FORM 10-K - ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 1998
Commission file Number: 001-12933
AUTOLIV, INC.
Incorporated in the State of Delaware I.R.S. Employer
Identification No. 51-0378542
Address of principal executive offices:
World Trade Center,
Klarabergsviadukten 70, SE-107 24 Stockholm, Sweden
Telephone number, including area code: +46 8 587 20 600
Securities 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 New York Stock Exchange
Stockholm Stock Exchange (Swedish Depositary Receipts)
Securities registered pursuant to Section 12(g) of the Act: None
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 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]
Aggregate market value of the Common Stock held by non-affiliates, based
upon the closing price on the New York Stock Exchange-Composite Transaction
Listing on March 12, 1999: $3,933 million.
Number of shares of Common Stock outstanding as of March 8,
1999:102,313,365
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Annual Report to Shareholders for the fiscal year ended
December 31, 1998 (the "Annual
Report"): Parts I ,II, III and IV
2. Portions of definitive Proxy Statement dated March 12, 1999 (the "1999
Proxy Statement"): Part III
3. Certain Exhibits of Registration Statement on Form S-4 (File #333-23813)
(the "Registration Statement"): Part IV
PART I
Item 1. Business*
General
Autoliv, Inc. ("Autoliv"), a Delaware holding corporation with principal
executive offices in Stockholm, Sweden, which owns two principal subsidiaries,
Autoliv AB ("AAB" or "Autoliv AB") and Autoliv ASP, Inc. ("ASP").
Shares of Autoliv common stock are traded on the New York Stock Exchange
under the symbol "ALV" and Swedish Depositary Receipts representing shares
of Autoliv common stock trade on the 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.
_______________________________
* THIS FORM 10-K CONTAINS STATEMENTS WHICH 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 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 AND FUTURE LITIGATION AND GOVERNMENTAL PROCEDURES;
CHANGES IN LAWS OR REGULATIONS, INCLUDING ENVIRONMENTAL; 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 ADDITON, 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. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE
PUBLICLY ANY FORWARD-LOOKING STATEMENTS WHETHER AS A RESULT
OF NEW INFORMATION OR FUTURE EVENTS.
AAB, a Swedish corporation, is a leading developer, manufacturer and
supplier to the automotive industry of car occupant restraint systems.
Starting with seat belts in 1956, AAB expanded its product lines to include
seat belt 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 inflators,
modules and airbag cushions. It sells inflators and modules for use in
driver, passenger, side-impact and knee bolster airbag systems for worldwide
automotive markets.
Business
Autoliv is one of the world's leading suppliers of automotive occupant
safety restraint systems with a broad range of product offerings including
modules and components for passenger and driver-side airbags, side-impact
airbag protection systems, seat belts, steering wheels, safety seats and
other safety systems and products. Autoliv has production facilities in 26
countries and has as customers almost all of the world's largest car
manufacturers.
Autoliv employs approximately 20,700 people and its head office is located
in Stockholm, Sweden and employs about 30 people. Autoliv's sales in 1998
were $3.5 billion, approximately 70% of which consisted of airbags and
associated products and approximately 30% of which consisted of seat belts
and associated products. Autoliv's major markets are in Europe and the
United States.
Financial Information on Segments
Autoliv considers its products to be components of integrated car passenger
protection systems which fall within a single industry segment. The
financial data relating to Autoliv's business in such segment over the last
three fiscal years is contained in the Financial Statements of the Annual
Report (pages 28-40 of the printed report) and is incorporated herein by
reference. A statement of net sales by product group for the last three
years is contained in Note 18 of the Notes to Consolidated Financial
Statements of the Annual Report and is incorporated herein by reference.
Financial Information on Geographic Areas
Financial information concerning Autoliv's geographic areas is included
in Note 18 in the Notes to Consolidated Financial Statements of the Annual
Report, and is incorporated herein by reference.
Products, Market and Competition
Information concerning products, markets and competition is included in the
sections entitled "The Market", "Autoliv's Safety Systems", "Airbags" and
"Seat belts" in the Annual Report and is incorporated herein by reference
(pages 6 through 13 in the printed report).
Major Customers
Information concerning major customers is included in the section
entitled "The Market-Customers" in the Annual Report and is incorporated
herein by reference (page 7 in the printed report).
Research and Development
Expenses incurred for research and development activities were $176.2
million, $136.6 million, and $100.0 million for the years ended December 31,
1998, 1997 and 1996, respectively. Further information is included in the
section entitled "Research and Development" of the Annual Report and is
incorporated herein by reference (pages 14 and 15 in the printed report).
Manufacturing and Production
Including joint venture operations, Autoliv has 60 wholly or partially owned
production facilities located in 28 countries, consisting of both component
factories and assembly factories. See "Item 2. Properties" for a
description of Autoliv's principal properties. The component factories
manufacture inflators, initiators, textile cushions, webbing materials,
electronics, pressed steel parts, springs, moulded plastic parts, and over-
moulded steel parts used in seat belt and airbag assembly, seat subsystems
and steering wheels. The assembly factories source components from a number
of parties, including Autoliv's own component factories, and assemble complete
restraint systems for "just-in-time" delivery to customers. The products
manufactured by Autoliv's assembly factories in 1998 consisted of
approximately 47 million complete seat belt systems (almost 23 million of
which were fitted with pretensioners), and about 28 million airbag modules
(including almost 8 million side impact airbags).
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 cause manufacturing
close to the customers to be an important competitive advantage. The fact
that the major automobile manufacturers are continually expanding
production activities into more countries and require the same or similar
safety systems as produced in Europe or the US increases the importance to
suppliers of having production capacity in several countries. Autoliv
currently operates production facilities for car safety products in more
countries than its competitors.
Automobile manufacturers are seeking competitive quotes from suppliers and
demand significant staged price reductions over a product's life cycle. In
line with its customers' purchasing strategies, Autoliv has implemented
cost-saving programs which are reducing Autoliv's own material, production
and administrative costs.
If the supply of raw materials and components is not disrupted, the Autoliv
assembly operations generally will not be constrained by capacity
considerations. Autoliv can adjust capacity in response to changes in demand
within a few weeks by the addition or removal of 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.
Quality Management.
Autoliv's products face extremely high reliability
requirements. In order to meet high customer quality requirements and
internal production efficiency requirements, Autoliv has for several years
operated an advanced quality management system. The system is a zero defect
rate system and is based upon preventive principles involving the
measurement of a number of quality indicators. By reference to best practice
within its industry segment, Autoliv had developed quality benchmarks
applied throughout Autoliv and places great emphasis on continually
improving the quality of its products, customer service and production
processes.
Virtually all wholly owned Autoliv companies that deliver products directly
to car manufacturers are certified according to ISO 9000 (as defined below)
requirements. Most of Autoliv's joint venture companies are also ISO
9000-certified, with the remaining ones expected to be certified during 1999.
"ISO 9000", a quality assurance management system endorsed by European nations
and many other countries, is a checklist of functions, policies and rules,
considered necessary to assure the quality of a company's products and
services.
Over 40 Autoliv subsidiaries have already received QS 9000 certification, a
quality standard stipulated by U.S. car manufacturers ("QS 9000"), and
Autoliv's other major assembly companies are in the process of becoming
QS 9000-certified. QS 9000 applies to all suppliers, internal and external,
who provide production and service parts and materials.
Major Components Production Units - Integration
For several years, Autoliv has continually increased the level of backward
vertical integration of its production activities. This integration helps
Autoliv maintain low production costs and gives Autoliv direct control and
experience with the underlying production phases.
Sources and Availability of Raw Materials and Components
Autoliv's business uses many raw materials in the manufacture of its
products, nearly all of which are generally available from a number of
qualified suppliers. Peaks in worldwide demand have had an impact on raw
material costs and availability, particularly with single or sole sourced
supplies. Autoliv's business, however, has not experienced significant or
long-term difficulty in obtaining raw materials.
Autoliv's Dependence on Suppliers
Autoliv may be dependent in certain instances on a single supplier for
certain components.
Delays or stoppages in the delivery of components could result in Autoliv
being unable to supply complete products. Such delays or stoppages could
result in Autoliv's customers having to halt their own production processes,
which might result not only in loss of income to Autoliv on the reduced
volume of supplied products but also in the customer seeking recoupment for
consequential losses incurred due to its own lost production.
Global Operations
An important element of Autoliv's strategy has been to establish joint
ventures to promote Autoliv's geographical expansion and technological
development and to gain assistance in marketing Autoliv's full product line
to local automobile manufacturers. Total sales of Autoliv's joint venture
operations to outside customers aggregated to approximately $115 million in
1998. These joint venture operations are accounted for according to the
equity method.
Autoliv typically contributes its design and production knowledge to the
joint venture, with the local partner providing sales support and
manufacturing facilities. Several of these local partners manufacture and
sell standardized seat belt systems, but will, through the joint venture with
Autoliv, be able to upgrade their technology to meet specific customer
demands. In addition to joint ventures established in emerging markets,
Autoliv has, also in certain instances, established joint ventures in markets
such as France, either to strengthen its sales position or to gain access to
the market.
These operations of Autoliv will be subject to the usual risks inherent in
global operations, including, but not limited to: risks with respect to
currency exchange rates; economic and political destabilization; other
disruption of markets; restrictive laws and actions of certain governments
(such as restrictions on transfers of funds, export duties and quotas,
foreign customs and tariffs, and unexpected changes in regulatory
environments); difficulty in obtaining distribution and support;
nationalization; the laws and policies of the United States, the European
Union, and the World Trade Organization affecting trade, investment and
loans; and tax laws.
There can be no assurance that these factors will not have a material
adverse impact on Autoliv's ability to increase or maintain its
international sales or on its results of operations.
Patents and Proprietary Technology
Autoliv has developed a considerable amount of proprietary technology
related to car occupant restraint systems and relies on a number of patents
to protect such technology. Autoliv protects many of its innovations with
patents, and vigorously protects and defends its patents, trademarks and
know-how against infringement and unauthorized use. At present, Autoliv
holds approximately 2,800 patents covering a large number of innovations and
product ideas, mainly in the fields of seat belt and airbag technologies. In
addition, Autoliv utilizes, and has access to, the patents of Autoliv's
joint ventures and joint venture partners. These patents expire on various
dates during the period 1999 to 2019. The expiration of any single patent is
not expected to have a material adverse effect on Autoliv's financial
position.
Although Autoliv believes that its products and technology do not infringe
the proprietary rights of others, there can be no assurance that third
parties will not assert infringement claims against Autoliv in the future.
In addition, there can be no assurance that any patents now owned by
Autoliv, will afford protection against competitors that develop similar
technology.
Dependence on the Automotive Industry
The customers of Autoliv are automobile manufacturers whose production
volumes are dependent upon general economic conditions and the level of
consumer spending. The volume of car production in Autoliv's most important
markets in North America, Europe and Asia has fluctuated considerably from
year to year, and such fluctuations may give rise to fluctuations in the
demand for Autoliv's products.
Substantial Reliance by Autoliv on Major Customers
A relatively small number of automobile manufacturers compose the existing
customer base of Autoliv. Although business with any given customer is
typically split into several contracts (usually one contract per car model),
the loss of all of the business of certain customers could have a material
adverse effect on Autoliv. Combined sales to Autoliv's largest customer
represented approximately 14% of total fiscal 1998 sales. See Note 17 to
the Notes to Consolidated Financial Statements of the Annual Report, which
is incorporated herein by reference.
Autoliv's Pricing Pressures
As a consequence of the major automobile manufacturers' strong purchasing
power, and the competitive pressures on car occupant restraint system
suppliers to increase such suppliers' manufacturing capabilities, the unit
prices of airbag systems and seat belts will continue to decline in the
future. In addition, similar to other automobile component manufacturers,
Autoliv expects that Autoliv and its subsidiaries will, under certain
circumstances, quote fixed or maximum prices for long-term supply
arrangements. The future profitability of Autoliv will depend upon, among
other things, its ability to continue to reduce its per unit costs and
maintain a cost structure, internally and with its suppliers, that will
enable it to remain cost-competitive. Autoliv's profitability may also be
influenced by its success in designing and marketing technological
improvements in car occupant restraint systems.
Product Recalls
The possibility of substantial product recalls could pose a significant
commercial risk to Autoliv in the future. Autoliv carries product recall
insurance with coverage limits that Autoliv management believes are
sufficient to cover potential product recalls. A substantial product recall
that is not covered by insurance or results in liabilities in excess of any
coverage limits could have a material adverse effect on the financial
condition and operating results of Autoliv.
Seasonality and Backlog
Autoliv's business is not subject to significant seasonal fluctuations.
There are no material backlogs in Autoliv's business.
Certain Regulatory Matters and Developments
The automotive safety industry is subject to substantial regulation, both in
the United States and in many other countries, which may affect the demand
for Autoliv's products and Autoliv's manufacturing and development costs.
These regulations are subject to frequent review by applicable regulatory
authorities and other governmental entities, and are subject to change. In
the United States, current federal legislation requires driver-side and
passenger-side airbags in all new passenger cars (effective September
1, 1997), and in all new light vehicles (unloaded vehicle weight of 5,500
pounds or less) effective since September 1, 1998. Changes in regulations
could have a material adverse impact on Autoliv's operations and financial
condition. Such regulations are subject to a number of factors that are not
within the control of Autoliv, including adverse publicity regarding the
safety risks of airbags to children and small adults, domestic and foreign
political developments, and litigation relating to Autoliv's and its
competitors' products. There can be no assurance that regulatory developments
or adverse publicity will not adversely affect customer demand for automotive
safety products of Autoliv's business. Such changes could also result in
slower increases, or in decreases, in demand for automotive safety products
in other countries.
In November and December 1996, the U.S. National Highway Traffic Safety
Administration("NHTSA") announced a series of proposed and final regulations
relating to airbags. NHTSA has proposed certain regulations, to be in force
until the regulations requiring adaptive airbags take effect, relating to the
depowering of airbags (which proposed regulations were adopted on an interim
basis in March 1997) and the deactivation of airbags at the request of
certain high-risk profile groups. Implementation of such regulations could
result in additional capital expenditures by Autoliv, could require additional
technological improvements, and could result in lower sales than would
otherwise be expected if Autoliv does not have the necessary technology
to meet the customer's requirements. The final regulations also require
various additional warning labels to be conspicuously installed on new cars
with airbags prior to the implementation of the regulations requiring airbags.
The effect on Autoliv of the proposed regulations, if implemented, or of
future regulatory developments in the United States or other countries is
dependent upon many factors, some of which are outside Autoliv's control and
cannot be predicted.
Environmental
AAB has no pending environmental related problems to the best of Autoliv's
management's knowledge. Information concerning ASP environmental matters is
included in Note 14 in the Notes to Consolidated Financial Statements of the
Annual Report, and is incorporated herein by reference. Based on available
information Autoliv does not believe that material expenditures for
environmental compliance will be required.
Employees
At December 31, 1998, Autoliv and its subsidiaries had approximately 20,700
employees.
Autoliv considers its labor relations to be good and has not experienced any
major strike or other significant labor dispute for many years.
The majority of Autoliv's employees in its subsidiaries in Sweden are
unionized. The principal unions to which Autoliv's Swedish employees belong
are the Swedish Metal Workers Union, the Swedish Union of Clerical and
Technical Employees in Industry, the Swedish Foremen and Supervisors'
Association and the Swedish Association of Graduated Engineers. Important
unions to which some of Autoliv's employees in subsidiaries in countries
other than Sweden belong are IG Metall and Textil und Bekleidung in Germany,
Amalgamated Engineering and Electrical Union in the United Kingdom, the
Metal Workers Union in Australia, the Union of Needletraders and Industrial
and Textile Employees in the United States, Confederation Generale des
Travaileurs in France and Federacion Minerometalurgica, Union General de
Trabajadores and Comisiones Obereras in Spain.
In Sweden, wages and general working conditions are typically the subject of
centrally negotiated collective bargaining agreements. Within the limits
established by these agreements, Autoliv's subsidiaries negotiate directly
with the local unions representing the employees. In Australia, France and
Spain, wages, salaries and general working conditions are negotiated with
the local unions. In Germany, wages but not salaries are negotiated with the
local unions, while in the United Kingdom and the United States there is far
less union involvement in establishing wages, salaries and working
conditions than in, for instance, Germany.
Under Swedish law, Autoliv's subsidiaries must negotiate important changes
in operations and working conditions with the unions representing its
employees. Although these negotiations may from time to time affect the
timing of certain management decisions and actions, Autoliv's experience is
that such negotiations contribute to good labor relations. In many other
countries (e.g. Germany, Spain and France), negotiations must take place
when a company wishes to dismiss employees and under certain other
circumstances.
Employees in the Netherlands and Germany are represented by legally mandated
workers' councils or similar organizations.
Item 2. Properties
Autoliv's various businesses operate through a number of production
facilities and offices. Autoliv believes its properties to be adequately
maintained and suitable for their intended use and its production facilities
to have a capacity adequate for its current and foreseeable needs.
<TABLE>
<CAPTION>
AUTOLIV MANUFACTURING FACILITIES
<S> <C>
Country Production facility Current primary activities Ownership*
Argentina Autoliv Argentina SA, Seat belts, airbags 100%
Buenos Aires
Australia Autoliv Australia, Melbourne Seat belts 100%
VOA Webco, Melbourne Seat belt webbing 100%
Canada VOA Colfab, Collingwood Seat belt webbing 100%
Autoliv Canada, Tillbury Webbing plant under construction 100%
China CHA, Changchun Seat belts JV
NHA, Nanjing Seat belts JV
Shanghai-VOA Seat belt webbing JV
France Autoliv France,
Gournay-en-Bray Seat belts and airbags 100%
Autoliv Automation, Gournay Production machinery equipment 100%
Autoliv Composants, Caudebec Metal components for seat
belts 100%
EAK, Valentigney Seat belts and airbags JV
Isodelta, Poitiers Steering wheels and covers 77%
Livbag, Brest Pyrotechnical inflators 51%
NCS, Survillier Initiators for airbag
inflators 51%
Sagem-Autoliv, Rouen Airbags and electronics 100%
Germany Autoliv, Dachau Airbags and pretensioners 100%
Autoliv, Elmshorn Seat belts 100%
Autoliv, Dobeln Seat belts 100%
Autoliv, Braunschweig Airbag module assembly 100%
Stakupress, Norderstedt Metal and plastic components 100%
Great
Britain Autoliv, Havant Seat belts and airbags 100%
Precision Components,
Chichester Metal and plastic components 100%
Tensator, Milton Keynes Springs for belt retractors 100%
and height adjusters
Airbags International,
Congleton Textile airbags 100%
Rykneld Tean, Derby Industrial webbing 100%
Hungary Autoliv, Sopron Seat belts 100%
India Autoliv-IFB, Bangalore Seat belts JV
*Denotes direct or indirect ownership by Autoliv
Indonesia Autoliv Indonesia, Jakarta Seat belts JV
Italy Cosma, Turin Injection-moulded components 100%
Japan Autoliv Japan, Tsukuba Airbags 100%
Malaysia Autobelt, Kuala Lumpur Seat belts JV
Airbag Systems Malaysia,
Kuala Lumpur Airbags JV
Furniweb-VOA Safety Webbing,
Kuala Lumpur Seat belt webbings JV
Mexico Autoliv Mexico, Toluca Seat belts 100%
Netherlands Autoliv, Landgraaf Seat belts and integrated
child seats 100%
Autoliv, Amsterdam Airbag inflator 100%
Van Oerle Alberton, Boxtel Seat belt webbing 100%
New Zealand Autoliv NZ, Auckland Seat belts 100%
Philippines Autoliv QB, Manila Seat belts 60%
Romania Autoliv Romania, Brasov Seat belts 80%
Russia Autoliv Russia, Dubna Seat belts 100%
South Africa Autoflug, Johannesburg Seat belts 100%
Spain Autoliv-KLE, Barcelona Seat belts and airbags 100%
Autoliv-BKI, Valencia Seat belts and airbags 100%
Sweden Autoliv Sverige, Vargarda Airbags, seat belts and
integrated child seats 100%
Autoflator, Vargarda Cold inflators 51%
Autoliv Hammarverken, Vaxjo Components for car seats
and knee protection 100%
Autoliv Mekan, Hassleholm Components for car seats 100%
Autoliv Electronics, Motala Airbag electronics 100%
Svensk Airbag, Kungalv Textile airbags 100%
Taiwan Mei-An Autoliv, Taipei Seat belts JV
Thailand Autoliv Thailand, Bangkok Seat belts 85%
Turkey Autoliv Cankor, Istanbul Seat belts 90%
USA Autoliv North America, Seat belts 100%
Indianapolis, Indiana
Brigham City, Utah Inflators 100%
North Ogden, Utah Component subassembly 100%
Ogden, Utah Airbag Modules 100%
Ogden, Utah Cushions 100%
Ogden, Utah Inflators 100%
Promontory, Utah Gas generant 100%
Fort Wayne, Indiana Steering Wheels 100%
Maryville, Tennessee Airbag module assembly 50%
Technical Centers and Crash Laboratories**
Location Function
Autoliv Research, Vargarda (Sweden) Research center
Autoliv Safety Center, Vargarda (Sweden) Technical center for full-scale
tests, roll-overs, etc.
Autoliv Germany, Dachau Technical center with full-scale
test laboratory
Autoliv France, Gournay-en-Bray Technical center with full-scale
test laboratory
Autoliv UK, Havant Technical center with full-scale
test laboratory
Autoliv North America, Detroit Technical center with full-scale
test laboratory
Autoliv Australia, Melbourne Full-scale test laboratory
Autoliv Spain, Barcelona Full-scale test laboratory
Autoliv Germany, Hamburg Full-scale test laboratory
Autoliv Inflator, Utah Pyrotechnic Research
Autoliv North America, Sled Testing
Rochester Hills, Michigan
Autoliv Japan,Yokohama Sled Testing
Autoliv Germany, Markgroningen Sled Testing
**All such facilities are wholly owned directly or indirectly by Autoliv
</TABLE>
Item 3. Legal Proceedings.
From time to time, Autoliv has been named as defendant in product liability
and other lawsuits. Such lawsuits historically have not had an adverse
impact on the financial condition of Autoliv. However, although AAB and ASP
each carry product liability insurance to the extent reasonably available
against insurable risks, future damages awarded in the United States in
product liability lawsuits could exceed the limits of available insurance
coverage, and Autoliv might be held liable for punitive damages which are not
capable of estimation. In addition, from time to time, the customers of
Autoliv request their suppliers to participate in the defense of product
liability litigation or to contribute to claim settlements. A substantial
product liability award that is not covered by insurance or results in
liabilities in excess of any coverage limits could have a material adverse
effect on the financial condition and operating results of Autoliv.
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 1998.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Information concerning the market for Autoliv's common stock including the
relevant trading market, recent share prices, dividends, and approximate
number of shareholders is included in the section entitled "Shareholder
Information" of the Annual Report and is incorporated herein by reference
(pages 47 and 48 in the printed report).
Item 6. Selected Financial Data
Selected financial data for the five years ended December 31, 1998 is
included in the Annual Report and is incorporated herein by reference
(page 46 in the printed report).
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, 1998 is included in the
Annual Report and is incorporated herein by reference (pages 24 through 27
in the printed annual report). The financial data in respect of the period
prior to May 1, 1997, is that of Autoliv AB and its consolidated
subsidiaries only and excludes that of ASP. The financial data for the
period commencing May 1, 1997 is that of Autoliv, Inc. and its consolidated
subsidiaries.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Quantitative and Qualitative Disclosures about Market Risk are included
in the Annual Report and are incorporated herein by reference (page 27 in the
printed report).
Item 8. Financial Statements and Supplementary Data
The Consolidated Balance Sheet of Autoliv as of December 31, 1998 and 1997,
and the Consolidated Statements of Income and Cash Flows for each of the
three years in the period ended December 31, 1998, the Notes to Consolidated
Financial Statements, and the Report of Independent Auditors are included in
the Annual Report and are incorporated herein by reference (pages 28 through
40 in the printed annual report).
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
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors:
Information concerning the directors and nominee for director of Autoliv is
included on pages 2-3 in the 1999 Proxy Statement and is incorporated herein
by reference.
Executive Officers:
GUNNAR BARK, age 59, until January 31, 1999, Chief Executive Officer,
appointed May 1, 1997. See Directors for further details.
LARS WESTERBERG, age 51, President and Chief Executive Officer from
February 1, 1999. See Directors for further details.
LEIF BERNTSSON, age 43, Vice President Purchasing, appointed May 1, 1997.
Mr. Berntsson has been Vice President Quality of Autoliv AB since 1988 and
also Vice President Purchasing of Autoliv AB since 1992. Mr. Berntsson holds
a Master of Science degree from the Chalmers Institute of Technology in
Gothenburg.
HANS BIORCK, age 47, Vice President and Chief Financial Officer effective
April 1, 1999. Mr. Biorck has been Vice President, Treasurer since
September 1998. Before that Mr. Biorck held CFO positions in Esselte AB and
EBS Inc. He holds a degree in Economics and Business Administration from the
Stockholm School of Economics.
WILHELM KULL, age 62, Vice President IT, and Chief Financial Officer from
May 1, 1997 until March 31, 1999. See Directors for further details.
CLAES HUMBLA, age 59, Vice President Human Resources, appointed May 1, 1997.
Mr. Humbla has been Vice President Human Resources of Autoliv AB since 1989.
Mr. Humbla holds a Master of Science degree from the Chalmers Institute of
Technology in Gothenburg.
YNGVE HALAND, age 53, Vice President Research, appointed May 1, 1997. Dr.
Haland has been Vice President Research of Autoliv AB since 1994. Prior to
that he was Group Manager Research for Autoliv AB since 1989. Dr. Haland
holds a Master of Science degree from the Chalmers Institute of Technology
in Gothenburg, from which he also holds a doctorate's degree.
BENOIT MARSAUD, age 46, Vice President Manufacturing, appointed February 4,
1998. Mr. Marsaud has been Vice President Manufacturing of Autoliv AB since
1992 and in addition was appointed President of Autoliv France in May 1997.
He holds a Master of Science Degree from Ecole Nationale Superieure Des Arts
et Metiers in Paris.
MATS ODMAN, age 48, Director of Investor Relations, appointed May 1, 1997.
Mr. Odman has been Director of Investor Relations of Autoliv AB since 1994.
Before that Mr. Odman had the same position in Fermenta AB and Gambro AB.
Prior to that Mr. Odman was Investor Relations Manager of Pharmacia AB.
JAN OLSSON, age 44, Vice President Engineering, appointed October 1, 1997.
Mr. Olsson has been Manager of Engineering of Autoliv Sverige AB since
1989 and President of the same company since August 1994. Mr. Olsson
holds a Master of Science degree from the Chalmers Institute of Technology
in Gothenburg.
JORGEN I. SVENSSON, age 37, 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 degree of
Master of Law from the University of Lund.
Item 11. Executive Compensation
Information concerning executive compensation for the year ended December
31, 1998 is included on pages 4, 5 and 7 through 12 of the 1999 Proxy
Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information concerning beneficial ownership of Autoliv's common stock is
included on page 4 of the 1999 Proxy Statement and is incorporated herein
by reference.
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents Filed as Part of this Report
(1) Financial Statements
The following consolidated financial statements are included on pages 28
through 40 and Selected Financial Data on page 46 of the Annual Report and
are incorporated herein by reference:
Consolidated Statement of Income-Years ended December 31, 1998, 1997 and
1996 (page 28)
Consolidated Balance Sheet-as of December 31, 1998 and 1997 (page 29)
Consolidated Statement of Cash Flows-Years ended December 31, 1998, 1997,
and 1996 (page 30)
Notes to Consolidated Financial Statements (pages 31-39)
Report of Independent Auditors (page 40)
(2) 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.
(3) Index to Exhibits
2.1(a) Combination Agreement, dated as of November 25, 1996, by and
among Autoliv AB, Morton International, Inc., Autoliv and ASP
Merger Sub Inc. (the "Combination Agreement"), incorporated
herein by reference to Exhibit 2.1(a) to the Registration
Statement. Autoliv agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the Securities and Exchange
Commission (the "Commission") upon request.
2.1(b) Amendment No. 1 to the Combination Agreement, dated as of April
30, 1997, by and among Autoliv AB, Morton International, Inc.,
Autoliv and ASP Merger Sub Inc. incorporated herein by reference
to Exhibit 2.1(b) to the Registration Statement.
2.2 Distribution Agreement, dated as of April 30, 1997, by and
between Morton International, Inc. and New Morton International
Inc., incorporated herein by reference to Exhibit 2.2 to the
Registration Statement. Autoliv agrees to furnish supplementally
a copy of any omitted exhibit or schedule to the Commission upon
request.
2.3 Tax Sharing Agreement, dated as of April 30, 1997, by and
between Morton International, Inc. and New Morton International
Inc. incorporated herein by reference to Exhibit 2.3 to the
Registration Statement. Autoliv agrees to furnish supplementally
a copy of any omitted exhibit or schedule to the Commission upon
request.
2.4 Employee Benefits Allocation Agreement, dated as of April 30,
1997, by and between Morton International, Inc. and New Morton
International Inc., incorporated herein by reference to Exhibit
2.4 to the Registration Statement, Autoliv agrees to furnish
supplementally a copy of any omitted exhibit or schedule to the
Commission upon request.
3.1 Autoliv's Restated Certificate of Incorporation incorporated
herein by reference to Exhibit 3.1 to the Registration
Statement.
3.2 Autoliv's Restated By-Laws incorporated herein by reference to
Exhibit 3.2 to the Registration Statement.
4 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).
11 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.
13 Autoliv's Annual Report to Shareholders for the fiscal year
ended December 31, 1998.
21 A list of Autoliv's subsidiaries is included under the section
entitled "Addresses" in the Annual Report and is incorporated
herein by reference (pages 41 through 43 in the printed report).
22 No matters were submitted to Autoliv's stockholders during the
fourth quarter of 1998.
23 Consent of Ernst & Young AB.
27 Financial Data Schedule.
99.1 Autoliv, Inc. 1997 Stock Incentive Plan, incorporated herein
by reference to Autoliv's Registration Statement on Form S-8
(File No. 333-26299)
99.2 Amendment No. 1 to Autoliv, Inc 1997 Stock Incentive Plan
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K for the three months ended
December 31, 1998.
SIGNATURES
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
the 26 day of March, 1999.
<TABLE>
AUTOLIV, INC.
(Registrant)
<S> <C>
By /s/ Wilhelm Kull
Wilhelm Kull
Vice President and Chief Financial Officer
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
the 26 day of March, 1999.
Chairman /s/ Gunnar Bark
Gunnar Bark
Chief Executive Officer and Director
(Principal Executive Officer) /s/ Lars Westerberg
Lars Westerberg
Vice President and Chief Financial Officer and Director
(Principal Financial and Accounting Officer) /s/ Wilhelm Kull
Wilhelm Kull
Director /s/ Per-Olof Aronson
Per-Olof Aronson
Director /s/ Walter Kunerth
Walter Kunerth
Director /s/ S. Jay Stewart
S. Jay Stewart
Director /s/ Roger W. Stone
Roger W. Stone
Director /s/ Per Welin
Per Welin
</TABLE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Autoliv Inc. of our report dated January 27, 1999,
included in the 1998 Annual Report to the Shareholders of Autoliv Inc.
We also consent to the incorporation by reference in the Registrations
Statements (Forms S-8 No. 333-26299 and No. 333-26303) pertaining to
the Autoliv, Inc. 1997 Stock Incentive Plan and Autoliv ASP Employee
Investment Plan of Autoliv Inc., respectively, of our report dated
January 27, 1999, with respect to the consolidated financial statements
of Autoliv Inc. incorporated by reference in the Annual Report (Form 10-K)
for the year ended December 31, 1998.
/s/ Ernst & Young AB
Torbjorn Hanson
Stockholm, Sweden
March 25, 1999
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