SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
|Commisson file Number: 001-12933|
(Exact name of registrant as
specified in its charter)
(State or other juris-
diction of incorporation
|World Trade Center,|
Klarabergsviadukten 70, SE-107 24
(Address of principal executive offices)
|+46 8 587 20 600|
(Registrant's telephone number,
including area code)
Securites registered pursuant to Section 12(b) of the Act:
Title of each class:
|Name of each exchange on which registered:|
|Common Stock, par value $1.00 per share
Swedish Depository Receipts
|New York Stock Exchange|
Stockholm Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes: [X] No: [ ]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes: [ ] No: [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes: [X] No: [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer (as defined in Exchange Act Rule 12b-2). Yes: [X] No: [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes: [ ] No: [X ]
The aggregate market value of the voting and non-voting common equity of Autoliv, Inc. as of the last business day of the second fiscal quarter of 2006, amounted to $4,646 million.
Number of shares of Common Stock outstanding as of February 20, 2007: 80,261,836.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Shareholders for the fiscal year ended December 31, 2006 (the "Annual Report") are incorporated by reference into Parts I and II.
2. Portions of the definitive Proxy Statement dated March 8, 2007, for the annual stockholders' meeting to be held May 3, 2007 (the "2007 Proxy Statement"), are incorporated by reference into Parts II and III.
3. Certain Exhibits of Autoliv, Inc.'s Registration Statement on Form S-4 filed on June 13, 1997 (File #333-23813)(the "Registration Statement") are incorporated by reference into Part IV.
|Item 1A.||Risk Factors|
|Item 1B.||Unresolved Staff Comments|
|Item 3.||Legal Proceedings|
|Item 4.||Submission of Matters to a Vote of Security Holders|
|Item 5.||Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities|
|Item 6.||Selected Financial Data|
|Item 7.||Management's Discussion and Analysis of Financial Condition and Results of Operations|
|Item 7A.||Quantitative and Qualitative Disclosures about Market Risk|
|Item 8.||Financial Statements and Supplementary Data|
|Item 9.||Changes in and Disagreements with Accountants on Accounting and Financial Disclosure|
|Item 9A.||Controls and Procedures|
|Item 9B.||Other Information|
|Item 10.||Directors, Executive Officers, and Corporate Governance|
|Item 11.||Executive Compensation|
|Item 12.||Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters|
|Item 13.||Certain Relationships and Related Transactions, and Director Independence|
|Item 14.||Principal Accounting Fees and Services|
|Item 15.||Exhibits and Financial Statement Schedules|
ITEM 1. BUSINESS*
Shares of Autoliv common stock are traded on the New York Stock Exchange under the symbol "ALV" and Swedish Depository Receipts representing shares of Autoliv common stock trade on the OMX Stockholm Stock Exchange under the symbol "ALIV". Options in Autoliv shares are listed on the Chicago Board Options Exchange under the symbol "ALIV". Autoliv's fiscal year ends on December 31.
AAB, a Swedish corporation, is a leading developer, manufacturer and supplier to the automotive industry of automotive safety systems. Starting with seatbelts in 1956, AAB expanded its product lines to include seatbelt pretensioners (1989), frontal airbags (1991), side-impact airbags (1994), steering wheels (1995) and seat sub-systems (1996).
ASP, an Indiana corporation, pioneered airbag technology in 1968 and has since grown into one of the world's leading producers of airbag modules and inflators. ASP designs, develops and manufactures airbag modules, inflators, airbag cushions, seatbelts, and steering wheels. ASP sells inflators and modules for use in driver, passenger, side-impact, and knee bolster airbag systems for worldwide automotive markets.
* This form 10-K contains statements that are not historical facts but forward-looking statements that involve risks and uncertainties that could cause the Company's results to differ materially from what is projected, including, but not limited to, the following: higher raw material costs or other expenses; a major loss of customers; increased competitive pricing pressure on the Company's business; failure to develop or commercialize successfully new products or technologies; the outcome of pending or future litigation and changes in governmental procedures, laws or regulations, including environmental regulations; plant disruptions or shutdowns due to accidents, natural acts or governmental action; product liability and recall issues; and other difficulties in improving margin or financial performance. In addition, the Company's forward-looking statements could be affected by general industry and market conditions and growth rates, general domestic and international economic conditions, including currency exchange rate fluctuations and other factors. Except for the Company's ongoing obligation to disclose material information under the federal securities laws, the Company undertakes no obligation to update public and forward-looking statements whether as a result of new information or future events. For any forward-looking statements contained in any document, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Autoliv's head office is located in Stockholm, Sweden, and employs approximately 40 people. Autoliv had approximately 35,700 employees at December 31, 2006, and a total headcount, including temporary employees, of 41,800. Autoliv's sales in 2006 were $6.2 billion, approximately 66% of which consisted of airbags and associated products and approximately 34% of which consisted of seatbelts and associated products. Autoliv's most important markets are in Europe, United States, Japan and Asia-Pacific.
The information required by Item 1 regarding developments in the Company's business during 2006 is contained in the Annual Report on pages 10-15 and 26 and is incorporated herein by reference.
Financial Information on Segments
Products, Market and Competition
Manufacturing and Production
Autoliv's "just-in-time" delivery systems have been designed to accommodate the specific requirements of each customer for low levels of inventory and rapid stock delivery service. "Just-in-time" deliveries require final assembly, or at least, distribution centers in geographic areas close to customers to facilitate rapid delivery. The fact that the major automobile manufacturers are continually expanding production activities into more countries and require the same or similar safety systems as those produced in Europe, Japan or the United States increases the importance to suppliers of having assembly capacity in several countries. Consolidation among our customers also supports this trend.
If the supply of raw materials and components is not disrupted, Autoliv's assembly operations generally are not constrained by capacity considerations. Autoliv can adjust capacity in response to changes in demand within a few weeks by adding or removing work shifts and within a few months by adding or removing standardized production and assembly lines. Most of Autoliv's assembly factories can make sufficient space available to accommodate additional production lines to satisfy foreseeable increases in capacity. As a result, Autoliv can usually adjust its manufacturing capacity faster than its customers can adjust their capacity fluctuations in the general demand for vehicles or in the demand for a specific vehicle model, provided that customers notify Autoliv when they become aware of such changes in demand.
Autoliv has for many years practiced a "zero-defect" proactive quality policy, and continues to strive to improve its working methods. This pursuit of excellence extends from the earliest phases of product development to the proper product disposal following many years of use in a vehicle. Autoliv's comprehensive Autoliv Product Development System (APDS) process includes several key check points during the development of new products that are designed to ensure that new products are well-built and have no hidden weaknesses.
The Autoliv Production System (APS) is at the core of Autoliv's manufacturing philosophy. APS integrates essential quality elements, such as mistake proofing, statistical process control and operator involvement, into the manufacturing processes. This "zero-defect" policy extends beyond Autoliv to the entire supplier base. The global Autoliv Supplier Manual, which is based on strict automotive standards, defines the quality requirements, as well as the collaboration model to the supply base.
Autoliv continues to execute its plan to have all subsidiaries certified to ISO/TS 16949, a global automotive quality management system. At present, approximately 95% of Autoliv's subsidiaries have been certified to this new quality standard. These subsidiaries account for approximately 98% of Autoliv's sales. The non-certified subsidiaries are primarily new subsidiaries that have not yet been certified.
Additional information on quality management is included in the section "Quality" on page 22 of the Annual Report and is incorporated herein by reference.
Seasonality and Backlog
Dependence on Customers
Research, Development and Engineering
Financial Information on Geographic Areas
Autoliv Joint Ventures at December 31, 2006
% Ownership by Autoliv
|30%||Changchun Hongguang-Autoliv Vehicle Safety Systems Co. Ltd., Changchun|
|45%||Shanghai-VOA Webbing Belt Co. Ltd., Shanghai|
|49%||EAK SA Composants pour L'Industrie Automobile, Valentigney|
|49%||EAK SNC Composants pour L'Industrie Automobile, Valentigney|
|50%||Autoliv-IFB India Ltd., Bangalore|
|49%||Autoliv-Hirotako Safety Sdn Bhd (parent and subsidiaries), Kuala Lumpur|
Autoliv typically contributes design and production knowledge to joint ventures, with the local partner providing sales support and manufacturing facilities. Some of these local partners manufacture and sell standardized seatbelt systems, and will, through the joint venture with Autoliv, be able to upgrade their technology to meet specific customer demands and/or expand their product offerings. In addition to joint ventures in emerging markets, Autoliv has also established joint ventures in developed markets, such as France, either to strengthen its sales position or to gain access to the market.
ITEM 1A - RISK FACTORS
Changes in the source and availability of raw materials and components.
Delays or stoppages in the delivery of components that are produced by a single
supplier would result in supply interruption to our customers and could negatively impact our business.
Our business is exposed to risks inherent in global operations.
If our patents are declared invalid or our technology infringes on the proprietary
rights of others, our ability to compete may be impaired.
The cyclicality of automotive production and sales could adversely affect our
Our business could be materially and adversely affected if we lost any of our
In addition, automobile manufacturers seek competitive quotes from suppliers and demand significant price reductions over a product's life cycle. In line with our customers' purchasing strategies, we have implemented cost-saving programs that management believes will help reduce our own material, production and administrative costs.
Information concerning our major customers is included on page 12 in the section "Creating Shareholder Value" and in Note 19 of the Consolidated Financial Statements on page 54 of the Annual Report, and is incorporated herein by reference.
Escalating pricing pressures from our customers may adversely affect our business.
Additional information on pricing pressure is included in the "Management's Discussion and Analysis" section "Risks and Risk Management" on page 32 of the Annual Report and is incorporated herein by reference.
We may incur material losses and costs as a result of product liability and warranty and recall claims that may be brought against us.
In addition, if any of our products are or are alleged to be defective, we may be required to participate in a recall involving such products. Every vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers. As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. A recall claim or a product liability claim brought against Autoliv in excess of our available insurance may have a material adverse effect on our business. Vehicle manufacturers are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold us responsible for some or the entire repair or replacement costs of defective products under new vehicle warranties, when the product supplied did not perform as represented. Accordingly, the future costs of warranty claims by our customers may be material. However, we believe our established reserves are adequate to cover potential warranty settlements. Our warranty reserves are based upon our best estimates of amounts necessary to settle future and existing claims. Although we regularly evaluate the appropriateness of these reserves, and adjust them when appropriate, the final amounts determined to be due related to these matters could differ materially from our recorded estimates.
Our business may be adversely affected by environmental and safety regulations or
To reduce our exposure to environmental risk, we implemented an environmental plan in 1996 based on our environmental policy. According to the plan, we sought to certify according to ISO 14001, an international standard for environmental management systems, all our plants and units. To date, 61 of our facilities, representing more than 95% of our consolidated sales, have been certified according to ISO 14001.
We have no pending material environmental related issues. We have however made and will continue to make capital and other expenditures to comply with environmental requirements. These regulatory developments or adverse publicity related thereto may adversely affect customer demand for our automotive safety products. Such changes could also result in slower increases, or in decreases, in demand for automotive safety products in other countries.
Additional information relating to our environmental management is included in the "Corporate Social Responsibility" section "Environment" starting on page 21 of the Annual Report and is incorporated herein by reference.
Loss of market share by domestic vehicle manufacturers may adversely affect our
results in the future.
Work stoppages or other labor issues at our customers' facilities or at our
facilities could adversely affect our operations.
Our ability to operate our company effectively could be impaired if we fail to
attract and retain key personnel.
We operate in highly competitive markets.
Additional information concerning competition is included in the "Management's Discussion and Analysis" section "Risks and Risk Management" on page 33 of the Annual Report and is incorporated herein by reference.
We may be unable to make the technological advances necessary to carry out product
innovations sufficient to meet our customers' demands.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
ITEM II. PROPERTIES
Autoliv's principal executive offices are located in the World Trade Center, Klarabergsviadukten 70, SE-107 24, Stockholm, Sweden. Autoliv's various businesses operate in a number of production facilities and offices. Autoliv believes that its properties are adequately maintained and suitable for their intended use and that the Company's production facilities have adequate capacity for the Company's current and foreseeable needs. All of Autoliv's production facilities and offices are owned or leased by operating (either subsidiary or joint venture) companies.
Autoliv Manufacturing Facilities
|Autoliv Argentina SA||Buenos Aires||Seatbelts and airbags||Owned|
|Autoliv Australia Proprietary Ltd||Melbourne||Seatbelts and airbags||Leased|
|VOA Webco Pty Ltd||Melbourne||Seatbelt webbing||Leased|
|Autoliv do Brasil Ltda.||Taubaté||Seatbelts, airbags, steering wheels and webbing||Owned|
|VOA Canada, Inc||Collingwood||Seatbelt webbing||Owned|
|Autoliv Canada, Inc||Tilbury||Airbag cushions||Owned|
|Autoliv Electronics Canada, Inc||Markham, Ontario||Airbag electronics||Leased|
|Autoliv Vehicle Safety
Systems Co. Ltd
|Shanghai||Airbags and steering wheels||Owned|
|Autoliv MawHung Vehicle
Safety Systems Co. Ltd
|Changchun Hongguang-Autoliv Vehicle
Safety System Co. Ltd
|Nanjing Hongguang Autoliv Safety
Systems Co. Ltd
|Shanghai-VOA Webbing Belt Co Ltd||Shanghai||Seatbelt webbing||Owned|
|Autoliv Vehicle Safety Systems Co., Ltd.||Guangzhou||Seat subsystems||Leased|
|Autoliv Inflator Co., Ltd||Shanghai||Inflators||Owned|
|Norma AS||Tallinn||Seatbelts and belt components||Owned|
|Autoliv France SNC||Gournay-en-Bray||Seatbelts and airbags, production machinery equipment||Leased|
|EAK Composants pour L'Industrie Automobile||Valentigney||Seatbelts and airbags||Owned|
|Isodelta SA||Chiré-de-Montreuil||Steering wheels and covers||Owned|
|Livbag SA||Pont-de-Buis||Airbag inflators||Leased|
|NCS Pyrotechnie et Technologies SA||Survillier||Initiators for airbag inflators||Owned|
|Autoliv Electronics SAS||Cergy-Pontoise||Airbag electronics||Leased|
|Autoliv Electronics||Etienne de Rouvray||Airbag electronics||Leased|
|Autoliv GmbH||Dachau||Airbags and pretensioners||Owned|
|Braunschweig||Airbag module assembly||Owned|
|Stakupress GmbH||Norderstedt||Seatbelt components||Leased|
|Autoliv Protektor GmbH||Lubeck||Seatbelts||Leased|
|Autoliv-IFB India Ltd||Bangalore||Seatbelts||Owned|
|P.T. Autoliv Indonesia||Jakarta||Seatbelts||Leased|
|Autoliv Japan Ltd||Tsukuba||Airbags||Owned|
|Autoliv-Nichiyu Japan Co. Ltd||Taketoyo||Airbag inflators||Leased|
|Autoliv-Izumi Japan Ltd||Atsugi||Steering wheels||Owned|
|NSK Autoliv Co. Ltd||Fujisama||Seatbelts||Leased|
|Autoliv Hiroshima Ltd||Hiroshima||Steering wheels||Owned|
|Autoliv Mando Corporation||Seoul||Airbags and seatbelts||Owned|
|Autoliv-Hirotako Safety Sdn Bhd||Kuala Lumpur||Seatbelts, airbags and steering wheels||Owned|
|Autoliv de Mexico SA de CV||Toluca||Seatbelts and airbags||Owned|
|Autoliv Safety Technologies de Mexico SA de CV||Tijuana||Seatbelts||Owned|
|Autoliv Components Mexico, SA de RL de CV||Querétaro||Airbag cushions||Owned|
|Autoliv Steering Wheels Mexico, S de RL de CV||Querétaro||Steering wheels||Owned|
|Autoliv Resortes Dinamicos SA de CV||Lerma||Springs for seatbelts, retractors and height adjusters||Owned|
|Van Oerle Alberton BV||Boxtel||Seatbelt webbing||Owned|
|Autoliv QB Inc||Manila||Seatbelts||Leased|
|Autoliv-Izumi Co||Cebu||Steering wheels||Leased|
|Autoliv Poland Sp z.o.o.||Olawa||Airbag cushions||Owned|
|Autoliv Romania SA||Brasov||Seatbelts||Owned|
|Van Oerle Alberton BV||Brasov||Seatbelt webbing||Owned|
|Autoliv Electronics Europe||Timisoara||Safety electronics||Leased|
|Autoliv Inflator Romania||Brasov||Inflators||Owned|
|Autoliv Southern Africa Pty Ltd||Gauteng||Seatbelts and airbags||Owned|
|Autoliv Sverige AB||Vårgårda||Airbags, seatbelts and
integrated child seats
|Autoflator AB||Vårgårda||Inflators||Owned/Leased office module|
|Autoliv Mekan AB||Hässleholm||Components for car seats||Owned|
|Autoliv Electronics AB||Motala||Safety electronics||Leased|
|Mei-An Autoliv Co. Ltd||Taipei||Seatbelts and airbags||Leased|
|Autoliv Thailand Ltd||Chonburi||Seatbelts and airbags||Owned|
|Autoliv Tunisia Zriba||Zriba||Seatbelts||Owned|
|Autoliv Steering Wheels Tunisia||El Fahs and Nadhour||Leather wrapping of steering wheels||Owned|
|Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve Ticaret AS||Istanbul||Seatbelts and airbags||Owned|
|Autoliv Spring Dynamics Turkey Ltd||Istanbul||Springs for retractors and height adjusters||Owned|
|Autoliv Leather Steering Wheel Ltd Co||Istanbul||Leather wrapping of steering wheels||Owned|
|Autoliv Spring Dynamics Ltd||Milton Keynes||Springs for belt retractors and
|Airbags International Ltd||Congleton||Airbag cushions||Leased|
|Spiroflex Ltd||Northampton||Springs for belt retractors and
|Autoliv ASP, Inc.||Brigham City, Utah||Inflators||Owned|
|Ogden, Utah||Airbag modules||Owned|
|Ogden, Utah||Service parts||Owned|
|Promontory, Utah||Gas generators||Owned|
|Colombia City, Indiana||Steering wheels||Owned|
|Goleta, California||Night vision cameras||Leased|
|OEA, Inc||Tremonton, Utah||Airbag initiators||Owned|
|TECHNICAL CENTERS AND CRASH TEST LABORATORIES|
|Autoliv Australia, Melbourne||Full-scale test laboratory|
|Autoliv France, Gournay-en-Bray||Technical center for airbags and seatbelts with full-scale test laboratory|
|Autoliv Electronics France, Cergy-Pontoise||Technical center for electronics and active safety|
|Autoliv Inflators, Pont-de-Buis||Technical center for inflators and pyrotechnic development|
|Autoliv Germany, Dachau||Technical center for frontal airbags with full-scale test laboratory|
|Autoliv Germany, Elmshorn||Technical center for seatbelts with full-scale test laboratory|
|Autoliv Japan, Tsukuba||Technical center for airbags with sled test laboratory|
|Autoliv NSK, Kanagawa||Technical center for seatbelts with full-scale test laboratory|
|Autoliv Mando, Seoul||Technical center with sled test laboratory|
|Autoliv Romaina, Brasov||Quality and sled test laboratory|
|Autoliv Spain, Barcelona||Full-scale test laboratory|
|Autoliv Research, Vårgårda||Research center|
|Autoliv Safety Center, Vårgårda||Technical center for side airbags with full-scale test laboratory, including roll-overs.|
|Autoliv Electronics Sweden, Motala/Linköping||Technical center for electronics and active safety|
|Autoliv North America, Auburn Hills, Michigan||Technical center for airbags, steering wheels, seatbelts with full-scale test laboratory|
|Autoliv North America, Ogden, Utah||Technical center for airbags, inflators and pyrotechnics|
|Autoliv Electronics America, Southfield, Michigan||Technical center for electronics and active safety|
|Additional information relating to the Company's properties is included in the
section titled "Global Presence" on pages 60 and 61 of the Annual Report and is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS.
Various claims, lawsuits and proceedings are pending or threatened against the Company or its subsidiaries, covering a range of matters that arise in the ordinary course of its business activities with respect to commercial, product liability and other matters.
Litigation is subject to many uncertainties, and the outcome of any litigation cannot be assured. After discussions with counsel, it is the opinion of management that the litigations to which the Company is currently a party will not have a material adverse impact on the consolidated financial position of Autoliv, but the Company cannot provide assurance that Autoliv will not experience any material product liability or other losses in the future.
In December 2003, a United States Federal District Court awarded a supplier of Autoliv ASP, Inc. approximately $27 million plus pre-judgment interest of approximately $7 million in connection with a commercial dispute that relates to purchase commitments. Autoliv appealed the verdict and the supplier has cross-appealed in regard to the calculation of the amount of pre-judgment interest. The United States Court of Appeals for the Federal Circuit on August 7, 2006, affirmed the judgment of the district court on certain appeal issues, vacated the district court's decision on certain other appeal issues and remanded the case for the district court to reconsider, and finally adjusted the district court's calculations of pre-judgment interest. On November 29, 2006, the United States Federal District Court amended the judgment on pre-judgment interest and denied Autoliv's motion for vacatur. Autoliv has appealed the decision. While legal proceedings are subject to inherent uncertainty, Autoliv believes that it has meritorious grounds for appeal, which would result in a new trial if we are successful, and that it is possible that the judgment could be eliminated or substantially altered as a result of the appeal process. Consequently, in the opinion of the Company's management, it is not possible to determine the final outcome of this litigation at this time. Autoliv cannot be assured that the final outcome of this litigation will not result in a loss that will have to be recorded by the Company.
The Company believes that it is currently adequately insured against product and other liability risks, at levels sufficient to cover potential claims, but Autoliv cannot assure that the level of coverage will be sufficient in the future or that such coverage will be available on the market.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of Autoliv during the fourth quarter of 2006.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Information concerning the market for Autoliv's common stock including the relevant trading market, and approximate number of shareholders is included in the section titled "The Autoliv Share" on pages 62 and 63 of the Annual Report and is incorporated herein by reference. In 2006, the Company began to accrue for dividends that had been declared but not yet paid. Information on the Company's dividend payments is included on page 29 of the Annual Report and is also incorporated by reference. The table below contains recent share prices and dividends declared for the two most recent years.
|SHARE PRICE AND DIVIDENDS|
|Equity Compensation Plans
Autoliv has only equity compensation plans approved by stockholders. Information about the Company's equity compensation plans as of December 31, 2006 is presented in the table below:
|Plan Category||Number of securities to be issued upon exercise of outstanding options, warrants and rights2)||Weighted-average exercise price of outstanding options, warrants and rights3)||Number of securities remaining available for future issuance (a)|
|Equity compensation plans approved by security holders1)||1,361,714||$37.10||1,760,2674)|
|Equity compensation plans not approved by security holders||-||-||-|
|1) Consists of Autoliv, Inc. 1997 Stock Incentive Plan.|
2) Includes 279,730 shares of common stock issuable upon the vesting and conversion of RSU.
3) Excludes vested and converted RSUs referred to in note 2 above.
4) Includes 1,760,267 shares of common stock available for future issuance under the Autoliv, Inc. 1997 Stock Incentive Plan.
Stock Repurchase Program
During the fourth quarter of 2006, Autoliv repurchased 1,152,000 shares at an average cost of US$57.64 per share. Since the repurchasing program was adopted in 2000, Autoliv has repurchased 24 million shares at an average cost of US$38.36 per share.
|Stockholm Stock Exchange||New York Stock Exchange||SSE+NYSE|
|("SSE")||("NYSE")||Total No. of Shares||Max. No. of Shares|
|Date||Total No. of Shares||Average Price in US$||Total No. of Shares||Average Price in US$||Purchased as Part of Publicly||Average Price in USD||that may yet be Purchased under the|
|Purchased||Paid per Share||Purchased||Paid per Share||Announced Plans or Programs||Paid per Share||Plans or Programs|
|The initial announcement of the share buy back program with an authorization to buy back 10 million shares was made on May 9, 2000. An expansion to 20 million shares and then to 30 million shares was announced on April 30, 2003, and December 15, 2005, respectively. The share buy back program does not have an expiration date.|
Additional information concerning the repurchase of Autoliv stock is included on page 15 in "Creating Shareholders value" and in the Management's Discussion and Analysis section titled "Share Buy-backs and Dividends" on page 24 of the Annual Report, and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the five years ended December 31, 2006 is included on page 65 of the Annual Report and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations for the three years ended December 31, 2006 is included on pages 23 through 33 of the Annual Report and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Quantitative and Qualitative Disclosures about market risk are included in the Management's Discussion and Analysis section "Risks and Risk Management" on pages 32 through 35 of the Annual Report and are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Balance Sheets of Autoliv as of December 31, 2006 and 2005 and the Consolidated Statements of Income and Cash Flows and Statements of Shareholders' Equity for each of the three years in the period ended December 31, 2006, the Notes to the Consolidated Financial Statements, and the Report of the Independent Registered Public Accounting Firm are included on pages 37 through 55 of the Annual Report and are incorporated herein by reference.
All of the schedules specified under Regulation S-X to be provided by Autoliv have been omitted either because they are not applicable, are not required or the information required is included in the financial statements or notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes and have been no disagreements in our two most recent fiscal years with our independent auditors regarding accounting or financial disclosure matters.
ITEM 9A. CONTROLS AND PROCEDURES
|(a)||Evaluation of Disclosure Controls and Procedures
An evaluation has been carried out, under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in reports that it files or submits under the Exchange Act.
|(b)||Management's Report on Internal Control Over Financial Reporting
The Management Report on Internal Control over Financial Reporting (as defined in Section 240.13a-15(f) or 240.15d-15(f) of the Exchange Act) is included in the section Management's Reports immediately preceding the audited financial statements on page 36 of the Annual Report, and is incorporated herein by reference.
Management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2006 has been audited by Ernst & Young AB, an independent registered public accounting firm, as stated in their report which is included on page 55 of the Annual Report and is incorporated herein by reference.
|(c)||Changes in Internal Control over Financial Reporting
There were no changes in the internal control over financial reporting in the period covered by this report.
ITEM 9B. Other Information
All events required to be disclosed on form 8-K during the 4th quarter have been reported.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers of the Registrant:
Lars Westerberg, age 58, President and Chief Executive Officer of Autoliv, Inc. from February 1, 1999, and Director of Autoliv since February 1999. From 1994 until he assumed his positions with Autoliv, Mr. Westerberg was President and Chief Executive Officer of Granges AB, a Swedish-based aluminum and plastics company listed on the Stockholm Stock Exchange. From 1991 until 1994, he held the same positions at the publicly-traded welding company Esab AB. He started his employment with Esab in 1984 and held several executive positions, including President of Esab's North American subsidiary. Mr. Westerberg is the Chairman of the Board of Husqvarna AB, the world's largest producer of chainsaws, lawn mowers and other garden equipment that is listed on the Stockholm Stock Exchange, and a director of SSAB, a leading Swedish producer of high-strength steel sheets and steel plates traded on the Stockholm Stock Exchange, Plastal AB, a Swedish supplier of automotive plastic components and Haldex AB, a listed Swedish automotive braking and transmission supplier. Mr. Westerberg holds a Master of Science Degree in Electrical Engineering from the Royal Institute of Technology (KTH) in Stockholm and a graduate in Business Administration from the University of Stockholm.
Steven Fredin, age 44, Vice President Engineering, appointed September 1, 2006. Mr. Fredin has worked for Autoliv since 1988 and has been a key technical leader in virtually all of Autoliv's product areas. Prior to assuming his current position, he was Director Global System Development of the Company and Vice President of Seatbelt Development for Autoliv North America. Mr. Fredin holds a Bachelor of Science degree in Mechanical Engineering from the Michigan Technological University.
Halvar Jonzon, age 56, Vice President Purchasing, appointed January 1, 2002. Prior to joining Autoliv, Mr. Jonzon held various positions since 1974 in Electrolux, the Swedish white goods company, including General Manager of Electrolux International (1983-86), Senior Vice President, Purchasing for the White Goods Division (1986-91), Senior Vice President and General Manager for Nordic Markets (1991-96) and for the European Logistics Division (1996-99), as well as Senior Vice President and Chief of Staff of Electrolux Home Products Europe S.A. in Brussels (1999-02). He holds an MBA from Stockholm School of Economics and an Executive Education Diploma from Columbia Business School in New York City.
Magnus Lindquist, age 43, Vice President and Chief Financial Officer, appointed March 8, 2001. Before joining Autoliv on July 1, 2001, Mr. Lindquist was Executive Vice President of Perstorp AB, a Swedish-based chemistry and materials technology corporation, with responsibility from 1996 of Finance, Business Development and Strategy, and from 1999 also for Treasury and IT. He has also held various positions in the finance departments of the public Swedish companies Stora (pulp and paper), Skanska (construction), Swedish Match (consumer goods) and the SEB Bank.
Benoît Marsaud, age 54, Vice President and Chief Operating Officer appointed September 1, 2006. Mr. Marsaud has served as Vice President Manufacturing since 1998, President of Autoliv France since 1997 and Vice President Manufacturing of Autoliv AB since 1992. He holds a Master of Science degree from Ecole Nationale Superieure Des Arts et Metiers in Paris.
Svante Mogefors, age 52, Vice President Quality, appointed April 1, 2005. Mr. Mogefors has been Director Corporate Quality of Autoliv AB since 2003. Mr Mogefors initially joined Autoliv in 1985 and has experience from several functions and positions within Autoliv, including the areas of product development, process implementations and quality control. Between 1990 and 1996, Mr Mogefors was for a period President of Lesjöfors Herrljunga AB and for another period President of Moelven E-Modul AB. Mr. Mogefors holds a Master of Science degree from the Chalmers Institute of Technology in Gothenburg.
Mats Ödman, age 56, Vice President Corporate Communications, appointed May 1, 1997. Mr. Ödman has served as Director of Investor Relations of Autoliv AB since 1994. Before that Mr. Ödman had the same position in Fermenta AB and Gambro AB. Prior to that Mr. Ödman was Investor Relations Manager in New York of Pharmacia AB.
Jan Olsson, age 52, Vice President Research, appointed April 1, 2005. Mr. Olsson was Vice President Engineering from 1997 to 2005, President of Autoliv Sverige AB from 1994 to 1997 and Manager of Engineering of Autoliv Sverige from 1989 until August 1994. Mr. Olsson holds a Master of Science degree from the Chalmers Institute of Technology in Gothenburg.
Hans-Göran Patring, age 57, Vice President Human Resources, appointed on April 26, 2001. Prior to assuming his current position on January 1, 2002, he was Deputy Vice President, Human Resources from September 3, 2001, and from 1999 Group Vice President of Human Resources of the Global Automation Division at ABB in Zurich, Switzerland. Previously, he was Vice President of Human Resources for ABB's Global Robotics Business based in the United Kingdom for three years.
Jörgen I. Svensson, age 45, Vice President Legal Affairs, General Counsel and Secretary, appointed May 1, 1997. Mr. Svensson has been Legal Counsel of Autoliv AB since 1989, General Counsel since 1991, and Vice President Legal Affairs and General Counsel since 1994. Mr. Svensson holds a Master of Law degree from the University of Lund, Sweden.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
A matrix summarizing Board Meeting Attendance is published on page 57 in the Annual Report and incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 regarding executive compensation for the year ended December 31, 2006 is included under the caption "Executive Compensation" on pages 13 through 21 of the 2007 Proxy Statement and is incorporated herein by reference. The information required by the same item regarding Compensation Committe is included in the sections "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report" on pages 10-12 in the 2007 Proxy Statement and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 regarding beneficial ownership of Autoliv's common stock is included under the caption "Voting Securities and Principal Holders Thereof" on pages 12-13 of the 2007 Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
In 2006, no transactions took place that the Company deemed to require disclosure under Item 13. For further information regarding the Company's policy and procedures concerning to related party transactions, see page 5 of the 2007 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 9 (e) of Schedule 14A regarding principal accounting fees and the information required by Item 14 regarding the pre-approval process of services provided to Autoliv is included under the caption "Ratification of Appointment of Independent Auditors" on pages 22-23 of the 2007 Proxy Statement and is incorporated herein by reference.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents Filed as Part of this Report
The following consolidated financial statements are included on pages 37 through 54 of the Annual Report and Selected Financial Data is included on page 65 of the Annual Report and are incorporated herein by reference:
(i) Consolidated Statements of Income - Years ended December 31, 2006, 2005 and 2004 (page 37); (ii) Consolidated Balance Sheets - as of December 31, 2006 and 2005 (page 38); (iii) Consolidated Statements of Cash Flows - Years ended December 31, 2006, 2005 and 2004 (page 39); (iv) Consolidated Statements of Shareholders' Equity - as of December 31, 2006, 2005 and 2004 (page 40); (v) Notes to Consolidated Financial Statements (pages 41-54); (vi) Report of Independent Registered Public Accounting Firm (page 55).
Financial Statement Schedules
All of the schedules specified under Regulation S-X to be provided by Autoliv have been omitted either because they are not applicable, they are not required, or the information required is included in the financial statements or notes thereto.
Index to Exhibits
Autoliv's Restated Certificate of Incorporation incorporated herein by reference to Exhibit 3.1 to the Registration Statement on Form S-4 (File No. 333-23813, filing date June 13, 1997) (the "Registration Statement").
Autoliv's Restated By-Laws incorporated herein by reference to Exhibit 3.2 to the Registration Statement.
Rights Agreement dated as of December 4, 1997 between Autoliv and First Chicago Trust Company of New York incorporated herein by reference to Exhibit 3 to Autoliv's Registration Statement on Form 8-A (File No. 1-12933, filing date December 4, 1997).
Facilities Agreement, dated November 13, 2000, among Autoliv, Inc. and the lenders named therein, as amended by amendment dated November 5, 2001, as further amended by amendment dated December 12, 2001, and as further amended by amendment dated June 6, 2002, is incorporated herein by reference to Exhibit 10.1 on Form 10-K (File No. 1-12933, filing date July 2, 2002).
Autoliv, Inc. 1997 Stock Incentive Plan, incorporated herein by reference to Autoliv's Registration Statement on Form S-8 (File No. 333-26299, filing date May 1, 1997).
Amendment No. 1 to Autoliv, Inc. Stock Incentive Plan, is incorporated herein by reference to Exhibit 10.3 on Form 10-K (File No. 1-12933, filing date July 2, 2002).
Form of Employment Agreement between Autoliv, Inc. and its executive officers, is incorporated herein by reference to Exhibit 10.3 on Form 10-K (File No. 1-12933, filing date July 2, 2002).
Form of Supplementary Agreement to the Employment Agreement between Autoliv and certain of its executive officers, is incorporated herein by reference to Exhibit 10.3 on Form 10-K (File No. 1-12933, filing date July 2, 2002).
Employment Agreement, dated November 11, 1998, between Autoliv, Inc. and Lars Westerberg, is incorporated herein by reference to Exhibit 10.3 on Form 10-K (File No. 1-12933, filing date July 2, 2002).
Form of Severance Agreement between Autoliv and its executive officers, is incorporated herein by reference to Exhibit 10.3 on Form 10-K (File No. 1-12933, filing date July 2, 2002).
Pension Agreement, dated November 26, 1999, between Autoliv AB and Lars Westerberg, is incorporated herein by reference to Exhibit 10.3 on Form 10-K (File No. 1-12933, filing date July 2, 2002).
Form of Amendment to Employment Agreement - notice.
Form of Amendment to Employment Agreement - pension.
Form of Agreement - additional pension.
Amendment No.2 to the Autoliv, Inc. 1997 Stock Incentive Plan.
Information concerning the calculation of Autoliv 's earnings per share is included in Note 1 of the Consolidated Notes to Financial Statements contained in the Annual Report and is incorporated herein by reference.
Autoliv's Annual Report to Shareholders for the fiscal year ended December 31, 2006.
Autoliv's List of Subsidiaries.
No matters were submitted to Autoliv's stockholders during the fourth quarter of 2006.
Consent of Independent Registered Public Accounting Firm.
Certification of the Chief Executive Officer and Chief Financial Officer of Autoliv, Inc.
Certification of the Chief Executive Officer and Chief Financial Officer of Autoliv, Inc.
Facilities Agreement of $1,100,000,000, dated November 7, 2005, among Autoliv Inc. and the lenders named therein.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, as of February 23, 2007.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, as of February 23, 2007.
|Chairman of the Board of Directors||/s/ S. Jay Stewart|
S. Jay Stewart
|Chief Executive Officer and Director
(Principal Executive Officer)
|/s/ Lars Westerberg|
|Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
|/s/ Magnus Lindquist|
|Director||/s/ Robert W. Alspaugh|
Robert W. Alspaugh
|Director||/s/ Per-Olof Aronson|
|Director||/s/ Sune Carlsson|
|Director||/s/ William E. Johnston Jr.|
William E. Johnston Jr.
|Director||/s/ Walter Kunerth|
|Director||/s/ George A. Lorch|
George A. Lorch
|Director||/s/ Lars Nyberg|
|Director||/s/ James M. Ringler|
James M. Ringler
|Director||/s/ Tetsuo Sekiya|
|Director||/s/ Per Welin|
List of Subsidiaries of the Company
Autoliv Argentina SA
Autoliv Australia Proprietary Ltd
Van Oerle Webco Pty Ltd
Autoliv Belgium N.V.
Autoliv do Brasil Ltda
Autoliv Canada, Inc
Autoliv Electronics Canada, Inc
VOA Canada, Inc
Autoliv China Electronics Co Ltd
Autoliv (Shanghai) Inflator Co Ltd
Autoliv (Shanghai) Automotive Restraint Systems Co Ltd
Autoliv (Shanghai) Vehicle Safety Systems Co Ltd
Autoliv (Changchun) Maw Hung Vehicle Safety Systems Co Ltd (59%)
ACG Autoliv (Guangzhou) Vehicle Safety Systems Co Ltd
Autoliv (Shanghai) Steering Wheel Co Ltd
Nanjing Hongguang Autoliv Vehicle Safety Co Ltd (70%)
Autoliv (China) Management Co Ltd
Autoliv China Technical Center Co Ltd
Taicang van Oerle Alberton Shenda Special Type Textile Products
Norma AS (51%)
Societe Franco Suedoise d'Investissement SA
Autoliv France SNC
Autoliv IsoDelta SA
NCS Pyrotechnie et Technologies SA
Autoliv Electronics SAS
OEA Europe Sarl
Autoliv Beteiligunsgesellschaft GmbH
Autoliv BV & Co KG
Autoliv Sicherheitstechnik GmbH
Autoliv Stakupress GmbH
Autoliv Autosicherheitstechnik GmbH
Autoliv Protektor GmbH
P.T. Autoliv Indonesia
Autoliv Italia S.P.A
Autoliv Kabushiki Kaisha Ltd
Autoliv Japan Ltd
Autoliv Nichiyu Co Ltd
Autoliv Izumi Co Ltd
Autoliv Hiroshima Ltd
Autoliv Mando Corporation (65%)
Autoliv Mexican Holdings S de RL de CV
Autoliv Components Mexico, S de RL de CV
Autoliv Servicios de Mexico S de RL de CV
Autoliv Safety Technology de Mexico SA de CV
Autoliv Steering Wheels Mexico S de RL de CV
Autoliv Steering Wheels Services S de RL de CV
Autoliv Resortes Dinamicos SA de CV
Servicios Administrativos Autoliv SA de CV
Autoliv Mexico SA de CV
Autoliv Autosicherheitstechnik BV
Autoliv Holding BV
Autoliv ASP BV
Autoliv Overseas BV
Van Oerle Alberton Holding BV
Van Oerle Alberton BV
Autoliv New Zealand Ltd
Autoliv Philippines Izumi Co
Autoliv Philippines Inc (91%)
Autoliv Poland Sp z.o.o.
Autoliv Romania SA
Autoliv Southern Africa Pty Ltd
Autoliv KLE, S.A.U.
Autoliv BKI SA
Autoliv Holding AB
Autoliv Sverige AB
Autoliv East Europe AB
Autoliv Electronics AB
Svensk Airbag AB
Autoliv Mekan AB
Mei-An Autoliv Co (59%)
Autoliv Thailand Ltd
NSK Safety Technology (Thailand) Co Ltd
Autoliv Tunisia Zriba
ASW1 El Fahs
ASF El Fahs
Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve Ticaret AS
Autoliv Springdynamics Turkey Ltd
Autoliv Leather Steering Wheel Limited Co
Autoliv UK Holding Ltd
Autoliv Holding Ltd
Airbags International Ltd
Autoliv Spring Dynamics Ltd
Autoliv ASP, Inc (Indiana)
OEA, Inc (Delaware)
Autoliv Safety Technology, Inc (Delaware)
Autoliv Holding, Inc (Delaware)
|All subsidiaries are wholly owned unless otherwise indicated.|
The names of certain subsidiaries, which considered in the aggregate would not constitute a "significant subsidiary" as such term is defined in the regulations under the federal securities laws, have been omitted from the foregoing list.
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in this Annual Report (Form 10-K) of Autoliv, Inc. of our reports dated February 19, 2007, with respect to the consolidated financial statements of Autoliv, Inc., Autoliv, Inc. management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting of Autoliv, Inc., included in the 2006 Annual Report to Shareholders of Autoliv, Inc.
We consent to the incorporation by reference in the following Registration Statements:
|(1)||Registration Statements (Form S-8 No. 333-26299 and 333-117505) pertaining to the Autoliv, Inc. 1997 Stock Incentive Plan|
|(2)||Registration Statement (Form S-8 No. 333-26303) pertaining to the Autoliv ASP Employee Investment Plan of Autoliv, Inc.|
of our reports dated February 19, 2007, with respect to the consolidated financial statements of Autoliv, Inc., Autoliv, Inc. management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting of Autoliv, Inc., incorporated herein by reference.
/s/ Ernst & Young AB
February 19, 2007