Financial Overview

(in million USD)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	Rate of change (%)	Factors
Overall
Net Sales	34,835	30,837	13.0	1)
Operating Income	1,905	1,750	8.9	-
Sales by Region
North America	17,859	16,241	10.0	2)
Europe	14,525	12,563	15.6	3)
Asia	1,539	1,188	29.5	4)
Rest of World	889	822	8.2	5)

Factors
1) Net Sales
-The Company's net sales in 2013 increased 13.0% from 2012 to a record USD 34,835 million. This increase was due to record sales from all of the Company's production areas as well as its tooling and other sales segment. Furthermore, the Company's complete vehicle assembly sales rose 20% compared to the previous year.

2) North America
-Sales in North America grew 10.0% to USD 17,859 million in 2013. The increase in sales was due to the following:

• Launch of new programs including the Ford Fusion, Jeep Cherokee, Honda Accord and Tesla Model S
• Higher production volumes for existing programs
• Acquisitions completed during or after 2012 including STT Technologies which provided a positive impact of USD 155 million to sales
• An increase in content for specific programs such as the Buick Enclave, GMC Acadia and Jeep Grand Cherokee

-The positive impact of these factors was partially offset by the following:

• Programs that ended during or after 2012
• A decrease in USD sales due to the weakening of the Canadian currency versus US currency
• A decrease in content in certain programs including the Jeep Patriot and Compass
• Net customer price concessions after 2012

3) Europe
-The Company's sales in Europe increased by 15.6% to USD 14,525 million in 2013. Factors that lead to the sales increase include the following:

• Launch of new programs including the Mercedes-Benz A-Class, MINI Paceman, Ford Kuga and Skoda Rapid
• Acquisitions of companies including ixetic and BDW technologies group which provided a positive impact of USD 466 million to sales
• A USD 233 million increase in USD sales to the strengthening of the euro versus the US dollar

-These factors were partially offset by the following:

• Lower production volumes on certain programs
• Programs that ended during or after 2012
• Net customer price concessions after 2012

4) Asia
-In 2013, the Company's operations in Asia recorded a 29.5% increase in sales to USD 1,539 million. The sales growth was primarily a result of the following factors:

• Higher production volumes on existing programs
• Launch of new programs, specifically in China
• A USD 25 million increase in sales due to the strengthening of foreign currency versus the US dollar
• Acquisitions of companies including ixetic which provided a positive impact of USD 18 million to sales

-The positive impact to sales was slightly offset by net customer price concessions after 2012.

5) Rest of World
-The Company's sales in the rest of the world increased by 8.2% to USD 889 million in 2013. The increase in sales was caused mainly by the following factors:

• Launch of new programs, primarily in Argentina and Brazil
• Higher production volumes on existing programs
• Net customer price increases after 2012

-These gains were partially offset by a USD 106 million decrease due to the weakening of foreign currencies versus the US dollar and various programs which ended production during and after 2012.

Acquisitions

-In November 2013, the Company acquired the remaining 49% interest in Textile Competence Centre Kft, a textile plant in Germany for cash considerations of USD 9 million.

Contracts

-The Company announced that its Magna Seating operating unit supplies complete seat systems for the GM Chevrolet Equinox and the GMC Terrain. The Company manufactures seat systems for both the Equinox and Terrain at facilities in London, Ontario, Canada, and Columbia, Tennessee, USA. (From a press release on August 21, 2013)

Awards

-The Company announced that its Magna Electronics manufacturing division in Tiengen, Germany, received the Volvo Cars Quality Excellence (VQE) Award. Magna Electronics' Tiengen facility employs approximately 320 people and manufactures 180-degree front/side-view megapixel cameras for Volvo Cars as well as engine electronics for other automakers. (From a press release on January 29, 2014)

-The Company announced that 11 of its manufacturing locations received the Supplier Quality Excellence Award from General Motors in 2013. Locations receiving the GM Supplier Quality Excellence Awards include:

• Estampados - Ramos Arizpe, Coahuila, Mexico
• Karmax Heavy Stamping - Milton, Ontario, Canada
• Magna Electronics Zhangjiagang - Zhangjiagang, Jiangsu Province, China
• Maple Stamping - Concord, Ontario, Canada
• Montezuma Manufacturing - Montezuma, Iowa, USA
• MPT Lansing - Lansing, Michigan, USA
• MPT Muncie - Muncie, Indiana, USA
• MSM South - Woodbridge, Ontario, Canada
• Pullmatic Manufacturing - Unionville, Ontario, Canada
• Venest Industries - St. Catharines, Ontario, Canada
• Victor Manufacturing - Victor, Iowa, USA

(From a press release on October 30, 2013)

-The Company received the Volkswagen Group Award 2013 in the Global Champion category for its swift support of Volkswagen in emerging markets. The Company was among 21 suppliers recognized for excelling in the areas of development expertise, product quality, competitiveness, and project management. Specifically, the Company was acknowledged for its flexibility and fast response times in Russia, and for transferring high-quality standards and technology to markets outside of Europe. (From a press release on July 3, 2013)

-The Company announced that its Cosma International operating unit received the BMW Supplier Innovation Award. Cosma was recognized in the area of Lightweight Construction for a lightweight, high-voltage battery housing made of die-cast aluminum. The battery housing is manufactured by Magna BDW technologies GmbH, a division of Cosma located in Germany. (From a press release on May 14, 2013)

-The Company announced that its Magna Seating operating unit received the General Motors 2012 Supplier of the Year award. (From a press release on March 18, 2013)

R&D Expenditure

-The Company's Corporate Constitution requires a minimum of 7% of its pre-tax profits for any fiscal year to be allocated to research and development during that fiscal year or the fiscal year that immediately follows. 

Technological Alliance

Partnership with bio-on for applications of sugar beet plastic
-The Company and bio-on, an Italian intellectual property company, signed a cooperation agreement in December 2013 to start exclusive R&D activities on the use of bio plastics for the automotive industry. bio-on developed a new kind of bio plastic created through the use of naturally occurring bacteria that feed off sugar beet by-products. The Magna Interiors operating unit is pairing its automotive know-how with bio-on's chemical expertise to research how production of this natural polyester product can be elevated to an industrial, cost-effective scale. Additionally, the two companies will test and evaluate how bio-on bio plastics will perform in different standard industry processes such as thermoforming. Magna Interiors will utilize its facility in Liberec, Czech Republic, for joint testing. (From a press release on February 7, 2014)

Development of carbon fiber sheet molding compound with Zoltek
-The Company announced that its Magna Exteriors and Interiors business unit, together with Zoltek, developed a new low-cost carbon fiber sheet molding compound. The new material, called EpicBlendSMC EB CFS-Z, allows the Company to provide an expanded range of lightweight parts, sub-systems and semi-structural applications for various markets. Additionally, the sheet molding compound is available for sale directly to molders through Magna Exteriors and Interiors. The new compound is developed from a combination of Zoltek's Panex 35 commercial carbon fiber and Magna's EpicBlendSMC formulations. (From a press release on March 12, 2013)

Partnership with CRIBE on project to integrate wood fiber in auto components
-The Company is currently partnered with the Center for Research in the Bio-Economy (CRIBE) and working with Alberta Innovates Bio Solutions on a project to integrate wood fiber into automotive components. The Company is looking to substitute glass fiber with wood fiber for certain components and sub-systems. In certain applications, wood fiber can provide the needed mechanical and physical properties but at a lower cost and weight compared to glass fiber. CRIBE has invested CAD 1.3 million into the project in support of both the forestry industry and automotive manufacturing industry.

Partnership with NRC for bio-composite development
-The Company is currently partnered with the National Research Council Canada (NRC) to develop bio-composite technology for the automotive industry. The partnership was formed in 2009 and led to the creation of the Magna-NRC Composites Center of Excellence, which opened in 2010. Composites that are being researched at the center include direct long fiber thermoplastics and sheet molding compounds.

Product development

View Top sliding folding roof
-Magna Steyr, an operating unit of the Company, showcased its roof systems capabilities at the 2013 Geneva Motor Show. Following the MILA Coupic concept from Geneva 2012, Magna Steyr presented the View Top, a sliding folding roof with integrated glass elements that create a unique open-air feeling – open or closed. To demonstrate the functionality of the View Top roof, Magna Steyr transformed a Peugeot RCZ production sports car into a coupe concept. (From a press release on February 27, 2013)

All-olefinic liftgate
-The Company developed a lightweight rear liftgate with an outer panel made from a thermoplastic polyolefin material and an inner panel made from polypropylene. This liftgate is 30% lighter than standard stamped steel liftgates, has greater flexibility in styling options, and requires fewer component parts in manufacturing. The new liftgate is already featured on the Nissan Rouge.

Single-piece hot stamped door ring
-In collaboration with Honda and ArcelorMittal, the Company developed the industry's first single-piece hot stamped side opening panel reinforcement (door ring). The single-piece design is laser welded, which creates a smoother load path. This improves seam strength and reduces weight over a conventional multi-piece spot weld design. The single-piece door ring is featured on the 2014 Acura MDX.

Capital Expenditure

(in million USD)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Overall	1,169	1,274	1,236

Investment Outside Canada

<Turkey>
-The Company announced the expansion of its business in Eastern Europe with the inauguration of a new manufacturing plant in Kocaeli, Turkey. The facility is being shared by the Company's Exteriors and Interiors, Mirrors, and Closures operating units. Customers include Ford, Fiat, and Renault. At full capacity, the 10,300-square-meter, just-in-sequence manufacturing plant will employ approximately 200 people. The facility will primarily manufacture fascias and outside mirrors for the new Ford Transit. Its product range also includes carriers for front-end modules, running boards and engineered glass products. (From a press release on October 8, 2013)

<Serbia>
-The Company. announced that its Magna Seating operating unit held an opening ceremony for Magna Seating d.o.o., a new seat component manufacturing facility in Odzaci, Serbia. This facility will supply OEM customers such as Smart, Renault and Ford. With approximately 300 employees and a production area of 4,300 square meters, Magna Seating d.o.o. represents the Company's first manufacturing site in Serbia. (From a press release on October 2, 2013)

<Mexico>
-The Company announced the opening of two new automotive supply facilities in Mexico: a Magna Interiors plant in Arteaga and a Cosma International plant in Ramos Arizpe. The new Magna Interiors facility, a 148,000-square-foot building, will employ approximately 345 people at full production. The facility will primarily manufacture headliners, complete overhead systems and consoles for a variety of auto makers. The new Cosma International facility, called CIMS, occupies 120,000 square feet and will employ approximately 180 people at full capacity. The facility will focus on engineering and design, including mechanical 2D and 3D assembly processing, and complete 3D assembly line design. (From a press release on September 10, 2013)

<China>
-The Company announced that its Magna Powertrain operating unit has opened a new facility in the Tianjin Airport Economic Area in China. The new facility is approximately 13,500 square meters and will employ up to 400 people at full production. The facility will initially produce rear axle drive modules and power take-off units for locally assembled Volkswagen and Audi models in China, and will serve as a center of excellence for driveline products. (From a press release on August 27, 2013)

-The Company announced that its Magna Steyr operating unit will open a new engineering center located in the Tiexi District of Shenyang, China. At full capacity, the new 1,050-square-meter engineering center will accommodate over 100 engineers. With this new location, Magna Steyr will be able to quickly and efficiently assist automakers' vehicle engineering projects. (From a press release on June 25, 2013)

-The Company announced that its Magna Electronics operating unit held a ceremony to celebrate the start of a new automotive camera production line at its Zhangjiagang plant in Jiangsu Province, China. The facility produces ReversAid cameras, which provide drivers with an undistorted rear view of the vehicle while in reverse. In addition, the plant planned to add a production line later in 2013 for forward facing imaging modules. These modules assist drivers by automatically reacting to certain driving situations. Both products come from Magna Electronics' EYERISTM global product line, a comprehensive portfolio of driver assistance systems. Magna Electronics (Zhangjiagang) Co., Ltd has approximately 100 employees and supplies components and systems to Ford, General Motors, Honda, Fiat, Geely and Great Wall. (From a press release on March 21, 2013)

<Germany>
-The Company announced that its Magna Exteriors and Interiors (MEI) operating unit has opened a new manufacturing facility in Meerane, Germany. MEI Meerane is located near Volkswagen Sachsen in Mosel, supplying just-in-time exterior plastic parts for the automaker. MEI Meerane covers a production area of 15,000 square meters and currently employs 140 people. The plant's capabilities include injection molding, painting and assembly. Its first program consists of front and rear bumpers for the new Golf VII. The plant is expected to start production of rocker panels for the next generation of the VW Passat in late 2014. (From a press release on April 24, 2013)