FORM 10-Q
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Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2018
Commission File No.: 001-38471
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Veoneer, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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82-3720890
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Klarabergsviadukten 70, Section C6
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Box 13089, SE-103 02
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Stockholm, Sweden
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N/A
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(Address of principal executive offices)
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(Zip Code)
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+46 8 527 762 00
(Registrant’s telephone number, including area code) |
Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging Growth Company
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¨
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Page
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2018
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2017
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2018
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|
2017
|
||||||||
Net sales
|
Note 3
|
|
$
|
526
|
|
|
$
|
567
|
|
|
$
|
1,692
|
|
|
$
|
1,729
|
|
Cost of sales
|
|
|
(428
|
)
|
|
(458
|
)
|
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(1,371
|
)
|
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(1,387
|
)
|
||||
Gross profit
|
|
|
99
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|
|
109
|
|
|
321
|
|
|
342
|
|
||||
Selling, general and administrative expenses
|
|
|
(44
|
)
|
|
(28
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)
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(112
|
)
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|
(83
|
)
|
||||
Research, development and engineering expenses, net
|
|
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(109
|
)
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(91
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)
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(334
|
)
|
|
(280
|
)
|
||||
Amortization of intangibles
|
|
|
(5
|
)
|
|
(6
|
)
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(16
|
)
|
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(30
|
)
|
||||
Other income, net
|
|
|
1
|
|
|
—
|
|
|
18
|
|
|
12
|
|
||||
Operating loss
|
|
|
(58
|
)
|
|
(16
|
)
|
|
(122
|
)
|
|
(39
|
)
|
||||
Loss from equity method investment
|
Note 8
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|
(15
|
)
|
|
(10
|
)
|
|
(45
|
)
|
|
(18
|
)
|
||||
Interest income
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|
—
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|
||||
Interest expense
|
|
|
—
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|
|
—
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|
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(1
|
)
|
|
—
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|
||||
Other non-operating items, net
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
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|
||||
Loss before income taxes
|
Note 14
|
|
(70
|
)
|
|
(26
|
)
|
|
(163
|
)
|
|
(56
|
)
|
||||
Income tax expense
|
Note 6
|
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(3
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)
|
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(10
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)
|
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(12
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)
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(32
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)
|
||||
Net loss
|
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$
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(72
|
)
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$
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(36
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)
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$
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(175
|
)
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|
$
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(88
|
)
|
Less: Net loss attributable to non-controlling interest
|
|
|
(5
|
)
|
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(3
|
)
|
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(13
|
)
|
|
(7
|
)
|
||||
Net loss attributable to controlling interest
|
|
|
$
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(68
|
)
|
|
$
|
(33
|
)
|
|
$
|
(162
|
)
|
|
$
|
(81
|
)
|
|
|
|
|
|
|
|
|
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|
||||||||
Net loss per share - basic
|
Note 13
|
|
$
|
(0.78
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(1.86
|
)
|
|
$
|
(0.93
|
)
|
Net loss per share - diluted
|
|
|
$
|
(0.78
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(1.86
|
)
|
|
$
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(0.93
|
)
|
|
|
|
|
|
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||||||||
Weighted average number of shares outstanding,
(in millions)
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87.15
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87.13
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87.15
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87.13
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Weighted average number of shares outstanding,
assuming dilution (in millions)
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87.15
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87.13
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87.15
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|
87.13
|
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Three Months Ended September 30,
|
|
Nine Months Ended September 30,
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||||||||||||
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2018
|
|
2017
|
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2018
|
|
2017
|
||||||||
Net loss
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$
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(72
|
)
|
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$
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(36
|
)
|
|
$
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(175
|
)
|
|
$
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(88
|
)
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
|
|
||||||||
Change in cumulative translation adjustment
|
(2
|
)
|
|
6
|
|
|
(6
|
)
|
|
21
|
|
||||
Net change in cash flow hedges
|
—
|
|
|
(4
|
)
|
|
1
|
|
|
(10
|
)
|
||||
Pension liability
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Other comprehensive income (loss), before tax
|
(3
|
)
|
|
2
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|
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(7
|
)
|
|
11
|
|
||||
Expense for taxes
|
—
|
|
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—
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—
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|
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—
|
|
||||
Other comprehensive income (loss), net of tax
|
(3
|
)
|
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2
|
|
|
(7
|
)
|
|
11
|
|
||||
Comprehensive loss
|
$
|
(75
|
)
|
|
$
|
(34
|
)
|
|
$
|
(182
|
)
|
|
$
|
(77
|
)
|
Less: Comprehensive loss attributable to non-controlling
interest
|
(9
|
)
|
|
(2
|
)
|
|
(16
|
)
|
|
(4
|
)
|
||||
Comprehensive loss attributable to controlling interest
|
$
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(66
|
)
|
|
$
|
(32
|
)
|
|
$
|
(166
|
)
|
|
$
|
(73
|
)
|
|
|
|
(unaudited)
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||||
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September 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
|
|
||||
Cash and cash equivalents
|
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|
$
|
919
|
|
|
$
|
—
|
|
Short-term investments
|
|
|
5
|
|
|
—
|
|
||
Receivables, net
|
|
|
437
|
|
|
460
|
|
||
Inventories, net
|
Note 7
|
|
166
|
|
|
154
|
|
||
Related party receivables
|
Note 15
|
|
63
|
|
|
—
|
|
||
Prepaid expenses and contract assets
|
|
|
33
|
|
|
34
|
|
||
Other current assets
|
|
|
25
|
|
|
—
|
|
||
Total current assets
|
|
|
1,648
|
|
|
648
|
|
||
Property, plant and equipment, net
|
|
|
456
|
|
|
362
|
|
||
Equity method investment
|
Note 8
|
|
120
|
|
|
98
|
|
||
Goodwill
|
Note 5
|
|
291
|
|
|
292
|
|
||
Intangible assets, net
|
Note 5
|
|
102
|
|
|
122
|
|
||
Deferred tax assets
|
|
|
28
|
|
|
30
|
|
||
Related party notes receivables
|
Note 15
|
|
—
|
|
|
76
|
|
||
Other non-current assets
|
|
|
82
|
|
|
34
|
|
||
Total assets
|
|
|
$
|
2,728
|
|
|
$
|
1,662
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
||
Accounts payable
|
|
|
$
|
356
|
|
|
$
|
323
|
|
Related party payables
|
Note 15
|
|
3
|
|
|
5
|
|
||
Accrued expenses
|
Note 9
|
|
237
|
|
|
195
|
|
||
Income tax payable
|
|
|
10
|
|
|
41
|
|
||
Other current liabilities
|
|
|
24
|
|
|
26
|
|
||
Total current liabilities
|
|
|
630
|
|
|
590
|
|
||
Related party long-term debt
|
Note 15
|
|
12
|
|
|
62
|
|
||
Pension liability
|
Note 10
|
|
19
|
|
|
14
|
|
||
Deferred tax liabilities
|
|
|
16
|
|
|
17
|
|
||
Other non-current liabilities
|
|
|
11
|
|
|
22
|
|
||
Total non-current liabilities
|
|
|
58
|
|
|
115
|
|
||
Commitments and contingencies
|
Note 12
|
|
|
|
|
|
|
||
Equity
|
|
|
|
|
|
|
|
||
Common stock (par value $1.00, 325 million shares authorized, 87 million shares issued and outstanding at September 30, 2018 and December 31, 2017)
|
|
|
87
|
|
|
—
|
|
||
Additional paid-in capital
|
|
|
1,929
|
|
|
—
|
|
||
Accumulated deficit
|
|
|
(68
|
)
|
|
—
|
|
||
Net Former Parent investment
|
|
|
—
|
|
|
844
|
|
||
Accumulated other comprehensive income (loss)
|
|
|
(12
|
)
|
|
(8
|
)
|
||
Total equity
|
|
|
1,936
|
|
|
836
|
|
||
Non-controlling interest
|
|
|
104
|
|
|
121
|
|
||
Total equity and non-controlling interest
|
|
|
2,040
|
|
|
957
|
|
||
Total liabilities, equity and non-controlling interest
|
|
|
$
|
2,728
|
|
|
$
|
1,662
|
|
|
Nine months ended September 30, 2018
|
|||||||||||||||||||||||||
|
Equity attributable to
|
|||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid In Capital
|
|
Net Former Parent
Investment
|
|
Accumulated deficit
|
|
Accumulated Other
Comprehensive Income
|
|
Non-controlling
Interest
|
|
Total
|
|||||||||||||
Balance at beginning of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
844
|
|
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
121
|
|
|
$
|
957
|
|
Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
(68
|
)
|
|
—
|
|
|
(13
|
)
|
|
(175
|
)
|
||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(6
|
)
|
||||||
Net change in cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Pension liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||
Reclassification of Former Parent's net investment and issuance of ordinary shares in connection with separation
|
87
|
|
|
1,926
|
|
|
(2,002
|
)
|
|
—
|
|
|
|
|
|
|
11
|
|
||||||||
Stock based compensation expense
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Total Comprehensive Income (Loss)
|
87
|
|
|
1,929
|
|
|
(2,097
|
)
|
|
(68
|
)
|
|
(4
|
)
|
|
(16
|
)
|
|
(169
|
)
|
||||||
Net transfers from Former Parent
|
—
|
|
|
—
|
|
|
1,253
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1,252
|
|
||||||
Balance at end of period
|
$
|
87
|
|
|
$
|
1,929
|
|
|
$
|
—
|
|
|
(68
|
)
|
|
$
|
(12
|
)
|
|
$
|
104
|
|
|
$
|
2,040
|
|
|
Nine months ended September 30, 2017
|
||||||||||||||
|
Equity attributable to
|
||||||||||||||
|
Net Former Parent
Investment
|
|
Accumulated Other
Comprehensive Loss
|
|
Non-controlling
Interest
|
|
Total
|
||||||||
Balance at beginning of period
|
$
|
877
|
|
|
$
|
(29
|
)
|
|
$
|
242
|
|
|
$
|
1,090
|
|
Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
||||||||
Net loss
|
(81
|
)
|
|
—
|
|
|
(7
|
)
|
|
(88
|
)
|
||||
Foreign currency translation
|
—
|
|
|
18
|
|
|
3
|
|
|
21
|
|
||||
Net change in cash flow hedges
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Total Comprehensive Income (Loss)
|
(81
|
)
|
|
8
|
|
|
(4
|
)
|
|
(77
|
)
|
||||
Net transfers from Former Parent
|
180
|
|
|
—
|
|
|
(1
|
)
|
|
179
|
|
||||
Balance at end of period
|
$
|
976
|
|
|
$
|
(21
|
)
|
|
$
|
237
|
|
|
$
|
1,193
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(175
|
)
|
|
$
|
(88
|
)
|
Depreciation and amortization
|
82
|
|
|
91
|
|
||
Contingent consideration write-down
|
(14
|
)
|
|
(13
|
)
|
||
Other, net
|
(4
|
)
|
|
(23
|
)
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts payable
|
—
|
|
|
(34
|
)
|
||
Related party receivables and payables, net
|
(58
|
)
|
|
2
|
|
||
Income taxes
|
(31
|
)
|
|
4
|
|
||
Accrued expenses
|
51
|
|
|
(8
|
)
|
||
Other current assets and liabilities, net
|
(22
|
)
|
|
1
|
|
||
Receivables, gross
|
13
|
|
|
18
|
|
||
Inventories, gross
|
(16
|
)
|
|
12
|
|
||
Prepaid expenses and contract assets
|
(7
|
)
|
|
(12
|
)
|
||
Net cash used in operating activities
|
(181
|
)
|
|
(50
|
)
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
|
|
||
Net decrease (increase) in related party notes receivable
|
76
|
|
|
(5
|
)
|
||
Capital expenditures
|
(123
|
)
|
|
(70
|
)
|
||
Equity method investment
|
(71
|
)
|
|
(112
|
)
|
||
Short-term investments
|
(5
|
)
|
|
—
|
|
||
Proceeds from sale of property, plant and equipment
|
3
|
|
|
5
|
|
||
Net cash used in investing activities
|
(120
|
)
|
|
(182
|
)
|
||
|
|
|
|
||||
Financing activities
|
|
|
|
|
|
||
Cash provided at separation by Former Parent
|
980
|
|
|
—
|
|
||
Net transfers from Former Parent
|
275
|
|
|
179
|
|
||
(Decrease) / increase in related party long-term debt
|
(49
|
)
|
|
53
|
|
||
Net cash provided by financing activities
|
1,206
|
|
|
232
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
14
|
|
|
—
|
|
||
Increase in cash and cash equivalents
|
919
|
|
|
—
|
|
||
Cash and cash equivalents at beginning of year
|
—
|
|
|
—
|
|
||
Cash and cash equivalents at end of year
|
$
|
919
|
|
|
$
|
—
|
|
Balance Sheet
(Dollars in millions)
|
Balance at
December 31,
2017
|
|
Adjustments due
to ASU 2014-09
|
|
Balance at
January 1,
2018
|
||||||
Assets
|
|
|
|
|
|
||||||
Inventories, net
|
$
|
154
|
|
|
$
|
(5
|
)
|
|
$
|
149
|
|
Prepaid expenses and contract assets
|
34
|
|
|
7
|
|
|
41
|
|
|||
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
||||||
Net Former Parent investment
|
844
|
|
|
1
|
|
|
845
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||
Income Statement
(Dollars in millions)
|
As Reported
|
|
Balances without
adoption of
ASC 606
|
|
Effect of Changes
|
|
As Reported
|
|
Balances without
adoption of
ASC 606
|
|
Effect of Changes
|
||||||||||||
Net sales
|
$
|
526
|
|
|
$
|
525
|
|
|
$
|
1
|
|
|
$
|
1,692
|
|
|
$
|
1,691
|
|
|
$
|
1
|
|
Cost of sales
|
(428
|
)
|
|
(427
|
)
|
|
(1
|
)
|
|
(1,371
|
)
|
|
(1,370
|
)
|
|
(1
|
)
|
||||||
Operating loss
|
(58
|
)
|
|
(58
|
)
|
|
—
|
|
|
(122
|
)
|
|
(122
|
)
|
|
—
|
|
|
As of September 30, 2018
|
||||||||||
Balance Sheet
(Dollars in millions)
|
As Reported
|
|
Balances without
adoption of
ASC 606
|
|
Effect of Changes
|
||||||
Assets
|
|
|
|
|
|
||||||
Inventories, net
|
$
|
166
|
|
|
$
|
173
|
|
|
$
|
(6
|
)
|
Prepaid expenses and contract assets
|
33
|
|
|
25
|
|
|
8
|
|
|||
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
||||||
Additional paid-in capital
|
1,929
|
|
|
1,928
|
|
|
1
|
|
(Dollars in millions)
|
Three Months Ended September 30, 2018
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||||
|
Electronics
|
|
Brake Systems
|
|
Total
|
|
Electronics
|
|
Brake Systems
|
|
Total
|
||||||||||||
Asia
|
$
|
98
|
|
|
$
|
85
|
|
|
$
|
183
|
|
|
$
|
114
|
|
|
$
|
89
|
|
|
$
|
203
|
|
Americas
|
166
|
|
|
15
|
|
|
181
|
|
|
166
|
|
|
29
|
|
|
195
|
|
||||||
Europe
|
163
|
|
|
—
|
|
|
163
|
|
|
170
|
|
|
—
|
|
|
170
|
|
||||||
Total region sales
|
426
|
|
|
100
|
|
|
526
|
|
|
449
|
|
|
118
|
|
|
567
|
|
||||||
Less: intercompany sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
426
|
|
|
$
|
100
|
|
|
$
|
526
|
|
|
$
|
449
|
|
|
$
|
118
|
|
|
$
|
567
|
|
(Dollars in millions)
|
Nine Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||
|
Electronics
|
|
Brake Systems
|
|
Total
|
|
Electronics
|
|
Brake Systems
|
|
Total
|
||||||||||||
Asia
|
$
|
314
|
|
|
$
|
280
|
|
|
$
|
594
|
|
|
$
|
353
|
|
|
$
|
264
|
|
|
$
|
617
|
|
Americas
|
517
|
|
|
45
|
|
|
562
|
|
|
525
|
|
|
98
|
|
|
624
|
|
||||||
Europe
|
537
|
|
|
—
|
|
|
537
|
|
|
491
|
|
|
—
|
|
|
491
|
|
||||||
Total region sales
|
1,367
|
|
|
325
|
|
|
1,692
|
|
|
1,369
|
|
|
363
|
|
|
1,732
|
|
||||||
Less: intercompany sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(3
|
)
|
||||||
Total
|
$
|
1,367
|
|
|
$
|
325
|
|
|
$
|
1,692
|
|
|
$
|
1,369
|
|
|
$
|
361
|
|
|
$
|
1,729
|
|
(Dollars in millions)
|
Three Months Ended September 30, 2018
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||||
|
Electronics
|
|
Brake Systems
|
|
Total
|
|
Electronics
|
|
Brake Systems
|
|
Total
|
||||||||||||
Restraint Control Systems
|
$
|
226
|
|
|
$
|
—
|
|
|
$
|
226
|
|
|
$
|
251
|
|
|
$
|
—
|
|
|
$
|
251
|
|
Active Safety products
|
201
|
|
|
—
|
|
|
201
|
|
|
198
|
|
|
—
|
|
|
198
|
|
||||||
Brake Systems
|
—
|
|
|
100
|
|
|
100
|
|
|
—
|
|
|
118
|
|
|
118
|
|
||||||
Total product sales
|
426
|
|
|
100
|
|
|
526
|
|
|
449
|
|
|
118
|
|
|
567
|
|
||||||
Less: intercompany sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total net sales
|
$
|
426
|
|
|
$
|
100
|
|
|
$
|
526
|
|
|
$
|
449
|
|
|
$
|
118
|
|
|
$
|
567
|
|
(Dollars in millions)
|
Nine Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||
|
Electronics
|
|
Brake Systems
|
|
Total
|
|
Electronics
|
|
Brake Systems
|
|
Total
|
||||||||||||
Restraint Control Systems
|
$
|
739
|
|
|
$
|
—
|
|
|
$
|
739
|
|
|
$
|
788
|
|
|
$
|
—
|
|
|
$
|
788
|
|
Active Safety products
|
628
|
|
|
—
|
|
|
628
|
|
|
581
|
|
|
—
|
|
|
581
|
|
||||||
Brake Systems
|
—
|
|
|
325
|
|
|
325
|
|
|
—
|
|
|
363
|
|
|
363
|
|
||||||
Total product sales
|
1,367
|
|
|
325
|
|
|
1,692
|
|
|
1,369
|
|
|
363
|
|
|
1,732
|
|
||||||
Less: intercompany sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(3
|
)
|
||||||
Total net sales
|
$
|
1,367
|
|
|
$
|
325
|
|
|
$
|
1,692
|
|
|
$
|
1,369
|
|
|
$
|
361
|
|
|
$
|
1,729
|
|
(Dollars in millions)
|
As of
|
||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Receivables, net
|
$
|
437
|
|
|
$
|
460
|
|
Contract assets
1
|
8
|
|
|
—
|
|
(Dollars in millions)
|
As of
|
||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Receivables
|
$
|
440
|
|
|
$
|
462
|
|
Allowance at beginning of period
|
(2
|
)
|
|
(4
|
)
|
||
Net decrease/(increase) of allowance
|
(1
|
)
|
|
2
|
|
||
Allowance at end of period
|
(3
|
)
|
|
(2
|
)
|
||
Receivables, net of allowance
|
$
|
437
|
|
|
$
|
460
|
|
(Dollars in millions)
|
Three months ended
September 30, 2018
|
|
Nine months ended
September 30, 2018
|
||||
|
Contract assets
|
|
Contract assets
|
||||
Beginning balance
|
$
|
7
|
|
|
$
|
—
|
|
Increases due to cumulative catch up adjustment
|
1
|
|
|
8
|
|
||
Increases due to revenue recognized
|
8
|
|
|
23
|
|
||
Decreases due to transfer to receivables
|
(8
|
)
|
|
(23
|
)
|
||
Ending balance
|
$
|
8
|
|
|
$
|
8
|
|
|
September 30, 2018
|
||||||||||
|
|
|
Fair Value Measurements
|
||||||||
|
Nominal
Value
|
|
Derivative Asset
(Other current/non
current assets)
|
|
Derivative Liability
(Other current/non
current liabilities)
|
||||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
||||||
Foreign exchange swaps, less than 6 months
|
$
|
108
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Total derivatives not designated as hedging instruments
|
$
|
108
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
December 31, 2017
|
||||||||||
|
|
|
Fair Value Measurements
|
||||||||
|
Nominal
Value
|
|
Derivative Asset
(Other current/non
current assets)
|
|
Derivative Liability
(Other current/non
current liabilities)
|
||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
||||||
Foreign exchange forward contracts, less than
1 year (cash flow hedge)
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Total derivatives designated as hedging instruments
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Three months ended
|
||||||||||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||||||||||
|
Foreign exchange forward contracts
|
|
Foreign exchange
swaps
|
|
Foreign exchange
forward contracts
|
|
Foreign exchange
swaps
|
||||||||
Foreign currency risk - Cost
of sales:
|
|
|
|
|
|
|
|
||||||||
Recorded into gain (loss)
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
Recorded gains (loss) into
AOCI net of tax
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
||||
Less: reclassified from
AOCI into gain (loss)
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
Nine months ended
|
||||||||||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||||||||||
|
Foreign exchange
forward contracts
|
|
Foreign exchange
swaps
|
|
Foreign exchange
forward contracts
|
|
Foreign exchange
swaps
|
||||||||
Foreign currency risk - Cost
of sales:
|
|
|
|
|
|
|
|
||||||||
Recorded into gain (loss)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Recorded gains (loss) into
AOCI net of tax
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
||||
Less: Reclassified from
AOCI gain (loss)
|
(1
|
)
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
1
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
(Dollars in millions)
|
Fair value
measurements
Level 3
|
|
Impairment
Losses
|
|
Fair value
measurements
Level 3
|
|
Impairment
Losses
|
||||||||
Goodwill
1
|
$
|
291
|
|
|
$
|
—
|
|
|
$
|
292
|
|
|
$
|
(234
|
)
|
Intangible assets, net
2
|
102
|
|
|
—
|
|
|
122
|
|
|
(12
|
)
|
|
As of
|
||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
107
|
|
|
$
|
90
|
|
Work in progress
|
11
|
|
|
21
|
|
||
Finished products
|
71
|
|
|
70
|
|
||
Inventories
|
$
|
189
|
|
|
$
|
181
|
|
Inventory valuation reserve
|
(23
|
)
|
|
(27
|
)
|
||
Total inventories, net of reserve
|
$
|
166
|
|
|
$
|
154
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net sales
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Gross profit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Operating loss
|
(31
|
)
|
|
(20
|
)
|
|
(90
|
)
|
|
(35
|
)
|
||||
Loss before income taxes
|
(30
|
)
|
|
(20
|
)
|
|
(90
|
)
|
|
(35
|
)
|
||||
Net loss
|
$
|
(30
|
)
|
|
$
|
(20
|
)
|
|
$
|
(90
|
)
|
|
$
|
(35
|
)
|
|
As of
|
||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Operating related accruals
|
$
|
58
|
|
|
$
|
55
|
|
Employee related accruals
|
71
|
|
|
57
|
|
||
Customer pricing accruals
|
64
|
|
|
36
|
|
||
Product related liabilities
1
|
24
|
|
|
22
|
|
||
Other accruals
|
20
|
|
|
25
|
|
||
Total Accrued Expenses
|
$
|
237
|
|
|
$
|
195
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service cost
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Interest cost
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Expected return on plan assets
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
||||
Net periodic benefit cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
As of
|
||
|
September 30, 2018
|
||
Benefit obligation as of April 1, 2018
|
$
|
—
|
|
Service cost
|
—
|
|
|
Interest cost
|
—
|
|
|
Benefits paid
|
—
|
|
|
Obligation transferred in
|
6
|
|
|
Benefit obligation at end of the period
|
$
|
6
|
|
Fair value of plan assets as of April 1, 2018
|
—
|
|
|
Company contributions
|
—
|
|
|
Benefits paid
|
—
|
|
|
Plan assets transferred in
|
—
|
|
|
Fair value of plan assets at end of the period
|
$
|
—
|
|
Funded status recognized in the balance sheet
|
$
|
(6
|
)
|
|
As of
|
||
|
September 30, 2018
|
||
Net actuarial loss (gain)
|
$
|
(1
|
)
|
Prior service cost (credit)
|
—
|
|
|
Total accumulated other comprehensive income
recognized in the balance sheet
|
$
|
(1
|
)
|
Country
|
Name of Defined Benefit Plans
|
Sweden
|
ITP plan
|
U.S.
|
Autoliv ASP, Inc. Pension Plan
|
Autoliv ASP, Inc. Excess Pension Plan
|
|
Autoliv ASP, Inc. Supplemental Pension Plan
|
•
|
Stock Option (SOs) - A number of SOs comprising
50%
of the value of the outstanding SOs calculated immediately prior to the Spin-Off continued to be applicable to Autoliv common stock. A number of SOs comprising the remaining
50%
of the pre-spin value were replaced with options to acquire shares of Veoneer common stock.
|
•
|
Restricted Stock Units (RSUs) - A number of RSUs comprising
50%
of the value of the outstanding RSU calculated immediately prior to the Spin-Off continued to be applicable to Autoliv common stock. A number of RSUs comprising the remaining
50%
of the pre-spin value were replaced with RSUs with underlying Veoneer common stock.
|
•
|
Performance Shares (PSs) - Outstanding PSs were converted to time-based RSUs and were treated in the same manner as other outstanding RSUs (as described above) on the Distribution Date. The number of outstanding PSs were converted based on:
|
1)
|
The level of actual achievement of performance goals for each outstanding PSs for the period between the first day of the performance period and December 31, 2017 (the “Performance Measurement Date”), referred to as “Level of Performance-to-Date”, and;
|
2)
|
The greater of the Level of Performance-to-Date and estimated target performance level (i.e.,
100%
) for the period between the Performance Measurement Date and the last day of the performance period.
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Reserve at beginning of the period
|
$
|
23
|
|
|
$
|
20
|
|
|
$
|
22
|
|
|
$
|
30
|
|
Change in reserve
|
1
|
|
|
5
|
|
|
10
|
|
|
5
|
|
||||
Cash payments
|
—
|
|
|
(2
|
)
|
|
(8
|
)
|
|
(12
|
)
|
||||
Transfers
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Translation difference
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Reserve at end of the period
|
$
|
24
|
|
|
$
|
23
|
|
|
$
|
24
|
|
|
$
|
23
|
|
(U.S. dollars in millions, except per share amounts)
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to common shareholders
|
$
|
(68
|
)
|
|
$
|
(33
|
)
|
|
$
|
(162
|
)
|
|
$
|
(81
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic: Weighted average number of shares outstanding (in millions)
|
87.15
|
|
|
87.13
|
|
|
87.15
|
|
|
87.13
|
|
||||
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions)
1
|
87.15
|
|
|
87.13
|
|
|
87.15
|
|
|
87.13
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic loss per share
|
(0.78)
|
|
(0.38)
|
|
(1.86)
|
|
(0.93)
|
||||||||
Diluted loss per share
|
(0.78)
|
|
(0.38)
|
|
(1.86)
|
|
(0.93)
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
(Loss) Before Income Taxes
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Electronics
|
$
|
(36
|
)
|
|
$
|
(4
|
)
|
|
$
|
(66
|
)
|
|
$
|
(11
|
)
|
Brake Systems
|
(9
|
)
|
|
(6
|
)
|
|
(23
|
)
|
|
(11
|
)
|
||||
Segment operating (loss)/income
|
(45
|
)
|
|
(10
|
)
|
|
(88
|
)
|
|
(22
|
)
|
||||
Corporate and other
|
(13
|
)
|
|
(6
|
)
|
|
(34
|
)
|
|
(17
|
)
|
||||
Interest and other non-operating items, net
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Loss from equity method investment
|
(15
|
)
|
|
(10
|
)
|
|
(45
|
)
|
|
(18
|
)
|
||||
Loss before income taxes
|
$
|
(70
|
)
|
|
$
|
(26
|
)
|
|
$
|
(163
|
)
|
|
$
|
(56
|
)
|
|
As of
|
||||||
RELATED PARTY
|
September 30, 2018
|
|
December 31, 2017
|
||||
Related party receivable
|
$
|
63
|
|
|
$
|
—
|
|
Related party notes receivable
|
—
|
|
|
76
|
|
||
Related party payables
|
3
|
|
|
5
|
|
||
Related party long-term debt
|
12
|
|
|
62
|
|
•
|
Executive Overview
|
•
|
Trends, Uncertainties and Opportunities
|
•
|
Market Overview
|
•
|
Non-U.S. GAAP Financial Measures
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance Sheet Arrangements and Other Matters
|
•
|
Contractual Obligations and Commitments
|
•
|
Significant Accounting Policies and Critical Accounting Estimates
|
Millions, (except where specified)
|
Light Vehicle Production by Region - 2018
|
||||||||||||
China
|
|
Japan
|
|
Rest of Asia
|
|
Americas
|
|
Europe
|
|
Other
|
|
Total
|
|
Third Quarter (
as of Oct-16-2018)
|
6.0
|
|
2.1
|
|
3.3
|
|
4.6
|
|
4.7
|
|
0.6
|
|
21.4
|
Change vs. Prior Year
|
-4.0%
|
|
-2.9%
|
|
1.7%
|
|
1.7%
|
|
-5.1%
|
|
-4.8%
|
|
-2.1%
|
Millions, (except where specified)
|
Light Vehicle Production by Region - 2018
|
||||||||||||
China
|
|
Japan
|
|
Rest of Asia
|
|
Americas
|
|
Europe
|
|
Other
|
|
Total
|
|
First nine months (
as of Oct-16-2018)
|
18.8
|
|
6.7
|
|
9.8
|
|
14.5
|
|
16.5
|
|
1.9
|
|
68.2
|
Change vs. Prior Year
|
1.2%
|
|
-0.7%
|
|
2.3%
|
|
0.2%
|
|
0.2%
|
|
4.6%
|
|
0.8%
|
|
Three Months Ended September 30
|
|
Components of Change vs. Prior Year
|
|||||||||||||||||||||||||||||||
Dollars in millions, (except where specified)
|
2018
|
|
2017
|
|
US GAAP Reported
|
|
Currency
|
|
Organic
1
|
|||||||||||||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
Chg. $
|
|
Chg. %
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||||
Net Sales
|
$
|
426
|
|
|
|
|
|
$
|
449
|
|
|
|
|
|
$
|
(23
|
)
|
|
-5.1
|
%
|
|
$
|
(12
|
)
|
|
-2.8
|
%
|
|
$
|
(10
|
)
|
|
-2.3
|
%
|
Operating Loss / Margin
|
$
|
(36
|
)
|
|
-8.4
|
%
|
|
$
|
(4
|
)
|
|
-0.9
|
%
|
|
$
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||
EBITDA
1
/ %
|
$
|
(18
|
)
|
|
-4.2
|
%
|
|
$
|
13
|
|
|
2.9
|
%
|
|
$
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Associates
|
6,804
|
|
|
|
|
|
5,548
|
|
|
|
|
1,256
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Septebmer 30
|
|
Components of Change vs. Prior Year
|
|||||||||||||||||||||||||||||||
Dollars in millions, (except where specified)
|
2018
|
|
2017
|
|
US GAAP Reported
|
|
Currency
|
|
Organic
1
|
|||||||||||||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
Chg. $
|
|
Chg. %
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||||
Net Sales
|
$
|
100
|
|
|
|
|
|
$
|
118
|
|
|
|
|
|
$
|
(18
|
)
|
|
-15.3
|
%
|
|
$
|
(1
|
)
|
|
-1.0
|
%
|
|
$
|
(17
|
)
|
|
-14.3
|
%
|
Operating Loss / Margin
|
$
|
(9
|
)
|
|
-9.0
|
%
|
|
$
|
(6
|
)
|
|
-4.8
|
%
|
|
$
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||
EBITDA
1
/ %
|
$
|
—
|
|
|
0.1
|
%
|
|
$
|
4
|
|
|
3.3
|
%
|
|
$
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Associates
|
1,467
|
|
|
|
|
|
1,576
|
|
|
|
|
(109
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30
|
|||||||||||||||||||
Dollars in millions,
(except where specified) |
2018
|
|
2017
|
US GAAP Reported
|
||||||||||||||||
$
|
|
%
|
$
|
|
%
|
|
Chg. $
|
|
Chg.%
|
|||||||||||
Net Sales
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
—
|
%
|
Operating Loss / Margin
|
$
|
(13
|
)
|
|
—
|
%
|
|
$
|
(6
|
)
|
|
—
|
%
|
|
$
|
(7
|
)
|
|
|
|
Segment EBITDA
(1)
/ Margin
|
$
|
(13
|
)
|
|
—
|
%
|
|
$
|
(6
|
)
|
|
—
|
%
|
|
$
|
(7
|
)
|
|
|
|
Associates
|
39
|
|
|
|
|
|
—
|
|
|
|
|
|
39
|
|
|
|
|
Consolidated Net Sales
|
Three Months Ended September 30
|
|
Components of Change vs. Prior Year
|
|||||||||||||||||||||||||
Dollars in millions, (except where specified)
|
2018
|
|
2017
|
|
US GAAP Reported
|
|
Currency
|
|
Organic
1
|
|
|
|||||||||||||||||
|
$
|
|
$
|
|
Chg. $
|
|
Chg. %
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||
Restraint Control
Systems
|
$
|
226
|
|
|
$
|
251
|
|
|
$
|
(25
|
)
|
|
-10
|
%
|
|
$
|
(3
|
)
|
|
-1.0
|
%
|
|
$
|
(22
|
)
|
|
-9.0
|
%
|
Active Safety
|
201
|
|
|
198
|
|
|
2
|
|
|
1
|
%
|
|
(10
|
)
|
|
-5.0
|
%
|
|
12
|
|
|
6.0
|
%
|
|||||
Brake Systems
|
100
|
|
|
118
|
|
|
(18
|
)
|
|
-15
|
%
|
|
(1
|
)
|
|
-1.0
|
%
|
|
(17
|
)
|
|
-14.0
|
%
|
|||||
Total
|
$
|
526
|
|
|
$
|
567
|
|
|
$
|
(40
|
)
|
|
-7.1
|
%
|
|
$
|
(14
|
)
|
|
-2.4
|
%
|
|
$
|
(27
|
)
|
|
-4.7
|
%
|
|
Three Months Ended September 30
|
|
|
||||||||||||||
(Dollars in millions, except per share data)
|
2018
|
|
2017
|
|
|
||||||||||||
|
Unaudited
|
|
%
|
|
Unaudited
|
|
%
|
|
Change
|
||||||||
Net Sales
|
$
|
526
|
|
|
|
|
$
|
567
|
|
|
|
|
|
$
|
(40
|
)
|
|
Cost of sales
|
(428
|
)
|
|
-81.2
|
%
|
|
(458
|
)
|
|
-80.8
|
%
|
|
31
|
|
|||
Gross Profit
|
99
|
|
|
18.8
|
%
|
|
109
|
|
|
19.2
|
%
|
|
(10
|
)
|
|||
SG&A
|
(44
|
)
|
|
-8.3
|
%
|
|
(28
|
)
|
|
-4.9
|
%
|
|
(16
|
)
|
|||
RD&E
|
(109
|
)
|
|
-20.7
|
%
|
|
(91
|
)
|
|
-16.0
|
%
|
|
(19
|
)
|
|||
Amortization of intangibles
|
(5
|
)
|
|
-1.0
|
%
|
|
(6
|
)
|
|
-1.1
|
%
|
|
1
|
|
|||
Other income (expense), net
|
1
|
|
|
0.2
|
%
|
|
—
|
|
|
—
|
%
|
|
1
|
|
|||
Operating Loss
|
(58
|
)
|
|
-11.0
|
%
|
|
(16
|
)
|
|
-2.8
|
%
|
|
(42
|
)
|
|||
Income (loss) from equity method investment
|
(15
|
)
|
|
-2.9
|
%
|
|
(10
|
)
|
|
-1.7
|
%
|
|
(5
|
)
|
|||
Loss before income tax expense
|
(70
|
)
|
|
-13.2
|
%
|
|
(26
|
)
|
|
-4.5
|
%
|
|
(44
|
)
|
|||
Income tax expense
|
(3
|
)
|
|
-0.6
|
%
|
|
(10
|
)
|
|
-1.8
|
%
|
|
7
|
|
|||
Net loss
|
$
|
(72
|
)
|
|
-13.8
|
%
|
|
$
|
(36
|
)
|
|
-6.4
|
%
|
|
$
|
(36
|
)
|
Less Net loss attributable to non-controlling interest
|
(5
|
)
|
|
-0.9
|
%
|
|
(3
|
)
|
|
-0.5
|
%
|
|
(2
|
)
|
|||
Net loss attributable to controlling interest
|
$
|
(68
|
)
|
|
-12.9
|
%
|
|
$
|
(33
|
)
|
|
-5.8
|
%
|
|
$
|
(35
|
)
|
Loss per share
|
(0.78
|
)
|
|
|
|
|
(0.38
|
)
|
|
|
|
|
|
|
|
Nine Months Ended September 30
|
|
Components of Change vs. Prior Year
|
|||||||||||||||||||||||||||||||
Dollars in millions, (except where specified)
|
2018
|
|
2017
|
|
US GAAP Reported
|
|
Currency
|
|
Organic
1
|
|||||||||||||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
Chg. $
|
|
Chg. %
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||||
Net Sales
|
$
|
1,367
|
|
|
|
|
|
$
|
1,369
|
|
|
|
|
|
$
|
(2
|
)
|
|
-0.1
|
%
|
|
$
|
31
|
|
|
2.3
|
%
|
|
$
|
(33
|
)
|
|
-2.4
|
%
|
Operating Loss / Margin
|
$
|
(66
|
)
|
|
-4.8
|
%
|
|
$
|
(11
|
)
|
|
-0.8
|
%
|
|
$
|
(54
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
EBITDA
1
/%
|
$
|
(12
|
)
|
|
-0.9
|
%
|
|
$
|
50
|
|
|
3.7
|
%
|
|
$
|
(62
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Associates
|
6,804
|
|
|
|
|
|
5,548
|
|
|
|
|
|
1,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30
|
|
Components of Change vs. Prior Year
|
|||||||||||||||||||||||||||||||
Dollars in millions, (except where specified)
|
2018
|
|
2017
|
|
US GAAP Reported
|
|
Currency
|
|
Organic
1
|
|||||||||||||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
Chg. $
|
|
Chg. %
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||||
Net Sales
|
$
|
325
|
|
|
|
|
|
$
|
363
|
|
|
|
|
|
$
|
(38
|
)
|
|
-10.5
|
%
|
|
$
|
9
|
|
|
2.3
|
%
|
|
$
|
(47
|
)
|
|
-12.9
|
%
|
Operating Loss / Margin
|
$
|
(23
|
)
|
|
-7.0
|
%
|
|
$
|
(11
|
)
|
|
-2.9
|
%
|
|
$
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
EBITDA
1
/ %
|
$
|
6
|
|
|
1.8
|
%
|
|
$
|
18
|
|
|
5.1
|
%
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Associates
|
1,467
|
|
|
|
|
|
1,576
|
|
|
|
|
|
(109
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30
|
|||||||||||||||||||
Dollars in millions,
(except where specified) |
2018
|
|
2017
|
US GAAP Reported
|
||||||||||||||||
$
|
|
%
|
$
|
|
%
|
|
Chg. $
|
|
Chg.%
|
|||||||||||
Net Sales
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
—
|
%
|
Operating Loss / Margin
|
$
|
(34
|
)
|
|
—
|
%
|
|
$
|
(17
|
)
|
|
—
|
%
|
|
$
|
(17
|
)
|
|
|
|
Segment EBITDA
(1)
/ Margin
|
$
|
(34
|
)
|
|
—
|
%
|
|
$
|
(17
|
)
|
|
—
|
%
|
|
$
|
(17
|
)
|
|
|
|
Associates
|
39
|
|
|
|
|
|
—
|
|
|
|
|
|
39
|
|
|
|
|
Consolidated Net Sales
|
Nine Months Ended September 30
|
|
Components of Change vs. Prior Year
|
|||||||||||||||||||||||||
Dollars in millions, (except where specified)
|
2018
|
|
2017
|
|
US GAAP Reported
|
|
Currency
|
|
Organic
1
|
|
|
|||||||||||||||||
|
$
|
|
$
|
|
Chg. $
|
|
Chg. %
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||
Restraint Control Systems
|
$
|
739
|
|
|
$
|
788
|
|
|
$
|
(48
|
)
|
|
-6.0
|
%
|
|
$
|
27
|
|
|
3.0
|
%
|
|
$
|
(75
|
)
|
|
-10.0
|
%
|
Active Safety
|
628
|
|
|
581
|
|
|
47
|
|
|
8.0
|
%
|
|
4
|
|
|
1.0
|
%
|
|
43
|
|
|
7.0
|
%
|
|||||
Brake Systems
|
325
|
|
|
361
|
|
|
(36
|
)
|
|
-10
|
%
|
|
8
|
|
|
2.0
|
%
|
|
(44
|
)
|
|
-12.0
|
%
|
|||||
Total
|
$
|
1,692
|
|
|
$
|
1,729
|
|
|
$
|
(37
|
)
|
|
-2.1
|
%
|
|
$
|
40
|
|
|
2.3
|
%
|
|
$
|
(77
|
)
|
|
-4.4
|
%
|
|
Nine Months ended September 30
|
|
|
||||||||||||||
(Dollars in millions, except per share data)
|
2018
|
|
2017
|
|
|
||||||||||||
|
Unaudited
|
|
%
|
|
Unaudited
|
|
%
|
|
Change
|
||||||||
Net Sales
|
$
|
1,692
|
|
|
|
|
$
|
1,729
|
|
|
|
|
|
$
|
(37
|
)
|
|
Cost of sales
|
(1,371
|
)
|
|
-81.0
|
%
|
|
(1,387
|
)
|
|
-80.2
|
%
|
|
17
|
|
|||
Gross Profit
|
321
|
|
|
19.0
|
%
|
|
342
|
|
|
19.8
|
%
|
|
(20
|
)
|
|||
SG&A
|
(112
|
)
|
|
-6.6
|
%
|
|
(83
|
)
|
|
-4.8
|
%
|
|
(29
|
)
|
|||
RD&E
|
(334
|
)
|
|
-19.7
|
%
|
|
(280
|
)
|
|
-16.2
|
%
|
|
(54
|
)
|
|||
Amortization of intangibles
|
(16
|
)
|
|
-0.9
|
%
|
|
(30
|
)
|
|
-1.7
|
%
|
|
14
|
|
|||
Other income (expense), net
|
18
|
|
|
1.1
|
%
|
|
12
|
|
|
0.7
|
%
|
|
5
|
|
|||
Operating Loss
|
(122
|
)
|
|
-7.2
|
%
|
|
(39
|
)
|
|
-2.2
|
%
|
|
(83
|
)
|
|||
Income (loss) from equity method investment
|
(45
|
)
|
|
-2.7
|
%
|
|
(18
|
)
|
|
-1.0
|
%
|
|
(28
|
)
|
|||
Loss before income tax expense
|
(163
|
)
|
|
-9.6
|
%
|
|
(56
|
)
|
|
-3.2
|
%
|
|
(106
|
)
|
|||
Income tax expense
|
(12
|
)
|
|
-0.7
|
%
|
|
(32
|
)
|
|
-1.8
|
%
|
|
19
|
|
|||
Net loss
|
$
|
(175
|
)
|
|
-10.4
|
%
|
|
$
|
(88
|
)
|
|
-5.1
|
%
|
|
$
|
(87
|
)
|
Less Net (loss) attributable to non-controlling interest
|
(13
|
)
|
|
-0.8
|
%
|
|
(7
|
)
|
|
-0.4
|
%
|
|
(6
|
)
|
|||
Net Loss attributable to controlling interest
|
$
|
(162
|
)
|
|
-9.6
|
%
|
|
$
|
(81
|
)
|
|
-4.7
|
%
|
|
$
|
(81
|
)
|
Loss per share
|
(1.86
|
)
|
|
|
|
|
(0.93
|
)
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
Net Loss to EBITDA
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net Loss
|
$
|
(72
|
)
|
|
$
|
(36
|
)
|
|
$
|
(175
|
)
|
|
$
|
(88
|
)
|
Depreciation and amortization
|
27
|
|
|
26
|
|
|
82
|
|
|
91
|
|
||||
Loss from equity method investment
|
15
|
|
|
10
|
|
|
45
|
|
|
18
|
|
||||
Interest and other non-operating items, net
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
||||
Income tax
|
3
|
|
|
10
|
|
|
12
|
|
|
32
|
|
||||
EBITDA
|
$
|
(31
|
)
|
|
$
|
10
|
|
|
$
|
(40
|
)
|
|
$
|
52
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
Segment EBITDA
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Electronics
|
$
|
(18
|
)
|
|
$
|
13
|
|
|
$
|
(12
|
)
|
|
$
|
50
|
|
Brake Systems
|
—
|
|
|
4
|
|
|
6
|
|
|
18
|
|
||||
Segment EBITDA
|
(18
|
)
|
|
17
|
|
|
(6
|
)
|
|
69
|
|
||||
Corporate and other
|
(13
|
)
|
|
(6
|
)
|
|
(34
|
)
|
|
(17
|
)
|
||||
EBITDA
|
$
|
(31
|
)
|
|
$
|
10
|
|
|
$
|
(40
|
)
|
|
$
|
52
|
|
|
Nine Months Ended September 30
|
||||||
Dollars in millions, (except where specified)
|
2018
|
|
2017
|
||||
Selected cash flow items
|
$
|
|
$
|
||||
Net cash provided by operating activities
|
$
|
(181
|
)
|
|
$
|
(51
|
)
|
Capital expenditures
|
$
|
(123
|
)
|
|
$
|
(70
|
)
|
Equity method investment
|
$
|
(71
|
)
|
|
$
|
(112
|
)
|
Net Cash Used in Investing Activities
|
$
|
(120
|
)
|
|
$
|
(182
|
)
|
Net Cash Provided by Financing Activities
|
$
|
1,206
|
|
|
$
|
232
|
|
Number Associates
|
|
September 30, 2018
|
|
June 30, 2018
|
|
December 31, 2017
|
|
September 30, 2017
|
||||||
Total Associates
|
|
8,310
|
|
|
7,937
|
|
|
7,484
|
|
|
7,124
|
|
||
Whereof:
|
|
Direct Manufacturing
|
|
2,186
|
|
|
2,229
|
|
|
2,232
|
|
|
2,145
|
|
|
|
R,D&E
|
|
4,327
|
|
|
3,959
|
|
|
3,576
|
|
|
3,320
|
|
|
|
Temporary
|
|
1,254
|
|
|
1,246
|
|
|
1,151
|
|
|
1,052
|
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Changes in Internal Control over Financial Reporting
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1*+
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
101*
|
|
The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Statements of Operations (Unaudited); (ii) the Condensed Consolidated Statements of Comprehensive Loss (Unaudited); (iii) the Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Changes in Equity (Unaudited); (v) the Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.
|
*
|
Filed herewith.
|
+
|
Management contract or compensatory plan.
|
By:
|
/s/ Mathias Hermansson
|
|
Mathias Hermansson
|
|
Chief Financial Officer
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
•
|
The number of share equivalents in the table above will be increased by an amount equivalent to the value of the potential dividends paid out during the period between the effective date of the Agreement and the vesting/payment date, as follows. Any cash dividend paid with respect to the common stock for which the record date occurs on or after June 29, 2018 and the dividend payment date occurs on or before the vesting/payment dates set forth in the above table will result in a credit to the number of share equivalents in the table above of additional share equivalents equal to (a) the dollar amount of the dividend per share of common stock multiplied by the number of share equivalents outstanding as of the applicable record date, divided by (b) the closing price per share of the common stock on the New York Stock Exchange on the applicable dividend payment date. The additional share equivalents credited will be subject to the same vesting schedule, forfeiture and other terms that apply to the original share equivalents. Share equivalents that, at the relevant dividend payment date, previously have been settled or forfeited will not be eligible to receive dividend equivalents.
|
•
|
On the vesting/payment date, the outstanding balance of share equivalents, including any increase in the number of share equivalents due to the crediting of dividend equivalents, will be converted to a cash payment based on the closing price per share of Company common stock on the vesting/payment date. Payment will be made as soon as practically possible following the applicable vesting/payment date.
|
•
|
Section 5(c) of the Plan is hereby incorporated by reference; provided, however, that, notwithstanding the provisions of Section 5(c) of the Plan, a Change in Control (as defined in the Plan) will
not
trigger any acceleration of vesting or payment dates of the retention payment described herein.
|
•
|
Payment may be made on dates earlier than those set forth above, as set forth in the second paragraph of Item 14 of the Employment Agreement.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of VEONEER, INC.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [Language omitted in accordance with SEC Release No. 34-54942] for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
[Language omitted in accordance with SEC Release No. 34-54942]
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
October 25, 2018
|
|
/s/ Jan Carlson
|
Jan Carlson
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of VEONEER, INC.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [Language omitted in accordance with SEC Release No. 34-54942] for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
[Language omitted in accordance with SEC Release No. 34-54942]
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
October 25, 2018
|
|
/s/ Mathias Hermansson
|
Mathias Hermansson
|
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Jan Carlson
|
Jan Carlson
|
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Mathias Hermansson
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Mathias Hermansson
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Chief Financial Officer
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