Magna Announces First Quarter Results

AURORA,ON, May 10, 2013 /CNW/ - Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the first quarter ended March 31, 2013.

THREE MONTHS ENDED MARCH 31, 2013

We posted sales of $8.36 billion for the first quarter ended March 31, 2013, an increase of 9% over the first quarter of 2012. We achieved this sales increase in a period when vehicle production increased 1% in North America and decreased 9% in Europe, each relative to the first quarter of 2012.  Our North American, European and Rest of World production sales, as well as tooling, engineering and other sales all increased in the first quarter of 2013 relative to the comparable quarter in 2012.

Complete vehicle assembly sales increased 33% to $798 million for the first quarter of 2013 compared to $599 million for the first quarter of 2012, while complete vehicle assembly volumes increased 25% to approximately 37,000 units.

During the first quarter of 2013, income from operations before income taxes was $457 million, net income attributable to Magna International Inc. was $369 million and diluted earnings per share were $1.57, increases of $18 million, $26 million and $0.11, respectively, each compared to the first quarter of 2012.

During the first quarter ended March 31, 2013, we generated cash from operations of $607 million before changes in non-cash operating assets and liabilities, and invested $456 million in non-cash operating assets and liabilities. Total investment activities for the first quarter of 2013 were $242 million, including $194 million in fixed asset additions and $48 million in investments and other assets.

A more detailed discussion of our consolidated financial results for the first quarter ended March 31, 2013 is contained in the Management's Discussion and Analysis of Results of Operations and Financial Position and the unaudited interim consolidated financial statements and notes thereto, which are attached to this Press Release.

DIVIDENDS

Yesterday, our Board of Directors declared a quarterly dividend of $0.32 with respect to our outstanding Common Shares for the quarter ended March 31, 2013. This dividend is payable on June 17, 2013 to shareholders of record on May 31, 2013.

UPDATED 2013 OUTLOOK

In this 2013 outlook, in addition to 2013 light vehicle production, we have assumed no material acquisitions or divestitures. In addition, we have assumed that foreign exchange rates for the most common currencies in which we conduct business relative to our U.S. dollar reporting currency will approximate current rates.

ABOUT MAGNA

We are a leading global automotive supplier with 315 manufacturing operations and 87 product development, engineering and sales centres in 29 countries. Our 121,000 employees are focused on delivering superior value to our customers through innovative processes and World Class Manufacturing. Our product capabilities include producing body, chassis, interior, exterior, seating, powertrain, electronic, vision, closure and roof systems and modules, as well as complete vehicle engineering and contract manufacturing. Our common shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA). For further information about Magna, visit our website atwww.magna.com.

We will hold a conference call for interested analysts and shareholders to discuss our first quarter results on Friday, May 10, 2013 at 2:00 p.m. EDT. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call is 1-800-728-2056. The number for overseas callers is 1-416-641-6705. Please call in at least 10 minutes prior to the call. We will also webcast the conference call at www.magna.com. The slide presentation accompanying the conference call will be available on our website Friday afternoon prior to the call.

FORWARD-LOOKING STATEMENTS

The previous discussion contains statements that constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation, including, but not limited to, statements relating to Magna's expected production sales, based on expected light vehicle production in North America and Europe; Magna's expected production sales in the North America, Europe and Rest of World segments; total sales; complete vehicle assembly sales; consolidated operating margin; effective income tax rate; fixed asset expenditures; implementation of improvement plans in our underperforming operations, and/or restructuring actions; and future purchases of our Common Shares under the Normal Course Issuer Bid. The forward-looking information in this document is presented for the purpose of providing information about management's current expectations and plans and such information may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as "may", "would", "could", "should", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "outlook", "project", "estimate" and similar expressions suggesting future outcomes or events to identify forward-looking statements. Any such forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation: the potential for a deterioration of economic conditions or an extended period of economic uncertainty; declines in consumer confidence and the impact on production volume levels; risks arising from the recession in Europe, including the potential for a deterioration of sales of our three largest German-based OEM customers; inability to sustain or grow our business with OEMs; restructuring actions by OEMs, including plant closures; restructuring, downsizing and/or other significant non-recurring costs; continued underperformance of one or more of our operating divisions; our ability to successfully launch material new or takeover business; liquidity risks; bankruptcy or insolvency of a major customer or supplier; a prolonged disruption in the supply of components to us from our suppliers; scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year); shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption; our ability to successfully compete with other automotive suppliers; a reduction in outsourcing by our customers or the loss of a material production or assembly program; the termination or non-renewal by our customers of any material production purchase order; a shift away from technologies in which we are investing; risks arising due to the failure of a major financial institution; impairment charges related to goodwill, long-lived assets and deferred tax assets; shifts in market share away from our top customers; shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content; risks of conducting business in foreign markets, including China, India, South America and other non-traditional markets for us; exposure to, and ability to offset, volatile commodities prices; fluctuations in relative currency values; our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies; our ability to conduct appropriate due diligence on acquisition targets; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; warranty and recall costs; risks related to natural disasters and potential production disruptions; factors that could cause an increase in our pension funding obligations; legal claims and/or regulatory actions against us; our ability to understand and compete successfully in non-automotive businesses in which we pursue opportunities; changes in our mix of earnings between jurisdictions with lower tax rates and those with higher tax rates, as well as our ability to fully benefit tax losses; other potential tax exposures; inability to achieve future investment returns that equal or exceed past returns; the unpredictability of, and fluctuation in, the trading price of our Common Shares; work stoppages and labour relations disputes; changes in credit ratings assigned to us; changes in laws and governmental regulations; costs associated with compliance with environmental laws and regulations; and other factors set out in our Annual Information Form filed with securities commissions in Canada and our annual report on Form 40-F filed with the United States Securities and Exchange Commission, and subsequent filings. In evaluating forward-looking statements, we caution readers not to place undue reliance on any forward-looking statements and readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements to reflect subsequent information, events, results or circumstances or otherwise.

For further information about Magna, please see our website at www.magna.com. Copies of financial data and other publicly filed documents are available through the internet on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com and on the United States Securities and Exchange Commission's Electronic Data Gathering, Analysis and Retrieval System (EDGAR) which can be accessed at www.sec.gov

MAGNA INTERNATIONAL INC.
Management's Discussion and Analysis of Results of Operations and Financial Position

Unless otherwise noted, all amounts in this Management's Discussion and Analysis of Results of Operations and Financial Position ("MD&A") are in U.S. dollars and all tabular amounts are in millions of U.S. dollars, except per share figures, which are in U.S. dollars. When we use the terms "we", "us", "our" or "Magna", we are referring to Magna International Inc. and its subsidiaries and jointly controlled entities, unless the context otherwise requires.

This MD&A should be read in conjunction with the unaudited interim consolidated financial statements for the three months ended March 31, 2013 included in this press release, and the audited consolidated financial statements and MD&A for the year ended December 31, 2012 included in our 2012 Annual Report to Shareholders.

This MD&A has been prepared as at May 9, 2013.

OVERVIEW

We are a leading global automotive supplier with 315 manufacturing operations and 87 product development, engineering and sales centres in 29 countries. Our 121,000 employees are focused on delivering superior value to our customers through innovative processes and World Class Manufacturing. Our product capabilities include body, chassis, interior, exterior, seating, powertrain, electronic, vision, closure and roof systems and modules, as well as complete vehicle engineering and contract manufacturing. Our Common Shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA). We follow a corporate policy of functional and operational decentralization, pursuant to which we conduct our operations through divisions, each of which is an autonomous business unit operating within pre-determined guidelines.

HIGHLIGHTS

North American light vehicle production increased 1% in the first quarter of 2013, compared to the first quarter of 2012, to 4.0 million units. In Europe, light vehicle production in the first quarter of 2013 declined 9% to 4.8 million units.

Our first quarter 2013 total sales increased 9% over the first quarter of 2012 to an all-time record of $8.36 billion, as North American, European and Rest of World production sales, as well as complete vehicle assembly sales and tooling, engineering and other sales all increased over the comparable quarter.

Our income from operations before income taxes increased 4% to $457 million in the first quarter of 2013, compared to $439 million in the first quarter of 2012. Our diluted earnings per Common Share increased 8% to $1.57 in the first quarter of 2013, compared to $1.46 in the first quarter of 2012.

Our North America segment reported another strong quarter with an Adjusted EBIT⁽¹⁾ of $381 million, which included $39 million of amortization related to the August 2012 acquisition of Magna E-Car Systems partnership ("E-Car"). This result compared to Adjusted EBIT of $405 million in the first quarter of 2012.

We continue to improve our financial performance in our Europe segment. Despite the decline in European vehicle production, we generated Adjusted EBIT of $72 million in the first quarter of 2013, compared to $63 million in the first quarter of 2012.

In our Rest of World segment, we reported a break-even Adjusted EBIT for the first quarter of 2013, compared to an Adjusted EBIT loss of $9 million in the first quarter of 2012. Within our Rest of World segment, for the first quarter of 2013, our Asia Pacific business generated a profit while our business in South America recorded a loss.

Both Europe and South America continue to be areas of focus for us, and we expect to be able to generate improved Adjusted EBIT in both regions during 2013 compared to 2012.

Lastly, during the first quarter of 2013, we repurchased 1.6 million Common Shares for aggregate consideration of $88 million pursuant to our outstanding Normal Course issuer bid that expires in November 2013.

^{_________________________
1} Adjusted EBIT represents income from operations before income taxes; interest expense, net; and other expense, net

FINANCIAL RESULTS SUMMARY

During the first quarter of 2013, we posted sales of $8.36 billion, an increase of 9% over the first quarter of 2012. This higher sales level was a result of increases in our North American, Rest of World and European production sales, complete vehicle assembly sales, and tooling, engineering and other sales. Comparing the first quarters of 2013 to 2012:

• North American vehicle production increased 1% and our North American production sales increased 3% to $4.05 billion;
• European vehicle production decreased 9% while our European production sales increased 5% to $2.45 billion;
• Rest of World production sales increased 26% to $516 million;
• Complete vehicle assembly sales increased 33% to $798 million and complete vehicle assembly volumes increased 25%; and
• Tooling, engineering and other sales increased by 31% to $554 million.

During the first quarter of 2013, we earned income from operations before income taxes of $457 million compared to $439 million for the first quarter of 2012. Excluding Other Expense recorded in the first quarter of 2013, as discussed in the "Other Expense" section, the $24 million increase in income from operations before income taxes was primarily as a result of:

• margins earned on higher production sales;
• incremental margin earned on new programs that launched during or subsequent to the first quarter of 2012;
• productivity and efficiency improvements at certain facilities;
• higher equity income;
• lower costs incurred in preparation for upcoming launches;
• decreased pre-operating costs incurred at new facilities;
• lower restructuring and downsizing costs;
• a $3 million revaluation gain in respect of asset-backed commercial paper ("ABCP"); and
• lower warranty costs of $1 million.

These factors were partially offset by:

• intangible asset amortization of $39 million related to the acquisition and re-measurement of E-Car;
• increased commodity costs;
• a larger amount of employee profit sharing;
• the re-acquisition, in the second quarter of 2012, of an interior systems operation;
• operational inefficiencies and other costs at certain facilities; and
• net customer price concessions subsequent to the first quarter of 2012.

During the first quarter of 2013, net income of $367 million increased $26 million compared to the first quarter of 2012. Net income was impacted by Other Expense, as discussed in the "Other Expense" section. Other Expense negatively impacted net income in the first quarter of 2013 by $6 million. Excluding Other Expense, after tax, net income for the first quarter of 2013 increased $32 million.

During the first quarter of 2013, our diluted earnings per share increased $0.11 to $1.57 compared to $1.46 for the first quarter of 2012. Other Expense, after tax, negatively impacted diluted earnings per share in the first quarter of 2013 by $0.02, as discussed in the "Other Expense" section. Excluding Other Expense, after tax, the $0.13 increase in diluted earnings per share is a result of the increase in net income attributable to Magna International Inc. and a decrease in the weighted average number of diluted shares outstanding during the first quarter of 2013. The decrease in the weighted average number of diluted shares outstanding was primarily due to the repurchase and cancellation of Common Shares, during or subsequent to the first quarter of 2012, pursuant to our normal course issuer bids and the cashless exercise of options, partially offset by options granted during or subsequent to the first quarter of 2012 and an increase in the number of diluted options outstanding as a result of an increase in the trading price of our common stock.

INDUSTRY TRENDS AND RISKS

Our success is primarily dependent upon the levels of North American and European car and light truck production by our customers and the relative amount of content we have on various programs. OEM production volumes in different regions may be impacted by factors which may vary from one region to the next, including but not limited to general economic and political conditions, consumer confidence levels, interest rates, credit availability, energy and fuel prices, international conflicts, labour relations issues, regulatory requirements, trade agreements, infrastructure, legislative changes, and environmental emissions and safety standards. These factors and a number of other economic, industry and risk factors which also affect our success, including such things as relative currency values, commodities prices, price reduction pressures from our customers, the financial condition of our supply base and competition from manufacturers with operations in low cost countries, are discussed in our Annual Information Form and Annual Report on Form 40-F, each in respect of the year ended December 31, 2012, and remain substantially unchanged in respect of the first quarter ended March 31, 2013.

RESULTS OF OPERATIONS

The preceding table reflects the average foreign exchange rates between the most common currencies in which we conduct business and our U.S. dollar reporting currency. The significant changes in these foreign exchange rates for the three months ended March 31, 2013 impacted the reported U.S. dollar amounts of our sales, expenses and income.

The results of operations whose functional currency is not the U.S. dollar are translated into U.S. dollars using the average exchange rates in the table above for the relevant period. Throughout this MD&A, reference is made to the impact of translation of foreign operations on reported U.S. dollar amounts where relevant.

Our results can also be affected by the impact of movements in exchange rates on foreign currency transactions (such as raw material purchases or sales denominated in foreign currencies). However, as a result of hedging programs employed by us, foreign currency transactions in the current period have not been fully impacted by movements in exchange rates. We record foreign currency transactions at the hedged rate where applicable.

Finally, foreign exchange gains and losses on revaluation and/or settlement of monetary items denominated in a currency other than an operation's functional currency impact reported results. These gains and losses are recorded in selling, general and administrative expense.

RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED MARCH 31, 2013

External Production Sales - North America

External production sales in North America increased 3% or $132 million to $4.05 billion for the first quarter of 2013 compared to $3.92 billion for the first quarter of 2012. The increase in external production sales is primarily as a result of:

• the launch of new programs during or subsequent to the first quarter of 2012, including the:
• Ford Fusion and Lincoln MKZ;
• Honda Accord; and
• Ford C-MAX; and
• acquisitions completed during or subsequent to the first quarter of 2012 which positively impacted sales by $42 million, including STT Technologies ("STT").

These factors were partially offset by:

• lower production volumes on certain existing programs;
• programs that ended production during or subsequent to the first quarter of 2012, including the:
• Jeep Liberty; and
• Mazda 6;
• a decrease in content on certain programs, including the Ford Escape;
• a decrease in reported U.S. dollar sales primarily as a result of the weakening of the Canadian dollar against the U.S. dollar; and
• net customer price concessions subsequent to the first quarter of 2012.

External Production Sales - Europe

External production sales in Europe increased $124 million to $2.45 billion for the first quarter of 2013 compared to $2.32 billion for the first quarter of 2012. The increase in external production sales is primarily as a result of:

• acquisitions completed during or subsequent to the first quarter of 2012, which positively impacted sales by $164 million, including ixetic Verwaltungs GmbH ("ixetic"), the re-acquisition of an interior systems operation and BDW technologies group ("BDW");
• the launch of new programs during or subsequent to the first quarter of 2012, including the:
• Ford Transit Custom;
• MINI Paceman;
• Ford Kuga; and
• Skoda Rapid and SEAT Toledo; and
• an increase in reported U.S. dollar sales primarily as a result of the strengthening of the euro against the U.S. dollar.

These factors were partially offset by:

• lower production volumes on certain existing programs; and
• net customer price concessions subsequent to the first quarter of 2012.

External Production Sales - Rest of World

External production sales in Rest of World increased 26% or $108 million to $516 million for the first quarter of 2013 compared to $408 million for the first quarter of 2012, primarily as a result of the launch of new programs during or subsequent to the first quarter of 2012, primarily in Brazil and China.

This factor was partially offset by a $22 million decrease in reported U.S. dollar sales as a result of the weakening of foreign currencies against the U.S. dollar, including the Brazilian real.

Complete vehicle assembly sales increased 33% or $199 million to $798 million for the first quarter of 2013 compared to $599 million for the first quarter of 2012 and assembly volumes increased 25% or 7,504 units.

The increase in complete vehicle assembly sales is primarily as a result of:

• an increase in assembly volumes for the:
• Mercedes-Benz G-Class; and
• MINI Countryman;
• the launch of the MINI Paceman during the fourth quarter of 2012; and
• a $5 million increase in reported U.S. dollar sales as a result of the strengthening of the euro against the U.S. dollar.

These factors were partially offset by:

• the end of production of the Aston Martin Rapide at our Magna Steyr facility during the second quarter of 2012; and
• a decrease in assembly volumes for the Peugeot RCZ.

Tooling, Engineering and Other Sales

Tooling, engineering and other sales increased 31% or $132 million to $554 million for the first quarter of 2013 compared to $422 million for the first quarter of 2012.

In the first quarter of 2013, the major programs for which we recorded tooling, engineering and other sales were the:

• Jeep Grand Cherokee;
• Chevrolet Suburban, Tahoe, Silverado and Avalanche;
• Qoros 3;
• MINI Countryman;
• Ford Fusion;
• Mercedes-Benz Actros;
• Ford Fiesta;
• Chevrolet Impala;
• GMC Acadia; and
• Ford Transit.

In the first quarter of 2012, the major programs for which we recorded tooling, engineering and other sales were the:

• Mercedes-Benz M-Class;
• MINI Countryman;
• Qoros 3;
• Ford Escape;
• Ford Fusion;
• Audi A8; and
• Opel Calibra.

Cost of goods sold increased $632 million to $7.32 billion for the first quarter of 2013 compared to $6.69 billion for the first quarter of 2012 primarily as a result of:

• higher material, overhead and labour costs associated with the increase in sales, including wage increases at certain operations;
• $225 million related to acquisitions completed during or subsequent to the first quarter of 2012, including ixetic, the re-acquisition of an interior systems operation, STT, BDW and E-Car;
• increased commodity costs; and
• a larger amount of employee profit sharing.

These factors were partially offset by:

• a net decrease in reported U.S. dollar cost of goods sold primarily due to the weakening of the Brazilian real, Canadian dollar and British pound, each against the U.S. dollar partially offset by the strengthening of the euro against the U.S. dollar;
• lower restructuring and downsizing costs; and
• lower warranty costs of $1 million.

Gross margin increased $63 million to $1.04 billion for the first quarter of 2013 compared to $0.98 billion for the first quarter of 2012 and gross margin as a percentage of sales decreased to 12.5% for the first quarter of 2013 compared to 12.8% for the first quarter of 2012. The decrease in gross margin as a percentage of sales was substantially due to:

• an increase in complete vehicle assembly sales which have a higher material content than our consolidated average;
• an increase in tooling, engineering and other sales that have low or no margins;
• increased commodity costs;
• the re-acquisition, in the second quarter of 2012, of an interior systems operation;
• a larger amount of employee profit sharing;
• operational inefficiencies and other costs at certain facilities; and
• net customer price concessions subsequent to the first quarter of 2012.

These factors were partially offset by:

• lower costs incurred in preparation for upcoming launches;
• the closure of certain facilities;
• decreased pre-operating costs incurred at new facilities;
• lower warranty costs;
• lower restructuring and downsizing costs; and
• productivity and efficiency improvements at certain facilities

Depreciation and Amortization

Depreciation and amortization costs increased $84 million to $255 million for the first quarter of 2013 compared to $171 million for the first quarter of 2012. The higher depreciation and amortization was primarily as a result of:

• intangible asset amortization of $39 million related to the acquisition and re-measurement of E-Car;
• $22 million related to acquisitions completed during or subsequent to the first quarter of 2012, including ixetic, E-Car and BDW;
• depreciation related to new facilities; and
• capital spending during or subsequent to the first quarter of 2012.

Selling, General and Administrative ("SG&A")

SG&A expense as a percentage of sales was 4.4% for the first quarter of 2013 compared to 5.2% for the first quarter of 2012. SG&A expense decreased $31 million to $367 million for the first quarter of 2013 compared to $398 million for the first quarter of 2012 primarily as a result of:

• a decrease in reported U.S. dollar SG&A related to foreign exchange;
• lower restructuring and downsizing costs; and
• a $3 million revaluation gain in respect of ABCP.

These factors were partially offset by:

• $7 million related to acquisitions completed during or subsequent to the first quarter of 2012, including E-Car, the re-acquisition of an interior systems operation and ixetic;
• higher labour, including wage increases at certain operations, and other costs to support the growth in sales;
• increased costs incurred at new facilities; and
• higher employee profit sharing.

Equity Income

Equity income increased $13 million to $45 million for the first quarter of 2013 compared to $32 million for the first quarter of 2012. Equity income for the first quarter of 2012 included $12 million of equity loss related to our investment in E-Car. Excluding this $12 million equity loss, the $1 million increase in equity income is primarily as a result of higher income from most of our equity accounted investments.

Other Expense, net

During the first quarter of 2013, we recorded net restructuring charges of $6 million ($6 million after tax) in Europe at our exterior and interior systems operations. We expect full year 2013 restructuring charges to be approximately $100 million.

Segment Analysis

Given the differences between the regions in which we operate, our operations are segmented on a geographic basis between North America, Europe and Rest of World. Consistent with the above, our internal financial reporting segments key internal operating performance measures between North America, Europe and Rest of World for purposes of presentation to the chief operating decision maker to assist in the assessment of operating performance, the allocation of resources, and our long-term strategic direction and future global growth.

Our chief operating decision maker uses Adjusted EBIT as the measure of segment profit or loss, since we believe Adjusted EBIT is the most appropriate measure of operational profitability or loss for our reporting segments. Adjusted EBIT represents income from operations before income taxes; interest expense, net; and other expense, net.

Excluded from Adjusted EBIT for the three months ended March 31, 2013 was the $6 million net restructuring costs recorded in our Europe segment, as discussed in the "Other Expense" section.

North America

Adjusted EBIT in North America decreased $24 million to $381 million for the first quarter of 2013 compared to $405 million for the first quarter of 2012 primarily as a result of:

• intangible asset amortization of $39 million related to the acquisition and re-measurement of E-Car;
• programs that ended production during or subsequent to the first quarter of 2012;
• operational inefficiencies and other costs at certain facilities;
• increased commodity costs;
• higher affiliation fees paid to corporate;
• a larger amount of employee profit sharing; and
• net customer price concessions subsequent to the first quarter of 2012.

These factors were partially offset by:

• margins earned on higher production sales, including margins earned on the launch of new facilities and new programs;
• lower restructuring and downsizing costs;
• lower costs incurred in preparation for upcoming launches;
• higher equity income;
• decreased pre-operating costs incurred at new facilities; and
• productivity and efficiency improvements at certain facilities.

Europe

Adjusted EBIT in Europe increased $9 million to $72 million for the first quarter of 2013 compared to $63 million for the first quarter of 2012 primarily as a result of:

• lower pre-operating costs incurred at new facilities;
• higher equity income;
• lower costs incurred in preparation for upcoming launches;
• lower warranty costs of $1 million; and
• productivity and efficiency improvements at certain facilities.

These factors were partially offset by:

• the re-acquisition, in the second quarter of 2012, of an interior systems operation;
• a larger amount of employee profit sharing;
• higher restructuring and downsizing costs;
• increased commodity costs;
• higher affiliation fees paid to corporate; and
• operational inefficiencies and other costs at certain facilities.

Rest of World

Rest of World Adjusted EBIT increased $9 million to $nil for the first quarter of 2013 compared to a loss of $9 million for the first quarter of 2012 primarily as a result of:

• margins earned on higher production sales, including margins earned on the launch of new facilities and new programs;
• productivity and efficiency improvements at certain facilities;
• lower costs related to new facilities;
• lower restructuring and downsizing costs; and
• lower launch costs.

These factors were partially offset by:

• higher affiliation fees paid to Corporate;
• a larger amount of employee profit sharing;
• lower equity income; and
• net customer price concessions subsequent to the first quarter of 2012.

Corporate and Other

Corporate and Other Adjusted EBIT increased $29 million to $14 million for the first quarter of 2013 compared to a loss of $15 million for the first quarter of 2012. The loss related to our equity accounted investment in E-Car included in Corporate and Other was $12 million for the first quarter of 2012. Excluding E-Car, Corporate and Other Adjusted EBIT increased $17 million to $14 million for the first quarter of 2013 compared to a loss of $3 million for the first quarter of 2012 primarily as a result of:

• $10 million of cash received related to the settlement of ABCP between the Investment Industry Regulatory Organization of Canada and financial institutions;
• an increase in affiliation fees earned from our divisions; and
• a $3 million revaluation gain in respect of ABCP.

These factors were partially offset by lower equity income.

Interest Expense, net

During the first quarter of 2013, we recorded net interest expense of $4 million compared to $5 million for the first quarter of 2012. The decrease in interest expense is primarily as a result of higher interest income partially offset by an increase in interest expense as a result of higher debt in Asia Pacific.

Income from Operations before Income Taxes

Income from operations before income taxes increased $18 million to $457 million for the first quarter of 2013 compared to $439 million for the first quarter of 2012. Excluding Other Expense, discussed in the "Other Expense" section, income from operations before income taxes for the first quarter of 2013 increased $24 million. The increase in income from operations before income taxes is the result of the increase in EBIT and the decrease in net interest expense, as discussed above.

Income Taxes

The effective income tax rate on income from operations before income taxes was 19.7% for the first quarter of 2013 compared to 22.3% for the first quarter of 2012. In the first quarter of 2013, income tax rates were impacted by the items discussed in the "Other Expense" section. Excluding Other Expense, after tax, the effective income tax rate decreased to 19.4% for the first quarter of 2013 compared to 22.3% for the first quarter of 2012 primarily as result of a decrease in our reserve for uncertain tax positions, resulting mainly from favourable audit settlements of prior taxation years.

Net Income

Net income of $367 million for the first quarter of 2013 increased $26 million compared to the first quarter of 2012. Excluding Other Expense, after tax, discussed in the "Other Expense" section, net income increased $32 million. The increase in net income is the result of the increase in income from operations before income taxes and lower income taxes, both as discussed above.

Net Loss Attributable to Non-controlling Interests

Net loss attributable to non-controlling interests was $2 million for the first quarters of 2013 and 2012.

Net Income Attributable to Magna International Inc.

Net income attributable to Magna International Inc. of $369 million for the first quarter of 2013 increased $26 million compared to the first quarter of 2012. Excluding Other Expense, after tax, discussed in the "Other Expense" section, net income attributable to Magna International Inc. increased $32 million as a result of the increase in net income, as discussed above.

Diluted earnings per share increased $0.11 to $1.57 for the first quarter of 2013 compared to $1.46 for the first quarter of 2012. Other Expense, after tax, negatively impacted diluted earnings per share in the first quarter of 2013 by $0.02, as discussed in the "Other Expense" section. Excluding Other Expense, after tax, the $0.13 increase in diluted earnings per share is a result of the increase in net income attributable to Magna International Inc. and a decrease in the weighted average number of diluted shares outstanding during the first quarter of 2013.

The decrease in the weighted average number of diluted shares outstanding was primarily due to the repurchase and cancellation of Common Shares, during or subsequent to the first quarter of 2012, pursuant to our normal course issuer bids and the cashless exercise of options, partially offset by options granted during or subsequent to the first quarter of 2012 and an increase in the number of diluted options outstanding as a result of an increase in the trading price of our common stock.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations before changes in non-cash operating assets and liabilities increased $76 million to $607 million for the first quarter of 2013 compared to $531 million for the first quarter of 2012. The increase in cash flow from operations was due to a $26 million increase in net income, as discussed above, and a $50 million increase in items not involving current cash flows. Items not involving current cash flows are comprised of the following:

Cash invested in non-cash operating assets and liabilities amounted to $456 million for the first quarter of 2013 compared to $302 million for the first quarter of 2012. The change in non-cash operating assets and liabilities is comprised of the following sources (and uses) of cash:

The increase in accounts receivable, inventories, accounts payable, accrued salaries and wages and other accrued liabilities in the first quarter of 2013 was primarily due to an increase in production activities at the end of the first quarter of 2013 compared to the end of 2012.

Capital and Investment Spending

Fixed assets, investments and other assets additions

In the first quarter of 2013, we invested $194 million in fixed assets. While investments were made to refurbish or replace assets consumed in the normal course of business and for productivity improvements, a large portion of the investment in the first quarter of 2013 was for facilities and manufacturing equipment for programs that will be launching subsequent to 2012. Consistent with our strategy to expand in developing markets, approximately 22% (2012 - 26%) of this investment was in China, India, Brazil and Russia.

In the first quarter of 2013, we invested $48 million in other assets related primarily to fully reimbursable engineering costs and tooling for programs that launched during the first quarter of 2013 or will be launching subsequent to the first quarter of 2013.

Purchase of subsidiaries

During the first quarter of 2012, we invested $42 million to purchase subsidiaries, including the acquisition of BDW, a structural casting supplier of aluminium components, which has operations in Germany, Poland and Hungary. The acquired business has sales primarily to Volkswagen, Audi, Porsche, Mercedes-Benz, Ferrari and ZF.

Proceeds from disposition

In the first quarter of 2013, the $30 million of proceeds include normal course fixed and other asset disposals.

Financing

During the first quarter of 2013, our Honorary Chairman and Founder, Mr. Stronach, exercised 716,666 options on a cashless basis in accordance with the applicable stock option plans. On exercise, cash payments totalling $20 million were made to Mr. Stronach which represented the difference between the aggregate fair market value of the Option Shares based on the closing price of our Common Shares on the Toronto Stock Exchange ("TSX") on the date of exercise and the aggregate Exercise Price of all such options surrendered.

During the first quarter of 2013, we repurchased 1.6 million Common Shares for an aggregate purchase price of $88 million under our normal course issuer bid.

Cash dividends paid per Common Share were $0.32 for the first quarter of 2013, for a total of $73 million.

Financing Resources

Total capitalization increased by $59 million to $9.95 billion at March 31, 2013 compared to $9.89 billion at December 31, 2012, primarily as a result of a $110 million increase in shareholders' equity partially offset by a $49 million decrease in liabilities.

The increase in shareholders' equity was primarily as a result of net income earned in the first quarter of 2013.

This factor was partially offset by:

• the $133 million net unrealized loss on translation of net investment in foreign operations;
• the repurchase of Common Shares in connection with our normal course issuer bid; and
• dividends paid during the first quarter of 2013.

The decrease in liabilities relates primarily to a decrease in our bank indebtedness.

Cash Resources

During the first quarter of 2013, our cash resources decreased by $275 million to $1.25 billion as a result of the cash used for investing and financing activities and the unfavourable effect of foreign exchange, partially offset by cash provided from operating activities, as discussed above. In addition to our cash resources at March 31, 2013, we had term and operating lines of credit totalling $2.47 billion of which $2.08 billion was unused and available.

Maximum Number of Shares Issuable

The following table presents the maximum number of shares that would be outstanding if all of the outstanding options at May 9, 2013 were exercised:

Contractual Obligations and Off-Balance Sheet Financing

There have been no material changes with respect to the contractual obligations requiring annual payments during the first quarter of 2013 that are outside the ordinary course of our business. Refer to our MD&A included in our 2012 Annual Report.

COMMITMENTS AND CONTINGENCIES

From time to time, we may be contingently liable for litigation, legal and/or regulatory actions and proceedings and other claims.

Refer to note 14 of our unaudited interim consolidated financial statements for the three months ended March 31, 2013, which describes these claims.

For a discussion of risk factors relating to legal and other claims/actions against us, refer to "Item 3. Description of the Business - Risk Factors" in our Annual Information Form and Annual Report on Form 40-F, each in respect of the year ended December 31, 2012.

CONTROLS AND PROCEDURES

There have been no changes in our internal controls over financial reporting that occurred during the three months ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

The previous discussion contains statements that constitute "forward-looking information" or "forward-looking statements" within the meaning of applicable securities legislation, including, but not limited to, statements relating to: expected light vehicle production and operating performance in North America, Europe and South America; implementation of improvement plans in our underperforming operations, and/or restructuring actions, including but not limited to, Europe and South America; improved future results in South America and Europe; and future purchases of our Common Shares under the Normal Course Issuer Bid. The forward-looking information in this MD&A is presented for the purpose of providing information about management's current expectations and plans and such information may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as "may", "would", "could", "should", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "outlook", "project", "estimate" and similar expressions suggesting future outcomes or events to identify forward-looking statements. Any such forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation: the potential for a deterioration of economic conditions or an extended period of economic uncertainty; declines in consumer confidence and the impact on production volume levels; risks arising from the recession in Europe, including the potential for a deterioration of sales of our three largest German-based OEM customers; inability to sustain or grow our business with OEMs; restructuring actions by OEMs, including plant closures; restructuring, downsizing and/or other significant non-recurring costs; continued underperformance of one or more of our operating divisions; our ability to successfully launch material new or takeover business; liquidity risks; bankruptcy or insolvency of a major customer or supplier; a prolonged disruption in the supply of components to us from our suppliers; scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year); shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption; our ability to successfully compete with other automotive suppliers; a reduction in outsourcing by our customers or the loss of a material production or assembly program; the termination or non-renewal by our customers of any material production purchase order; a shift away from technologies in which we are investing; risks arising due to the failure of a major financial institution; impairment charges related to goodwill, long-lived assets and deferred tax assets; shifts in market share away from our top customers; shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content; risks of conducting business in foreign markets, including China, India, South America and other non-traditional markets for us; exposure to, and ability to offset, volatile commodities prices; fluctuations in relative currency values; our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies; our ability to conduct appropriate due diligence on acquisition targets; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; warranty and recall costs; risks related to natural disasters and potential production disruptions; factors that could cause an increase in our pension funding obligations; legal claims and/or regulatory actions against us; our ability to understand and compete successfully in non-automotive businesses in which we pursue opportunities; changes in our mix of earnings between jurisdictions with lower tax rates and those with higher tax rates, as well as our ability to fully benefit tax losses; other potential tax exposures; inability to achieve future investment returns that equal or exceed past returns; the unpredictability of, and fluctuation in, the trading price of our Common Shares; work stoppages and labour relations disputes; changes in credit ratings assigned to us; changes in laws and governmental regulations; costs associated with compliance with environmental laws and regulations; and other factors set out in our Annual Information Form filed with securities commissions in Canada and our annual report on Form 40-F filed with the United States Securities and Exchange Commission, and subsequent filings. In evaluating forward-looking statements, we caution readers not to place undue reliance on any forward-looking statements and readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements to reflect subsequent information, events, results or circumstances or otherwise.

MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME
[Unaudited]
[U.S. dollars in millions, except per share figures]

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
[Unaudited]
[U.S. dollars in millions]

MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited]
[U.S. dollars in millions]

MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
[Unaudited]
[U.S. dollars in millions]

MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
[Unaudited]
[U.S. dollars in millions]

MAGNA INTERNATIONAL INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
[Unaudited]
[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]

1. SIGNIFICANT ACCOUNTING POLICIES

[a] Basis of presentation

The unaudited interim consolidated financial statements of Magna International Inc. and its subsidiaries [collectively "Magna" or the "Company"] have been prepared in United States dollars following United States generally accepted accounting principles ["GAAP"] as further discussed in note 1[b] and the accounting policies as set out in note 1 to the annual consolidated financial statements for the year ended December 31, 2012.

The unaudited interim consolidated financial statements do not conform in all respects to the requirements of GAAP for annual financial statements. Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the December 31, 2012 audited consolidated financial statements and notes included in the Company's 2012 Annual Report.

In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, which consist only of normal and recurring adjustments, necessary to present fairly the financial position at March 31, 2013 and the results of operations, cash flows and changes in equity for the three months ended March 31, 2013 and 2012.

[b] Accounting Changes

Intangibles

In July 2012, the Financial Accounting Standards Board issued Accounting Standards Update ["ASU"] 2012-02, "Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment". ASU 2012-02 provides an option to first perform a qualitative assessment to determine whether it is more-likely-than-not that an indefinite-lived intangible asset is impaired. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

[c] Seasonality

The Company's businesses are generally not seasonal. However, the Company's sales and profits are closely related to its automotive customers' vehicle production schedules. The Company's largest North American customers typically halt production for approximately two weeks in July and one week in December. Additionally, many of the Company's customers in Europe typically shutdown vehicle production during portions of August and one week in December.

2.OTHER EXPENSE, NET

During the first quarter of 2013, the Company recorded net restructuring charges of $6 million [$6 million after tax] in Europe at its exterior and interior systems operations.

3. EARNINGS PER SHARE

4.DETAILS OF CASH FROM OPERATING ACTIVITIES

[a] Cash and cash equivalents:

[b] Items not involving current cash flows:

[c] Changes in non-cash operating assets and liabilities:

5.INVENTORIES

Inventories consist of:

Tooling and engineering inventory represents costs incurred on tooling and engineering services contracts in excess of billed and unbilled amounts included in accounts receivable.

6.Other assets

Other assets consist of:

7. Warranty

The following is a continuity of the Company's warranty accruals:

8.LONG-TERM EMPLOYEE BENEFIT LIABILITIES

The Company recorded long-term employee benefit expenses as follows:

9.OTHER LONG-TERM LIABILITIES

Other long-term liabilities consist of:

10. STOCK-BASED COMPENSATION

[a] Incentive Stock Option Plan

The following is a continuity schedule of options outstanding [number of options in the table below are expressed in whole numbers]:

The weighted average assumptions used in measuring the fair value of stock options granted and/or modified and the compensation expense recorded in selling, general and administrative expenses are as follows:

[b] Long-term retention program

The following is a continuity of the stock that has not been released to the executives and is reflected as a reduction in the stated value of the Company's Common Shares [number of Common Shares in the table below are expressed in whole numbers]:

[c] Restricted stock unit program

The following is a continuity schedule of restricted stock unit programs outstanding [number of stock units in the table below are expressed in whole numbers]:

[d] Compensation expense related to Stock-based compensation

Stock-based compensation expense recorded in selling, general and administrative expenses related to the above programs is as follows:

11. COMMON SHARES

[a] During the first quarter of 2013, the Company purchased for cancellation 1,593,615 Common Shares under a normal course issuer bid for cash consideration of $88 million.

[b] The following table presents the maximum number of shares that would be outstanding if all the dilutive instruments outstanding at May 9, 2013 were exercised or converted: