Exhibit 99.1

MAGNA INTERNATIONAL INC.

Management’s Discussion and Analysis of Results of Operations and Financial Position

All amounts in this Management’s Discussion and Analysis of Results of Operations and Financial Position (“MD&A”) are in U.S. dollars and all tabular amounts are in millions of U.S. dollars, except per share figures and average dollar content per vehicle, which are in U.S. dollars, unless otherwise noted. When we use the terms “we”, “us”, “our” or “Magna”, we are referring to Magna International Inc. and its subsidiaries and jointly controlled entities, unless the context otherwise requires.

This MD&A should be read in conjunction with the unaudited interim consolidated financial statements for the three months and six months ended June 30, 2007 included in this Second Quarter Report, and the audited consolidated financial statements and MD&A for the year ended December 31, 2006 included in our 2006 Annual Report to Shareholders. The unaudited interim consolidated financial statements for the three months and six months ended June 30, 2007 have been prepared in accordance with Canadian generally accepted accounting principles [“GAAP”] with respect to the preparation of interim financial information and the audited consolidated financial statements for the year ended December 31, 2006 have been prepared in accordance with Canadian GAAP.

This MD&A has been prepared as at August 8, 2007.

OVERVIEW

We are a leading global supplier of technologically advanced automotive systems, assemblies, modules and components. We design, develop and manufacture automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers (“OEMs”) of cars and light trucks in North America, Europe, Asia, South America and Africa. Our product capabilities span a number of major automotive areas including: the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; metal body and structural systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; as well as complete vehicle engineering and assembly. We follow a corporate policy of functional and operational decentralization, pursuant to which we conduct our operations through divisions, each of which is an autonomous business unit operating within pre-determined guidelines. As at June 30, 2007, we had 236 manufacturing divisions and 63 product development and engineering centres in 23 countries.

Our operations are segmented on a geographic basis between North America, Europe, and Rest of World (primarily Asia and South America). A Co-Chief Executive Officer heads management in each of our two primary markets, North America and Europe. The role of the North American and European management teams is to manage our interests to ensure a coordinated effort across our different product capabilities. In addition to maintaining key customer, supplier and government contacts in their respective markets, our regional management teams centrally manage key aspects of our operations while permitting our divisions enough flexibility through our decentralized structure to foster an entrepreneurial environment.

PROPOSED TRANSACTION

On May 10, 2007, we announced a major strategic investment in Magna to be made by OJSC Russian Machines, a wholly owned subsidiary of Basic Element Limited. Russian Machines represents the Machinery Sector of Basic Element, and includes automobile manufacturer GAZ Group, airplane manufacturer Aviacor and train car manufacturer Abakanvagonmash. Basic Element is a diversified holding company founded in 1997 with assets in Russia, countries of the Commonwealth of Independent States, Europe, Africa, South America and Australia.

Under the terms of the transaction agreement entered into by Magna, the Stronach Trust and Russian Machines, Russian Machines would invest approximately $1.54 billion to indirectly acquire 20 million Class A Subordinate Voting Shares of Magna from treasury. A new Canadian holding company would hold the respective share holdings in Magna of the Stronach Trust, Russian Machines and certain principals who are also members of Magna’s executive management.

We also announced our intention to make a substantial issuer bid, expected to be an offer to purchase up to 20 million Class A Subordinate Voting Shares at an aggregate price of not more than $1.54 billion.

We believe that the investment by Russian Machines will benefit Magna by:

·Allowing us to accelerate our strategic efforts to capitalize on the significant growth opportunities in the growing Russian automotive market, as well as other emerging markets;

·Achieving a greater alignment of interests of the Stronach Trust, Russian Machines and our executive management with other Magna shareholders, while creating “checks and balances” on the exercise of the Stronach Trust’s controlling interest in Magna by virtue of Russian Machines’ nominees representation on our Board.

Magna International Inc. Second Quarter Report 2007 1

A number of our operating units are pursuing business opportunities in Russia with local OEMs, as well as with our traditional customers that are increasing assembly capacity in Russia. We believe that the best way to minimize risks and maximize returns in this market is by working together with Russian Machines, an established industrial partner.

For more information on our proposed transaction, please refer to our Management Information Circular/Proxy Statement dated July 25, 2007 (the “Circular”) issued in connection with the Special Shareholders’ meeting to take place on August 28, 2007 which was called to consider the proposed investment in Magna by Russian Machines and approve the proposed plan of arrangement and Class B Share acquisition related thereto.

INDUSTRY TRENDS AND RISKS

Our success is primarily dependent upon the levels of North American and European car and light truck production by our customers and the relative amount of content we have on the various programs. OEM production volumes in different regions may be impacted by factors which may vary from one region to the next, including general economic and political conditions, interest rates, energy and fuel prices, international conflicts, labour relations issues, regulatory requirements, trade agreements, infrastructure, legislative changes, and environmental emissions and safety issues. A number of other economic, industry and risk factors discussed in our Annual Information Form and Annual Report on Form 40-F, each in respect of the year ended December 31, 2006, also affect our success, including such things as relative currency values, commodities prices, price reduction pressures from our customers, the financial condition of our supply base and competition from manufacturers with operations in low cost countries.

The economic, industry and risk factors discussed in our Annual Information Form and Annual Report on Form 40-F, each in respect of the year ended December 31, 2006, remain substantially unchanged in respect of the six months ended June 30, 2007, except that our maximum potential exposure in connection with our dispute with a major steel supplier has increased by approximately $30 million to $165 million as at June 30, 2007. Additionally, risks relating to the proposed investment in Magna by Russian Machines are disclosed in the Circular and incorporated herein by reference.

HIGHLIGHTS

During the second quarter of 2007, we reported sales of $6.7 billion, an increase of 6% over the second quarter of 2006. This higher sales level was achieved as a result of increases in our North American, European and Rest of World production sales, offset in part by reductions in complete vehicle assembly sales and tooling, engineering and other sales. During the second quarter of 2007, North American and European average dollar content per vehicle increased 7% and 19%, respectively, over the second quarter of 2006. During the second quarter of 2007, North American vehicle production declined 2% while European vehicle production increased 1%, each compared to the second quarter of 2006.

We reported strong sales despite the fact that in the second quarter of 2007 two of our largest OEM customers in North America continued to reduce vehicle production levels compared to the second quarter of 2006. While overall North American vehicle production volumes declined 2% in the second quarter of 2007 compared to the second quarter of 2006, Ford and General Motors (“GM”) vehicle production declined by 10% and 8%, respectively.

Operating income for the second quarter of 2007 increased 32% to $377 million from $286 million for the second quarter of 2006. Excluding the unusual items recorded in the second quarters of 2007 and 2006 (see “Unusual Items” below), operating income for the second quarter of 2007 increased $85 million or 26%. The increase in operating income excluding unusual items was primarily due to additional margins earned on the launch of new programs during or subsequent to the second quarter of 2006, increased margins earned on higher volumes for certain production and assembly programs and operational improvements at certain underperforming divisions. These factors were partially offset by lower margins earned on decreased sales as a result of programs that ended production subsequent to the second quarter of 2006, operational inefficiencies and other costs at certain powertrain and interior facilities, higher employee profit sharing and incentive compensation, a one-time charge to compensation expense representing the remaining measured but unrecognized compensation expense related to restricted shares previously awarded to a former executive and incremental customer price concessions.

Net income for the second quarter of 2007 increased 36% or $69 million to $262 million from $193 million for the second quarter of 2006. Excluding the unusual items recorded in the second quarters of 2007 and 2006 (see “Unusual Items” below), net income for the second quarter of 2007 increased 32% or $70 million. The increase in net income excluding unusual items was primarily a result of the increase in operating income (excluding unusual items) partially offset by higher income taxes (excluding unusual items) due to increased pretax income, partially offset by a decrease in our effective tax rate.

Diluted earnings per share for the second quarter of 2007 increased 34% or $0.60 to $2.35 from $1.75 for the second quarter of 2006. The increase in diluted earnings per share is a result of the increase in net income (excluding unusual items) partially offset by an increase in the weighted average number of diluted shares outstanding in the second quarter of 2007, primarily as a result of the Class A Subordinate Voting Shares issued on the exercise of stock options during or subsequent to the second quarter of 2006.

2 Magna International Inc. Second Quarter Report 2007

Unusual Items

During the three months and six months ended June 30, 2007 and 2006, we recorded certain unusual items as follows:

	2007						2006
					Diluted							Diluted
	Operating Income		Net Income		Earnings per Share		Operating Income		Net Income			Earnings per Share
Second Quarter
Restructuring charges (1)	$   (14	)	$   (10	)	$   (0.09	)	$   (25	)	$	(18	)	$	(0.16	)
Impairment charges (1)	(22	)	(14	)	(0.12	)	—		—			—
Sale of facilities (2)	—		—		—		(17	)	(15		)	(0.14		)
Future tax recovery (3)	—		—						10			0.09
Total second quarter unusual items	(36	)	(24	)	(0.21	)	(42	)	(23		)	(0.21		)
First Quarter
Restructuring charges (1)	—		—		—		(10	)	(9		)	(0.08		)
Total first quarter unusual items	—		—		—		(10	)	(9		)	(0.08		)
Total year to date unusual items	$   (36	)	$   (24	)	$   (0.21	)	$   (52	)	$	(32	)	$	(0.29	)

(1)Restructuring and Impairment Charges

[a]For the six months ended June 30, 2007

During the second quarter of 2007, we incurred restructuring and rationalization charges of $10 million related to two facilities in North America and $4 million related to one facility in Europe.

During the second quarter of 2007, we recorded an asset impairment of $22 million [$14 million after tax] relating to specific assets at a powertrain facility in the United States.

[b]For the six months ended June 30, 2006

During the first quarter of 2006, we incurred restructuring and rationalization charges of $10 million related primarily to non-contractual termination benefits for employees at an exteriors facility in Belgium.

During the second quarter of 2006, we incurred restructuring and rationalization charges of $25 million. Specifically, we recorded a $17 million charge as a result of an agreement we reached with employees related to rightsizing a powertrain facility in the United States. In addition, we incurred additional restructuring and rationalization charges of$4 million related to two facilities in North America and $4 million related to two facilities in Europe.

(2)Sale of Facilities

During the second quarter of 2006, we entered into agreements for the sale of two underperforming powertrain facilities. As a result, we incurred losses on disposition of the facilities of $12 million and $5 million in Europe and North America, respectively.

(3)Other Unusual Items

During the second quarter of 2006 we recorded a $10 million future income tax recovery as a result of a reduction in future income tax rates in Canada.

RESULTS OF OPERATIONS

Accounting Change

In January 2005, the Canadian Institute of Chartered Accountants approved Handbook Sections 1530, “Comprehensive Income”, 3855 “Financial Instruments – Recognition and Measurement”, 3861 “Financial Instruments – Disclosure and Presentation”, and 3865 “Hedges”. We adopted these new recommendations effective January 1, 2007 with no restatement of prior periods, except to classify the currency translation adjustment as a component of accumulated other comprehensive income. With the adoption of these new standards, our accounting for financial instruments and hedges complies with U.S. GAAP in all material respects on January 1, 2007.

Magna International Inc. Second Quarter Report 2007 3

Financial Instruments

Under the new standards, all of our financial assets and financial liabilities are classified as held for trading, held to maturity investments, loans and receivables, available-for-sale financial assets or other financial liabilities. Held for trading financial instruments, which include cash and cash equivalents, are measured at fair value and all gains and losses are included in net income in the period in which they arise. Held to maturity investments are recorded at amortized cost using the effective interest method, and include long-term interest bearing government securities held to partially fund certain Austrian lump sum termination and long service payment arrangements. Loans and receivables, which include accounts receivable and long-term receivables, accounts payable, accrued salaries and wages, and certain other accrued liabilities are recorded at amortized cost using the effective interest method. We do not currently have any available for sale financial assets.

Comprehensive Income

Other comprehensive income includes the unrealized gains and losses on translation of our net investment in self-sustaining foreign operations, and to the extent that cash flow hedges are effective, the change in their fair value, net of income taxes. Other comprehensive income is presented below net income on the Consolidated Statements of Income and Comprehensive Income. Comprehensive income is composed of our net income and other comprehensive income.

Accumulated other comprehensive income is a separate component of shareholders’ equity, which includes the accumulated balances of all components of other comprehensive income which are recognized in comprehensive income but excluded from net income.

Hedges

Previously, under Canadian GAAP derivative financial instruments that met hedge accounting criteria were accounted for on an accrual basis, and gains and losses on hedge contracts were accounted for as a component of the related hedged transaction. The new standards require that all derivative instruments, whether designated in hedging relationships or not, be recorded on the balance sheet at fair value. The fair values of derivatives are recorded in other assets or other liabilities. To the extent that cash flow hedges are effective, the change in their fair value is recorded in other comprehensive income. Amounts accumulated in other comprehensive income are reclassified to net income in the period in which the hedged item affects net income.

The impact of this accounting policy change on the consolidated balance sheet as at January 1, 2007 was as follows:

Increase in prepaid expenses and other	$	28
Increase in other assets	17
Increase in future tax assets	14
Increase in other accrued liabilities	$	32
Increase in other long-term liabilities	17
Increase in future tax liabilities	13
Decrease in accumulated other comprehensive income	$	3

Average Foreign Exchange

	For the three months				For the six months
	ended June 30,				ended June 30,
	2007	2006	Change		2007	2006	Change
1 Canadian dollar equals U.S. dollars	0.913	0.892	+	2%	0.884	0.879	+	1%
1 euro equals U.S. dollars	1.348	1.259	+	7%	1.330	1.231	+	8%
1 British pound equals U.S. dollars	1.986	1.832	+	8%	1.970	1.792	+	10%

The preceding table reflects the average foreign exchange rates between the most common currencies in which we conduct business and our U.S. dollar reporting currency. The significant changes in these foreign exchange rates for the three months and six months ended June 30, 2007 impacted the reported U.S. dollar amounts of our sales, expenses and income.

The results of operations whose functional currency is not the U.S. dollar are translated into U.S. dollars using the average exchange rates in the table above for the relevant period. Throughout this MD&A, reference is made to the impact of translation of foreign operations on reported U.S. dollar amounts where relevant.

Our results can also be affected by the impact of movements in exchange rates on foreign currency transactions (such as raw material purchases or sales denominated in foreign currencies). However, as a result of hedging programs employed by us, primarily in Canada, foreign currency transactions in the current period have not been fully impacted by movements in exchange rates. We record foreign currency transactions at the hedged rate where applicable.

Finally, holding gains and losses on foreign currency denominated monetary items, which are recorded in selling, general and administrative expenses, impact reported results.

4 Magna International Inc. Second Quarter Report 2007

RESULTS OF OPERATIONS –FOR THE THREE MONTHS ENDED JUNE 30, 2007

Sales

	For the three months
	ended June 30,
	2007		2006		Change
Vehicle Production Volumes (millions of units)
North America	4.057		4.145		-	2%
Europe	4.254		4.223		+	1%
Average Dollar Content Per Vehicle
North America	$	840	$	784	+	7%
Europe	$	405	$	340	+	19%
Sales
External Production
North America	$	3,408	$	3,251	+	5%
Europe	1,723		1,437		+	20%
Rest of World	100		67		+	49%
Complete Vehicle Assembly	1,064		1,075		-	1%
Tooling, Engineering and Other	436		539		-	19%
Total Sales	$	6,731	$	6,369	+	6%

Total sales increased 6% or $362 million to $6.7 billion for the second quarter of 2007 compared to $6.4 billion for the second quarter of 2006.

External Production Sales - North America

External production sales in North America increased 5% or $157 million to $3.408 billion for the second quarter of 2007 compared to $3.251 billion for the second quarter of 2006. This increase in production sales reflects a 7% increase in our North American average dollar content per vehicle partially offset by a 2% decrease in North American vehicle production volumes. We reported strong sales despite the fact that in the second quarter of 2007 two of our largest OEM customers in North America continued to reduce vehicle production levels compared to the second quarter of 2006. While overall North American vehicle production volumes declined 2% in the second quarter of 2007 compared to the second quarter of 2006, Ford and General Motors (“GM”) vehicle production declined by 10% and 8%, respectively.

Our average dollar content per vehicle grew by 7% or $56 to $840 for the second quarter of 2007 compared to $784 for the second quarter of 2006, primarily as a result of:

·the launch of new programs during or subsequent to the second quarter of 2006, including:

·the Ford Edge and Lincoln MKX;

·the Saturn Outlook, GMC Acadia and Buick Enclave;

·GM’s full-size pickups;

·the Jeep Wrangler, Wrangler Unlimited and Patriot;

·the BMW X5;

·      the Ford F-Series SuperDuty;

·the Dodge Nitro; and

·      the Dodge Avenger and Chrysler Sebring; and

·an increase in reported U.S. dollar sales due to the strengthening of the Canadian dollar against the U.S. dollar.

These factors were partially offset by:

·the impact of lower production and/or content on certain programs, including:

·the Dodge Caravan, Grand Caravan and Chrysler Town & Country;

·the Chrysler Pacifica;

·the Ford Fusion, Mercury Milan and Lincoln MKZ / Zephyr;

·the HUMMER H3;

·GM’s SUVs;

·the Chrysler PT Cruiser;

·the Jeep Liberty;

·the Chevrolet HHR and Malibu; and

·the Pontiac Montana SV6, Saturn RELAY, Buick Terraza and Chevrolet Uplander; and

·programs that ended production during or subsequent to the second quarter of 2006, including the Ford Freestar and Mercury Monterey;

·the sale of certain facilities during or subsequent to the second quarter of 2006; and

·incremental customer price concessions.

Magna International Inc. Second Quarter Report 2007 5

External Production Sales - Europe

External production sales in Europe increased 20% or $286 million to $1.723 billion for the second quarter of 2007 compared to $1.437 billion for the second quarter of 2006. This increase in production sales reflects a 19% increase in our European average dollar content per vehicle combined with a 1% increase in European vehicle production volumes for the second quarter of 2007, each as compared to the second quarter of 2006.

Our average dollar content per vehicle grew by 19% or $65 to $405 for the second quarter of 2007 compared to $340 for the second quarter of 2006, primarily as a result of:

·the launch of new programs during or subsequent to the second quarter of 2006, including:

·the MINI Cooper;

·the Mercedes-Benz C-Class; and

·the smart fortwo;

·an increase in reported U.S. dollar sales due to the strengthening of the euro and British pound, each against the U.S. dollar;

·acquisitions completed subsequent to the second quarter of 2006, including the acquisition of two facilities from Pressac Investments Limited (the “Pressac acquisition”) in January 2007; and

·increased production and/or content on certain programs, including the BMW 3-Series.

These factors were partially offset by:

·the impact of lower production and/or content on certain programs, including:

·the Mercedes-Benz E-Class; and

·the Nissan Micra;

·the sale of certain facilities during or subsequent to the second quarter of 2006; and

·incremental customer price concessions.

External Production Sales - Rest of World

External production sales in the Rest of World increased 49% or $33 million to $100 million for the second quarter of 2007 compared to $67 million for the second quarter of 2006. The increase in production sales is primarily a result of:

·increased production and/or content on certain programs in Korea, China and Brazil;

·the launch of new programs during or subsequent to the second quarter of 2006 in Korea, China and Brazil;

·an increase in reported U.S. dollar sales as a result of the strengthening of the Korean Won and Chinese Renminbi, each against the U.S. dollar.

Complete Vehicle Assembly Sales

The terms of our various vehicle assembly contracts differ with respect to the ownership of components and supplies related to the assembly process and the method of determining the selling price to the OEM customer. Under certain contracts we are acting as principal, and purchased components and systems in assembled vehicles are included in our inventory and cost of sales. These costs are reflected on a full-cost basis in the selling price of the final assembled vehicle to the OEM customer. Other contracts provide that third party components and systems are held on consignment by us, and the selling price to the OEM customer reflects a value-added assembly fee only.

Production levels of the various vehicles assembled by us have an impact on the level of our sales and profitability. In addition, the relative proportion of programs accounted for on a full-cost basis and programs accounted for on a value-added basis, also impacts our level of sales and operating margin percentage, but may not necessarily affect our overall level of profitability. Assuming no change in total vehicles assembled, a relative increase in the assembly of vehicles accounted for on a full-cost basis has the effect of increasing the level of total sales, however, because purchased components are included in cost of sales, profitability as a percentage of total sales is reduced. Conversely, a relative increase in the assembly of vehicles accounted for on a value-added basis has the effect of reducing the level of total sales and increasing profitability as a percentage of total sales.

	For the three months
	ended June 30,
	2007		2006		Change
Complete Vehicle Assembly Sales	$	1,064	$	1,075	-	1%
Complete Vehicle Assembly Volumes (Units)
Full-Costed:
BMW X3, Mercedes-Benz E-Class and G-Class, and Saab 93 Convertible	36,436		39,602		-	8%
Value-Added:
Jeep Grand Cherokee, Chrysler 300, Chrysler Voyager, and Jeep Commander	18,916		23,101		-	18%
	55,352		62,703		-	12%

6 Magna International Inc. Second Quarter Report 2007

Complete vehicle assembly sales decreased 1% or $11 million to $1.064 billion for the second quarter of 2007 compared to $1.075 billion for the second quarter of 2006 while assembly volumes decreased 12% or 7,351 units. The decrease in complete vehicle assembly sales is primarily as a result of:

·the end of production of the Mercedes-Benz E-Class 4MATIC at our Graz assembly facility in the fourth quarter of 2006, as DaimlerChrysler is assembling this vehicle in-house; and

·a decrease in assembly volumes for the Saab 93 Convertible and all vehicles accounted for on a value-added basis.

These factors were partially offset by:

·an increase in reported U.S. dollar sales due to the strengthening of the euro against the U.S. dollar; and

·higher assembly volumes for the BMW X3 and the Mercedes-Benz G-Class.

In May 2007, BMW informed us of its intention to commence in-house assembly of the next generation BMW X3. We expect current BMW X3 production in our Graz assembly facility to end in 2010. In July 2007, DaimlerChrysler announced that it will consolidate production of the Chrysler 300 at its assembly facility in Brampton, Ontario. We expect current Chrysler 300 production in our Graz assembly facility to end in 2009.

Tooling, Engineering and Other

Tooling, engineering and other sales decreased 19% or $103 million to $436 million for the second quarter of 2007 compared to $539 million for the second quarter of 2006.

In the second quarter of 2007 the major programs for which we recorded tooling, engineering and other sales were:

·the Ford Flex;

·the Dodge Grand Caravan and Chrysler Town & Country;

·GM’s full-size pickups;

·the Cadillac STS; and

·the Mazda 6.

In the second quarter of 2006, the major programs for which we recorded tooling, engineering and other sales were:

·GM’s full-size pickups and SUVs;

·the MINI Cooper;

·the BMW Z4;

·the Freightliner P-Class;

·the Ford Edge;

·the BMW 3-Series; and

·the Suzuki XL7.

In addition, tooling, engineering and other sales benefited from the strengthening of the Canadian dollar, euro and British pound, each against the U.S. dollar.

Gross Margin

Gross margin increased $125 million to $972 million for the second quarter of 2007 compared to $847 million for the second quarter of 2007 and gross margin as a percentage of total sales increased to 14.4% compared to 13.3%.

The unusual items discussed in the “Highlights” section above negatively impacted gross margin as a percent of total sales by 0.2% and 0.3% in the second quarters of 2007 and 2006, respectively. Excluding these unusual items, the 1.0% increase in gross margin as a percentage of total sales was primarily as a result of:

·incremental gross margin earned on new programs that launched during or subsequent to the second quarter of 2006;

·incremental gross margin earned as a result of increased production volumes for certain programs;

·productivity and efficiency improvements at certain facilities, including underperforming divisions; and

·the decrease in tooling sales that earn low or no margins.

These factors were partially offset by:

·costs incurred at new facilities in preparation for upcoming launches or for programs that have not fully ramped up production;

·operational inefficiencies and other costs at certain facilities, in particular at certain powertrain and interiors facilities in the United States;

·reduced gross margin earned as a result of a decrease in production volumes for certain programs;

·higher employee profit sharing; and

·incremental customer price concessions.

Magna International Inc. Second Quarter Report 2007 7

Depreciation and Amortization

Depreciation and amortization costs increased 4% or $9 million to $210 million for the second quarter of 2007 compared to $201 million for the second quarter of 2006. The increase in depreciation and amortization was primarily as a result of:

·depreciation and amortization of assets at new facilities that launched during or subsequent to the second quarter of 2006;

·acquisitions completed during or subsequent to the second quarter of 2006 including:

·the Pressac acquisition in January 2007; and

·the Magna Golf Club and Fontana Golf and Sports Club in the third and fourth quarters of 2006, respectively;

·an increase in reported U.S. dollar depreciation and amortization due to the strengthening of the Canadian dollar and euro, each against the U.S. dollar;

·accelerated depreciation on certain program specific assets in North America; and

·an increase in assets employed in the business to support future growth.

These factors were partially offset by a decrease in assets as a result of impairments recorded in the fourth quarter of 2006.

Selling, General and Administrative (“SG&A”)

SG&A expenses as a percentage of sales decreased to 5.6% for the second quarter of 2007 compared to 5.8% for the second quarter of 2006. SG&A expenses increased 3% or $11 million to $378 million for the second quarter of 2007 compared to $367 million for the second quarter of 2006. Excluding the unusual items discussed in the “Highlights” section above, SG&A expenses increased by $34 million primarily as a result of:

·higher infrastructure costs to support the increase in sales, including spending related to programs that launched during or subsequent to the second quarter of 2006;

·increased stock compensation costs related to restricted shares, specifically:

·during the second quarter of 2007, restricted share agreements with a former executive were accelerated, which resulted in a one-time charge to compensation expense of approximately $10 million, representing the remaining measured but unrecognized compensation expense related to the restricted shares awarded during 2006;

·an increase in reported U.S. dollar SG&A due to the strengthening of the euro and Canadian dollar, each against the U.S. dollar; and

·increased employee profit sharing and incentive compensation.

These factors were partially offset by:

·the sale or disposition of certain facilities during or subsequent to the second quarter of 2006;

·reduced spending at certain underperforming divisions; and

·the recovery of a long-term receivable that was previously written off.

Earnings before Interest and Taxes (“EBIT”)(1)

Our operations are segmented on a geographic basis between North America, Europe and Rest of World. Our success may be impacted by factors which may vary from one region to the next. In particular, EBIT as a percentage of external sales in Europe is lower than in North America primarily as a result of:

·our assembly operations in Europe, since margins as a percentage of sales for complete vehicle assembly sales are generally lower than margins earned on production sales due to the high number of purchased components; and

·generally lower margins earned on production sales in Europe as compared to North America.

	For the three months
	ended June 30,
	2007		2006		Change
North America	$	262	$	249	+	5	%
Europe	96		24		+	300	%
Rest of World	5		—			n/a
Corporate and Other	1		10		-	90	%
Total EBIT	$	364	$	283	+	29	%

Included in EBIT for the second quarters of 2007 and 2006 were the following unusual items, which have been discussed in the “Highlights” section above:

(1)EBIT is defined as operating income as presented on our unaudited consolidated financial statements before net interest (income) expense.

8 Magna International Inc. Second Quarter Report 2007

	For the three months
	ended June 30,
	2007			2006
North America
Restructuring charges	$	(10	)	$	(26	)
Impairment charges	(22		)	—
	(32		)	(26		)
Europe
Restructuring charges	(4		)	(16		)
	(4		)	(16		)
	$	(36	)	$	(42	)

North America

EBIT in North America increased 5% or $13 million to $262 million for the second quarter of 2007 compared to $249 million for the second quarter of 2006. Excluding the North American unusual items discussed in the “Highlights” section above, the $19 million increase in EBIT was primarily as a result of:

·incremental margin earned on new programs that launched during or subsequent to the second quarter of 2006;

·incremental margin earned on increased production on certain programs; and

·productivity and efficiency improvements at certain facilities, including underperforming divisions.

These factors were partially offset by:

·lower margins earned as a result of a decrease in production on certain programs;

·operational inefficiencies and other costs at certain underperforming divisions, in particular at certain powertrain and interiors facilities in the United States;

·costs incurred in preparation for upcoming launches or for programs that have not fully ramped up production;

·costs incurred to develop and grow our electronics capabilities;

·higher employee profit sharing;

·higher affiliation fees paid to Corporate; and

·incremental customer price concessions.

Europe

EBIT in Europe increased 300% or $72 million to $96 million for the second quarter of 2007 compared to $24 million for the second quarter of 2006. Excluding the European unusual items discussed above, the remaining $60 million increase in EBIT was primarily as a result of:

·incremental margin earned on new programs that launched during or subsequent to the second quarter of 2006;

·incremental margin earned on higher volumes for certain production and complete vehicle assembly programs;

·operational improvements at certain facilities, including underperforming divisions;

These factors were partially offset by:

·lower margins earned as a result of a decrease in vehicle production volumes on certain programs, including the end of production of the Mercedes-Benz E-Class 4MATIC at our Graz assembly facility in the fourth quarter of 2006;

·operational inefficiencies and other costs at certain facilities;

·costs incurred to develop and grow our electronics capabilities;

·higher affiliation fees paid to Corporate;

·higher employee profit sharing;

·costs incurred to develop and grow our business in Russia; and

·incremental customer price concessions.

Rest of World

Rest of World EBIT increased $5 million to $5 million for the second quarter of 2007. The increase in EBIT was primarily as a result of:

·additional margin earned on the increase in production sales discussed above;

·improved operating efficiencies at certain new facilities, primarily in China; and

·equity income earned on our 41% interest in Shin Young Metal Ind. Co., which we acquired during 2006.

These factors were partially offset by costs incurred at other new facilities, primarily in China, as we continue to pursue opportunities in this growing market.

Magna International Inc. Second Quarter Report 2007 9

Corporate and Other

Corporate and Other EBIT declined $9 million to $1 million for the second quarter of 2007 compared to $10 million for the second quarter of 2006. The decrease in EBIT was primarily as a result of:

·increased stock compensation costs as discussed in the SG&A section above;

·an increase in reported U.S. dollar SG&A due to the strengthening of the euro and Canadian dollar, each against the U.S. dollar;

·increased consulting fees incurred with respect to a purchasing initiative;

·increased incentive compensation; and

·a decrease in equity income earned.

These factors were partially offset by:

·an increase in affiliation fees earned from our divisions; and

·the recovery of a long-term receivable that was previously written off.

Interest Income, Net

Net interest income increased $10 million to $13 million for the second quarter of 2007 compared to $3 million for the second quarter of 2006. The increase in interest income was primarily as a result of:

·a reduction in interest expense due to:

·the repayment in January 2007 of the third series of our senior unsecured notes related to the acquisition of New Venture Gear (“NVG”); and

·the $59 million and $48 million repayment of senior unsecured notes in May 2006 and October 2006, respectively; and

·an increase in interest income earned.

Operating Income

Operating income increased 32% or $91 million to $377 million for the second quarter of 2007 compared to $286 million for the second quarter of 2006. Excluding the unusual items discussed in the “Highlights” section above, operating income for the second quarter of 2007 increased 26% or $85 million. This increase in operating income was the result of the increase in EBIT (excluding unusual items) combined with the increase in net interest income earned, both as discussed above.

Income Taxes

Our effective income tax rate on operating income (excluding equity income) decreased to 30.7% for the second quarter of 2007 from 33.0% for the second quarter of 2006. In the second quarters of 2006 and 2007, our income tax rate was impacted by the unusual items discussed in the “Highlights” section above. Excluding the unusual items, our effective income tax rate decreased to 30.9% for the second quarter of 2007 compared to 34.6% in the second quarter of 2006. The decrease in the effective income tax rate is a result of a decrease in losses not benefited, partially offset by a change in mix of earnings, whereby proportionately more income was earned in jurisdictions with higher income tax rates.

Net Income

Net income increased by 36% or $69 million to $262 million for the second quarter of 2007 compared to $193 million for the second quarter of 2006. Excluding unusual items (discussed in the “Highlights” section above), net income increased $70 million as a result of the increase in operating income (excluding unusual items), partially offset by higher income taxes (excluding unusual items), all as discussed above.

Earnings per Share

	For the three months
	ended June 30,
	2007		2006		Change
Earnings per Class A Subordinate Voting or Class B Share
Basic	$	2.40	$	1.78	+ 35	%
Diluted	$	2.35	$	1.75	+ 34	%
Average number of Class A Subordinate Voting and Class B Shares outstanding (millions)
Basic	109.1		108.6		—
Diluted	112.0		111.4		+  1	%

10 Magna International Inc. Second Quarter Report 2007

Diluted earnings per share increased 34% or $0.60 to $2.35 for the second quarter of 2007 compared to $1.75 for the second quarter of 2006. Diluted earnings per share increased $0.60 from the second quarter of 2006 to the second quarter of 2007 as a result of the increase in net income (excluding unusual items) described above, partially offset by an increase in the weighted average number of diluted shares outstanding in the second quarter of 2007, primarily as a result of the Class A Subordinate Voting Shares issued on the exercise of stock options during or subsequent to the second quarter of 2006.

Return on Funds Employed (“ROFE”)(1)

An important financial ratio that we use across all of our operations to measure return on investment is ROFE.

ROFE for the second quarter of 2007 was 22.3%, an increase from 16.9% for the second quarter of 2006. The unusual items discussed in the “Highlights” section above negatively impacted ROFE in the second quarter of 2007 by 2.2% and negatively impacted ROFE by 2.3% in the second quarter of 2006.

Excluding these unusual items, ROFE increased 5.3% primarily as a result of an increase in EBIT (excluding unusual items) as discussed above.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flow from Operations

	For the three months
	ended June 30,
	2007			2006			Change
Net income	$	262		$	193
Items not involving current cash flows	260			222
	522			415			$	107
Changes in non-cash operating assets and liabilities	(240		)	(141		)
Cash provided from operating activities	$	282		$	274		$	8

Cash flow from operations before changes in non-cash operating assets and liabilities increased $107 million to $522 million for the second quarter of 2007 compared to $415 million for the second quarter of 2006. The increase in cash flow from operations was due to a $69 million increase in net income (as discussed above) and a $38 million increase in items not involving current cash flows, including:

·a $ 22 million impairment charge, as discussed in the “Highlights” section above; and

·a $19 million increase in future taxes, including the impact of the $10 million income tax recovery in the second quarter of 2006 as discussed in the “Highlights” section above.

These factors were partially offset by the loss on sale of facilities in the second quarter of 2006 as discussed in the “Highlights” section above.

Cash invested in operating assets and liabilities amounted to $240 million for the second quarter of 2007 which was comprised of the following sources (and uses) of cash:

	For the three months
	ended June 30,
	2007			2006
Accounts receivable	$	(117	)	$	(132	)
Inventory	(8		)	—
Prepaid expenses and other	1			(1		)
Accounts payable and other accrued liabilities	(109		)	(41		)
Income taxes payable	(1		)	36
Deferred revenue	(6		)	(3		)
Changes in non-cash operating assets and liabilities	$	(240	)	$	(141	)

The increase in accounts receivable in the second quarter of 2007 was primarily due to an increase in production receivables related to higher production sales in the second quarter of 2007 compared to the first quarter of 2007. The decrease in accounts payable and other accrued liabilities was primarily due to the timing of payments to suppliers.

(1) ROFE is defined as EBIT divided by the average funds employed for the period. Funds employed is defined as long-term assets, excluding future tax assets, plus non-cash operating assets and liabilities. Non-cash operating assets and liabilities are defined as the sum of accounts receivable, inventory, income taxes recoverable and prepaid assets less the sum of accounts payable, accrued salaries and wages, other accrued liabilities, income taxes payable and deferred revenues.

Magna International Inc. Second Quarter Report 2007 11

Capital and Investment Spending

	For the three months
	ended June 30,
	2007			2006			Change
Fixed assets	$	(137	)	$	(179	)
Investments and other assets	(10		)	(43		)
Fixed assets, investments and other assets additions	(147		)	(222		)
Proceeds from disposals	12			7
Cash used in investing activities	$	(135	)	$	(215	)	$	80

Fixed assets, investments and other assets additions

In the second quarter of 2007, we invested $137 million in fixed assets. While investments were made to refurbish or replace assets consumed in the normal course of business and for productivity improvements, a large portion of the investment in the second quarter of 2007 was for manufacturing equipment for programs that launched during the second quarter of 2007 or will be launching subsequent to the second quarter of 2007.

Proceeds from disposition

Proceeds from disposition for the second quarter of 2007 and the second quarter of 2006 represent normal course fixed and other asset disposals.

Financing

	For the three months
	ended June 30,
	2007			2006			Change
Repayments of debt	$	(5	)	$	(106	)
Issues of debt	54			17
Issues of Class A Subordinate Voting Shares	19			7
Cash dividends paid	(26		)	(41		)
Cash used in financing activities	$	42		$	(123	)	$	165

The repayments of debt during the second quarter of 2006 included the repayment of $59 million in senior unsecured notes as well as a reduction in bank indebtedness of $47 million.

The issues of debt during the second quarter of 2007 relate primarily to an increase in bank indebtedness as a result of the payments made to suppliers prior to quarter end as discussed in the “Cash flow from Operations” section above.

During the second quarter of 2007, we received cash proceeds of $19 million on the exercise of stock options for Class A Subordinate Voting Shares compared to $7 million during the second quarter of 2006.

Cash dividends paid per Class A Subordinate Voting or Class B Share were $0.24 in the second quarter of 2007 compared to $0.38 in the second quarter of 2006.

The Dividend Policy in our Corporate Constitution entitles Class A Subordinate Voting and Class B shareholders to dividends equal to, in aggregate in respect of a financial year: (a) at least 10% of Magna’s After Tax Profits (as defined in the Corporate Constitution) for that financial year; and (b) on average, at least 20% of Magna’s After Tax Profits for that year and the two immediately preceding years.  Magna has complied with this requirement since 1992 and intends to continue to fully comply with this requirement.

Based on our financial results for the six months ended June 30, 2007, our Board of Directors declared a quarterly dividend of U.S. $0.36 per share with respect to our outstanding Class A Subordinate Voting Shares and Class B Shares for the quarter ended June 30, 2007.  The dividend is payable on September 14, 2007 to shareholders of record on August 31, 2007.

In making this determination, the Board reconsidered and determined to rescind the dividend formula described in our press release dated April 2, 2007, which would have maintained a constant dividend amount in each of the first three quarters based on the prior year’s results, and provided for an adjustment in the fourth quarter to meet the 20% payout contemplated by that formula.  The Board reserves the right to further modify the dividend at any time and for any reason, subject to the requirements of the Corporate Constitution, particularly in response to financial, operating or other relevant circumstances.

12 Magna International Inc. Second Quarter Report 2007

Financing Resources

	As at		As at
	June 30,		December 31,
	2007		2006		Change
Liabilities
Bank indebtedness	$	136	$	63
Long-term debt due within one year	84		98
Long-term debt	579		605
	799		766
Shareholders’ equity	7,924		7,157
Total capitalization	$	8,723	$	7,923	$	800

Total capitalization increased by 10% or $800 million to $8.7 billion at June 30, 2007 as compared to $7.9 billion at December 31, 2006. The increase in capitalization was a result of increases in shareholders’ equity and liabilities of $767 million and $33 million, respectively.

The increase in shareholders’ equity is primarily the result of:

·net income earned during the first six months of 2007 (as discussed above);

·a $302 million increase in accumulated other comprehensive income, primarily as a result of the strengthening of the Canadian dollar, euro and British pound, between December 31, 2006 and June 30, 2007, each against the U.S. dollar; and

·Class A Subordinate Voting Shares issued on the exercise of stock options.

These factors were partially offset by:

·dividends paid during the first six months of 2007; and

·a $7 million reduction of share capital related to the repurchase of our Class A Subordinate Voting Shares which had previously been awarded on a restricted basis to certain executives.

The increase in liabilities is primarily the result of an increase in bank indebtedness as a result of earlier timing of payments made to certain suppliers.

This increase in bank indebtedness was partially offset by decreases in long-term debt as a result of the repayment of the third series of our senior unsecured notes related to the NVG acquisition.

During the first six months of 2007, our cash resources increased by $348 million to $2.2 billion as a result of the cash provided from operating activities, partially offset by the cash used in investing and financing activities. In addition to our cash resources, we had term and operating lines of credit totalling $2.0 billion, of which $1.6 billion was unused and available. In July 2007, our five-year revolving term facility was extended for one additional year, expiring on July 31, 2012.

Maximum Number of Shares Issuable

The following table presents the maximum number of shares that would be outstanding if all of the outstanding stock options and Subordinated Debentures issued and outstanding at August 8, 2007 were exercised or converted:

Class A Subordinate Voting and Class B Shares	110,556,701
Subordinated Debentures (i)	1,096,589
Stock options (ii)	3,079,723
	114,733,013

(i)	The above amounts include shares issuable if the holders of the 6.5% Convertible Subordinated Debentures exercise their conversion option but exclude Class A Subordinate Voting Shares issuable, only at our option, to settle interest and principal related to the 6.5% Convertible Subordinated Debentures on redemption or maturity. The number of Class A Subordinate Voting Shares issuable at our option is dependent on the trading price of Class A Subordinate Voting Shares at the time we elect to settle the 6.5% Convertible Subordinated Debenture interest and principal with shares.
	The above amounts also exclude Class A Subordinate Voting Shares issuable, only at our option, to settle the 7.08% Subordinated Debentures on redemption or maturity. The number of shares issuable is dependent on the trading price of Class A Subordinate Voting Shares at redemption or maturity of the 7.08% Subordinated Debentures.
(ii)	Options to purchase Class A Subordinate Voting Shares are exercisable by the holder in accordance with the vesting provisions and upon payment of the exercise price as may be determined from time to time pursuant to our stock option plans.

Magna International Inc. Second Quarter Report 2007 13

Contractual Obligations and Off-Balance Sheet Financing

There have been no material changes with respect to the contractual obligations requiring annual payments during the second quarter of 2007 that are outside the ordinary course of business. Refer to our MD&A included in our 2006 Annual Report.

Long-term receivables in other assets are reflected net of outstanding borrowings from a customer’s finance subsidiary of $36 million since we have a legal right of set-off of the customer’s long-term receivable payable to us against such borrowings and intend to settle the related amounts simultaneously.

RESULTS OF OPERATIONS – FOR THE SIX MONTHS ENDED JUNE 30, 2007

Sales

	For the six months
	ended June 30,
	2007		2006		Change
Vehicle Production Volumes (millions of units)
North America	7.886		8.275		-	5	%
Europe	8.503		8.230		+	3	%
Average Dollar Content Per Vehicle
North America	$	836	$	772	+	8	%
Europe	$	398	$	341	+	17	%
Sales
External Production
North America	$	6,595	$	6,386	+	3	%
Europe	3,380		2,810		+	20	%
Rest of World	187		122		+	53	%
Complete Vehicle Assembly	2,168		2,115		+	3	%
Tooling, Engineering and Other	824		955		-	14	%
Total Sales	$	13,154	$	12,388	+	6	%

External Production Sales - North America

External production sales in North America increased 3% or $209 million to $6.6 billion for the six months ended June 30, 2007 compared to $6.4 billion for the six months ended June 30, 2006. This increase in production sales reflects an 8% increase in our North American average dollar content per vehicle partially offset by a 5% decrease in North American vehicle production volumes. We reported strong sales despite the fact that production volumes at two of our largest North American customers for the first half of 2007 continued to deteriorate when compared to the first half of 2006. While North American vehicle production volumes declined 5% during the first six months of 2007 compared to the first six months of 2006, production volumes at Ford and GM declined 13% and 11%, respectively.

Our average dollar content per vehicle grew by 8% or $64 to $836 for the six months ended June 30, 2007 compared to $772 for the six months ended June 30, 2006, primarily as a result of:

·the launch of new programs during or subsequent to the six months ended June 30, 2006, including:

·the Ford Edge and Lincoln MKX;

·GM’s full-size pickups;

·      the Saturn Outlook, GMC Acadia and the Buick Enclave;

·      the Jeep Wrangler, Wrangler Unlimited and Patriot;

·      the BMW X5;

·      the Dodge Nitro;

·      the Ford F-Series SuperDuty; and

·      the Dodge Avenger and Chrysler Sebring; and

·an increase in reported U.S. dollar sales due to the strengthening of the Canadian dollar against the U.S. dollar.

These factors were partially offset by:

·the impact of lower production and/or content on certain programs, including:

·the Dodge Caravan, Grand Caravan and Chrysler Town & Country;

·the Ford Fusion, Mercury Milan and Lincoln MKZ / Zephyr;

·      the Pontiac Montana SV6, Saturn RELAY, Buick Terraza and Chevrolet Uplander;

·      the Chrysler Pacifica;

·      the Chevrolet HHR and Malibu;

·      the GMC Envoy, Buick Rainier, and Chevrolet Trailblazer;

·      the Chrysler 300 and 300C, and Dodge Charger and Magnum;

14 Magna International Inc. Second Quarter Report 2007

·the Dodge Ram; and

·the Jeep Liberty;

·programs that ended production during or subsequent to the six months ended June 30, 2006, including the Ford Freestar and Mercury Monterey;

·the sale of certain facilities during or subsequent to the six months ended June 30, 2006; and

·incremental customer price concessions.

External Production Sales - Europe

External production sales in Europe increased 20% or $570 million to $3.3 billion for the six months ended June 30, 2007 compared to $2.8 billion for the six months ended June 30, 2006. This increase in production sales reflects a 17% increase in our European average dollar content per vehicle combined with a 3% increase in European vehicle production volumes.

Our average dollar content per vehicle grew by 17% or $57 to $398 for the six months ended June 30, 2007 compared to $341 for the six months ended June 30, 2006, primarily as a result of:

·the launch of new programs during or subsequent to the first six months of 2006, including:

·the MINI Cooper;

·the Mercedes-Benz C-Class; and

·the BMW 3-Series;

·an increase in reported U.S. dollar sales primarily due to the strengthening of the euro and British pound against the U.S. dollar;

·acquisitions completed during or subsequent to the first six months of 2006, including the Pressac acquisition in January 2007; and

·increased production and/or content on certain programs.

These factors were partially offset by:

·the impact of lower production and/or content on certain programs, including:

·the Mercedes-Benz E-Class; and

·the Nissan Micra;

·the sale of certain facilities during or subsequent to the first six months of 2006; and

·incremental customer price concessions.

External Production Sales - Rest of World

External production sales in the Rest of World increased 53% or $65 million to $187 million for the six months ended June 30, 2007 compared to $122 million for the six months ended June 30, 2006. The increase in production sales is primarily a result of:

·increased production and/or content on certain programs in Korea, China and Brazil;

·the launch of new programs during or subsequent to the six months ended June 30, 2006 in Korea, China and Brazil; and

·an increase in reported U.S. dollar sales as a result of the strengthening of the Korean Won and Chinese Renminbi, each against the U.S. dollar.

Complete Vehicle Assembly Sales

	For the six months
	ended June 30,
	2007		2006		Change
Complete Vehicle Assembly Sales	$	2,168	$	2,115	+	3	%
Complete Vehicle Assembly Volumes (Units)
Full-Costed:	74,673		78,949		-	5	%
BMW X3, Mercedes-Benz E-Class and G-Class, and
Saab 93 Convertible
Value-Added:	41,448		47,911		-	13	%
Jeep Grand Cherokee, Chrysler 300,
Chrysler Voyager, and Jeep Commander
	116,121		126,860		-	8	%

Complete vehicle assembly sales increased 3% or $53 million to $2.168 billion for the six months ended June 30, 2007 compared to $2.115 billion for the six months ended June 30, 2006 while assembly volumes decreased 8% or 10,739 units. The increase in complete vehicle assembly sales is primarily as a result of:

·higher assembly volumes for the BMW X3; and

·an increase in reported U.S. dollar sales due to the strengthening of the euro against the U.S. dollar.

Magna International Inc. Second Quarter Report 2007 15

These factors were partially offset by:

·the end of production of the Mercedes-Benz E-Class 4MATIC at our Graz assembly facility in the fourth quarter of 2006, as DaimlerChrysler is assembling this vehicle in-house; and

·a decrease in assembly volumes for the Saab 93 Convertible and the Chrysler Voyager and 300.

Tooling, Engineering and Other

Tooling, engineering and other sales decreased 14% or $131 million to $824 billion for the six months ended June 30, 2007 compared to $955 billion for the six months ended June 30, 2006.

In the six months ended June 30, 2007, the major programs for which we recorded tooling, engineering and other sales were:

·the BMW X3;

·the Ford Flex;

·the Dodge Grand Caravan and Chrysler Town & Country;

·GM’s full-size pickups;

·the Mazda 6;

·the Ford F-Series;

·the Cadillac STS; and

·the Audi A5.

In the six months ended June 30, 2006, the major programs for which we recorded tooling, engineering and other sales were:

·GM’s full-size pickups and SUVs;

·the MINI Cooper;

·the BMW Z4;

·the BMW X5;

·the Freightliner P-Class;

·the Ford Edge;

·the Ford F-Series SuperDuty;

·the BMW 3-Series; and

·the Suzuki XL7.

In addition, tooling, engineering and other sales benefited from the strengthening of the Canadian, euro and British pound, each against the U.S. dollar.

EBIT

	For the six months
	ended June 30,
	2007		2006		Change
North America	$	408	$	468
Europe	216		93
Rest of World	10		—
Corporate and Other	26		32
Total EBIT	$	660	$	593	+  11	%

Included in EBIT for the six-month periods ended June 30, 2007 and 2006 were the following unusual items, which have been discussed in the “Highlights” section above:

	For the six months
	ended June 30,
	2007			2006
North America
Impairment charges	$	(22	)	$	—
Restructuring charges	(10		)	(23		)
Sale of facilities	—			(5		)
	(32		)	(28		)
Europe
Restructuring charges	(4		)	(12		)
Sale of facility	—			(12		)
	(4		)	(24		)
	$	(36	)	$	(52	)

16 Magna International Inc. Second Quarter Report 2007

North America

EBIT in North America decreased 13% or $60 million to $408 million for the six months ended June 30, 2007 compared to $468 million for the six months ended June 30, 2006. Excluding the North American unusual items discussed in the “Highlights” section above, EBIT decreased $56 million, primarily as a result of:

·lower margins earned on decreased production on certain programs;

·operational inefficiencies and other costs at certain underperforming divisions, in particular at certain powertrain and interiors facilities in the United States;

·costs incurred at new facilities in preparation for upcoming launches or for programs that have not fully ramped up production;

·costs incurred to develop and grow our electronics capabilities;

·higher employee profit sharing;

·higher affiliation fees paid to Corporate; and

·incremental customer price concessions.

These factors were partially offset by:

·incremental margin earned on new programs that launched during or subsequent to the six months ended June 30, 2006; and

·productivity and efficiency improvements at certain facilities, including underperforming divisions.

Europe

EBIT in Europe increased 132% or $123 million to $216 million for the six months ended June 30, 2007 compared to $93 million for the six months ended June 30, 2006. Excluding the European unusual items discussed in the “Highlights” section above, EBIT increased by $103 million, primarily as a result of:

·incremental margin earned on new programs that launched during or subsequent to the six months ended June 30, 2006;

·incremental margin earned on higher volumes for certain production and complete vehicle assembly programs;

·acquisitions completed during or subsequent to the first six months of 2006;

·the sale and/or closure of certain underperforming divisions during or subsequent to the first six months of 2006; and

·operational improvements at certain facilities, including underperforming divisions.

These factors were partially offset by:

·lower margins as a result of a decrease in vehicle production volumes on certain programs including the end of production of the Mercedes-Benz E-Class 4MATIC at our Graz assembly facility in the fourth quarter of 2006;

·operational inefficiencies and other costs at certain facilities, specifically certain interior facilities;

·costs incurred to develop and grow our electronics capabilities;

·higher affiliation fees paid to Corporate;

·higher employee profit sharing; and

·incremental customer price concessions.

Rest of World

EBIT in the Rest of World increased $10 million to $10 million for the six months ended June 30, 2007 in comparison to the six months ended June 30, 2006. EBIT increased primarily as a result of:

·incremental margin earned on the increase in production sales discussed above;

·operational efficiencies at certain new facilities, primarily in China; and

·equity income earned on our 41% interest in Shin Young Metal Ind. Co., which we acquired during 2006.

These factors were partially offset by costs incurred at other new facilities, primarily in China, as we continue to pursue opportunities in this growing market.

Corporate and Other

Corporate and Other EBIT decreased 19% or $6 million to $26 million for the six months ended June 30, 2007 compared to $32 million for the six months ended June 30, 2006. The decrease in EBIT was primarily as a result of:

·increased stock compensation costs as discussed in the SG&A section above;

·an increase in reported U.S. dollar SG&A due to the strengthening of the euro and Canadian dollar, each against the U.S. dollar; and

·increased incentive compensation.

These factors were partially offset by:

·an increase in affiliation fees earned from our divisions; and

·the recovery of a long-term receivable that was previously written off.

Magna International Inc. Second Quarter Report 2007 17

COMMITMENTS AND CONTINGENCIES

From time to time, we may be contingently liable for litigation and other claims. Refer to note 21 of our 2006 audited consolidated financial statements, which describes these claims.

CONTROLS AND PROCEDURES

There have been no changes in our internal controls over financial reporting that occurred during the six months ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

The previous discussion may contain statements that, to the extent that they are not recitations of historical fact, constitute “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. We use words such as “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intend”, “plan”, “forecast”, “project”, “estimate” and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, assumptions and uncertainties. These risks, assumptions and uncertainties include, without limitation, those related to the strategic alliance with Russian Machines, including: the risk that the benefits, growth prospects and strategic objectives expected to be realized from the investment by, and strategic alliance with, Russian Machines may not be fully realized, realized at all or may take longer to realize than expected; we will be governed by a board of directors on which the Stronach Trust and Russian Machines each, indirectly, have the right to designate an equal number of nominees, in addition to the current co-chief executive officers, with the result that we may be considered to be effectively controlled, indirectly, by the Stronach Trust and Russian Machines for so long as the governance arrangements remain in place between them; our Russian strategy involves making investments and carrying on business and operations in Russia, which will expose us to the political, economic and regulatory risks and uncertainties of that country; the possibility that Russian Machines may exercise its right to withdraw its investment in Newco and Newco II and exit from the governance arrangements in connection with the Arrangement at any time after two years; the possibility that the Stronach Trust may exercise its right to require Russian Machines to withdraw its investment in Newco and Newco II and exit from such arrangements at any time after three years; the possibility that Russian Machines’ lender may require Russian Machines to withdraw its investment in Newco and Newco II and exit from such arrangements at any time if such lender is entitled to realize on its loan to Russian Machines; the conditions precedent to completion of the Arrangement may not be satisfied or, if satisfied, the timing of such satisfaction may be delayed; and the occurrence of any event, change or other circumstances that could give rise to the termination of the Transaction Agreement, the delay of the completion of the Arrangement or failure to complete the Arrangement for any other reason. In addition to the risks, assumptions and uncertainties related to the proposed strategic alliance, there are additional risks and uncertainties relating generally to Magna and its business and affairs, including the impact of: declining production volumes and changes in consumer demand for vehicles; a reduction in the production volumes of certain vehicles, such as certain light trucks; the termination or non-renewal by our customers of any material contracts; our ability to offset increases in the cost of commodities, such as steel and resins, as well as energy prices; fluctuations in relative currency values; our ability to offset price concessions demanded by our customers; our dependence on outsourcing by our customers; our ability to compete with suppliers with operations in low cost countries; changes in our mix of earnings between jurisdictions with lower tax rates and those with higher tax rates, as well as our ability to fully benefit tax losses; other potential tax exposures; the financial distress of some of our suppliers and customers; the inability of our customers to meet their financial obligations to us; our ability to fully recover pre-production expenses; warranty and recall costs; product liability claims in excess of our insurance coverage; expenses related to the restructuring and rationalization of some of our operations; impairment charges; our ability to successfully identify, complete and integrate acquisitions; risks associated with new program launches; legal claims against us; risks of conducting business in foreign countries; unionization activities at our facilities; work stoppages and labour relations disputes; changes in laws and governmental regulations; costs associated with compliance with environmental laws and regulations; potential conflicts of interest involving our controlling shareholder, the Stronach Trust; and other factors set out in our Annual Information Form filed with securities commissions in Canada and our annual report on Form 40-F filed with the United States Securities and Exchange Commission, and subsequent filings. In evaluating forward-looking statements, readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements to reflect subsequent information, events, results or circumstances or otherwise.

18 Magna International Inc. Second Quarter Report 2007

MAGNA INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

[Unaudited]

[U.S. dollars in millions, except per share figures]

		Three months ended						Six months ended
		June 30,						June 30,
	Note	2007			2006			2007			2006
Sales		$	6,731		$	6,369		$	13,154		$	12,388
Cost of goods sold		5,759			5,522			11,339			10,721
Depreciation and amortization		210			201			413			389
Selling, general and administrative	10	378			367			728			691
Interest income, net		(13		)	(3		)	(22		)	(2		)
Equity income		(2		)	(4		)	(8		)	(6		)
Impairment charges	3	22			—			22			—
Income from operations before income taxes		377			286			682			595
Income taxes		115			93			202			190
Net income		262			193			480			405
Other comprehensive income:	2,9
Net unrealized gains on translation of net investment in foreign operations		245			189			301			225
Net unrealized losses on cash flow hedges		(2		)	—			—			—
Reclassifications of net (gains) losses on cash flow hedges to net income		(1		)	—			4			—
Comprehensive income		$	504		$	382		$	785		$	630
Earnings per Class A Subordinate Voting or Class B Share:
Basic		$	2.40		$	1.78		$	4.40		$	3.73
Diluted		$	2.35		$	1.75		$	4.32		$	3.66
Cash dividends paid per Class A Subordinate Voting or
Class B Share		$	0.24		$	0.38		$	0.43		$	0.76
Average number of Class A Subordinate Voting and Class B Shares outstanding during the period [in millions]:
Basic		109.1			108.6			109.0			108.6
Diluted		112.0			111.4			111.9			111.3

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

[Unaudited]

[U.S. dollars in millions]

	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Retained earnings, beginning of period	$	3,970		$	3,579		$	3,773		$	3,409
Net income	262			193			480			405
Dividends on Class A Subordinate Voting and Class B Shares	(26		)	(41		)	(47		)	(83		)
Retained earnings, end of period	$	4,206		$	3,731		$	4,206		$	3,731

See accompanying notes

Magna International Inc. Second Quarter Report 2007 19

MAGNA INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

[Unaudited]

[U.S. dollars in millions]

		Three months ended						Six months ended
		June 30,						June 30,
	Note	2007			2006			2007			2006
Cash provided from (used for):
OPERATING ACTIVITIES
Net income		$	262		$	193		$	480		$	405
Items not involving current cash flows		260			222			478			437
		522			415			958			842
Changes in non-cash operating assets and liabilities		(240		)	(141		)	(411		)	(366		)
		282			274			547			476
INVESTMENT ACTIVITIES
Fixed asset additions		(137		)	(179		)	(262		)	(346		)
Purchase of subsidiaries	4	—			—			(46		)	(203		)
Increase in other assets		(10		)	(43		)	(30		)	(52		)
Proceeds from disposition		12			7			27			31
		(135		)	(215		)	(311		)	(570		)
FINANCING ACTIVITIES
Repayments of debt		(5		)	(106		)	(61		)	(119		)
Issues of debt		54			17			77			19
Issues of Class A Subordinate Voting Shares		19			7			23			15
Dividends		(26		)	(41		)	(47		)	(82		)
		42			(123		)	(8		)	(167		)
Effect of exchange rate changes on cash and cash equivalents		91			78			120			97
Net increase (decrease) in cash and cash equivalents during the period		280			14			348			(164		)
Cash and cash equivalents, beginning of period		1,953			1,504			1,885			1,682
Cash and cash equivalents, end of period		$	2,233		$	1,518		$	2,233		$	1,518

See accompanying notes

20 Magna International Inc. Second Quarter Report 2007

MAGNA INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

[Unaudited]

[U.S. dollars in millions]

		June 30,		December 31,
	Note	2007		2006
ASSETS
Current assets
Cash and cash equivalents		$	2,233		$	1,885
Accounts receivable		4,371			3,629
Inventories		1,564			1,437
Prepaid expenses and other	2	122			109
		8,290			7,060
Investments		158			151
Fixed assets, net		4,106			4,114
Goodwill	4	1,178			1,096
Future tax assets	2	308			255
Other assets	2	492			478
		$	14,532		$	13,154
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Bank indebtedness		$	136		$	63
Accounts payable		3,510			3,608
Accrued salaries and wages		530			453
Other accrued liabilities	2,5	920			426
Income taxes payable		181			135
Long-term debt due within one year		84			98
		5,361			4,783
Deferred revenue		67			73
Long-term debt		579			605
Other long-term liabilities	2	338			288
Future tax liabilities	2	263			248
		6,608			5,997
Shareholders’ equity
Capital stock	7
Class A Subordinate Voting Shares
[issued: 109,454,324; December 31, 2006 – 108,787,387]		2,536			2,505
Class B Shares
[convertible into Class A Subordinate Voting Shares] [issued: 1,092,933]		—			—
Contributed surplus	8	66			65
Retained earnings		4,206			3,773
Accumulated other comprehensive income	2,9	1,116			814
		7,924			7,157
		$	14,532		$	13,154

See accompanying notes

Magna International Inc. Second Quarter Report 2007 21

MAGNA INTERNATIONAL INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

[Unaudited]

[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]

1.BASIS OF PRESENTATION

The unaudited interim consolidated financial statements of Magna International Inc. and its subsidiaries [collectively “Magna” or the “Company”] have been prepared in United States dollars following Canadian generally accepted accounting principles [“GAAP”] with respect to the preparation of interim financial information. Accordingly, they do not include all the information and footnotes as required in the preparation of annual financial statements and should be read in conjunction with the December 31, 2006 audited consolidated financial statements and notes included in the Company’s 2006 Annual Report. These interim consolidated financial statements have been prepared using the same accounting policies as the December 31, 2006 annual consolidated financial statements, except for the accounting change set out in note 2.

In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, which consist only of normal and recurring adjustments, necessary to present fairly the financial position at June 30, 2007 and the results of operations and cash flows for the three-month and six-month periods ended June 30, 2007 and 2006.

2.ACCOUNTING CHANGE

In January 2005, the Canadian Institute of Chartered Accountants approved Handbook Sections 1530, “Comprehensive Income”, 3855 “Financial Instruments – Recognition and Measurement”, 3861 “Financial Instruments – Disclosure and Presentation”, and 3865 “Hedges”. The Company adopted these new recommendations effective January 1, 2007 with no restatement of prior periods, except to classify the currency translation adjustment as a component of accumulated other comprehensive income. With the adoption of these new standards, the Company’s accounting for financial instruments and hedges complies with U.S. GAAP in all material respects as of January 1, 2007.

Financial Instruments

Under the new standards, all of our financial assets and financial liabilities are classified as held for trading, held to maturity investments, loans and receivables, available-for-sale financial assets, or other financial liabilities. Held for trading financial instruments, which include cash and cash equivalents, are measured at fair value and all gains and losses are included in net income in the period in which they arise. Held to maturity investments are recorded at amortized cost using the effective interest method, and include long-term interest bearing government securities held to partially fund certain Austrian lump sum termination and long service payment arrangements. Loans and receivables, which include accounts receivable and long-term receivables, accounts payable, accrued salaries and wages and certain other accrued liabilities are recorded at amortized cost using the effective interest method. The Company does not currently have any available for sale financial assets.

Comprehensive Income

Other comprehensive income includes unrealized gains and losses on translation of the Company’s net investment in self-sustaining foreign operations, and to the extent that cash flow hedges are effective, the change in their fair value, net of income taxes. Other comprehensive income is presented below net income on the Consolidated Statements of Income and Comprehensive Income. Comprehensive income is composed of net income and other comprehensive income.

Accumulated other comprehensive income is a separate component of shareholders’ equity which includes the accumulated balances of all components of other comprehensive income which are recognized in comprehensive income but excluded from net income.

Hedges

Previously, under Canadian GAAP, derivative financial instruments that met hedge accounting criteria were accounted for on an accrual basis, and gains and losses on hedge contracts were accounted for as a component of the related hedged transaction. The new standards require that all derivative instruments, whether designated in hedging relationships or not, be recorded on the balance sheet at fair value. The fair values of derivatives are recorded in other assets or other liabilities. To the extent that cash flow hedges are effective, the change in their fair value is recorded in other comprehensive income. Amounts accumulated in other comprehensive income are reclassified to net income in the period in which the hedged item affects net income.

22 Magna International Inc. Second Quarter Report 2007

MAGNA INTERNATIONAL INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

[Unaudited]

[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]

2.ACCOUNTING CHANGE (CONTINUED)

The impact of this accounting policy change on the consolidated balance sheet as at January 1, 2007 was as follows:

Increase in prepaid expenses and other	$	28
Increase in other assets	17
Increase in future tax assets	14
Increase in other accrued liabilities	$	32
Increase in other long-term liabilities	17
Increase in future tax liabilities	13
Decrease in accumulated other comprehensive income	$	3

3.IMPAIRMENT CHARGE

During the second quarter of 2007, the Company recorded an asset impairment of $22 million [$14 million after tax] relating to specific assets at a powertrain facility in the United States.

4.ACQUISITIONS

[a]   For the six months ended June 30, 2007

On January 15, 2007, Magna acquired two facilities from Pressac Investments Limited [“Pressac”]. The facilities in Germany and Italy manufacture electronic components for sale to various customers, including Volkswagen, DaimlerChrysler and Fiat. The total consideration for the acquisition amounted to $52 million [€40 million], consisting of $46 million paid in cash, net of cash acquired, and $6 million of assumed debt. The excess purchase price over the book value of assets acquired and liabilities assumed was $29 million.

The purchase price allocations for Pressac are preliminary and adjustments to the allocations may occur as a result of obtaining more information regarding asset valuations. On a preliminary basis, an allocation of the excess purchase price over the book value of assets acquired and liabilities assumed has been made to fixed assets and goodwill.

[b]     For the six months ended June 30, 2006

On February 2, 2006, Magna acquired CTS Fahrzeug-Dachsysteme GmbH, Bietingheim-Bissingen [“CTS”], a leading manufacturer of roof systems for the automotive industry. CTS manufactures soft tops, hard tops and modular retractable hard tops. In addition to Porsche, its customers include DaimlerChrysler, Ferrari, Peugeot and General Motors. CTS has six facilities in Europe and two facilities in North America.

The total consideration for the acquisition of CTS amounted to $271 million, consisting of $203 million paid in cash and $68 million of assumed debt.

Magna International Inc. Second Quarter Report 2007 23

MAGNA INTERNATIONAL INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

[Unaudited]

[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]

5.WARRANTY

The following is a continuity of the Company’s warranty accruals:

	2007			2006
Balance, beginning of period	$	94		$	96
Expense, net	3			7
Settlements	(6		)	(5		)
Acquisition	1			6
Foreign exchange and other	1			2
Balance, March 31,	93			106
Expense, net	8			7
Settlements	(7		)	(3		)
Foreign exchange and other	9			5
Balance, June 30	$	103		$	115

6.EMPLOYEE FUTURE BENEFIT PLANS

The Company recorded employee future benefit expenses as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2007		2006		2007		2006
Defined benefit pension plans and other	$	5	$	5	$	11	$	9
Termination and long service arrangements	4		5		10		10
Retirement medical benefits plan	4		4		6		5
	$	13	$	14	$	27	$	24

7.CAPITAL STOCK

[a]Changes in the Class A Subordinate Voting Shares for the three-month and six-month periods ended June 30, 2007 are shown in the following table [numbers of shares in the following table are expressed in whole numbers]:

	Subordinate Voting
	Number of	Stated
	shares	value
Issued and outstanding at December 31, 2006	108,787,387	$	2,505
Issued under the Incentive Stock Option Plan	74,082	5
Issued under the Dividend Reinvestment Plan	1,381	—
Issued and outstanding at March 31, 2007	108,862,850	2,510
Issued for cash under the Incentive Stock Option Plan	288,644	22
Issued under Stock Appreciation Rights [note 7[b]]	301,364	11
Issued under the Dividend Reinvestment Plan	1,466	—
Repurchase of Class A Subordinate Voting Shares (i)	—	(7		)
Issued and outstanding at June 30, 2007	109,454,324	$	2,536

(i) During the three months ended June 30, 2007, 90,407 Magna Class A Subordinate Voting Shares, which were purchased for cash consideration of $7 million, were awarded on a restricted basis to certain executives. Since this stock has not been released to the executives, it has been reflected as a reduction in the stated value of the Company’s Class A Subordinate Voting Shares.

24 Magna International Inc. Second Quarter Report 2007

MAGNA INTERNATIONAL INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

[Unaudited]

[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]

7.CAPITAL STOCK (CONTINUED)

[b]On June 29, 2007, following approval by the Company s Corporate Governance and Compensation Committee and in accordance with the Amended and Restated Incentive Stock Option Plan, the Company granted stock appreciation rights ( SARs ) to the Company’s Chairman, Mr. Stronach, and an associated company, Stronach & Co., in respect of 648,475 previously granted and unexercised stock options.

Simultaneously, all such SARs were exercised and all of the previously granted and unexercised stock options were surrendered and cancelled. On exercise of the SARs, Stronach & Co. and Mr. Stronach received 301,364 Magna Class A Subordinate Voting Shares, representing an amount equal to the difference between the aggregate fair market value of the shares covered by the surrendered options and the aggregate exercise price of such surrendered options. Fair market value was determined based on the weighted average closing price of the Company s Class A Subordinate Voting Shares on the Toronto Stock Exchange or the New York Stock Exchange (based the surrendered options’ currency) for the five consecutive trading days ending on the trading day immediately prior to the date of exercise.

[c]The following table presents the maximum number of shares that would be outstanding if all the dilutive instruments outstanding at August 8, 2007 were exercised or converted:

Class A Subordinate Voting and Class B Shares	110,556,701
Subordinated Debentures (i)	1,096,589
Stock options (ii)	3,079,723
	114,733,013

(i)	The above amounts include shares issuable if the holders of the 6.5% Convertible Subordinated Debentures exercise their conversion option but exclude Class A Subordinate Voting Shares issuable, only at the Company’s option, to settle interest and principal related to the 6.5% Convertible Subordinated Debentures. The number of Class A Subordinate Voting Shares issuable at the Company’s option is dependent on the trading price of the Class A Subordinate Voting Shares at the time the Company elects to settle the 6.5% Convertible Subordinated Debenture interest and principal with shares.
	The above amounts also exclude Class A Subordinate Voting Shares issuable, only at the Company’s option, to settle the 7.08% Subordinated Debentures on redemption or maturity. The number of shares issuable is dependent on the trading price of Class A Subordinate Voting Shares at redemption or maturity of the 7.08% Subordinated Debentures.
(ii)	Options to purchase Class A Subordinate Voting Shares are exercisable by the holder in accordance with the vesting provisions and upon payment of the exercise price as may be determined from time to time pursuant to the Company’s stock option plans.

8.CONTRIBUTED SURPLUS

Contributed surplus consists of accumulated stock option compensation expense less the fair value of options at the grant date that have been exercised and reclassified to share capital, the accumulated restricted stock compensation expense, and the value of the holders conversion option on the 6.5% Convertible Subordinated Debentures. The following is a continuity schedule of contributed surplus:

	2007			2006
Stock-based compensation
Balance, beginning of period	$	62		$	62
Stock-based compensation expense	2			2
Exercise of options	(1		)	(3		)
Balance, March 31,	63			61
Stock-based compensation expense	14			3
Exercise of options	(3		)	(3		)
Exercise of stock appreciation rights [note 7[b]]	(11		)	—
Balance, June 30,	63			61
Holders conversion option	3			3
	$	66		$	64

Magna International Inc. Second Quarter Report 2007 25

MAGNA INTERNATIONAL INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

[Unaudited]

[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]

9.ACCUMULATED OTHER COMPREHENSIVE INCOME

The following is a continuity schedule of accumulated other comprehensive income:

	Three months ended					Six months ended
	June 30,					June 30,
	2007			2006		2007			2006
Accumulated net unrealized gains on translation of net investment in foreign operations
Balance, beginning of period	$	870		$	657	$	814		$	621
Net unrealized gains on translation of net investment in foreign operations	245			189		301			225
Balance, end of period	1,115			846		1,115			846
Accumulated net unrealized gain on cash flow hedges
Balance, beginning of period	4			—		—			—
Adjustment for change in accounting policy [note 2]	—			—		(3		)	—
Net unrealized losses on cash flow hedges (i)	(2		)	—		—			—
Reclassifications of net losses (gains) on cash flow hedges to net income (ii)	(1		)	—		4			—
Balance, end of period	1			—		1			—
Total accumulated other comprehensive income	$	1,116		$	846	$	1,116		$	846

(i)Net of income tax benefits of $2 million.

(ii)Net of income tax expense of $nil for the three months ended June 30, 2007 and income tax benefit of $2 million for the six months ended June 30, 2007.

The amount of other comprehensive income that is expected to be reclassified to net income over the next 12 months is $3 million (net of income taxes of $1 million).

10.STOCK-BASED COMPENSATION

[a]The following is a continuity of options outstanding [number of options in the table below are expressed in whole numbers]:

	2007					2006
	Options outstanding					Options outstanding
			Exercise	Options				Exercise	Options
	Options		price (i)	exercisable		Options		price (i)	exercisable
	#		Cdn$	#		#		Cdn$	#
Beginning of year	4,087,249		77.45	3,811,336		4,600,039		75.46	4,116,104
Granted	—		—	—		115,000		87.80	—
Exercised	(74,082	)	63.21	(74,082	)	(166,209	)	58.32	(166,209	)
Vested	—		—	55,443		—		—	80,100
Cancelled	(7,306	)	73.64	(4,400	)	(17,001	)	93.35	(12,059	)
March 31	4,005,861		77.72	3,788,297		4,531,829		76.33	4,017,936
Granted	40,000		88.87	—		—		—	—
Exercised	(590,008	)	64.08	(590,008	)	(140,535	)	62.92	(140,535	)
Vested	—		—	29,000		—		—	8,138
Cancelled	(366,686	)	69.78	(361,641	)	(6,862	)	73.11	(2,658	)
June 30	3,089,167		81.41	2,865,648		4,384,432		76.76	3,882,881

(i) The exercise price noted above represents the weighted average exercise price in Canadian dollars.

26 Magna International Inc. Second Quarter Report 2007

MAGNA INTERNATIONAL INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

[Unaudited]

[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]

10.STOCK-BASED COMPENSATION (CONTINUED)

[b]The fair value of stock options is estimated at the date of grant using the Black-Scholes option pricing model. The weighted average assumptions used in measuring the fair value of stock options granted or modified, during the three-month and six-month periods ended June 30, 2007 and 2006 are as follows:

	Three months ended					Six months ended
	June 30,					June 30,
	2007			2006		2007			2006
Risk free interest rate	4.36		%	—		4.36		%	3.99		%
Expected dividend yield	1.00		%	—		1.00		%	2.05		%
Expected volatility	22		%	—		22		%	23		%
Expected time until exercise	4 years			—		4 years			4 years
Weighted average fair value of options granted or modified in period (Cdn$)	$	19.35		—		$	19.35		$	14.89
Compensation expense recorded in selling, general and administrative expenses	$	1		$	1	$	2		$	3

[c]During the three-month period ended June 30, 2007, $13 million [2006 - $1 million] was charged to compensation expense related to restricted stock arrangements. At June 30, 2007, unamortized compensation expense related to the restricted stock arrangements was $47 million [December 31, 2006 - $42 million] and has been presented as a reduction of shareholders’ equity.

11.SEGMENTED INFORMATION

	Three months ended									Three months ended
	June 30, 2007									June 30, 2006
								Fixed									Fixed
	Total			External				assets,		Total			External				assets,
	sales			sales		EBIT (i)		net		sales			sales		EBIT (i)		net
North America
Canada	$	1,828		$	1,755			$	1,102	$	1,743		$	1,672			$	1,130
United States	1,589			1,550				1,031		1,558			1,501				1,241
Mexico	388			343				368		420			410				337
Eliminations	(139		)	—				—		(130		)	—				—
	3,666			3,648		$	262	2,501		3,591			3,583		$	249	2,708
Europe
Euroland	2,515			2,475				1,017		2,392			2,349				1,167
Great Britain	304			304				88		238			237				80
Other European countries	217			195				135		155			119				96
Eliminations	(41		)	—				—		(49		)	—				—
	2,995			2,974		96		1,240		2,736			2,705		24		1,343
Rest of World	121			106		5		135		92			81		—		93
Corporate and Other	(51		)	3		1		230		(50		)	—		10		114
Total reportable segments	$	6,731		$	6,731	$	364	4,106		$	6,369		$	6,369	$	283	4,258
Current assets								8,290									7,484
Investments, goodwill and other assets								2,136									1,861
Consolidated total assets								$	14,532								$	13,603

Magna International Inc. Second Quarter Report 2007 27

MAGNA INTERNATIONAL INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

[Unaudited]

[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]

11.  SEGMENTED INFORMATION (CONTINUED)

	Six months ended									Six months ended
	June 30, 2007									June 30, 2006
								Fixed									Fixed
	Total			External				assets,		Total			External				assets,
	sales			sales		EBIT (i)		net		sales			sales		EBIT (i)		net
North America
Canada	$	3,511		$	3,377			$	1,102	$	3,441		$	3,308			$	1,130
United States	3,064			2,985				1,031		3,015			2,898				1,241
Mexico	729			638				368		778			759				337
Eliminations	(274		)	—				—		(244		)	—				—
	7,030			7,000		$	408	2,501		6,990			6,965		$	468	2,708
Europe
Euroland	5,078			4,993				1,017		4,652			4,572				1,167
Great Britain	590			589				88		481			479				80
Other European countries	406			366				135		309			235				96
Eliminations	(84		)					—		(98		)	—				—
	5,990			5,948		216		1,240		5,344			5,286		93		1,343
Rest of World	229			202		10		135		156			137		—		93
Corporate and Other	(95		)	4		26		230		(102		)	—		32		114
Total reportable segments	$	13,154		$	13,154	$	660	4,106		$	12,388		$	12,388	$	593	4,258
Current assets								8,290									7,484
Investments, goodwill and other assets								2,136									1,861
Consolidated total assets								$	14,532								$	13,603

(i) EBIT represents operating income before interest income or expense.

12.  SUBSEQUENT EVENTS

On July 17, 2007, the Company extended its five-year revolving term facility for an additional one year expiring on July 31, 2012.

13.  COMPARATIVE FIGURES

Certain of the comparative figures have been reclassified to conform to the current period’s method of presentation.

28 Magna International Inc. Second Quarter Report 2007

CORPORATE OFFICE

Magna International Inc.

337 Magna Drive
Aurora, Ontario
Canada L4G 7K1

Telephone: (905) 726-2462
www.magna.com

TRANSFER AGENTS AND REGISTRARS

Canada – Class A Subordinate	United States – Class A Subordinate
Voting and Class B Shares	Voting Shares
Computershare Trust Company of Canada	Computershare Trust Company N.A.
100 University Avenue, 9th Floor	350 Indiana Street
Toronto, Ontario M5J 2Y1, Canada	Golden, Colorado, 80401, U.S.A.
Telephone: 1-800-564-6253	Telephone: (303) 262-0600
	www.computershare.com

EXCHANGE LISTINGS

Class A Subordinate Voting Shares
Toronto Stock Exchange	MG.A
	MG.SV.A (November 15, 2004 to May 8, 2006)
The New York Stock Exchange	MGA
Class B Shares
Toronto Stock Exchange	MG.B
	MG.MV.B (November 15, 2004 to May 8, 2006)
6.5% Convertible Unsecured Subordinated Debentures due March 31, 2010
Toronto Stock Exchange	MG.DB
	DEC.DB (to March 6, 2005)

Shareholders wishing to communicate with the non-management members of the Magna Board of Directors may do so by contacting the Lead Director through the office of Magna’s Corporate Secretary at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1, (905) 726-7022.

2006 Annual Report

Copies of the 2006 Annual Report may be obtained from: The Secretary, Magna International Inc., 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1 or www.magna.com. Copies of financial data and other publicly filed documents are available through the internet on the Canadian Securities Administrators  System for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com and on the United States Securities and Exchange Commission’s Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) which can be accessed at www.sec.gov

Magna International Inc.

337 Magna Drive, Aurora, Ontario Canada L4G 7K1

Telephone: (905) 726-2462

Fax: (905) 726-7164

Visit our website at: www.magna.com

Printed in Canada