Magna International Inc. : Press Release - Magna Announces Second Quarter and Year to Date Results

AURORA, ON, Aug. 9, 2013/PRNewswire/ - Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the second quarter ended June 30, 2013.

THREE MONTHS ENDED JUNE 30, 2013

We posted record sales of $8.96 billionfor the second quarter ended June 30, 2013, an increase of 16% from the second quarter of 2012. We achieved this sales increase in a period when vehicle production increased 7% in North Americaand declined 1% in Europe, both relative to the second quarter of 2012. In the second quarter of 2013, our North American, European and Rest of World production sales, as well as complete vehicle assembly sales and tooling, engineering and other sales increased, in each case relative to the comparable quarter in 2012.

Complete vehicle assembly sales increased 23% to $796 millionfor the second quarter of 2012 compared to $645 millionfor the second quarter of 2012, while complete vehicle assembly volumes increased 17% to approximately 39,000 units.

During the second quarter of 2013, income from operations before income taxes was $543 million, net income attributable to Magna International Inc. was $415 millionand diluted earnings per share were $1.78, increases of $73 million, $66 millionand $0.30respectively, each compared to the second quarter of 2012.

During the second quarter ended June 30, 2013, we generated cash from operations of $714 millionbefore changes in non-cash operating assets and liabilities, and invested $12 millionin non-cash operating assets and liabilities. Total investment activities for the second quarter of 2013 were $285 million, including $232 millionin fixed asset additions and $53 millionin investments and other assets.

SIX MONTHS ENDED JUNE 30, 2013

We posted record sales of $17.32 billionfor the six months ended June 30, 2013, an increase of 13% from the six months ended June 30, 2012. This higher sales level reflected increases in our North American, European and Rest of World production sales, as well as complete vehicle assembly sales and tooling, engineering and other sales, in each case relative to the first six months of 2012.

During the six months ended June 30, 2013, vehicle production increased 4% to 8.3 million units in North Americaand decreased 5% to 9.8 million units in Europe, each compared to the first six months of 2012.

Complete vehicle assembly sales increased 28% to $1.59 billionfor the six months ended June 30, 2013compared to $1.24 billionfor the six months ended June 30, 2012, while complete vehicle assembly volumes increased 21% to approximately 76,000 units.

During the six months ended June 30, 2013, income from operations before income taxes was $1.00 billion, net income attributable to Magna International Inc. was $784 millionand diluted earnings per share were $3.35, increases of $91 million, $92 millionand $0.41, respectively, each compared to the first six months of 2012.

During the six months ended June 30, 2013, we generated cash from operations before changes in non-cash operating assets and liabilities of $1.32 billion, and invested $468 millionin non-cash operating assets and liabilities. Total investment activities for the first six months of 2013 were $527 million, including $426 millionin fixed asset additions and a $101 millionincrease in investments and other assets.

A more detailed discussion of our consolidated financial results for the second quarter and six months ended June 30, 2013is contained in the Management's Discussion and Analysis of Results of Operations and Financial Position and the unaudited interim consolidated financial statements and notes thereto, which are attached to this Press Release.

DIVIDENDS

Yesterday, our Board of Directors declared a quarterly dividend of $0.32with respect to our outstanding Common Shares for the quarter ended June 30, 2013. This dividend is payable on September 16, 2013to shareholders of record on August 30, 2013.

UPDATED 2013 OUTLOOK

In this 2013 outlook, in addition to 2013 light vehicle production, we have assumed no material acquisitions or divestitures. In addition, we have assumed that foreign exchange rates for the most common currencies in which we conduct business relative to our U.S. dollar reporting currency will approximate current rates.

ABOUT MAGNA

We are a leading global automotive supplier with 314 manufacturing operations and 89 product development, engineering and sales centres in 29 countries. Our 123,000 employees are focused on delivering superior value to our customers through innovative processes and World Class Manufacturing. Our product capabilities include producing body, chassis, interior, exterior, seating, powertrain, electronic, vision, closure and roof systems and modules, as well as complete vehicle engineering and contract manufacturing. Our common shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA). For further information about Magna, visit our website at www.magna.com.

We will hold a conference call for interested analysts and shareholders to discuss our second quarter results on Friday, August 9, 2013at 8:00 a.m. EDT. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call is 1-800-909-7814. The number for overseas callers is 1-212-231-2939. Please call in at least 10 minutes prior to the call. We will also webcast the conference call at www.magna.com. The slide presentation accompanying the conference call will be available on our website Friday morning prior to the call.

FORWARD-LOOKING STATEMENTS

The previous discussion contains statements that constitute "forward-looking information" or "forward-looking statements" within the meaning of applicable securities legislation, including, but not limited to, statements relating to: forecast light vehicle production volumes in North Americaand Europe; Magna's expected production sales in its North American, European and Rest of World segments; total sales; complete vehicle assembly sales; consolidated operating margin; average effective income tax rate; capital spending; and other matters. The forward-looking information in this press release is presented for the purpose of providing information about management's current expectations and plans and such information may not be appropriate for other purposes. 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, and other statements that are not recitations of historical fact. We use words such as "may", "would", "could", "should", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "outlook", "project", "estimate" and similar expressions suggesting future outcomes or events to identify forward-looking statements. Any such forward-looking statements are based on information currently available to us, and 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, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation: the potential for a deterioration of economic conditions or an extended period of economic uncertainty; declines in consumer confidence and the impact on production volume levels; risks arising from the recession in Europe, including the potential for a deterioration of sales of our three largest German-based OEM customers; inability to sustain or grow our business with OEMs; restructuring actions by OEMs, including plant closures; restructuring, downsizing and/or other significant non-recurring costs; continued underperformance of one or more of our operating divisions; our ability to successfully launch material new or takeover business; liquidity risks; bankruptcy or insolvency of a major customer or supplier; a prolonged disruption in the supply of components to us from our suppliers; scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year); shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption; our ability to successfully compete with other automotive suppliers; a reduction in outsourcing by our customers or the loss of a material production or assembly program; the termination or non-renewal by our customers of any material production purchase order; a shift away from technologies in which we are investing; risks arising due to the failure of a major financial institution; impairment charges related to goodwill, long-lived assets and deferred tax assets; shifts in market share away from our top customers; shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content; risks of conducting business in foreign markets, including China, India, South Americaand other non-traditional markets for us; exposure to, and ability to offset, volatile commodities prices; fluctuations in relative currency values; our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies; our ability to conduct appropriate due diligence on acquisition targets; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; warranty and recall costs; risk of production disruptions due to natural disasters; pension liabilities; legal claims and/or regulatory actions against us; our ability to understand and compete successfully in non-automotive businesses in which we pursue opportunities; 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; inability to achieve future investment returns that equal or exceed past returns; the unpredictability of, and fluctuation in, the trading price of our Common Shares; work stoppages and labour relations disputes; changes in credit ratings assigned to us; changes in laws and governmental regulations; costs associated with compliance with environmental laws and regulations; and other factors set out in our Annual Information Form filed with securities commissions in Canadaand our annual report on Form 40-F filed with the United States Securities and Exchange Commission, and subsequent filings. In evaluating forward-looking statements, we caution readers not to place undue reliance on any forward-looking statements and 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.

For further information about Magna, please see our website at 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

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

Unless otherwise noted, 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, which are in U.S. dollars. 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, 2013included in this press release, and the audited consolidated financial statements and MD&A for the year ended December 31, 2012included in our 2012 Annual Report to Shareholders.

This MD&A has been prepared as at August 8, 2013.

OVERVIEW

We are a leading global automotive supplier with 314 manufacturing operations and 89 product development, engineering and sales centres in 29 countries. Our 123,000 employees are focused on delivering superior value to our customers through innovative processes and World Class Manufacturing. Our product capabilities include producing body, chassis, interior, exterior, seating, powertrain, electronic, vision, closure and roof systems and modules, as well as complete vehicle engineering and contract manufacturing. Our Common Shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA). 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.

HIGHLIGHTS

Our second quarter 2013 sales increased 16% over the second quarter of 2012 to a record $8.96 billion, as North American, European and Rest of World production sales, as well as complete vehicle assembly sales and tooling, engineering and other sales all increased over the comparable quarter. North American light vehicle production increased 7% in the second quarter of 2013 to 4.3 million units. In Europe, light vehicle production in the second quarter of 2013 declined 1% to 5.0 million units.

Our income from operations before income taxes increased 16% to $543 millionfor the second quarter of 2013, compared to $470 millionin the second quarter of 2012. Our diluted earnings per Common Share increased 20% to $1.78in the second quarter of 2013, compared to $1.48for the second quarter of 2012.

Our North Americasegment continues to perform well, with Adjusted EBIT1 of $422 million, which included $40 millionof amortization related to the August 2012acquisition of Magna E-Car Systems Partnership ("E-Car"). This result compares to Adjusted EBIT of $415 millionin the second quarter of 2012.

Our Europesegment showed further improvement in the second quarter of 2013, despite continued weak levels of vehicle production in Europe. We generated an Adjusted EBIT of $120 millionfor the second quarter of 2013, compared to $65 millionin the second quarter of 2012.

In our Rest of World segment, we reported $2 millionof Adjusted EBIT in the second quarter of 2013, compared to an Adjusted EBIT loss of $16 millionin the second quarter of 2012. Within our Rest of World segment, our Asia Pacificbusiness again generated a profit while our business in South Americarecorded a loss.

We continue to focus on improving operating results in both Europeand South America, and we expect to generate improved Adjusted EBIT in both regions during 2013 compared to 2012.

Lastly, during the second quarter of 2013, we repurchased 5.2 million Common Shares for aggregate consideration of $337 millionpursuant to our outstanding Normal Course issuer bid that expires in November of this year. We intend to continue purchasing our Common Shares under the bid.

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1 Adjusted EBIT represents income from operations before income taxes; interest expense, net; and other expense, net

FINANCIAL RESULTS SUMMARY

During the second quarter of 2013, we posted sales of $8.96 billion, an increase of 16% from the second quarter of 2012. This higher sales level was a result of increases in our North American, European and Rest of World production sales, our tooling, engineering and other sales and complete vehicle assembly sales. Comparing the second quarter of 2013 to 2012:

• North American vehicle production increased 7% and our North American production sales increased 10% to $4.30 billion;
• European vehicle production decreased 1% while our European production sales increased 14% to $2.56 billion;
• Rest of World production sales increased 38% to $572 million;
• Complete vehicle assembly sales increased 23% to $796 millionand complete vehicle assembly volumes increased 17%; and
• Tooling, engineering and other sales increased 43% to $733 million.

During the second quarter of 2013, we earned income from operations before income taxes of $543 millioncompared to $470 millionfor the second quarter of 2012. The $73 millionincrease was primarily as a result of:

• margins earned on higher production sales;
• incremental margin earned on new programs that launched during or subsequent to the second quarter of 2012;
• productivity and efficiency improvements at certain facilities;
• the benefit of restructuring and downsizing activities undertaken in Europeduring or subsequent to the second quarter of 2012;
• a loss on disposal of an investment in the second quarter of 2012;
• higher equity income;
• acquisitions completed during or subsequent to the second quarter of 2012, including ixetic Verwaltungs GmbH ("ixetic"); and
• lower costs incurred in preparation for upcoming launches.

These factors were partially offset by:

• intangible asset amortization of $40 millionrelated to the acquisition and re-measurement of E-Car;
• programs that ended production during or subsequent to the second quarter of 2012;
• a larger amount of employee profit sharing;
• the recovery of due diligence costs in the second quarter of 2012;
• increased pre-operating costs incurred at new facilities;
• favourable settlement of certain commercial items in the second quarter of 2012;
• a $5 millionnet decrease in revaluation gains in respect of asset-backed commercial paper ("ABCP"); and
• operational inefficiencies and other costs at certain facilities.

During the second quarter of 2013, net income was $412 million, an increase of $63 millioncompared to the second quarter of 2012.

During the second quarter of 2013, our diluted earnings per share increased $0.30to $1.78compared to $1.48for the second quarter of 2012. The increase in diluted earnings per share is a result of the increase in net income attributable to Magna International Inc. and a decrease in the weighted average number of diluted shares outstanding during the second quarter of 2013. The decrease in the weighted average number of diluted shares outstanding was due to the repurchase and cancellation of Common Shares, during or subsequent to the second quarter of 2012, pursuant to our normal course issuer bids and the cashless exercise of options, partially offset by the issue of Common Shares related to the exercise of stock options and an increase in the number of diluted options outstanding as a result of an increase in the trading price of our common stock.

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 various programs. OEM production volumes in different regions may be impacted by factors which may vary from one region to the next, including but not limited to general economic and political conditions, consumer confidence levels, interest rates, credit availability, energy and fuel prices, international conflicts, labour relations issues, regulatory requirements, trade agreements, infrastructure, legislative changes, and environmental emissions and safety standards. These factors and a number of other economic, industry and risk factors which 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 other suppliers, are discussed in our Annual Information Form and Annual Report on Form 40-F, each in respect of the year ended December 31, 2012. The economic, industry and risk factors remain substantially unchanged in respect of the second quarter ended June 30, 2013, except that, as a result of general economic conditions in Western Europetogether with restructuring actions being taken by us, our customers and other suppliers, there may be a heightened risk of labour disruptions which could impact some of our Western European divisions from time to time. While we do not anticipate any such labour disruption having a material impact on our results of operations, we cannot predict whether or when any labour disruption may arise, or how long it lasts if it does arise.

RESULTS OF OPERATIONS

Average Foreign Exchange

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 changes in these foreign exchange rates for the three months and six months ended June 30, 2013impacted 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, 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, foreign exchange gains and losses on revaluation and/or settlement of monetary items denominated in a currency other than an operation's functional currency impact reported results. These gains and losses are recorded in selling, general and administrative expense.

RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED JUNE 30, 2013

External Production Sales - North America

External production sales in North Americaincreased 10% or $394 millionto $4.30 billionfor the second quarter of 2013 compared to $3.91 billionfor the second quarter of 2012. The increase in external production sales is primarily as a result of:

• the launch of new programs during or subsequent to the second quarter of 2012, including the:
  • Ford Fusion and Lincoln MKZ;
  • Ford Escape;
  • Honda Accord; and
  • GM full-size pickups;
• higher production volumes on certain existing programs; and
• acquisitions completed during or subsequent to the second quarter of 2012 which positively impacted sales by $46 million, including STT Technologies ("STT").

These factors were partially offset by:

• programs that ended production during or subsequent to the second quarter of 2012, including the Jeep Liberty;
• a decrease in reported U.S. dollar sales primarily as a result of the weakening of the Canadian dollar against the U.S. dollar; and
• net customer price concessions subsequent to the second quarter of 2012.

External Production Sales - Europe

External production sales in Europeincreased 14% or $311 millionto $2.56 billionfor the second quarter of 2013 compared to $2.25 billionfor the second quarter of 2012. The increase in external production sales is primarily as a result of:

• the launch of new programs during or subsequent to the second quarter of 2012, including the:
  • Mercedes-Benz A-Class;
  • MINI Paceman;
  • Ford Transit Custom;
  • Ford Kuga; and
  • Mercedes-Benz CLA-Class;
• acquisitions completed during or subsequent to the second quarter of 2012, which positively impacted sales by $126 million, including ixetic and the re-acquisition of an interior systems operation; and
• an increase in reported U.S. dollar sales primarily as a result of the strengthening of the euro against the U.S. dollar.

These factors were partially offset by lower production volumes on certain existing programs.

External Production Sales - Rest of World

External production sales in Rest of World increased 38% or $157 millionto $572 millionfor the second quarter of 2013 compared to $415 millionfor the second quarter of 2012, primarily as a result of:

• the launch of new programs during or subsequent to the second quarter of 2012, primarily in Braziland China; and
• higher production volumes on certain existing programs.

These factors were partially offset by a $14 milliondecrease in reported U.S. dollar sales as a result of the net weakening of foreign currencies against the U.S. dollar, including the Brazilian real and Argentine peso.

Complete vehicle assembly sales increased 23%, or $151 million, to $796 millionfor the second quarter of 2013 compared to $645 millionfor the second quarter of 2012 and assembly volumes increased 17% or 5,541 units.

The increase in complete vehicle assembly sales is primarily as a result of:

• the launch of the MINI Paceman during the fourth quarter of 2012;
• an increase in assembly volumes for the Mercedes-Benz G-Class; and
• a $14 millionincrease in reported U.S. dollar sales as a result of the strengthening of the euro against the U.S. dollar.

These factors were partially offset by:

• a decrease in assembly volumes for the:
  • MINI Countryman; and
  • Peugeot RCZ; and
• the end of production of the Aston Martin Rapide at our Magna Steyrfacility during the second quarter of 2012.

Tooling, Engineering and Other Sales

Tooling, engineering and other sales increased 43% or $222 millionto $733 millionfor the second quarter of 2013 compared to $511 millionfor the second quarter of 2012.

In the second quarter of 2013, the major programs for which we recorded tooling, engineering and other sales were the:

• Skoda Octavia;
• GM full-size pickups and SUVs;
• Ford Transit;
• Ford Fusion;
• MINI Paceman;
• Qoros 3;
• Range Rover Evoque; and
• Mercedes-Benz M-Class.

In the second quarter of 2012, the major programs for which we recorded tooling, engineering and other sales were the:

• Ford Fusion;
• MINI Countryman;
• Qoros 3;
• Audi A1;
• Mercedes-Benz GL-Class;
• Mercedes-Benz SLS AMG;
• Cadillac ATS; and
• Chevrolet Silverado and GMC Sierra.

Cost of goods sold increased $1.05 billionto $7.79 billionfor the second quarter of 2013 compared to $6.74 billionfor the second quarter of 2012 primarily as a result of:

• higher material, overhead and labour costs associated with the increase in sales, including wage increases at certain operations;
• $181 millionrelated to acquisitions completed during or subsequent to the second quarter of 2012, including ixetic, STT and E-Car and the re-acquisition of an interior systems operation;
• a net increase in reported U.S. dollar cost of goods sold primarily due to the strengthening of the euro against the U.S. dollar partially offset by the weakening of the Canadian dollar, Brazilian real, Argentine peso and British pound, each against the U.S. dollar; and
• a larger amount of employee profit sharing.

Gross margin increased $183 millionto $1.17 billionfor the second quarter of 2013 compared to $0.99 billionfor the second quarter of 2012 and gross margin as a percentage of sales increased to 13.0% for the second quarter of 2013 compared to 12.7% for the second quarter of 2012. The increase in gross margin as a percentage of sales was primarily due to:

• margins earned on higher production sales;
• incremental margin earned on new programs that launched during or subsequent to the second quarter of 2012;
• the closure of certain facilities;
• lower costs incurred in preparation for upcoming launches; and
• productivity and efficiency improvements at certain facilities.

These factors were partially offset by:

• an increase in tooling, engineering and other sales that have low or no margins;
• an increase in complete vehicle assembly sales which have a higher material content than our consolidated average;
• programs that ended production during or subsequent to the second quarter of 2012;
• a larger amount of employee profit sharing;
• increased pre-operating costs incurred at new facilities;
• favourable settlement of certain commercial items in the second quarter of 2012;
• the re-acquisition, in the second quarter of 2012, of an interior systems operation; and
• operational inefficiencies and other costs at certain facilities.

Depreciation and Amortization

Depreciation and amortization costs increased $76 millionto $260 millionfor the second quarter of 2013 compared to $184 millionfor the second quarter of 2012. The higher depreciation and amortization was primarily as a result of:

• intangible asset amortization of $40 millionrelated to the acquisition and re-measurement of E-Car;
• $21 millionrelated to acquisitions completed during or subsequent to the second quarter of 2012, including ixetic, E-Car and STT;
• depreciation related to new facilities; and
• capital spending during or subsequent to the second quarter of 2012.

Selling, General and Administrative ("SG&A")

SG&A expense as a percentage of sales was 4.6% for the second quarter of 2013 compared to 4.8% for the second quarter of 2012. SG&A expense increased $42 millionto $410 millionfor the second quarter of 2012 compared to $368 millionfor the second quarter of 2012 primarily as a result of:

• increased costs incurred at new facilities;
• $10 millionrelated to acquisitions completed during or subsequent to the second quarter of 2012, including ixetic, E-Car, and STT;
• higher incentive compensation;
• higher labour and other costs to support the growth in sales, including wage increases at certain operations;
• an increase in reported U.S. dollar SG&A related to foreign exchange;
• the recovery of due diligence costs in the second quarter of 2012; and
• a $5 millionnet decrease in revaluation gains in respect of ABCP.

These factors were partially offset by:

• a loss on disposal of an investment in the second quarter of 2012; and
• lower restructuring and downsizing costs.

Equity Income

Equity income increased $7 millionto $49 millionfor the second quarter of 2013 compared to $42 millionfor the second quarter of 2012. Equity income for the second quarter of 2012 included $10 millionof equity loss related to our investment in E-Car and $2 millionof equity income related to our investment in STT. Excluding this $8 millionnet equity loss, the $1 milliondecrease in equity income is primarily as a result of lower income from our equity accounted investments in North America.

Other Expense, net

During the second quarter of 2013 and 2012, no other expense, net was recorded. We expect full year 2013 restructuring charges to be approximately $100 million.

During the first quarter of 2013, we recorded net restructuring charges of $6 million($6 millionafter tax) in Europeat our exterior and interior systems operations.

Segment Analysis

Given the differences between the regions in which we operate, our operations are segmented on a geographic basis between North America, Europeand Rest of World. Consistent with the above, our internal financial reporting segments key internal operating performance measures between North America, Europeand Rest of World for purposes of presentation to the chief operating decision maker to assist in the assessment of operating performance, the allocation of resources, and our long-term strategic direction and future global growth.

Our chief operating decision maker uses Adjusted EBIT as the measure of segment profit or loss, since we believe Adjusted EBIT is the most appropriate measure of operational profitability or loss for our reporting segments. Adjusted EBIT represents income from operations before income taxes; interest expense, net; and other expense, net.

North America

Adjusted EBIT in North Americaincreased $7 millionto $422 millionfor the second quarter of 2013 compared to $415 millionfor the second quarter of 2012 primarily as a result of:

• margins earned on higher production sales;
• incremental margin earned on new programs that launched during or subsequent to the second quarter of 2012; and
• productivity and efficiency improvements at certain facilities.

These factors were partially offset by:

• intangible asset amortization of $40 millionrelated to the acquisition and re-measurement of E-Car;
• programs that ended production during or subsequent to the second quarter of 2012;
• operational inefficiencies and other costs at certain facilities;
• increased commodity costs;
• lower equity income;
• a larger amount of employee profit sharing;
• higher warranty costs of $3 million; and
• net customer price concessions subsequent to the first quarter of 2012.

Europe

Adjusted EBIT in Europeincreased $55 millionto $120 millionfor the second quarter of 2013 compared to $65 millionfor the second quarter of 2012 primarily as a result of:

• margins earned on higher production sales;
• incremental margin earned on new programs that launched during or subsequent to the second quarter of 2012;
• the benefit of restructuring and downsizing activities undertaken during or subsequent to the second quarter of 2012;
• lower costs incurred in preparation for upcoming launches;
• decreased commodity costs;
• acquisitions completed during or subsequent to the second quarter of 2012, including ixetic; and
• productivity and efficiency improvements at certain facilities.

These factors were partially offset by:

• favourable settlement of certain commercial items in the second quarter of 2012;
• a larger amount of employee profit sharing;
• higher restructuring and downsizing costs;
• higher affiliation fees paid to corporate;
• the re-acquisition, in the second quarter of 2012, of an interior systems operation; and
• operational inefficiencies and other costs at certain facilities.

Rest of World

Rest of World Adjusted EBIT increased $18 millionto income of $2 millionfor the second quarter of 2013 compared to a loss of $16 millionfor the second quarter of 2012 primarily as a result of:

• margins earned on higher production sales, including margins earned on the launch of new facilities and new programs;
• productivity and efficiency improvements at certain facilities;
• lower restructuring and downsizing costs; and
• higher equity income.

These factors were partially offset by:

• higher costs related to new facilities;
• higher launch costs; and
• increased commodity costs.

Corporate and Other

Corporate and Other Adjusted EBIT decreased $8 millionto $3 millionfor the second quarter of 2013 compared to $11 millionfor the second quarter of 2012. The loss related to our equity accounted investment in E-Car included in Corporate and Other was $10 millionfor the second quarter of 2012. Excluding E-Car, Corporate and Other Adjusted EBIT decreased $18 millionto $3 millionfor the second quarter of 2013 compared to $21 millionfor the second quarter of 2012 primarily as a result of:

• the recovery of due diligence costs in the second quarter of 2012;
• a $5 millionnet decrease in revaluation gains in respect of ABCP; and
• higher incentive compensation.

These factors were partially offset by:

• a loss on disposal of an investment in the second quarter of 2012; and
• an increase in affiliation fees earned from our divisions.

Interest Expense, net

During the second quarter of 2013, we recorded net interest expense of $4 millioncompared to $5 millionfor the second quarter of 2012.

Income from Operations before Income Taxes

Income from operations before income taxes increased $73 millionto $543 millionfor the second quarter of 2013 compared to $470 millionfor the second quarter of 2012. The increase in income from operations before income taxes is the result of the increase in EBIT and the decrease in net interest expense, as discussed above.

Income Taxes

The effective income tax rate on income from operations before income taxes decreased to 24.1% for the second quarter of 2013 compared to 25.7% for the second quarter of 2012 primarily as a result of a decrease in losses not benefitted in Europepartially offset by a change in mix of earnings, whereby proportionately more income was earned in jurisdictions with higher tax rates.

Net Income

Net income of $412 millionfor the second quarter of 2013 increased $63 millioncompared to the second quarter of 2012. The increase in net income is the result of the increase in income from operations before income taxes partially offset by higher income taxes.

Net Loss Attributable to Non-controlling Interests

Net loss attributable to non-controlling interests was $3 millionfor the second quarter of 2013 compared to $nil for the second quarter of 2012.

Net Income attributable to Magna International Inc.

Net income attributable to Magna International Inc. of $415 millionfor the second quarter of 2013 increased $66 millioncompared to the second quarter of 2012 as a result of the increase in net income, as discussed above.

Diluted earnings per share increased $0.30to $1.78for the second quarter of 2013 compared to $1.48for the second quarter of 2012. The increase in diluted earnings per share was a result of the increase in net income attributable to Magna International Inc. and a decrease in the weighted average number of diluted shares outstanding during the second quarter of 2013.

The decrease in the weighted average number of diluted shares outstanding was due to the repurchase and cancellation of Common Shares, during or subsequent to the second quarter of 2012, pursuant to our normal course issuer bids and the cashless exercise of options, partially offset by the issue of Common Shares related to the exercise of stock options and an increase in the number of diluted options outstanding as a result of an increase in the trading price of our common stock.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations before changes in non-cash operating assets and liabilities increased $128 millionto $714 millionfor the second quarter of 2013 compared to $586 millionfor the second quarter of 2012. The increase in cash flow from operations was due to a $63 millionincrease in net income, as discussed above, and a $65 millionincrease in items not involving current cash flows. Items not involving current cash flows are comprised of the following:

Cash invested in non-cash operating assets and liabilities amounted to $12 millionfor the second quarter of 2013 compared to $122 millionfor the second quarter of 2012. The change in non-cash operating assets and liabilities is comprised of the following sources (and uses) of cash:

The increase in inventories was primarily due to higher tooling inventory and increased production inventory to support launch activities. The increase in accounts payable was primarily due to an increase in production activities at the end of the second quarter of 2013 and timing of payments. The decrease in accrued salaries and wages was primarily due to employee profit sharing payments.

Capital and Investment Spending
				For the three months
				ended June 30,
				2013			2012				Change
Fixed asset additions			$	(232)		$	(267)
Investments and other assets				(53)			(35)
Fixed assets, investments and other assets additions				(285)			(302)
Purchase of subsidiaries				Share © Publicnow - 2013 Latest news about Magna International Inc. Serve Robotics Expands Accord With Magna International to Bolster Robot Manufacturing Apr. 24 MT Serve Robotics Inc. Enters Production Agreement with Magna International Inc. to Scale Robot Manufacturing Apr. 24 CI TD Cowen Adjusts Magna International Price Target to $63 From $69, Maintains Buy Rating Apr. 22 MT JPMorgan Raises Price Target on Magna International to $71 From $69, Maintains Overweight Rating Apr. 22 MT Magna International Price Target Lowered to US$63 at TD Apr. 22 MT Barclays Trims Price Target on Magna International to $62 From $63, Maintains Equalweight Rating Apr. 11 MT UBS Cuts Magna International's Price Target to $56 From $60, Maintains Neutral Rating Apr. 05 MT Transcript : Magna International Inc. Presents at BofA Securities 2024 Automotive Summit, Mar-26-2024 02:10 PM Mar. 26 LG Magna e-Powertrain Secures Cyber Security Management System Certification from TÜV Rheinland Mar. 26 MT Wipro Incorporates New Entity for Automotive Software Marketplace; Shares Down 3% Mar. 22 MT Wipro Partners with General Motors, Magna for Automotive Software Marketplace Mar. 05 MT Magna International Has Underwriting Agreement for $400 Million Offering of 2029 Notes Mar. 05 MT Magna Announcing Senior Notes Offering Mar. 05 MT Magna Brief: Announcing Senior Notes Offering Mar. 05 MT Magna International Inc. Announces Senior Notes Offering Mar. 05 CI General Motors Teaming Up With Magna, Wipro to Develop Digital Automotive Software Marketplace Mar. 05 MT General Motors, Magna, and Wipro Team Up to Develop Automotive Software Marketplace Mar. 05 MT Magna Brief: General Motors, Magna, and Wipro Team Up to Develop Automotive Software Marketplace Mar. 05 MT General Motors, Magna, and Wipro Team Up to Develop Automotive Software Mar. 05 CI GM, Magna and Wipro team up for automotive software marketplace Mar. 05 RE Yulu Bikes Pvt. Ltd. announced that it has received INR 1.6 billion in funding from Magna International Inc., Bajaj Auto Limited Feb. 21 CI UHNDER Inc. announced that it has received $50 million in funding from ACME, LLC, Qualcomm Ventures LLC, Monta Vista Capital, El Camino Capital, Sagitta Ventures and other investors Feb. 20 CI Transcript : Magna International Inc. Presents at Wolfe Research Global Auto and Auto Tech Conference 2024, Feb-15-2024 04:15 PM Feb. 15 Tranche Update on Magna International Inc. (TSX:MG)'s Equity Buyback Plan announced on November 4, 2022. Feb. 13 CI News Highlights : Top Energy News of the Day - Tuesday at 7 AM ET Feb. 13 DJ Chart Magna International Inc. DurationAuto.2 months3 months6 months9 months1 year2 years5 years10 yearsMax. PeriodDayWeek More charts Company Profile Magna International Inc. is a Canada-based global automotive supplier. The Company has complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis, exterior, seating, powertrain, active driver assistance, electronics, mechatronics, mirrors, lighting, and roof systems. Its Veoneer Active Safety provides sensor, software and systems engineering solutions to a range of customers. The Company's segments include Body Exteriors & Structures; Power & Vision; Seating Systems; and Complete Vehicles. Its Body Exteriors & Structures include body structures, chassis structures, exterior, energy storage systems and other. Its Power & Vision products include electrified powertrain technologies, powertrain subsystems and other. Its Complete Vehicles consist of complete vehicle engineering and complete vehicle manufacturing. The Company's global network includes 341 manufacturing operations and 88 product development. Sector Auto, Truck & Motorcycle Parts Calendar 2024-05-02 - Q1 2024 Earnings Release More about the company Income Statement Evolution More financial data Ratings for Magna International Inc. Trading Rating Investor Rating ESG Refinitiv B More Ratings Analysts' Consensus Sell Buy Mean consensus OUTPERFORM Number of Analysts 20 Last Close Price 49.13 USD Average target price 63.97 USD Spread / Average Target +30.21% Consensus EPS Revisions Estimates Revisions Quarterly earnings - Rate of surprise Company calendar Sector Other Auto, Truck & Motorcycle Parts 1st Jan change Capi. MAGNA INTERNATIONAL INC. -15.01% 14.11B DENSO CORPORATION +31.01% 54.1B WEICHAI POWER CO., LTD. +25.77% 20.54B APTIV PLC -21.83% 19.47B HYUNDAI MOBIS CO.,LTD +2.95% 16.05B FUYAO GLASS INDUSTRY GROUP CO., LTD. +19.68% 15.77B CONTINENTAL AG -19.29% 13.52B SUMITOMO ELECTRIC INDUSTRIES, LTD. +32.55% 12.18B AISIN CORPORATION +22.85% 10.87B SAMVARDHANA MOTHERSON INTERNATIONAL LIMITED +24.71% 10.31B Other Auto, Truck & Motorcycle Parts Stock Market Equities MG Stock News Magna International Inc. Magna International Inc. : Press Release - Magna Announces Second Quarter and Year to Date Results Discover our Free Content to Help You Better Understand the Stock Market. 100% Free Registration