10-Q 1 alv-20220930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

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

 

For the quarterly period ended September 30, 2022

or

 

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

 

For the transition period from  to

 

Commission File No.: 001-12933

 

AUTOLIV, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

51-0378542

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

Klarabergsviadukten 70, Section B7

 

 

Box 70381,

 

 

Stockholm, Sweden

 

SE-107 24

(Address of principal executive offices)

 

(Zip Code)

+46 8 587 20 600

(Registrant’s telephone number, including area code)

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock (par value $1.00 per share)

 

ALV

 

New York Stock Exchange

 

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

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

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

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

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

Yes: No: ☒

 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of October 17, 2022, there were 86,836,590 shares of common stock of Autoliv, Inc., par value $1.00 per share, outstanding.

 

 

 


 

FORWARD-LOOKING STATEMENTS

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

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

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

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

2


 

 

INDEX

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

4

 

 

 

ITEM 1. FINANCIAL STATEMENTS

 

4

 

 

 

1.

Basis of Presentation

 

10

2.

New Accounting Standards

 

10

3.

Fair Value Measurements

 

11

4.

Income Taxes

 

14

5.

Inventories

 

14

6.

Restructuring

 

15

7.

Product-Related Liabilities

 

15

8.

Retirement Plans

 

16

9.

Contingent Liabilities

 

17

10.

Stock Incentive Plan

 

19

11.

Earnings Per Share

 

19

12.

Related Party Transactions

 

20

13.

Revenue Disaggregation

 

20

14.

Subsequent Events

 

20

 

 

 

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

 

21

 

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

34

 

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

34

 

 

 

PART II - OTHER INFORMATION

 

35

 

 

 

ITEM 1. LEGAL PROCEEDINGS

 

35

 

 

 

ITEM 1A. RISK FACTORS

 

35

 

 

 

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

 

35

 

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

36

 

 

 

ITEM 4. MINE SAFETY DISCLOSURES

 

36

 

 

 

ITEM 5. OTHER INFORMATION

 

36

 

 

 

ITEM 6. EXHIBITS

 

37

 

3


 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in millions, except per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

2,302

 

 

$

1,847

 

 

$

6,507

 

 

$

6,111

 

Cost of sales

 

 

(1,918

)

 

 

(1,546

)

 

 

(5,510

)

 

 

(4,968

)

Gross profit

 

 

383

 

 

 

301

 

 

 

998

 

 

 

1,143

 

Selling, general and administrative expenses

 

 

(105

)

 

 

(101

)

 

 

(333

)

 

 

(319

)

Research, development and engineering expenses, net

 

 

(106

)

 

 

(98

)

 

 

(325

)

 

 

(311

)

Amortization of intangibles

 

 

(0

)

 

 

(2

)

 

 

(2

)

 

 

(8

)

Other (expense) income, net1)

 

 

(1

)

 

 

(1

)

 

 

91

 

 

 

(5

)

Operating income

 

 

171

 

 

 

99

 

 

 

429

 

 

 

500

 

Income from equity method investment

 

 

1

 

 

 

(0

)

 

 

3

 

 

 

2

 

Interest income

 

 

2

 

 

 

1

 

 

 

4

 

 

 

3

 

Interest expense

 

 

(15

)

 

 

(14

)

 

 

(41

)

 

 

(46

)

Other non-operating items, net

 

 

(6

)

 

 

1

 

 

 

(5

)

 

 

(3

)

Income before income taxes

 

 

153

 

 

 

87

 

 

 

389

 

 

 

456

 

Income tax expense

 

 

(47

)

 

 

(27

)

 

 

(121

)

 

 

(135

)

Net income

 

 

106

 

 

 

60

 

 

 

268

 

 

 

322

 

Less: Net income attributable to non-controlling interest

 

 

1

 

 

 

0

 

 

 

1

 

 

 

1

 

Net income attributable to controlling interest

 

$

105

 

 

$

60

 

 

$

267

 

 

$

320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share – basic2)

 

$

1.21

 

 

$

0.68

 

 

$

3.06

 

 

$

3.66

 

Net earnings per share – diluted2)

 

$

1.21

 

 

$

0.68

 

 

$

3.06

 

 

$

3.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

87.0

 

 

 

87.4

 

 

 

87.2

 

 

 

87.4

 

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

 

 

87.2

 

 

 

87.7

 

 

 

87.4

 

 

 

87.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividend per share – declared

 

$

0.64

 

 

$

0.62

 

 

$

1.92

 

 

$

1.24

 

Cash dividend per share – paid

 

$

0.64

 

 

$

0.62

 

 

$

1.92

 

 

$

1.24

 

 

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

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

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

 

 

 

 

See Notes to the unaudited Condensed Consolidated Financial Statements.

4


 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in millions)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

106

 

 

$

60

 

 

$

268

 

 

$

322

 

Other comprehensive loss before tax:

 

 

 

 

 

 

 

 

 

 

 

 

Change in cumulative translation adjustments

 

 

(98

)

 

 

(49

)

 

 

(214

)

 

 

(76

)

Net change in unrealized components of defined benefit plans

 

 

(1

)

 

 

0

 

 

 

14

 

 

 

2

 

Other comprehensive loss, before tax

 

 

(99

)

 

 

(49

)

 

 

(200

)

 

 

(74

)

Tax effect allocated to other comprehensive loss

 

 

0

 

 

 

0

 

 

 

(4

)

 

 

(1

)

Other comprehensive loss, net of tax

 

 

(99

)

 

 

(49

)

 

 

(203

)

 

 

(74

)

Comprehensive income

 

 

7

 

 

 

11

 

 

 

65

 

 

 

248

 

Less: Comprehensive income attributable to
   non-controlling interest

 

 

0

 

 

 

0

 

 

 

(0

)

 

 

1

 

Comprehensive income attributable to
   controlling interest

 

$

7

 

 

$

11

 

 

$

65

 

 

$

247

 

 

See Notes to the unaudited Condensed Consolidated Financial Statements.

5


 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in millions)

 

 

 

As of

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

483

 

 

$

969

 

Receivables, net

 

 

1,893

 

 

 

1,699

 

Inventories, net

 

 

924

 

 

 

777

 

Prepaid expenses and accrued income

 

 

218

 

 

 

164

 

Other current assets

 

 

69

 

 

 

65

 

Total current assets

 

 

3,587

 

 

 

3,675

 

Property, plant and equipment, net

 

 

1,795

 

 

 

1,855

 

Operating lease right-of-use assets

 

 

116

 

 

 

132

 

Goodwill

 

 

1,364

 

 

 

1,387

 

Intangible assets, net

 

 

5

 

 

 

8

 

Other non-current assets

 

 

467

 

 

 

481

 

Total assets

 

 

7,334

 

 

 

7,537

 

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

Short-term debt

 

 

692

 

 

 

346

 

Accounts payable

 

 

1,503

 

 

 

1,144

 

Accrued expenses

 

 

965

 

 

 

996

 

Operating lease liabilities - current

 

 

35

 

 

 

38

 

Other current liabilities

 

 

263

 

 

 

297

 

Total current liabilities

 

 

3,458

 

 

 

2,821

 

Long-term debt

 

 

1,037

 

 

 

1,662

 

Pension liability

 

 

149

 

 

 

197

 

Operating lease liabilities - non-current

 

 

81

 

 

 

94

 

Other non-current liabilities

 

 

118

 

 

 

115

 

Total non-current liabilities

 

 

1,385

 

 

 

2,067

 

Common stock

 

 

102

 

 

 

103

 

Additional paid-in capital

 

 

1,315

 

 

 

1,329

 

Retained earnings

 

 

2,797

 

 

 

2,742

 

Accumulated other comprehensive loss

 

 

(610

)

 

 

(408

)

Treasury stock

 

 

(1,125

)

 

 

(1,133

)

Total controlling interest's equity

 

 

2,478

 

 

 

2,633

 

Non-controlling interest

 

 

13

 

 

 

15

 

Total equity

 

 

2,491

 

 

 

2,648

 

Total liabilities and equity

 

$

7,334

 

 

$

7,537

 

 

See Notes to the unaudited condensed consolidated financial statements.

6


 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in millions)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

Net income

 

$

268

 

 

$

322

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

273

 

 

 

297

 

Gain on divestiture of property

 

 

(80

)

 

 

 

Deferred income taxes

 

 

(29

)

 

 

5

 

Other, net

 

 

(15

)

 

 

(8

)

Net change in operating assets and liabilities

 

 

(168

)

 

 

(179

)

Net cash provided by operating activities

 

 

251

 

 

 

437

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Expenditures for property, plant and equipment

 

 

(418

)

 

 

(303

)

Proceeds from sale of property, plant and equipment

 

 

98

 

 

 

3

 

Net cash used in investing activities

 

 

(319

)

 

 

(301

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Net decrease in short-term debt

 

 

(110

)

 

 

(278

)

Decrease in long-term debt

 

 

(51

)

 

 

(1

)

Dividends paid

 

 

(167

)

 

 

(109

)

Dividends paid to non-controlling interest

 

 

(1

)

 

 

(1

)

Stock repurchased

 

 

(60

)

 

 

 

Common stock options exercised

 

 

0

 

 

 

2

 

Net cash used in financing activities

 

 

(389

)

 

 

(386

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(28

)

 

 

(25

)

Decrease in cash and cash equivalents

 

 

(486

)

 

 

(275

)

Cash and cash equivalents at beginning of period

 

 

969

 

 

 

1,178

 

Cash and cash equivalents at end of period

 

$

483

 

 

$

903

 

 

See Notes to unaudited condensed consolidated financial statements.

7


 

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

 

 

Common
stock

 

 

Additional
paid-in
capital

 

 

Retained
earnings

 

 

Accumulated
other
comprehensive
loss

 

 

Treasury
stock

 

 

Total
controlling
interest's
equity

 

 

Non-
controlling
interest

 

 

Total
equity

 

Balances at December 31, 2021

$

103

 

 

$

1,329

 

 

$

2,742

 

 

$

(408

)

 

$

(1,133

)

 

$

2,633

 

 

$

15

 

 

$

2,648

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

83

 

 

 

 

 

 

 

 

 

83

 

 

 

0

 

 

 

83

 

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

6

 

 

 

0

 

 

 

6

 

Pension liability

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Total Comprehensive Income

 

 

 

 

 

 

 

83

 

 

 

14

 

 

 

 

 

 

97

 

 

 

0

 

 

 

98

 

Stock repurchased and retired

 

(0

)

 

 

(4

)

 

 

(13

)

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

 

 

 

 

 

2

 

Cash dividends declared

 

 

 

 

 

 

 

(56

)

 

 

 

 

 

 

 

 

(56

)

 

 

 

 

 

(56

)

Balances at March 31, 2022

$

103

 

 

$

1,325

 

 

$

2,755

 

 

$

(393

)