(Stockholm, Jan. 27, 2005) - In the
quarter that ended December 31, 2004, Autoliv Inc. (NYSE: ALV and SSE: ALIV) - the worldwide leader in automotive safety
systems - reported continued strong underlying improvement trends in sales, earnings and cash flow.
Despite a 3% decline in the light vehicle production in the Triad, consolidated sales rose by 15% to $1,695 million and
organic sales by 8%, compared to the corresponding quarter 2003. Both operating income and income before taxes rose by 7%,
to $146 million and to $138 million, respectively. After adjustment for special items in 2003, operating income rose by 24%
on a comparable basis and pre-tax income by 25%. These sales and income levels are record-highs for any three-month period.
Net income decreased by 5% to $87 and earnings per share declined by 2% to 94 cents. These amounts were impacted by the special
items in 2003 and a higher tax rate in 2004.
Cash flow from operations amounted to $226 million and to $137 million after investing activities. This was the best cash
flow ever except for the fourth quarter 2003 which was boosted by the special items.
Sales for the first quarter 2005 are expected to increase by approximately 12%
given current exchange rates. Operating margin could reach the same level as in the first quarter 2004, provided that raw
material prices do not increase more than expected.
An earnings conference call will be held today at 3.30 p.m. (CET) (9.30 a.m. New York time). To listen in call:
In Europe +44-207-162-9919
In North America +1-334-323-0340
The conference will also be available and archived at www.autoliv.com under Financial info/Calendar.
4
th
Quarter 2004
Market Overview
Autoliv's market is driven not
only by vehicle production but also by the fact that new vehicle models are being equipped with more airbags and other
safety systems. For Autoliv's short-term performance, the changes in vehicle production are more important than the
relatively steady growth in the supply value per vehicle.
During the quarter, light vehicle production in the Triad (i.e. Western Europe, North America and Japan) is
estimated to have declined by 3% from the fourth quarter 2003.
In
Western Europe
, where Autoliv generates more than half of its revenues, light vehicle production dropped
by almost 5% which was nearly twice as much as expected at the beginning of the quarter. Most of the deviation, however,
did not affect Autoliv's most important customers or vehicle models. Instead, production increased for the Citroën C4 and C5,
Peugeot 407, Opel Astra, Seat Altea and the Volvo S40/V50. As a result, the vehicle mix was more favorable than anticipated.
In
North America
, which accounts for slightly more than a quarter of Autoliv's revenues, light vehicle
production decreased by 3% as expected. However, the Asian and European vehicle manufacturers increased their production in
North America by 5%, while GM, Ford and Chrysler ("the Big 3") cut their production by 6%. Since Autoliv has a higher sales
value per vehicle to the Asian and European manufacturers than to an average Big 3 vehicle, Autoliv benefited from the
changes in the region's production mix.
In
Japan
, which accounts for nearly one tenth of consolidated sales, light vehicle production increased by 1%.
Consolidated Sales
During the quarter, the Company continued to increase its global market share. Consolidated net sales rose by 15%
to $1,695 million compared to the fourth quarter 2003. Currency effects added 6% and acquisitions 1%. Consequently, sales
grew organically (sales excluding translation currency effects and acquisitions/divestitures) by 8% compared to an expected
growth rate of 5%. As a result, Autoliv outperformed the underlying vehicle production in the Triad by 11% and not by the
8% expected. The stronger-than-expected sales was partly due to the performance in the Rest of the World ("RoW") where both
vehicle production and the safety content per vehicle are increasing rapidly. Due to the difficulty to receive accurate
quarterly market data from the RoW, Autoliv has to compare its sales performance with the light vehicle production in the Triad,
although the total global production becomes increasingly more relevant as Autoliv's sales in the RoW grow.
The strong organic sales performance, in spite of declining light vehicle production and continued pricing pressure
from the vehicle manufacturers, reflects primarily three significant trends: 1) Autoliv's increasing share of the seat belt
market, 2) the introduction of curtain airbags in an increasing number of new vehicle models and 3) Autoliv's strong
performance in the RoW. Consolidated sales of curtain airbags grew organically by 49%. In addition, strong performance in
steering wheels (up 29%) and side airbags for chest protection (up 30%) contributed to the healthy top-line expansion.
Sales by Product
Sales of
airbag products
(incl. steering wheels) increased by 12% to $1,104 million. Currency effects added 5%, while sales grew organically by 7%,
or about 10% better than the light vehicle production in the Triad. In addition to the favorable vehicle mix, the superior growth
was due to the market penetration of side airbags for head protection and side airbags for chest protection as well as to
Autoliv's market share gains in steering wheels and safety electronics. Sales of knee airbags have also started to take off.
Sales of
seat belt products
(incl. seat sub-systems) expanded by 20% to $591 million. Organic growth added
12%, currency effects 7% and acquisitions 1%. Autoliv gained market shares in all regions. In Europe, sales were driven by
Audi's A6, Citroën's C4 and C5, Mercedes' A-class, Mitsubishi's Colt, Opel's Astra, Peugeot's 407, Smart's ForFour and
Volvo's S40/V50. In North America, sales were driven by new business for the Buick LaCrosse, Ford 500 and Freestyle,
Theta Equinox and Malibu Maxx. In Japan, sales were driven by new business for Honda Edix, Mazda 3 and Nissan Tiida and LaFesta.
Sales by Region
Sales from Autoliv's
European
companies
rose by 17% to $971 million including currency effects of 9%. The organic growth of 8% was roughly 13% better
than West European vehicle production. Autoliv's performance reflects market share gains in seat belts and steering wheels
as well as strong sales performance for the
Inflatable Curtain
. Sales of this product were driven by several new models,
such as, Citroën's C4, Honda's CR-V, Renault's Mégane, Skoda's Octavia, Opel's Astra, Peugeot's 407, Seat's Altea, Toyota's
Corolla Verso and Volkswagen's Golf, which all have Autoliv's side-curtain airbag as standard.
Sales from Autoliv's
North American companies
increased by 4% to $434 million which was 7% better than the
region's light vehicle production. Autoliv's performance was mainly due to the introduction of head curtain airbags, market
share gains in seat belts and the favorable customer mix. Sales continued to be adversely effected by the expiration of
frontal airbag contracts and by the on-going phase-out of low-margin inflators for airbag systems. These negative effects
were offset by new business for the
Inflatable Curtain
(up 61%), which included the Dodge Dakota, the
Ford 500 and Freestyle, the Nissan Pathfinder, the Honda Odyssey and the Toyota Sienna and Sequoia. Sales were also
driven by strong demand for knee airbags. Seat belt sales grew by 22%, spear-headed by a 42% increase in the pretensioner
product area.
Sales from Autoliv companies in
Japan
rose by 18% to $150 million. Currency effects added 4% to sales.
Consequently, organic growth was 14% compared to the 1% increase in the Japanese vehicle production. The organic growth
occurred in almost all product areas. The introduction of Honda's CR-V, Mazda's 3-series, Nissan's Tiida and LaFesta and
Toyota's Corolla helped Autoliv to outperform vehicle production also in Japan.
Sales from Autoliv companies in the
Rest of the World
(RoW) surged by 40% to $141 million. The organic
growth hit 26%, while acquisitions added 9% to sales and currency effects 5%. The organic growth occurred in virtually all
product areas, and was especially strong in Korea.
Earnings
The strong improvement trends in
the underlying earnings continued in the fourth quarter, but the comparisons in reported numbers were affected by special
items in 2003. For details, refer to the reconciliation tables below.
The favorable underlying trends are due to growth generated by new products (e.g. the
Inflatable Curtain
), higher
market shares (mainly for seat belts), expansions in Japan and other Asian markets, as well as to a positive vehicle mix
and currency effects. The fact that Autoliv has managed to cope with both pricing pressure from customers and higher raw
material prices is also a result of a number of internal cost-reduction initiatives such as plant consolidations, moving production
to low-cost countries, consolidation of the supplier base and re-designing of products.
During the quarter, gross profit improved by 18% or $51 million to $335 million despite approximately $12 million
of higher raw material costs than anticipated at the beginning of the year. In 2003, gross profit was charged with provisions
of $8 million as special items. After adjustment for these costs, the improvement was 15%. In 2004, currency translation effects contributed 6% or
$18 million to gross profit. Gross margin amounted to 19.7%, the same level as reported a year ago. Excluding the special
items the margin was 19.2% in the fourth quarter 2003. The margin improvement was due to the strong sales performance and
the cost-reduction programs.
Operating income rose by 7% to $146 million and by 24% excluding special items. In 2003, the Company recorded $31
million in income for a license revenue and $13 million in costs for provisions, giving a net effect of $18 million in special
items. Operating margin in 2004 amounted to 8.6% compared to 9.2% reported for the fourth quarter
2003 and 8.0% excluding the special items. Selling, administrative and general expense stood unchanged at 5.3% of
sales despite approximately $5 million in incremental external cost due to the new act "Sarbanes-Oxley". The other operating
expense includes $6 million for streamlining of production and movement of production to low-cost countries.
Research, Development and Engineering (R,D&E) expense decreased in relation to sales to 5.2% from 5.5%, partly due to a
one-time royalty income in 2004. The improvement in margin also reflects the higher sales and gross margin.
Income before taxes grew by 7% to $138 million and by 25% excluding the special items in 2003. The improvement was
due to better operating income and the effect of lower debt.
In the previous quarterly report, the effective tax rate for the full year 2004 was expected to be 31%. In this report
the overall effective tax for the year has been increased to 32%, resulting in the recognition of additional tax expense and an
effective tax rate of 34.7% in the fourth quarter. The amounts included in this press release are unaudited. The Company continues
to review certain income tax positions, and will finalize this process prior to publishing its final 2004 financial statements. The
fourth quarter 2003 was affected by a favorable catch up effect, resulting in an effective tax rate of 26.6%. This was
mainly an effect of an unusually low effective tax rate on the license income included in the special items.
Due to the special items in 2003 and the higher tax rate in 2004, net income for the quarter decreased by 5% to $87
million and earnings per share by 2% to 94 cents. In 2004, the higher tax rate decreased earnings per share by 12 cents
(whereof 6 cents relates to the license income in 2003), while currency effects added 9 cents and the effect of the stock
repurchase program added 2 cents per share. In 2003, the special items boosted earnings per share by 18 cents.
Return on capital employed improved to 19% from 18% on a reported basis and from 15% on a comparable basis. Return
on equity amounted to 14% compared to 16% reported for the fourth quarter 2003 and to 13% on a comparable basis.
Cash Flow and Balance Sheet
Operations generated a positive
cash flow for the 13th quarter in a row. Cash flow amounted to $226 million before investing activities and $137 million
after these activities. This was the best cash flow ever for a quarter, except for the fourth quarter 2003 which was
boosted by $26 million in cash from special items. The strong cash flow in the 2004 quarter was due to the earnings
performance and to a reduction of funds tied up in working capital.
Compared to the corresponding quarter 2003, capital expenditures, net, increased by 64% or by $36 million to $91
million which was $11 million more than depreciation and amortization of $80 million. The capital expenditures included
additional manufacturing capacity for the
Inflatable Curtain
.
Working capital continued to decrease. In absolute numbers, it decreased by $31 million during the quarter and, in
relation to sales, to 7.9% from 8.7% at the beginning of the quarter and from 10.0% at the beginning of the year. Autoliv therefore continued
to meet its target that working capital should not exceed 10% of sales. In relation to sales days, receivables decreased
during the quarter to 66 days from 82 days and from the beginning of the year from 69 days. Days inventory outstanding
stood unchanged at 28 days from the beginning of the year but decreased during the quarter from 32 days.
During the quarter, net debt decreased by $114 million to $599 million and net debt to capitalization to 18% from 22%,
despite a dividend payment of $18 million and stock buy-backs for $14 million. Gross interest-bearing debt increased, however,
by $51 million to $981 million due to currency effects and timing differences between cash generation and debt maturities.
Autoliv's policy is to always maintain a net debt that is significantly below 3.0 times the EBITDA (Earnings before
Interest, Taxes, Depreciation and Amortization) and an interest coverage ratio significantly above 2.75 times. At the end
of the year, these ratios were 0.8 and 14.8, respectively.
During the quarter, equity increased by $179 million to $2,630 million. Equity was favorably effected by $123 million
from currency effects, by $87 million from the net income and by $2 million each from the effect of exercised stock options
and the effect of changes in the market value of cash-flow hedges. Equity decreased by the dividend payment
and the stock buy-backs agregating to $33 million, as well as by $2 million from mainly pension costs. The stock repurchase
program increased equity per share by 7 cents to $28.58.
Full Year
Market Overview
During the 12-month period
January through December 2004, light vehicle production in the Triad stalled at the same level as in 2003.
In
Western Europe
, light vehicle production decreased by 0.5% with a favorable mix for Autoliv.
In
North America
, light vehicle production also declined by less than 1%. However, Asian and European
vehicle manufacturers increased their North American production by 9%, while GM, Ford and Chrysler reduced their production
by 4%. Therefore, the vehicle mix was favorable for Autoliv.
In
Japan
, light vehicle production increased by almost 3%.
Consolidated Sales
Sales for the year rose by 16% to
$6.144 million. Organic growth was 8% despite the flat vehicle production in the Triad. Currency effects added 7% to sales
and acquisitions 1%. Organic growth was primarily due to higher market shares in seat belts and the
Inflatable Curtain
. Higher market shares in steering wheels and safety electronics also contributed to the performance, as well as higher
penetration rates for side airbags for chest protection.
Airbag products sales
increased by 12% to $4,028 million. Both currency effects and organic growth
contributed 6%.
Seat belt products sales
rose by 25% to $2,116 million including currency effects of 8% and acquisitions of
4%. The organic growth of 13% was mainly driven by market share gains and a favorable vehicle mix in the Triad along with
increased vehicle production in Asia.
Sales from Autoliv's
European companies
rose by 19% to $3.518 million including currency effects of 10%. The
fact that sales grew organically by 9% at the same time as West European light vehicle production was flat was due to a
favorable vehicle model mix in combination with the global trends of higher market shares in seat belts and the
introduction of curtain airbags. Higher market shares for steering wheels and the continuos rollout of thorax side airbags
also contributed to the strong performance.
Sales from Autoliv's
North American companies
increased by 3% to $1,659 million mainly due to the
introduction of the
Inflatable Curtain
, significant market share gains in seat belts and safety electronics. The increase
was also due to a favorable customer mix.
Sales from Autoliv's companies in
Japan
jumped 30% to $507 million. Excluding acquisitions of 11% and currency
effects of 7%, the organic growth was 12%, which was 9% better than the Japanese light vehicle production.
Sales from Autoliv companies in the
Rest of the World
expanded by 30% to $460 million. Currency
effects impacted sales by 8% and acquisitions by 5%. The organic growth of 17% mainly occurred in Korea and China due to
strong demand for seat belts and both frontal and side airbags.
Earnings
Income improved on all lines in
the income statement. Gross profit increased by 22% to $1,221 million and the gross margin rose to 19.9%
from 18.9%, despite approximately $20 million higher raw material prices than anticipated at the beginning of the year. After
adjustment for special items, the increase was 21% and the 2003 gross profit margin 19.1%. In 2003, currency hedging reduced gross
profit by $15 million. In 2004, currency hedging and currency translations added $70 million.
Operating income rose by 20% to $513 million and the operating margin to 8.4% from 8.1%. Adjusting for the special
items, the improvement in operating income was 26% and the 2003 operating margin 7.7%. The implementation of the
Sarbanes-Oxley Act reduced the 2004 operating income by $9 million.
Income before taxes improved by 22% to $485 million and by 28% excluding special items. The improvements are due to
the strong sales performance, the margin improvement and a lower interest expense.
The effective tax rate rose to 32% from 30.3% in 2003, which was unusually low partly due to the lower effective rate on the special
items.
Net income rose by 19% to $320 million and earnings per share rose by 21% or by 59 cents to $3.40. Currency effects added
39 cents and the effect of the stock repurchase program 3 cents to earnings per share, while the higher tax rate reduced
earnings per share by 8 cents. In 2003, the special items boosted earnings per share by 18 cents.
The return on equity improved to 13% from 12% and the return on capital employed to 16% from 14% in 2003.
Cash Flow and Balance Sheet
Operations generated $680 million
in cash compared to $529 million in 2003. The cash generation is due to both the net income and a reduction in working
capital. In relation to sales, working capital was reduced to 7.9% during the year from 10.0%.
After capital expenditures and acquisitions, operating activities generated $377 million in cash and $368 million
excluding the acquisitions. Capital expenditures, net rose by $67 million to $313 million. Depreciation and
amortization amounted to $298 million.
During the year, net debt has been reduced by $186 million, gross interest-bearing debt by $15 million and the
net-debt-to-capitalization ratio to 18% from 24% despite dividend payments and stock buy-backs aggregating to $214 million.
Equity increased by $228 million. Net income added $320 million, currency effects $109 million, exercise of stock
options $10 million and changes in the market value of cash-flow hedges $5 million. Equity was reduced by the dividend
payments of $70 million, payments related to the share repurchase program of $144 million and $2 million primarily relating to
pension costs.
Q4 - Report 2004
Headcount
Total headcount (employees plus
temporary hourly workers) decreased by 100 during the quarter and increased by 2,800 during the full year to 39,800. Of the
full-year increase, 90% was concentrated in low-labor-cost countries and only 5% was fixed employees in high-labor-cost
countries.
Currently, 35% of headcount (and 39% of fixed employees) are in low-labor-cost countries compared to 31% a year ago
and less than 10% six years ago, when the reallocation of production started to accelerate.
Prospects
During the first quarter of 2005,
light vehicle production in the Triad is expected to decrease by 2%. Currency effects are expected to add 3% to the
Company's revenues (provided that the mid-January exchange rates prevail). In most countries there will be three more
reporting days in this year's first quarter than in the first quarter 2004, which should boost sales by approximately 5%.
Based on these assumptions and the general growth of the automotive safety market, sales could grow by approximately 12% in
the first quarter compared to the corresponding period 2004. Provided that the effect of higher raw material prices
does not exceed $25 million, net, operating margin could reach approximately 8%, i.e. roughly the same level as recorded in
the first quarter 2004.
The favorable impact in the first quarter from the change in the number of reporting days will be offset by a
corresponding negative effect in the fourth quarter. This adjustment will therefore not have any impact on the full-year
results.
During the full year 2005, light vehicle production in the Triad is expected to be flat. Currency effects are
expected to add 4% to sales (provided that the mid-January exchange rates prevail). In addition, the Company expects to
continue to improve its market share and to outperform the over-all occupant restraint market but the growth rate will not be as
exceptional as in 2004.
The effective tax rate for 2005 is projected to be on a similar level as in 2004. The Company believes that the
rate may be more volatile quarter by quarter than historically.
Other Significant Events
These financial results have been affected by a few small changes in the Company's structure. As of April 1, 2004,
Autoliv started to consolidate its joint venture in Taiwan. Autoliv's interest remains 59%, but through an amendment in the
ownership agreement Autoliv has received a controlling position in the joint venture, which has nearly $20 million in
external sales. Similarly, as of October 1, Autoliv started to consolidate its joint venture in Nanjing, China, following
a change in the ownership agreement. Autoliv's interest in the joint venture, which has nearly $35 million in annual sales,
remains 50%.
The full-year comparisons have also been affected by the acquistions on April 1, 2003 of NSK's Asian seat belt
operations and of the NSI steering wheel operations. The NSK operations had $150 million in external sales and NSI less
than $2 million. In addition, in the third quarter 2003, Autoliv acquired Protektor with $10 million in annual sales.
During the fourth quarter, Autoliv has bought back 0.3 million shares for $14 million. During the full year, Autoliv
repurchased 3.4 million for $144 million at an average cost of $41.88 per share. In addition, Autoliv paid dividends of $18
million in the quarter and $70 million during the full year.
Since the repurchasing program was adopted in 2000, Autoliv has bought back shares for $320 million at an average
cost of $27.61. At the end of 2004, this investment had a market value of $560 million, an increase of more than 75%. Under
the existing authorizations, another 8.4 million shares could be repurchased.
The bank group that has granted Autoliv an $850 million revolving credit facility ("RCF") has agreed to remove the
covenant requirements of the RCF due to Autoliv's strong financial position. Autoliv therefore no longer has to maintain
certain key ratios in order to utilize the RCF.
Dividend and Next Report
The Company has declared a 25%
increase in the dividend per share to 25 cents to be paid on March 3 to shareholders of record as of February 3. The
ex-date is February 1.
The next quarterly report will be published on April 21, 2005.
Annual General Meeting of Shareholders
The Annual General Meeting of
Shareholders will be held in Chicago on April 26. Holders of record at the close of business on March 1 are entitled to be
present and vote at the Meeting. Notice of the General Meeting, the Annual Report, the Proxy Statement and the Proxy Card
will be mailed in March to Autoliv's shareholders. Shareholders are urged to return their proxy cards whether or not they
plan to attend the Meeting.
"Safe Harbor Statement"
Statements in this report that
are not statements of historical facts may be forward-looking statements, which involve risks and uncertainties, including
- but not limited to - the economic outlook for the Company's markets, fluctuation of foreign currencies, fluctuation in
vehicle production schedules for which the Company is a supplier, continued uncertainty in program awards and performance,
the financial results of companies in which Autoliv has made technology investments, pricing negotiations with customers,
increasing costs, supply issues, product liability, warranty and recall claims, dependence on customers and other factors
discussed in Autoliv's filings with the Securities and Exchange Commission (SEC). We do not intend or assume any obligation
to update any of these statements.
Definitions and SEC Filings
Please refer to www.autoliv.com/
Financial info or to the Annual Report for definitions of terms used in this report.
The filings with the SEC of Autoliv's annual report, 10-K report, quarterly reports in the form of 10-Q reports,
proxy statements, management's certifications, press releases in the form of 8-K and other documents can also be obtained
free of charge from Autoliv at the Company's address. These documents are also available at SEC's website www.sec.gov and
at Autoliv's corporate website www.autoliv.com
KEY RATIOS
Quarter Oct - Dec
12 months Jan - Dec
2004
2003
2003
2004
2003
2003
Reported
Reported
Adjusted
1)
Reported
Reported
Adjusted
1)
Earnings per share
2)
$.94
$.96
$.78
$3.40
$2.81
$2.63
Equity per share
28.58
25.31
25.31
28.58
25.31
25.31
Cash dividend per share
.20
.15
.15
.80
.56
.56
Working capital, $ in millions
484
528
528
484
528
528
Capital employed, $ in millions
3,229
3,187
3,187
3,229
3,187
3,187
Net debt, $ in millions
3)
599
785
785
599
785
785
Net debt to equity ratio, %
23
33
33
23
33
33
Net debt to capitalization, %
4)
18
24
24
18
24
24
Gross margin, %
5)
19.7
19.2
19.7
19.9
18.9
19.1
Operating margin, %
6)
8.6
9.2
8.0
8.4
8.1
7.7
Return on shareholders' equity, %
13.7
15.8
12.9
12.9
12.2
11.5
Return on capital employed, %
18.5
17.5
15.3
16.4
14.3
13.7
Average no. of shares in millions
2)
92.6
95.2
95.2
94.2
95.4
95.4
No. of shares at period-end in millions
7)
92.0
94.9
94.9
92.0
94.9
94.9
No. of employees at period-end
34,500
32,100
32,100
34,500
32,100
32,100
Headcount at period-end
39,800
37,000
37,000
39,800
37,000
37,000
Days receivables outstanding
8)
66
69
69
73
77
77
Days inventory outstanding
9)
28
28
28
31
31
31
1)
Highlighted figures exclude Special Items and thus the adjusted figures are a non-GAAP financial measure (see Reconciliation of Non-GAAP Financial Measures to U.S. GAAP)
2)
Assuming dilution and net of treasury shares
3)
Short- and long-term interest bearing liabilities and related derivatives, less cash and cash equivalents
4)
Net debt in relation to net debt and equity (including minority)
5)
Gross profit relative to sales
6)
Operating income relative to sales
7)
Excluding dilution and net of treasury shares
8)
Outstanding receivables at average exchange rates relative to average daily sales
9)
Outstanding inventory at average exchange rates relative to average daily sales
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share
data)
Quarter Oct - Dec
12 months Jan - Dec
2004
2003
2003
2004
2003
2003
Reported
Reported
Adjusted
1)
Reported
Reported
Adjusted
1)
Net sales
- Airbag products
$1,103.9
$984.3
$984.3
$4,028.0
$3,607.6
$3,607.6
- Seat belt products
590.9
491.8
491.8
2,115.9
1,693.2
1,693.2
Total net sales
1,694.8
1,476.1
1,476.1
6,143.9
5,300.8
5,300.8
Cost of sales
1,360.1
(1,192.2)
(1,184.7)
(4,922.7)
(4,298.1)
(4,290.6)
Gross profit
334.7
283.9
291.4
1,221.2
1,002.7
1,010.2
Selling, general & administrative expenses
(89.5)
(78.9)
(78.9)
(307.4)
(273.2)
(273.2)
Research, development & engineering expenses
(88.4)
(81.4)
(81.4)
(368.4)
(305.4)
(305.4)
Amortization of intangibles
(5.2)
(5.4)
(5.4)
(21.1)
(21.1)
(21.1)
Other income (expense), net
(5.3)
18.0
(7.5)
(11.2)
23.8
(1.7)
Operating income
146.3
136.2
118.2
513.1
426.8
408.8
Equity in earnings of affiliates
1.7
3.2
3.2
9.6
11.5
11.5
Interest income
1.2
1.1
1.1
4.0
3.9
3.9
Interest expense
(11.2)
(11.7)
(11.7)
(40.2)
(47.7)
(47.7)
Other financial items
(0.2)
(0.4)
(0.4)
(2.0)
2.5
2.5
Income before income taxes
137.8
128.4
110.4
484.5
397.0
379.0
Income taxes
(47.8)
(34.2)
(33.4)
(155.3)
(120.2)
(119.4)
Minority interests in subsidiaries
(2.9)
(2.5)
(2.5)
(9.2)
(8.4)
(8.4)
Net income
$87.1
$91.7
$74.5
$320.0
$268.4
$251.2
Earnings per share (basic and diluted)
$.94
$.96
$.78
$3.40
$2.81
$2.63
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
Dec 31
Sept 30
June 30
March 31
Dec 31
2004
2004
2004
2004
2003
Assets
Cash & cash equivalents
$229.2
$106.8
$112.7
$127.5
$93.7
Receivables
1,288.8
1,228.9
1,262.4
1,281.8
1,195.3
Inventories
509.2
454.8
415.6
423.8
452.0
Other current assets
85.9
77.8
76.9
90.3
98.40
Total current assets
2,113.1
1,868.3
1,867.6
1,923.4
1,839.4
Property, plant & equipment, net
1,159.7
1,065.2
1,057.3
1,045.3
1,052.2
Goodwill assets, net
1,552.0
1,529.5
1,528.7
1,529.0
1,531.4
Intangible assets, net
157.3
162.1
167.5
172.9
178.9
Investments and other non-current assets
323.6
287.1
287.9
285.0
292.4
Total assets
$5,305.7
$4,912.2
$4,909.0
$4,955.6
$4,894.3
Liabilities and shareholders' equity
Short-term debt
$313.8
$176.1
$121.4
$114.5
$149.4
Accounts payable
798.9
702.5
723.0
698.1
720.5
Other current liabilities
606.1
548.2
543.4
559.0
497.0
Total current liabilities
1,718.8
1,426.8
1,387.8
1,371.6
1,366.9
Long-term debt
667.1
754.0
780.3
868.8
846.2
Pension liability
73.6
65.9
67.7
67.4
64.5
Other non-current liabilities
157.7
166.2
168.6
173.6
173.8
Minority interests in subsidiaries
58.8
48.6
50.0
45.9
40.9
Shareholders' equity
2,629.7
2,450.7
2,454.6
2,428.3
2,402.0
Total liabilities and shareholders' equity
$5,305.7
$4,912.2
$4,909.0
$4,955.6
$4,894.3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
Quarter Oct - Dec
12 months Jan - Dec
2004
2003
2004
2003
Net income
$87.1
$91.7
$320.0
$268.4
Depreciation and amortization
80.3
75.0
298.3
278.8
Deferred taxes and other
1.8
20.3
10.2
31.4
Change in operating assets and liabilities
56.5
42.3
51.7
(49.8)
Net cash provided by operating activities
225.7
229.3
680.2
528.8
Capital expenditures, net
(90.8)
(55.2)
(312.7)
(246.2)
Acquisitions of businesses and other, net
1.6
(0.5)
9.8
(29.2)
Net cash before financing
136.5
173.6
377.3
253.4
Net increase (decrease) in short-term debt
89.8
(18.0)
33.2
(51.9)
Issuance of long-term debt
0.7
39.2
95.1
157.5
Repayments and other changes in long-term debt
(93.1)
(201.9)
(185.9)
(284.9)
Dividends paid
(18.4)
(14.2)
(70.3)
(51.3)
Shares repurchased
(14.4)
0.0
(143.9)
(43.0)
Stock options exercised
2.0
3.6
10.2
7.1
Other, net
0.2
2.5
0.9
(6.3)
Effect of exchange rate changes on cash
19.1
4.5
18.9
11.6
Increase (decrease) in cash and cash equivalents
122.4
(10.7)
135.5
(7.8)
Cash and cash equivalents at period-start
106.8
104.4
93.7
101.5
Cash and cash equivalents at period- end
$229.2
$93.7
$229.2
$93.7
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
(Dollars in millions)
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