording operating lease assets and lease liabilities of approximately $75 million as of January 1, 2019. The adoption of the new lease standard did not have a material impact on the Company's condensed consolidated financial statements.
Accounting Standards Issued But Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes. ASU 2019-12 is effective for public business entities for annual periods beginning after December 15, 2020, and early adoption is permitted. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company plans to adopt ASU 2019-12 as of January 1, 2021. The Company has concluded that the pending adoption of ASU 2019-12 will not have a material impact on the Company’s condensed consolidated financial statements.
In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. ASU 2018-14 removes the requirements to disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of plan assets expected to be returned to the employer; and the effects of a one-percentage point change in assumed health care cost trend rates. ASU 2018-14 requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company is currently evaluating this guidance to determine the impact on the Company's condensed consolidated financial statements.
Note 3. Revenue
Disaggregation of revenue
In the following tables, revenue is disaggregated by primary region and products.
Net Sales by Region
Three Months Ended September 30, 2020Three Months Ended September 30, 2019
(Dollars in millions)ElectronicsBrake SystemsTotalElectronicsBrake SystemsTotal
Asia$85 $ $85 $80 $77 $157 
Americas123 13 136 133 14 147 
Europe150  150 158  158 
Total net sales$358 $13 $371 $371 $91 $462 

Net Sales by Region
Nine Months Ended September 30, 2020Nine Months Ended September 30, 2019
(Dollars in millions)ElectronicsBrake SystemsTotalElectronicsBrake SystemsTotal
Asia$202 $24 $226 $259 $229 $488 
Americas283 33 316 432 46 478 
Europe376  376 480  480 
Total net sales$861 $57 $918 $1,171 $275 $1,446 


Net Sales by Products
Three Months Ended September 30, 2020Three Months Ended September 30, 2019
(Dollars in millions)ElectronicsBrake SystemsTotalElectronicsBrake SystemsTotal
Restraint Control Systems$188 $ $188 $193 $ $193 
Active Safety products170  170 178  178 
Brake Systems 13 13  91 91 
Total net sales$358 $13 $371 $371 $91 $462 

Net Sales by Products
Nine Months Ended September 30, 2020Nine Months Ended September 30, 2019
(Dollars in millions)ElectronicsBrake SystemsTotalElectronicsBrake SystemsTotal
Restraint Control Systems$450 $ $450 $617 $ $617 
Active Safety products411  411 554  554 
Brake Systems 57 57  275 275 
Total net sales$861 $57 $918 $1,171 $275 $1,446 

Note 4. Business Combinations
Business combinations generally take place to either gain key technology or strengthen Veoneer’s position in a certain geographical area or with a certain customer. The results of operations and cash flows from the Company’s acquisitions have been included in the Company’s unaudited condensed consolidated financial statements prospectively from their date of acquisition.
Zenuity, Inc and Zenuity GmbH
On April 2, 2020, the Company entered into a non-binding agreement with Volvo Cars Corporation (VCC) to separate Zenuity, a 50% ownership joint venture with VCC in order for each company to more effectively drive their respective strategies. The parties entered into definitive agreements and effected the separation on July 1, 2020. As part of the transaction the Company paid approximately $37 million to Zenuity for 200 software engineers and two business units located in Germany and the US.
The Company applied the acquisition method of accounting to the Zenuity, Inc and Zenuity GmbH entities, whereby the excess of the fair value of the business over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the workforce. The recognized goodwill of $23 million recorded as part of this acquisition is included in the Electronics reportable segment and is not deductible for tax purposes. The preliminary opening balance sheet is subject to adjustment based on final assessment of the fair values of certain acquired assets, principally intangibles, and certain assumed liabilities. The Company used discounted cash flow ("DCF") analyses, which represent Level 3 fair value measurements, to assess the purchase price allocation. As the Company finalizes the fair value of the acquired assets and assumed liabilities, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments occur.
Total Zenuity, Inc and Zenuity GmbH acquisition related costs were approximately $1 million for the period ended September 30, 2020. These costs were reflected in Selling, general and administrative expenses in the unaudited Condensed Consolidated Statements of Operations for the period ended September 30, 2020.


The following table summarizes the estimated fair values of identifiable acquired assets and assumed liabilities:
AssetsAs of July 1, 2020
Cash and cash equivalents$4 
Receivable, net12 
Property, plant and equipment, net3 
Operating lease right-of-use assets10 
Total assets$52 
Tax payable2 
Accrued liabilities3 
Operating lease non-current liabilities
Total liabilities$15 
Net assets acquired$37 

Intellectual property

In addition, the Company acquired the right to use VCC intellectual property of $10 million in a transaction outside of the business combination. The acquired intangible asset will be assigned a useful life of 8 years and amortized over the useful life on a straight-line basis.

Separately, the Company has licensed intellectual property for $10 million to VCC with zero cost base in a transaction outside of the business combination and recognized this amount as Other Income in the unaudited Condensed Consolidated Statements of Operations for the period ended September 30, 2020.

Note 5. Divestiture and held for sale
In 2019, the Company started exploring strategic options for its non-core business in the Brake Systems segment. In the first quarter of 2020, management committed and approved a plan to sell VBS. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of June 30, 2020 and were required to be adjusted to the lower of fair value less cost to sell or carrying value. This resulted in an impairment charge of approximately $144 million which was recorded within Gain/(loss) on divestiture and assets held for sales, net on the unaudited Condensed Consolidated Statements of Operations during the period ended June 30, 2020. The impairment was measured using third party sales pricing to determine fair values of the assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The assets and liabilities associated with the transaction are separately classified as held for sale in the unaudited Condensed Consolidated Balance Sheet as of June 30, 2020 and depreciation of long-lived assets ceased on June 30, 2020. The divestiture did not meet the criteria for presentation as a discontinued operation.
On August 10, 2020 Veoneer signed a definitive agreement to sell the majority of the Brake Systems business in North America to ZF. The aggregate purchase price was $1. In connection with the transaction, the Company received approximately $22 million from ZF for VBS operational cost reimbursement. The reimbursement cost was recognized as asset and liability held for sale on the unaudited Condensed Consolidated Balance sheet as of June 30, 2020.
In the fourth quarter of 2019, management approved a plan to sell VNBS. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of December 31, 2019, and depreciation of long-lived assets ceased. The divestiture did not meet the criteria for presentation as a discontinued operation.
On October 30, 2019, the Company entered into definitive agreements with Nissin-Kogyo Co., Ltd. and Honda Motor Co., Ltd to divest VNBS. On February 3, 2020, the Company completed the sale of VNBS. The aggregate purchase price of the transaction was $176 million, subject to certain adjustments. The net cash proceeds after adjusting for closing costs was $175 million. The Company recognized a gain on the divestiture of $77 million, net of closing costs.

The major classes of assets and liabilities held for sale were as follows:
(Dollars in millions)As of
Assets held for saleDecember 31, 2019
Cash and cash equivalents$35 
Receivables, net58 
Inventories, net17 
Property, plant and equipment, net126 
Intangible assets, net66 
Other current assets15 
Total assets held for sale$317 
Liabilities held for sale
Accounts payable50 
Accrued expenses20 
Related party short-term debt12 
Pension liability8 
Other current liabilities28 
Total liabilities held for sale$118 

Note 6. Debt
The Company’s short and long-term debt consists of the following:
As of
(Dollars in millions)September 30, 2020December 31, 2019
Short-Term Debt:
Short-term borrowings$3 $3 
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)167 160 
Other long-term borrowings6 8 
Total Debt$176 $171 
Long-Term Debt:
4.00% Convertible Senior Notes
On May 28, 2019, the Company issued, in a registered public offering in the U.S., Convertible Senior Notes (the “Notes”) with an aggregate principal amount of $207 million. The Notes bear interest at a rate of 4.00% per year payable semi-annually in arrears on June 1 and December 1 of each year, beginning December 1, 2019. The Notes will mature on June 1, 2024, unless repurchased, redeemed or converted in accordance with their terms prior to such date.
The net proceeds from the offering of the Notes were approximately $200 million, after deducting issuance costs of $7 million. The Company accounted for these issuance costs as a direct deduction from the carrying amount of the Notes. These costs are being amortized into interest expense for 5 years or through June 2024.
The conversion rate is 44.8179 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $22.3125 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if the Company delivers a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or notice of redemption, as the case may be. In no event will the conversion rate per $1,000 principal amount of notes as a result of this adjustment exceed 57.1428 shares of common stock, as stipulated in the indenture.
The Company may not redeem the Notes prior to June 1, 2022. On or after this date, the Company may redeem for cash, shares or both all or any portion of the Notes, at our option, if the last reported sale price of the Company's common stock has been at

least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.
If the Company undergoes a fundamental change (as defined in the indenture), holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The Notes are the Company's general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, equal in right of payment with all of the Company's liabilities that are not so subordinated, effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Holders may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding March 1, 2024 only under the following circumstances: (1) if the last reported sale price of the Company's common stock for at least 20 trading days, whether or not consecutive, during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the "trading price" (as defined in the indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.