Financial Report Q2 2000

Financial Report January - March 2000 * Sales up 16% to $1.1 billion * Earnings per share up 25% to $.54 * Agreement on acquisition of NSK's seat belt operations (Stockholm, April 19, 2000) -- Autoliv Inc. (NYSE: ALV and SSE: ALIV), the worldwide leader in automotive safety systems, reported record sales and the best first quarter earnings ever for the three-month period ended March 31, 2000. Consolidated net sales rose by 16% to $1.1 billion, operating income by 25% to $104 million and earnings per share by 25% to $.54 compared to the corresponding quarter 1999. Sales and earnings were mainly driven by increased penetration of safety products, market share gains and higher global light vehicle production. Income before taxes improved by 31% to $95 million. Sales Consolidated net sales grew by 16% to $1,084 million from $935 million. Autoliv's sales (and global light vehicle production) have been favorably impacted by approximately 5% more working days than during the same period in l999 (which will be reversed during the second and fourth quarters). Acquisitions increased sales by 4%, while currency translation effects reduced sales by 6%. Adjusted for currency effects and acquisitions/divestitures, sales rose by 18%. This compares favorably with global light vehicles production which is estimated to have risen by less than 4%. The fact that Autoliv's revenues increased faster than vehicle production is a reflection of the strong worldwide demand for safer cars, as well as of Autoliv's market share gains within the automotive safety industry. Autoliv's sales grew particularly fast in the U.S. (where it was led by a 50% increase in seat belt sales), in Sweden (led by strong demand for the Inflatable Curtain and anti-whiplash systems) and in Spain and Australia (due to higher car production and export sales). Sales of airbag products (incl. steering wheels) rose by 18% to $779 million from $659 million. The decline in average selling prices has abated considerably from prior years. Currency effects reduced sales by 5%. The acquisition of Izumi increased sales by 4%. Consequently, the underlying increase was 19%. Sales growth was partly driven by a three- fold increase in steering wheel sales to $68 million. More than a third of this increase was attributable to the Izumi acquisition. Sales of seat belt products (incl. seat sub-systems) grew by 10% to $305 million from $276 million. Currency effects reduced sales by 8%, while changes in the corporate structure - i.e. mainly the consolidation of Norma AS - increased seat belt sales by 2%. Consequently, underlying sales rose by 16%. This organic growth is mainly due to market share gains in the U.S., introductions of Autoliv's anti-whiplash system in more car models and higher light vehicle production. Earnings Gross profit rose by 19% to $228 million from $191 million, improving gross margin to 21.0% from 20.4%. The margin improvement reflects - besides higher sales - the on-going moderation in pricing pressure as well as the effects of Autoliv's cost saving actions, such as transferring more than 1000 jobs to low labor-cost countries during the last 12-month period and the introduction of more cost-efficient inflators. Operating income increased by 25% to $104 million from $83 million and operating margin improved to 9.6% from 8.9%, despite a 20% increase in R&D expenses following the strong order intake during the last few quarters. The margin improvement was due to the above-mentioned action program, the price pressure moderation and higher sales. Net financial expenses declined by $2.0 million to $9.7 million as a result of approximately $100 million lower average net debt. Income before taxes rose by 31% to $95 million from $73 million mainly as an effect of higher sales and operating margin. The effective tax rate stood unchanged at 41%. Excluding non-deductible goodwill amortization, the tax rate was 37%. Net income improved by 25% to $55 million from $44 million or to 54 cents per share from 43 cents. Cash Flow and Balance Sheet The operations generated $70 million in cash compared to $97 million during the same quarter 1999. Capital expenditures amounted to $48 million and $63 million, respectively, and acquisitions to $5 million and $25 million. The net cash flow after operating and investing activities improved by $7 million to $17 million. Liquid funds declined by $17 million to $102 million. The most important acquisition was Izumi and the largest capital expenditures were capacity expansions for the Inflatable Curtain. As a result of the acquisitions and more working capital, net debt increased by $23 million during the quarter to $619 million and the interest-bearing debt by $6 million to $721 million. The net debt-to- equity ratio stood almost unchanged at 32%. Equity has been negatively impacted by currency effects. Employees The number of employees increased by 2,000 during the quarter to 24,600. Excluding acquisitions the increase was 200. Significant Events ¤ As of January 1, Japan's second largest steering wheel business was acquired from Izumi and the option to increase Autoliv's interest in Norma to 51% was exercised. Izumi makes Autoliv the only company with steering wheel plants in North America, South America, Europe and Japan. Norma gives Autoliv a unique market position in Eastern Europe and yet another alternative to move production to low labor-cost countries. ¤ Autoliv has agreed to Acquire NSK's seat belt operations in several steps. As of April 1, the US operations with annual sales of approximately $70 million were acquired together with a 40% interest in NSK's Asian seat belt operations. Autoliv has an option to acquire the remaining 60% in two steps on April 1, 2002 and 2003. This business has sales of almost $250 million. The acquisition makes Autoliv the global leader in seat belts. ¤ Autoliv has commenced a tender offer worth $206 million for the shares in OEA, Autoliv's main external supplier of initiators for airbag inflators. During 1999, OEA had sales of $250 million. The offer has cleared the anti-trust approval in the US, one of the conditions for the offer. The Board of OEA recommends the transaction. The planned integration of OEA is expected to have a positive effect on earnings already after one year from the merger. Prospects If the current exchange rate between the US dollar and the Euro would prevail for the rest of the year, Autoliv's sales and earnings will be negatively affected by approximately 5% compared to the corresponding 9- month period 1999. DRI expects light vehicle production in North America and Europe to remain unchanged compared to the period April-December 1999. The supply value of safety products is expected to continue to grow faster than the global vehicle production. The three acquisitions already concluded are expected to add approximately 5% during the remainder of the year to Autoliv's organic sales growth. The effect of the planned acquisition of OEA would be additional. Dividend A dividend of 11 cents per share will be paid on June 5 to stock-holders of record as of May 8, 2000. Ex-date will be May 4. Report The next quarterly report for the period April 1 through June 30 will be published on July 20, 2000. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/19/20000419BIT00700/bit0001.doc The full report http://www.bit.se/bitonline/2000/04/19/20000419BIT00700/bit0002.pdf The full report