Magna International - 40-F annual report 2021

falseFY0000749098trueONNYAOCL is Accumulated Other Comprehensive Loss.The ownership percentages and carrying values of the Company’s principal equity method investments at December 31 were as follows [in millions, except percentages]: 2021 2020 LG Magna e-Powertrain Co., Ltd. [i] 49.0 % $ 481 $ — Litens Automotive Partnership [ii] 76.7 % $ 291 $ 273 Hubei HAPM Magna Seating Systems Co., Ltd. 49.9 % $ 127 $ 121 [i] On July 28, 2021, the Company’s Power & Vision segment formed a joint venture with LG Electronics [“LG”], LG Magna e-Powertrain Co., Ltd. [“LME”], for cash consideration of $517 million. LME is a variable interest entity [“VIE”] and depends on the Company and LG for funding. The Company is not considered the primary beneficiary. The Company’s known maximum exposure to loss approximated the carrying value of its investment balance as at December 31, 2021. The difference between the purchase price of the Company’s investment in LME and its proportionate share of the fair value of LME’s net assets created a basis difference of $188 million, which has been allocated on a preliminary basis as follows: Equity method goodwill $ 118 Intangible assets 47 Fixed assets 47 Deferred tax liabilities (24 ) Total basis difference included in equity method investments $ 188 The basis differences for intangible and fixed assets are being amortized over an average estimated useful life of 8 years. [ii] The Company accounts for its investments under the equity method of accounting as a result of significant participating rights that prevent control.On July 28, 2021, the Company’s Power & Vision segment formed a joint venture with LG Electronics [“LG”], LG Magna e-Powertrain Co., Ltd. [“LME”], for cash consideration of $517 million. LME is a variable interest entity [“VIE”] and depends on the Company and LG for funding. The Company is not considered the primary beneficiary. The Company’s known maximum exposure to loss approximated the carrying value of its investment balance as at December 31, 2021. The difference between the purchase price of the Company’s investment in LME and its proportionate share of the fair value of LME’s net assets created a basis difference of $188 million, which has been allocated on a preliminary basis as follows: Equity method goodwill $ 118 Intangible assets 47 Fixed assets 47 Deferred tax liabilities (24 ) Total basis difference included in equity method investments $ 188 The basis differences for intangible and fixed assets are being amortized over an average estimated useful life of 8 years.The Company accounts for its investments under the equity method of accounting as a result of significant participating rights that prevent control.Included in Corporate and Other Adjusted EBIT are intercompany fees charged to the automotive segments.Includes foreign exchange gains reported on U.S. dollar denominated assets for Mexican tax purposes that are not recognized for GAAP purposes and losses related to the re-measurement of financial statement balances of foreign subsidiaries, primarily in Mexico, that are maintained in a currency other than their functional currency.In October 2020, the Company signed agreements with Fisker Inc. [“Fisker”] for the platform sharing, engineering and manufacturing of the Fisker Ocean SUV. In connection with the arrangement, Fisker issued approximately 19.5 million penny warrants to the Company to purchase common stock, which vest based on specified milestones. During 2021, two third of the warrants vested with a value of $201 million. The initial value attributable to the warrants was deferred within other accrued liabilities and other long-term liabilities and is being recognized in income as performance obligations are satisfied.Re-measurement of deferred tax assets of a China subsidiary. 0000749098 2021-01-01 2021-12-31 0000749098 2020-01-01 2020-12-31 0000749098 2021-12-31 0000749098 2020-12-31 0000749098 2021-04-28 0000749098 2021-11-10 0000749098 2021-11-10 2021-11-10 0000749098 2021-04-28 2021-04-28 0000749098 2021-01-01 2021-01-01 0000749098 2021-01-01 0000749098 2019-12-31 0000749098 srt:MaximumMember mga:SpecialPurposeEquipmentMember 2021-01-01 2021-12-31 0000749098 srt:MaximumMember mga:GeneralPurposeEquipmentMember 2021-01-01 2021-12-31 0000749098 srt:MinimumMember mga:SpecialPurposeEquipmentMember 2021-01-01 2021-12-31 0000749098 srt:MinimumMember mga:GeneralPurposeEquipmentMember 2021-01-01 2021-12-31 0000749098 srt:MaximumMember us-gaap:BuildingMember 2021-01-01 2021-12-31 0000749098 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United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM

40-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13(a) or 15(d) of THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2021		Commission File Number 001-11444

Magna International Inc.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English (if applicable)

Province of Ontario,

Canada

(Province of other jurisdiction of incorporation or organization)

3714

(Primary Standard Industrial Classification Code number (if applicable)

Not Applicable

(I.R.S. Employer Identification Number (if applicable)

337 Magna Drive, Aurora, Ontario, Canada L4G 7K1

(905) 726-2462

(Address and telephone number of Registrant’s principal executive offices)

Corporation Service Company, 19 West 44th Street, Suite 200, New York, NY 10036

Telephone

212-299-5600

(Name, address (including zip code) and telephone number (including area code)

of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act.


Title of each class		Name of each exchange on which registered
Common Shares		New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

For annual reports, indicate by check mark the information filed with this Form:


☒ Annual Information Form		☒ Audited Annual Financial Statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

297,871,976 Common Shares

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule

12b-2

of the Exchange Act.

Emerging Growth Company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.


Auditor Name: Deloitte LLP		Auditor Location: Toronto, Canada		Auditor Firm ID: 1208

1.	ANNUAL INFORMATION FORM

The Registrant’s Annual Information Form for the year ended December 31, 2021 is attached as

Exhibit 1

(the “Annual Information Form”) to this annual report on Form

40-F

and is incorporated by reference herein.

2.	AUDITED ANNUAL FINANCIAL STATEMENTS

The Registrant’s consolidated audited financial statements as at and for the fiscal years ended December 31, 2021 and December 31, 2020, including the Report of Independent Registered Public Accounting Firm, prepared by Deloitte LLP (“Deloitte”) with respect thereto, are included in

Exhibit 2

attached to this annual report on

Form 40-F and

are incorporated by reference herein.

3.	MANAGEMENT’S DISCUSSION AND ANALYSIS

The Registrant’s Management’s Discussion and Analysis of Operations and Financial Position for the year ended December 31, 2021 is included in

Exhibit 3

attached to this annual report on

Form 40-F and

is incorporated by reference herein.

4.	WEBSITE INFORMATION

Notwithstanding any reference to the Registrant’s website on the World Wide Web in the Annual Information Form or in the documents attached or incorporated as exhibits hereto, the information contained in the Registrant’s website, or any other site on the World Wide Web referred to in the Registrant’s website, is not a part of this annual report on Form

40-F

and, therefore, is not filed with the Commission.

5.	FORWARD-LOOKING STATEMENTS

The Registrant has made in the documents filed as part of this annual report on Form

40-F,

and from time to time may otherwise make “forward-looking statements”, within the meaning of Section 21E under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the U.S. Securities Act of 1933, and related assumptions concerning its operations, economic performance and financial matters. Actual results or events could differ materially from those set forth in, or implied by, the forward-looking statements and the related assumptions due to a variety of factors. Reference is made to the section titled “Forward-Looking Statements” on page 2 of the Annual Information Form for a discussion of such factors.

6.	CONTROLS AND PROCEDURES

The Registrant’s Chief Executive Officer and its Executive Vice-President and Chief Financial Officer are responsible for establishing and maintaining the Registrant’s disclosure controls and procedures (as such term is defined in Rules

13a-15(e)

and

15d-15(e)

under the Exchange Act) and internal control over financial reporting (as such term is defined in Rules

13a-15(f)

and

15d-15(f)

under the Exchange Act).

Disclosure Controls and Procedures

The Registrant maintains disclosure controls and procedures designed to ensure that material information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported on a timely basis, and that such information is accumulated and communicated to senior management, including the Registrant’s Chief Executive Officer and Chief Financial Officer, as appropriate, to enable them to make timely decisions regarding required disclosure of such information. The Registrant has conducted an evaluation of its disclosure controls and procedures as of December 31, 2021 under the supervision, and with the participation of, its Chief Executive Officer and its Chief Financial Officer. Based on this evaluation, the Registrant’s Chief Executive Officer and Chief Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as this term is defined in the rules adopted by Canadian securities regulatory authorities and the United States Securities and Exchange Commission) are effective as of December 31, 2021.

Internal Control Over Financial Reporting

Management of the Registrant is responsible for establishing and maintaining adequate internal control over financial reporting for the Registrant. Internal control over financial reporting is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and preparation of financial

statements for external purposes in accordance with U.S. GAAP. Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Additionally, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Registrant’s management used the Committee of Sponsoring Organizations of the Treadway Commission [“COSO”] Internal Control-Integrated Framework (2013) to evaluate the effectiveness of internal control over financial reporting. Based on this evaluation, the Registrant’s Chief Executive Officer and Chief Financial Officer have assessed the effectiveness of the internal control over financial reporting and concluded that, as at December 31, 2021, such internal control over financial reporting is effective. The Registrant’s internal control over financial reporting as of December 31, 2021 has been audited by Deloitte, the Independent Registered Public Accounting Firm who also audited the Registrant’s consolidated financial statements for the year ended December 31, 2021. Deloitte expressed an unqualified opinion on the effectiveness of the Registrant’s internal control over financial reporting. This report precedes the Registrant’s audited consolidated financial statements for the year ended December 31, 2021, included in

Exhibit 2

attached to this annual report on Form 40-F.

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

7.	AUDIT COMMITTEE MEMBERS AND AUDIT COMMITTEE FINANCIAL EXPERT

The Registrant has a separately designated standing audit committee of its Board of Directors (the “Audit Committee”), which is currently comprised of the following members of the Registrant’s Board of Directors: Robert F. MacLellan (Chair), Peter G. Bowie, Mary Lou Maher and Cynthia A. Niekamp.

The Registrant’s Board of Directors has determined that each of Mr. MacLellan, the Chair of the Audit Committee, and Mr. Bowie, Ms. Maher and Ms. Niekamp, is an “audit committee financial expert” and that each member of the Audit Committee is “independent” and “financially literate”, as such terms are defined in the listing standards of the New York Stock Exchange and Exchange Act

Rule 10A-3.

8.	CODE OF ETHICS

The Registrant has adopted a code of ethics that applies to all of its employees, including its Chief Executive Officer, its Chief Financial Officer, its Controller and other persons performing similar functions. The full text of such code of ethics is available on the Registrant’s website at www.magna.com under the Leadership & Governance section.

9.	CORPORATE GOVERNANCE

As a “foreign private issuer” listed on the New York Stock Exchange (NYSE), the Registrant is required to disclose the significant ways in which its corporate governance practices differ from those to be followed by U.S. domestic issuers under the NYSE listing standards. The Registrant has disclosed on its website (www.magna.com) a Statement of Significant Corporate Governance Differences (NYSE), which discloses such differences.

10.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

The table below shows the fees for professional services rendered by our principal accountant, Deloitte, for the fiscal years ended December 31, 2021 and December 31, 2020.


	Fiscal 2021				Fiscal 2020
Type of Services	Fees		% of Total		Fees		% of Total
Audit Fees		9,453,000		58%		9,032,000		56	%
Audit-Related Fees		5,603,000		35%		5,332,000		33	%
Tax Fees		999,000		6%		911,000		6	%
All Other Fees		195,000		1%		738,000		5	%
Total		16,250,000		100.00%		16,013,000		100.00	%

The services comprising the “Audit Fees” category for each of the last two fiscal years were performed by Deloitte to comply with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), including integrated audit of the consolidated financial statements and quarterly reviews. In some cases, fees in this category may include an appropriate allocation of fees for tax services or accounting consultations, to the extent such services were necessary to comply with the standards of the PCAOB. This category includes fees incurred in connection with the audit of our internal control over financial reporting for purposes of Section 404 of the Sarbanes-Oxley Act of 2002.

The services comprising the “Audit-Related Fees” category consists of fees paid in respect of assurance and related services, including such things as due diligence relating to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, services related to statutory audits of certain foreign subsidiaries, attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards. Audit-related services actually provided by Deloitte in each of fiscal 2021 and fiscal 2020 consisted of: services related to statutory audits of certain foreign subsidiaries, assurance services and procedures related to attest engagements not required by statute or regulation, and other assurance services.

The services comprising the “Tax Fees” category consists of all fees paid in respect of tax compliance, planning and advisory services performed by Deloitte’s tax professionals, except those services required in order to comply with the standards of the PCAOB which are included under “Audit Services”. The tax services actually provided by Deloitte in each of fiscal 2021 and fiscal 2020 consisted of: domestic and international tax advisory, compliance and research services, as well as transfer pricing advisory services.

The category “All Other Fees” captures fees in respect of all permitted services not falling under any of the previous categories.

In order to protect Deloitte’s independence, the Audit Committee has a process for

pre-approving

all services provided by, and related fees to be paid to, Deloitte. This process includes reviewing, on a quarterly basis, the details and associated costs of the services expected to be provided by Deloitte. Audit Committee approval is required for any services that have not previously been approved by the Audit Committee. In assessing the impact of any proposed services on auditor independence, the Audit Committee considers whether:

•

the services are consistent with applicable auditor independence rules;

•

the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Registrant’s business, people, culture, accounting systems and risk profile; and

•

the services enhance the Registrant’s ability to manage or control risks and improve audit quality

None of the services provided by Deloitte in 2021 were treated as exempt from

pre-approval

pursuant to the

de minimis

provision of paragraph (c)(7)(i)(C) of

Rule 2-01

Regulation S-X.

11.	TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

For the tabular disclosure regarding the Registrant’s known contractual obligations, with amounts aggregated by the type of contractual obligation, see pages 20 and 21 of the Management’s Discussion and Analysis, included in

Exhibit 3

to this annual report on Form 40-F.

12.	INTERACTIVE DATA FILE

Concurrent with this filing, the Registrant has submitted to the Commission and posted on its website, www.magna.com, an Interactive Data File.

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A.	Undertaking

Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to

Form 40-F;

the securities in relation to which the obligation to file an annual report on

Form 40-F

arises; or transactions in said securities.

B.	Consent to Service of Process

Form F-X

signed by the Registrant and its agent for service of process was previously filed with the Commission.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form

40-F

and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.


Registrant:		MAGNA INTERNATIONAL INC.

By (Signature and Title):		/s/ “Bassem Shakeel”
		Bassem A. Shakeel,
		Vice-President and Corporate Secretary

Date:		March 25, 2022.

EXHIBIT INDEX


Exhibit 1		Annual Information Form of the Registrant dated March 24, 2022.

Exhibit 2		Registrant’s audited financial statements as at and for the two-year period ended December 31, 2021

Exhibit 3		Registrant’s Management’s Discussion and Analysis of Results of Operations and Financial Position for the year ended December 31, 2021

Exhibit 4		Consent of Deloitte LLP.

Exhibit 99.1		Certificate of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (S. Kotagiri).

Exhibit 99.2		Certificate of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (P. McCann).

Exhibit 99.3		Certificate of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (S. Kotagiri).

Exhibit 99.4		Certificate of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (P. McCann).

Exhibit 101		Interactive Data File.

Exhibit 104		Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Magna International - 40-F annual report 2021

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