10-Q - ALV - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2023

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934<br><br><br><br>For the transition period from to

Commission File No.: 001-12933

AUTOLIV, INC.

(Exact name of registrant as specified in its charter)

Delaware	51-0378542
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Klarabergsviadukten 70, Section B7
Box 70381,
Stockholm, Sweden	SE-107 24
(Address of principal executive offices)	(Zip Code)

+46 8 587 20 600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (par value $1.00 per share)	ALV	New York Stock Exchange

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: ☒ 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 a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes: ☐ No: ☒

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of July 13, 2023, there were 85,376,775 shares of common stock of Autoliv, Inc., par value $1.00 per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities, events or developments that Autoliv, Inc. (“Autoliv,” the “Company” or “we”) or its management believes or anticipates may occur in the future. All forward-looking statements are based upon our current expectations, various assumptions and/or data available from third parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements.

In some cases, you can identify these statements by forward-looking words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “may,” “likely,” “might,” “would,” “should,” “could,” or the negative of these terms and other comparable terminology, although not all forward-looking statements contain such words.

Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements for a variety of reasons, including without limitation: general economic conditions, including inflation; changes in light vehicle production; fluctuation in vehicle production schedules for which the Company is a supplier; global supply chain disruptions, including port, transportation and distribution delays or interruptions; supply chain disruptions and component shortages specific to the automotive industry or the Company; disruptions and impacts relating to the ongoing war between Russia and Ukraine; changes in general industry and market conditions or regional growth or decline; changes in and the successful execution of our capacity alignments: restructuring, cost reduction and efficiency initiatives and the market reaction thereto; loss of business from increased competition; higher raw material, fuel and energy costs; changes in consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer bankruptcies, consolidations or restructuring or divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; component shortages; market acceptance of our new products; costs or difficulties related to the integration of any new or acquired businesses and technologies; continued uncertainty in pricing and other negotiations with customers; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; our ability to be awarded new business; product liability, warranty and recall claims and investigations and other litigation, civil judgements or financial penalties and customer reactions thereto; higher expenses for our pension and other postretirement benefits, including higher funding needs for our pension plans; work stoppages or other labor issues; possible adverse results of pending or future litigation or infringement claims and the availability of insurance with respect to such matters; our ability to protect our intellectual property rights; negative impacts of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business; tax assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; our ability to meet our sustainability targets, goals and commitments; political conditions; dependence on and relationships with customers and suppliers; and other risks and uncertainties identified in Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, Item 1A “Risk Factors” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 16, 2023.

For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update publicly or revise any forward-looking statements in light of new information or future events, except as required by law.

INDEX
PART I - FINANCIAL INFORMATION		4
ITEM 1. FINANCIAL STATEMENTS		4
1.	Basis of Presentation	9
2.	New Accounting Standards	10
3.	Fair Value Measurements	11
4.	Income Taxes	14
5.	Inventories	14
6.	Restructuring	15
7.	Product-Related Liabilities	15
8.	Retirement Plans	16
9.	Contingent Liabilities	17
10.	Stock Incentive Plan	19
11.	Earnings Per Share	19
12.	Revenue Disaggregation	20
13.	Subsequent Events	20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		35
ITEM 4. CONTROLS AND PROCEDURES		35
PART II - OTHER INFORMATION		36
ITEM 1. LEGAL PROCEEDINGS		36
ITEM 1A. RISK FACTORS		36
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		36
ITEM 3. DEFAULTS UPON SENIOR SECURITIES		36
ITEM 4. MINE SAFETY DISCLOSURES		36
ITEM 5. OTHER INFORMATION		36
ITEM 6. EXHIBITS		37

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in millions, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net sales	$	2,635		$	2,081		$	5,127		$	4,206
Cost of sales		(2,188	)		(1,755	)		(4,301	)		(3,591	)
Gross profit		447			326			826			614
Selling, general and administrative expenses		(129	)		(112	)		(261	)		(227	)
Research, development and engineering expenses, net		(120	)		(112	)		(237	)		(219	)
Amortization of intangibles		(0	)		(0	)		(1	)		(2	)
Other income (expense), net1)		(103	)		22			(107	)		92
Operating income		94			124			221			258
Income from equity method investment		1			1			2			2
Interest income		6			1			8			2
Interest expense		(25	)		(13	)		(45	)		(26	)
Other non-operating items, net		7			5			5			1
Income before income taxes		83			117			191			237
Income tax expense		(30	)		(38	)		(64	)		(74	)
Net income2)		53			79			127			163
Less: Net income attributable to non-controlling interest		0			0			1			1
Net income attributable to controlling interest	$	53		$	79		$	127		$	162
Net earnings per share – basic	$	0.61		$	0.91		$	1.48		$	1.86
Net earnings per share – diluted	$	0.61		$	0.91		$	1.47		$	1.85
Weighted average number of shares outstanding, net of<br> treasury shares (in millions)		85.6			87.2			85.9			87.2
Weighted average number of shares outstanding,<br> assuming dilution and net of treasury<br> shares (in millions)		85.8			87.3			86.0			87.4
Cash dividend per share – declared	$	0.66		$	0.64		$	1.32		$	1.28
Cash dividend per share – paid	$	0.66		$	0.64		$	1.32		$	1.28

1) The three months period ending June 30, 2022, includes a gain of $21 million from a patent litigation settlement. The six months period ending June 30, 2022, includes a gain on sale of property of $80 million in Japan in the first quarter of 2022 and a gain of $21 million from a patent litigation settlement in the second quarter of 2022.

2) For the three months period ended June 30, 2023 and June 30, 2022, the aggregate transaction gain (loss) included in net income for the period were $(10) million and $(9) million, respectively. For the six months period ended June 30, 2023 and June 30, 2022, the aggregate transaction gain (loss) included in net income for the period were $(15) million and $(15) million, respectively.

See Notes to the unaudited Condensed Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net income	$	53		$	79		$	127		$	163
Other comprehensive income before tax:
Change in cumulative translation adjustments		(46	)		(121	)		(10	)		(115	)
Net change in unrealized components of defined benefit plans		5			3			5			15
Other comprehensive income, before tax		(40	)		(118	)		(5	)		(100	)
Tax effect allocated to other comprehensive income		(1	)		(1	)		(1	)		(5	)
Other comprehensive income, net of tax		(41	)		(118	)		(6	)		(104	)
Comprehensive income		12			(40	)		122			58
Less: Comprehensive income attributable to<br> non-controlling interest		(0	)		(1	)		0			(0	)
Comprehensive income attributable to<br> controlling interest	$	12		$	(40	)	$	121		$	58

See Notes to the unaudited Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in millions)

	As of
	June 30, 2023			December 31, 2022
Assets
Cash and cash equivalents	$	475		$	594
Receivables, net		2,189			1,907
Inventories, net		947			969
Prepaid expenses and accrued income		166			160
Other current assets		120			84
Total current assets		3,898			3,714
Property, plant and equipment, net		2,047			1,960
Operating lease right-of-use assets		149			160
Goodwill		1,375			1,375
Intangible assets, net		6			7
Other non-current assets		484			502
Total assets		7,959			7,717
Liabilities and equity
Short-term debt		481			711
Accounts payable		1,844			1,693
Accrued expenses		1,122			915
Operating lease liabilities - current		35			39
Other current liabilities		274			283
Total current liabilities		3,756			3,642
Long-term debt		1,290			1,054
Pension liability		152			154
Operating lease liabilities - non-current		113			119
Other non-current liabilities		91			121
Total non-current liabilities		1,645			1,450
Common stock		90			91
Additional paid-in capital		1,096			1,113
Retained earnings		2,260			2,310
Accumulated other comprehensive loss		(527	)		(522	)
Treasury stock		(374	)		(379	)
Total controlling interest's equity		2,545			2,613
Non-controlling interest		13			13
Total equity		2,557			2,626
Total liabilities and equity	$	7,959		$	7,717

See Notes to the unaudited Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in millions)

	Six Months Ended June 30,
	2023			2022
Operating activities
Net income	$	127		$	163
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		186			186
Gain on divestiture of property		—			(80	)
Other, net		(8	)		7
Net change in operating assets and liabilities		28			(257	)
Net cash provided by operating activities		334			19
Investing activities
Expenditures for property, plant and equipment		(268	)		(254	)
Proceeds from sale of property, plant and equipment		1			98
Net cash used in investing activities		(267	)		(156	)
Financing activities
Net increase (decrease) in short-term debt		5			(277	)
Proceeds from long-term debt		556			269
Repayment of long-term debt		(533	)		(302	)
Dividends paid		(113	)		(112	)
Stock repurchased		(82	)		(40	)
Common stock options exercised		0			0
Dividend paid to non-controlling interest		(1	)		—
Net cash used in financing activities		(168	)		(462	)
Effect of exchange rate changes on cash and cash equivalents		(17	)		(43	)
Net decrease in cash and cash equivalents		(119	)		(642	)
Cash and cash equivalents at beginning of period		594			969
Cash and cash equivalents at end of period	$	475		$	327

See Notes to unaudited Condensed Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF TOTAL EQUITY (UNAUDITED) (Dollars in millions)

	Common<br>stock			Additional<br>paid-in<br>capital			Retained<br>earnings			Accumulated<br>other<br>comprehensive<br>loss			Treasury<br>stock			Total<br>controlling<br>interest's<br>equity			Non-<br>controlling<br>interest			Total<br>equity
Balances at December 31, 2022	$	91		$	1,113		$	2,310		$	(522	)	$	(379	)	$	2,613		$	13		$	2,626
Comprehensive Income:
Net income								74									74			0			74
Foreign currency translation<br> adjustment											36						36			0			36
Pension liability											(0	)					(0	)					(0	)
Total Comprehensive Income		—			—			74			35			—			110			0			110
Stock repurchased and retired		(0	)		(9	)		(33	)								(42	)					(42	)
Stock-based compensation														3			3						3
Cash dividends declared								(57	)								(57	)					(57	)
Balances at March 31, 2023	$	91		$	1,105		$	2,295		$	(487	)	$	(376	)	$	2,627		$	14		$	2,641
Comprehensive Income:
Net income								53									53			0			53
Foreign currency translation<br> adjustment											(45	)					(45	)		(1	)		(46	)
Pension liability											4						4						4
Total Comprehensive Income		—			—			53			(41	)		—			12			(0	)		12
Stock repurchased and retired		(0	)		(9	)		(31	)								(41	)					(41	)
Stock-based compensation														3			3						3
Cash dividends declared								(56	)								(56	)					(56	)
Dividends paid to non-controlling interest<br> on subsidiary shares																	0			(1	)		(1	)
Balances at June 30, 2023	$	90		$	1,096		$	2,260		$	(527	)	$	(374	)	$	2,545		$	13		$	2,557
	Common<br>stock			Additional<br>paid-in<br>capital			Retained<br>earnings			Accumulated<br>other<br>comprehensive<br>loss			Treasury<br>stock			Total<br>controlling<br>interest's<br>equity			Non-<br>controlling<br>interest			Total<br>equity
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Balances at December 31, 2021	$	103		$	1,329		$	2,742		$	(408	)	$	(1,133	)	$	2,633		$	15		$	2,648
Comprehensive Loss:
Net income								83									83			0			83
Foreign currency translation<br> adjustment											6						6			0			6
Pension liability											8						8						8
Total Comprehensive Income		—			—			83			14			—			97			0			98
Retired and repurchased shared		(0	)		(4	)		(13	)								(18	)					(18	)
Stock-based compensation														2			2						2
Cash dividends declared								(56	)								(56	)					(56	)
Balances at March 31, 2022	$	103		$	1,325		$	2,755		$	(393	)	$	(1,131	)	$	2,659		$	15		$	2,674
Comprehensive Loss:
Net income								79									79			0			79
Foreign currency translation<br> adjustment											(121	)					(121	)		(1	)		(122	)
Pension liability											3						3						3
Total Comprehensive Loss		—			—			79			(119	)		—			(40	)		(1	)		(40	)
Retired and repurchased shared		(0	)		(6	)		(16	)								(22	)					(22	)
Stock-based compensation														2			2						2
Cash dividends declared								(56	)								(56	)					(56	)
Balances at June 30, 2022	$	102		$	1,319		$	2,762		$	(512	)	$	(1,128	)	$	2,544		$	15		$	2,558

See Notes to the unaudited Condensed Consolidated Financial Statements.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise noted, all amounts are presented in millions of dollars, except for per share amounts)

June 30, 2023

1. BASIS OF PRESENTATION

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements. The unaudited condensed consolidated financial statements have been prepared on the same basis as the prior year audited consolidated financial statements and all adjustments considered necessary for a fair presentation have been included in the consolidated financial statements. All such adjustments are of a normal recurring nature. The results for the interim period are not necessarily indicative of the results to be expected for any future period or for the fiscal year ending December 31, 2023.

The Condensed Consolidated Balance Sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements.

The Company has one reportable segment, which includes Autoliv’s airbag and seatbelt products and components.

Certain amounts in the condensed consolidated financial statements and associated notes may not reconcile due to rounding. All percentages have been calculated using unrounded amounts. Certain amounts in prior periods have been reclassified to conform to current year presentation.

Statements in this report that are not of historical fact are forward-looking statements that involve risks and uncertainties that could affect the actual results of the Company. A description of the important factors that could cause Autoliv’s actual results to differ materially from the forward-looking statements contained in this report may be found in this report and Autoliv’s other reports filed with the Securities and Exchange Commission (the “SEC”). For further information, refer to the consolidated financial statements, footnotes and definitions thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 16, 2023.

2. NEW ACCOUNTING STANDARDS

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”).

Adoption of new accounting standards

In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50), Disclosure of Supplier Finance Program Obligations, which requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude. During the fiscal year of adoption, the information on the key terms of the programs and the balance sheet presentation of the program obligations, which are annual disclosure requirements, should be disclosed in each interim period. The amendments in this update should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on roll-forward information, which should be applied prospectively.

The Company adopted ASU 2022-04 as of January 1, 2023. The Company has an agreement with an external payment service provider to facilitate the payments to certain suppliers. The outstanding obligations confirmed towards the external payment service provider are recorded in Accounts Payable in the Condensed Consolidated Balance Sheet until payment has been effected. The Company has undertaken to make sure the payment is effected on the original invoice maturity date. The payment terms range between 30 days and 165 days, with a weighted average of 130 days.

The roll-forward of the Company's outstanding obligations confirmed as valid under its supplier finance program for the six months period ended June 30, 2023 is as follows (dollars in millions):

	As of
	June 30, 2023
Confirmed obligations outstanding at beginning of the period	$	314
Invoices confirmed during the period		680
Confirmed invoices paid during the period		(661	)
Confirmed obligations outstanding at end of the period1)	$	333

1) Amount of obligations confirmed under the program that remains unpaid by the Company is reported as Accounts Payable in the Condensed Consolidated Balance Sheet.

Accounting standards issued but not yet adopted

None.

3. FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, short-term debt and other current financial assets and liabilities approximate their fair value because of the short-term maturity of these instruments.

The Company uses derivative financial instruments (“derivatives”) as part of its debt management to mitigate the market risk that occurs from its exposure to changes in interest rates and foreign exchange rates. The Company does not enter into derivatives for trading or other speculative purposes. The Company’s use of derivatives is in accordance with the strategies contained in the Company’s overall financial policy. All derivatives are recognized in the consolidated financial statements at fair value. For certain derivatives, hedge accounting is not applied either because non-hedge accounting treatment creates the same accounting result or the hedge does not meet the hedge accounting requirements, although each hedge is entered into applying the same rationale concerning mitigating market risk that occurs from changes in interest rates and foreign exchange rates.

The degree of judgment utilized in measuring the fair value of the instruments generally correlates to the level of pricing observability. Pricing observability is impacted by several factors, including the type of asset or liability, whether the asset or liability has an established market and the characteristics specific to the transaction. Instruments with readily active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, assets rarely traded or not quoted will generally have less, or no, pricing observability and a higher degree of judgment utilized in measuring fair value.

All the Company’s derivatives are classified as Level 2 financial instruments in the fair value hierarchy. Level 2 pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.

The carrying value is the same as the fair value as these instruments are recognized in the consolidated financial statements at fair value. Although the Company is party to close-out netting agreements (“ISDA agreements”) with all derivative counterparties, the fair values in the tables below and in the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 have been presented on a gross basis. According to the ISDA agreements, transaction amounts payable to a counterparty on the same date and in the same currency can be netted. The amounts subject to netting agreements that the Company chose not to offset are presented below.

Derivatives designated as hedging instruments

There were no derivatives designated as hedging instruments as of June 30, 2023 or December 31, 2022 related to the Company's operations.

Derivatives not designated as hedging instruments

Derivatives not designated as hedging instruments relate to economic hedges and are marked to market with all amounts recognized in the Consolidated Statements of Income. The derivatives not designated as hedging instruments outstanding as of June 30, 2023 and December 31, 2022 were foreign exchange swaps.

For the three months period ended June 30, 2023 and June 30, 2022, the gains (losses) recognized in other non-operating items, net were $13 million and $(23) million, respectively, for derivative instruments not designated as hedging instruments. For the six months period ended June 30, 2023 and 2022, the gains (losses) recognized in other non-operating items, net were $8 million and $(14) million, respectively. The realized part of the losses referred to above is reported under financing activities in the statement of cash flows.

For the three and six months periods ended June 30, 2023 and June 30, 2022, the gains (losses) recognized as interest expense were immaterial.

The tables below present information about the Company’s derivative financial assets and liabilities measured at fair value on a recurring basis (dollars in millions).

	As of
	June 30, 2023									December 31, 2022
				Fair Value Measurements									Fair Value Measurements
Description	Nominal<br>volume			Derivative<br>asset<br>(Other<br>current assets)			Derivative<br>liability<br>(Other<br>current<br>liabilities)			Nominal<br>volume			Derivative<br>asset<br>(Other<br>current assets)			Derivative<br>liability<br>(Other<br>current<br>liabilities)
Derivatives not designated as hedging<br> instruments
Foreign exchange swaps, less<br> than 6 months	$	1,710	1)	$	10	2)	$	8	3)	$	2,616	4)	$	22	5)	$	15	6)
Total derivatives not designated<br> as hedging instruments	$	1,710		$	10		$	8		$	2,616		$	22		$	15

1) Net nominal amount after deducting for offsetting swaps under ISDA agreements is $1,710 million.

2) Net amount after deducting for offsetting swaps under ISDA agreements is $10 million.

3) Net amount after deducting for offsetting swaps under ISDA agreements is $8 million.

4) Net nominal amount after deducting for offsetting swaps under ISDA agreements is $2,616 million.

5) Net amount after deducting for offsetting swaps under ISDA agreements is $22 million.

6) Net amount after deducting for offsetting swaps under ISDA agreements is $15 million.

Fair Value of Debt

The fair value of long-term debt is determined either from quoted market prices as provided by participants in the secondary market or for long-term debt without quoted market prices, estimated using a discounted cash flow method based on the Company’s current borrowing rates for similar types of financing. The Company has determined that each of these fair value measurements of debt reside within Level 2 of the fair value hierarchy.

During the first quarter of 2023, the Company issued a five-year €500 million Eurobond. These notes were issued as green bonds. In the second quarter of 2023, the Company repaid the €500 million for the five-year Eurobond that matured in June 2023.

The fair value and carrying value of debt is summarized in the table below (dollars in millions).

	As of
	June 30, 2023				December 31, 2022
	Carrying<br>value1)		Fair<br>value		Carrying<br>value1)		Fair<br>value
Long-term debt
Bonds	$	1,013	$	984	$	767	$	735
Loans		276		283		287		292
Other long-term debt		1		1		—		—
Total long-term debt		1,290		1,268		1,054		1,027
Short-term debt
Short-term portion of long-term debt		297		289		533		527
Overdrafts and other short-term debt		184		184		178		178
Total short-term debt	$	481	$	473	$	711	$	705

1) Debt as reported in balance sheet.

Assets and liabilities measured at fair value on a nonrecurring basis

In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company also has assets and liabilities in its balance sheet that are measured at fair value on a nonrecurring basis, including certain long-lived assets, including equity method investments, goodwill and other intangible assets, typically as it relates to impairment.

The Company has determined that the fair value measurements included in each of these assets and liabilities rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets and settlements of liabilities, as observable inputs are not available. The Company has determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy. To determine the fair value of long-lived assets, the Company utilizes the projected cash flows expected to be generated by the long-lived assets, then discounts the future cash flows over the expected life of the long-lived assets.

For the three and six months periods ended June 30, 2023 and June 30, 2022, the Company did not record any material impairment charges on its long-lived assets for its operations.

4. INCOME TAXES

The effective tax rate for the three months period ended June 30, 2023 was 35.8% compared to 32.2% for the three months period ended June 30, 2022. Discrete tax items, net for the three months period ended June 30, 2023 had a favorable impact of 4.5%. Discrete tax items, net for the three months period ended June 30, 2022 had an unfavorable impact of 1.5%.

The effective tax rate for the six months period ended June 30, 2023 was 33.4% compared to 31.3% for the six months period ended June 30, 2022. Discrete tax items, net for the six months period ended June 30, 2023 had a favorable impact of 1.5%. Discrete tax items, net for the six months period ended June 30, 2022 had an unfavorable impact of 1.0%.

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. states and non-U.S. jurisdictions. At any given time, the Company is undergoing tax audits in several tax jurisdictions covering multiple years. The Company is no longer subject to income tax examination by the U.S. federal income tax authorities for years prior to 2015. With few exceptions, the Company is no longer subject to income tax examination by U.S. state or local tax authorities or by non-U.S. tax authorities for years before 2012.

As of June 30, 2023, the Company is not aware of any proposed income tax adjustments resulting from tax examinations that would have a material impact on the Company’s condensed consolidated financial statements. The conclusion of such audits could result in additional increases or decreases to unrecognized tax benefits in some future period or periods.

During the six months period ended June 30, 2023, the Company recorded a net increase of $6 million to income tax reserves for unrecognized tax benefits based on tax positions related to the current year, including accruing additional interest related to unrecognized tax benefits from prior years. Of the total unrecognized tax benefits of $52 million recorded as of June 30, 2023, $15 million is classified as current tax payable within Other current liabilities and $37 million is classified as non-current tax payable within Other non-current liabilities on the Condensed Consolidated Balance Sheet.

5. INVENTORIES

Inventories are stated at the lower of cost (“FIFO”) and net realizable value. The components of inventories were as follows (dollars in millions):

	As of
	June 30, 2023			December 31, 2022
Raw materials	$	436		$	445
Work in progress		333			350
Finished products		267			265
Inventories		1,035			1,060
Inventory valuation reserve		(89	)		(91	)
Total inventories, net of reserve	$	947		$	969

6. RESTRUCTURING

As of June 30, 2023, approximately $105 million out of the $127 million in total reserve balance can be attributed to footprint optimization activities in Europe, mainly Germany and the United Kingdom (UK), initiated in the second quarter of 2023. These activities are expected to be concluded during 2024 and 2025.

The provision charge for the three and six months periods ended June 30, 2023 mainly relate to restructuring activities in Germany and the UK. The cash payments for the three months period ended June 30, 2022 related to restructuring activities in Europe and Asia. The majority of the cash payments for the six months period ended June 30, 2022 mainly related to footprint optimization activities in Asia.

The table below summarizes the change in the balance sheet position of the employee-related restructuring reserves (dollars in millions). The restructuring reserve balances are included within Accrued expenses in the Condensed Consolidated Balance Sheets. The changes in the employee-related reserves have been charged against Other income (expense), net in the Consolidated Statements of Income. Restructuring costs other than employee related costs are immaterial for all periods presented.

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Reserve at beginning of the period	$	29		$	58		$	32		$	88
Provision - charge		107			0			110			12
Provision - reversal		(0	)		(0	)		(0	)		(0	)
Cash payments		(9	)		(9	)		(15	)		(50	)
Translation difference		(0	)		(4	)		0			(5	)
Reserve at end of the period	$	127		$	45		$	127		$	45

7. PRODUCT-RELATED LIABILITIES

The Company is exposed to product liability and warranty claims in the event that the Company’s products fail to perform as represented and such failure results, or is alleged to result, in bodily injury, and/or property damage or other loss. The Company has reserves for product risks. Such reserves are related to product performance issues, including recalls, product liability and warranty issues. For further explanation, see Note 9. Contingent Liabilities below.

For the three and six months periods ended June 30, 2023, provisions and cash payments primarily relate to warranty related issues. For the three and six months periods ended June 30, 2022, provisions and cash payments primarily related to warranty related issues. As of June 30, 2023, the reserve for product related liabilities mainly relate to recall related issues.

The table below summarizes the change in the balance sheet position of the product-related liabilities (dollars in millions). The reserve for product related liabilities is included in accrued expenses and Other non-current liabilities on the Condensed Consolidated Balance Sheets. A majority of the Company’s product-related liabilities as of June 30, 2023 are covered by insurance. Insurance receivables are included within Other current assets and Other non-current assets on the Condensed Consolidated Balance Sheets. As of June 30, 2023, the Company had total insurance receivables of $169 million.

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Reserve at beginning of the period	$	141		$	150		$	145		$	144
Change in reserve		42			2			43			12
Cash payments		(4	)		(5	)		(9	)		(8	)
Translation difference		(0	)		(2	)		(0	)		(2	)
Reserve at end of the period	$	178		$	145		$	178		$	145

8. RETIREMENT PLANS

The components of total Net Periodic Benefit Cost associated with the Company’s defined benefit retirement plans are as follows (dollars in millions):

U.S. Plans	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Interest cost	$	3		$	4			6			6
Expected return on plan assets		(3	)		0			(5	)		(4	)
Settlement loss		0			0			0			1
Net periodic benefit cost	$	0		$	4		$	1		$	3
Non-U.S. Plans	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Service cost	$	3		$	2		$	5		$	5
Interest cost		3			2			5			3
Expected return on plan assets		0			(1	)		(1	)		(1	)
Settlement/curtailment gain		0			(4	)		0			(5	)
Net periodic benefit cost (gain)	$	6		$	(1	)	$	9		$	2

The Service cost component in the table above is reported among other employee compensation costs in the Consolidated Statements of Income. The remaining components - Interest cost, Expected return on plan assets, Amortization of actuarial loss, Settlement loss (gain) and Curtailment gain - are reported as Other non-operating items, net in the Consolidated Statements of Income.

Settlement accounting has been triggered for the primary U.S. pension plan in the second quarter of 2023 because the lump-sum payments made during the quarter exceeded the sum of Service cost and Interest cost for this U.S. plan. Due to the settlement accounting, the obligation and plan assets for the primary U.S. plan have been re-measured as of June 30, 2023, which resulted in an immaterial change in the net pension liability compared to December 31, 2022. The discount rate used to determine the U.S. net periodic benefit cost because of the re-measurement was changed from 5.09% to 5.32% in the second quarter of 2023. The expected long-term rate of return on plan asset is unchanged at 5.05%.

9. CONTINGENT LIABILITIES

Legal Proceedings

Various claims, lawsuits and proceedings are pending or threatened against the Company or its subsidiaries, covering a range of matters that arise in the ordinary course of its business activities with respect to commercial, product liability and other matters. Litigation is subject to many uncertainties, and the outcome of any litigation cannot be assured. After discussions with counsel, and with the exception of losses resulting from the antitrust proceedings described below, it is the opinion of management that the various legal proceedings and investigations to which the Company currently is a party will not have a material adverse impact on the consolidated financial position of Autoliv, but the Company cannot provide assurance that Autoliv will not experience material litigation, product liability or other losses in the future.

ANTITRUST MATTERS

Authorities in several jurisdictions have conducted broad, and in some cases, long-running investigations of suspected anti-competitive behavior among parts suppliers in the global automotive vehicle industry. These investigations included, but are not limited to, the products that the Company sells. In addition to concluded matters, authorities of other countries with significant light vehicle manufacturing or sales may initiate similar investigations.

PRODUCT WARRANTY, RECALLS AND INTELLECTUAL PROPERTY

Autoliv is exposed to various claims for damages and compensation if its products fail to perform as expected. Such claims can be made, and result in costs and other losses to the Company, even where the product is eventually found to have functioned properly. Where a product (actually or allegedly) fails to perform as expected or is defective, the Company may face warranty and recall claims. Where such (actual or alleged) failure or defect results, or is alleged to result, in bodily injury and/or property damage, the Company may also face product liability and other claims. There can be no assurance that the Company will not experience material warranty, recall or product (or other) liability claims or losses in the future, or that the Company will not incur significant costs to defend against such claims. The Company may be required to participate in a recall involving its products. Each vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers. As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. Government safety regulators may also play a role in warranty and recall practices. Recall decisions regarding the Company’s products may require a significant amount of judgment by us, our customers and safety regulators and are influenced by a variety of factors. Once a recall has been made, the cost of a recall is also subject to a significant amount of judgment and discussions between the Company and its customers. A warranty, recall or product-liability claim brought against the Company in excess of its insurance may have a material adverse effect on the Company’s business. Vehicle manufacturers are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold the Company responsible for some, or all, of the repair or replacement costs of products when the product supplied did not perform as represented by us or expected by the customer in either a warranty or a recall situation. Accordingly, the future costs of warranty or recall claims by the customers may be material. However, the Company believes its established reserves are adequate. Autoliv’s warranty reserves are based upon the Company’s best estimates of amounts necessary to settle future and existing claims. The Company regularly evaluates the adequacy of these reserves, and adjusts them when appropriate. However, the final amounts actually due related to these matters could differ materially from the Company’s recorded estimates.

In addition, as vehicle manufacturers increasingly use global platforms and procedures, quality performance evaluations are also conducted on a global basis. Any one or more quality, warranty or other recall issue(s) (including those affecting few units and/or having a small financial impact) may cause a vehicle manufacturer to implement measures such as a temporary or prolonged suspension of new orders, which may have a material impact on the Company’s results of operations.

The Company maintains a program of insurance, which may include commercial insurance, self-insurance, or a combination of both approaches, for potential recall and product liability claims in amounts and on terms that it believes are reasonable and prudent based on our prior claims experience. The Company’s insurance policies generally include coverage of the costs of a recall, although costs related to replacement parts are generally not covered. In addition, a number of the agreements entered into by the Company, including the Spin-off Agreements, require Autoliv to indemnify the other parties for certain claims. Autoliv cannot assure that the level of coverage will be sufficient to cover every possible claim that can arise in our businesses or with respect to other obligations, now or in the future, or that such coverage always will be available should we, now or in the future, wish to extend, increase or otherwise adjust our insurance.

Product Liability:

On September 18, 2014, Jamie Andrews filed a wrongful death products liability suit against several Autoliv entities stemming from a fatal car accident in 2013 where the plaintiff’s husband was fatally injured. The lawsuit alleges that Autoliv should be liable for a defectively-designed driver seatbelt. The case was removed to the United States District Court for the Northern District of Georgia. The suit originally included Bosch and Mazda entities as well, but these entities were dismissed pursuant to confidential settlement agreements with the plaintiff, and all of the Autoliv entities except Autoliv Japan Ltd. were also dismissed. On January 10, 2017, the District Court entered an order granting summary judgment in favor of Autoliv, concluding that Autoliv was not actively involved in the design of Mr. Andrews’s seatbelt and, therefore, should not be liable for plaintiff’s claims as a matter of law. However, on appeal, the Eleventh Circuit Court of Appeals reversed the decision, holding that, under Georgia’s products liability statute, Autoliv could be liable for a design defect associated with the seatbelt, regardless of its level of involvement in the seatbelt’s ultimate design, because Autoliv manufactured it. On October 4, 2021, the case proceeded to a bench trial before the United States District Court for the Northern District of Georgia. On December 31, 2021, the District Court entered a Final Order and Judgment concluding that Mr. Andrews’s seatbelt was defectively designed and Autoliv was strictly liable for the design. In doing so, the District Court concluded that Mr. Andrews had incurred $27,019,343 in compensatory damages, but only ordered Autoliv to pay 50 percent of that amount, $13,509,671 after finding that 50 percent of the fault for Mr. Andrews’s damages should be apportioned to Mazda. The Court declined to apportion any fault for Mr. Andrews’s damages to Mr. Andrews or Bosch. The District Court also entered an award of punitive damages against Autoliv in the amount of $100,000,000. Subsequently, on September 30, 2022, the District Court awarded pre-judgment interest on the compensatory damages award of approximately $4,734,350. The Company believes the District Court's verdict was in error, including the grossly high punitive damages award, and appealed the verdict. Ms. Andrews also initiated a cross-appeal. The Company determined that a loss with respect to this litigation is probable and in the fourth quarter of 2021 accrued $14 million pursuant to ASC 450. The Company accrued an additional $5 million for the pre-judgement interest in the third quarter of 2022. On July 18, 2023, the Company, without admitting any liability, executed settlement agreements and resolved the lawsuit with all interested parties. The final amount by which the product liability accrual exceeds the product liability insurance receivable is $8 million and includes self-insurance retention costs and deductibles.

In June 2023, several Autoliv subsidiaries were named as defendants in a class action lawsuit filed in the United States District Court for the Eastern District of Michigan by David Anderson, et al. These subsidiaries were also named defendants in a class action filed in the Western District of Tennessee in September 2022 but have not yet been served. The plaintiffs in these lawsuits (the "ARC Inflator Class Action") generally allege that the defendants have violated various state competition, warranty, and trade practice laws relating to ARC inflators included in airbag modules that the defendants allegedly supplied after Autoliv acquired certain Delphi assets (the "Delphi Acquisition") in December 2009. The Company denies these allegations. Autoliv is not aware of any performance issues regarding ARC inflators included with its airbags at the directions of its customers that it shipped following the Delphi Acquisition. The Company has determined pursuant to ASC 450 that a loss is reasonably possible with respect to the ARC Inflator Class Action. However, the Company continues to evaluate this matter, no accrual has been made, and no estimated range of potential loss can be determined at this time. The Company cannot predict the ultimate outcome of the ARC Inflator Class Action.

Specific Recalls:

In the fourth quarter of 2020, the Company was made aware of a potential recall by American Honda Motor Co. and the recall of approximately 449,000 vehicles relating to the malfunction of front seat belt buckles was announced on March 9, 2023 (the “Honda Buckle Recall”). The Company determined pursuant to ASC 450 that a loss with respect to the Honda Buckle Recall is probable and accrued an amount that is reflected in the total product liability accrual in the fourth quarter of 2020 and increased the accrual in the fourth quarter of 2021. The amount by which the product liability accrual exceeds the product liability insurance receivable with respect to the Honda Buckle Recall is $27 million and includes self-insurance retention costs and deductibles. The ultimate loss to the Company of the Honda Buckle Recall could be materially different from the amount the Company has accrued.

Volvo Car USA, LLC (together with its affiliates, “Volvo”) has recalled approximately 762,000 vehicles relating to the malfunction of inflators produced by ZF (the “ZF Inflator Recall”). The recalled ZF inflators were included in airbag modules supplied by the Company only to Volvo. The recall commenced in November 2020 and later expanded in September 2021. Because the Company’s airbags were involved with the ZF Inflator Recall, the Company has determined pursuant to ASC 450 that a loss is reasonably possible with respect to the ZF Inflator Recall. The Company continues to evaluate this matter with Volvo and ZF and no accrual has been made. Although the Company currently estimates a range of $0 to $43 million with respect to this potential loss, the Company anticipates that any losses net of insurance claims and claims against ZF will be immaterial.

Intellectual Property:

In its products, the Company utilizes technologies which may be subject to intellectual property rights of third parties. While the Company does seek to procure the necessary rights to utilize intellectual property rights associated with its products, it may fail to do so. Where the Company so fails, the Company may be exposed to material claims from the owners of such rights. Where the Company has sold products which infringe upon such rights, its customers may be entitled to be indemnified by the Company for the claims they suffer as a result thereof. Such claims could be material.

The table in Note 7 above summarizes the change in the balance sheet position of the product-related liabilities.

10. STOCK INCENTIVE PLAN

Eligible employees and non-employee directors of the Company participate in the Autoliv, Inc.1997 Stock Incentive Plan, as amended, (“the Plan”), and receive Autoliv stock-based awards which include restricted stock units (“RSUs”) and performance stock units (“PSUs”) and in the past included stock options.

For the three and six months periods ended June 30, 2023, the Company recorded approximately $5 million and $8 million, respectively, in stock-based compensation expense related to RSUs and PSUs. For the three and six months periods ended June 30, 2022, the Company recorded approximately $3 million and $5 million, respectively, in stock-based compensation expense related to RSUs and PSUs.

During the three and six months periods ended June 30, 2023, approximately 20 thousand and 112 thousand shares of common stock from the treasury stock were utilized by the Plan. During the three and six months periods ended June 30, 2022, approximately 16 thousand and 138 thousand shares, respectively, of common stock from the treasury stock were utilized by the Plan.

11. EARNINGS PER SHARE

The computation of basic and diluted earnings per share is set forth in the table below. Anti-dilutive shares outstanding were immaterial for all periods presented below.

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share amounts)	2023		2022		2023		2022
Numerator:
Basic and diluted:
Net income attributable to controlling interest	$	53	$	79	$	127	$	162
Denominator:
Basic: Weighted average common stock		85.6		87.2		85.9		87.2
Add: Weighted average stock options/share awards		0.1		0.1		0.2		0.2
Diluted weighted average common stock:		85.8		87.3		86.0		87.4
Net earnings per share - basic	$	0.61	$	0.91	$	1.48	$	1.86
Net earnings per share - diluted	$	0.61	$	0.91	$	1.47	$	1.85

12. REVENUE DISAGGREGATION

The Company’s disaggregated revenue for the three and six months periods ended June 30, 2023 and June 30, 2022 were as follows (dollars in millions).

Net Sales by Products	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Airbags, Steering Wheels and Other1)	$	1,757	$	1,336	$	3,430	$	2,716
Seatbelt Products1)		878		746		1,698		1,489
Total net sales	$	2,635	$	2,081	$	5,127	$	4,206
Net Sales by Region	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
China	$	497	$	363	$	950	$	810
Asia, excl. China		471		369		954		779
Americas		916		738		1,747		1,431
Europe		751		611		1,476		1,186
Total net sales	$	2,635	$	2,081	$	5,127	$	4,206

1) Including Corporate and other sales.

Contract Balances

Contract assets relate to the Company's rights to consideration for work completed but not billed (generally in conjunction with contracts for which revenue is recognized over time) at the reporting date on production parts and is included in Other current assets in the Condensed Consolidated Balance Sheet. The contract assets are reclassified into the receivables balance when the rights to receive payments become unconditional. The net change in the contract assets balance, reflecting the adjustments needed to align revenue recognition for work completed but not billed, for the three and six months periods ended June 30, 2023 and June 30, 2022, were not material in any period.

13. SUBSEQUENT EVENTS

There were no reportable events subsequent to June 30, 2023.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein and with our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the United States Securities and Exchange Commission (the “SEC”) on February 16, 2023. Unless otherwise noted, all dollar amounts are in millions.

Autoliv, Inc. (“Autoliv” or the “Company”) is a Delaware corporation with its principal executive offices in Stockholm, Sweden. The Company functions as a holding corporation and owns two principal operating subsidiaries, Autoliv AB and Autoliv ASP, Inc.

Through its operating subsidiaries, Autoliv is a supplier of automotive safety systems with a broad range of product offerings, including modules and components for passenger and driver airbags, side airbags, curtain airbags, seatbelts, steering wheels and pedestrian protection systems.

Autoliv’s filings with the SEC, including this Quarterly Report on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, proxy statements and all of our other reports and statements, and amendments thereto, are available free of charge on our corporate website at www.autoliv.com as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC (generally the same day as the filing).

The primary exchange market for Autoliv’s securities is the New York Stock Exchange ("NYSE") where Autoliv’s common stock trades under the symbol “ALV”. Autoliv’s Swedish Depositary Receipts ("SDRs") are traded on Nasdaq Stockholm’s list for large market cap companies under the symbol “ALIV SDB”. Options in SDRs trade on Nasdaq Stockholm under the name “Autoliv SDB”. Options in Autoliv shares are traded on Nasdaq OMX PHLX and on NYSE Amex Options under the symbol “ALV”.

Autoliv’s fiscal year ends on December 31.

Non-U.S. GAAP financial measures

Some of the following discussions refer to non-U.S. GAAP financial measures: see reconciliations for “Organic sales”, “Trade working capital”, “Free cash flow”, “Net debt”, “Leverage ratio”, “Adjusted operating income”, “Adjusted operating margin” and “Adjusted earnings per share, diluted” provided below. Management believes that these non-U.S. GAAP financial measures provide supplemental information to investors regarding the performance of the Company’s business and assist investors in analyzing trends in the Company's business. Additional descriptions regarding management’s use of these financial measures are included below. Investors should consider these non-U.S. GAAP financial measures in addition to, rather than as substitutes for, financial reporting measures prepared in accordance with U.S. GAAP. These historical non-U.S. GAAP financial measures have been identified as applicable in each section of this report with a tabular presentation reconciling them to the most directly comparable U.S. GAAP financial measures. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.

EXECUTIVE OVERVIEW

During the quarter, we took further steps towards our full year indications that support our medium term targets. First, we achieved new second quarter records for sales, adjusted operating income and operating cash flow since the Veoneer spin-off in 2018. Second, we achieved the price compensations from customers we planned for. Third, to secure our medium and long term competitiveness, we announced the acceleration of our structural cost reductions. Last week, we announced the first step towards the necessary optimization of our cost structure to the market environment. This first step is expected to reduce costs by around $25 million in 2024, increasing to around $55 million in 2025 and to reach around $75 million when fully completed. Further actions will be announced as plans materialize.

We generated an organic growth of 27%, growing 11pp faster than LVP due to successful product launches and price compensation achievements. The strong volume growth combined with price compensations, cost saving activities and lower premium freight costs enabled us to improve adjusted operating income by 71%, despite substantial inflationary pressure and FX headwinds.

The Company is pleased that we delivered an adjusted RoCE of more than 20%. We delivered strong operating and free cash flow in the quarter, driven by an improved adjusted operating income and reversal of the negative working capital effects from the first quarter, in line with our previous indication. This contributed to an improved leverage ratio which supports our share repurchase ambitions.

We saw continued improvement in call-off volatility in the quarter but still higher volatility than pre-pandemic levels. We believe this reflects an improving global supply chain environment for both our customers and suppliers. Except for two isolated supply chain disruptions in Europe and Americas in the quarter, Autoliv's supply chain showed sequential improvement.

We reiterate our full year indications. Looking to the second half of the year, we expect the adjusted operating margin to be back-end loaded due to normal seasonality between the third and fourth quarters and the expected closing of price negotiations. The steps we took in the second quarter support our confidence in sequentially improving adjusted operating margin, which should allow us to deliver a substantial full year increase in operating cash flow and adjusted operating income.

Financial highlights in the three months period ended June 30, 2023

Change figures below compare to the same period of the previous year, except when stated otherwise.

$2,635 million net sales

27% net sales increase

27% organic sales increase (Non-U.S. GAAP measure, see reconciliation table below)

3.6% operating margin

8.0% adjusted operating margin (Non-U.S. GAAP measure, see reconciliation table below)

$0.61 EPS, 32% decrease

$1.93 adjusted EPS (Non-U.S. GAAP measure, see reconciliation table below), 115% increase

Key business developments in the three months period ended June 30, 2023

Change figures below compare to the same period of the previous year, except when stated otherwise.

• Sales increased organically (Non-U.S. GAAP measure, see reconciliation table below) by 27%, which was 11pp better than global LVP growth of 15.5% (S&P Global July 2023). We outperformed significantly in all regions, mainly due to new product launches and higher prices.

• Profitability improved substantially, positively impacted by price increases, organic growth and our cost reduction activities. Operating income was $94 million and operating margin was 3.6%. Adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below) improved from $124 million to $212 million and adjusted operating margin (Non-U.S. GAAP measure, see reconciliation table below) increased from 6.0% to 8.0%, despite inflationary pressure, adverse FX effects and two isolated supply chain disruptions. Return on capital employed was 9.5% and adjusted return on capital employed (Non-U.S. GAAP measure, see reconciliation table below) was 21.0%.

• Operating cash flow increased from negative $51 million to $379 million, driven mainly by improved adjusted operating income and positive working capital effects. Free cash flow (Non-U.S. GAAP measure, see reconciliation table below) increased to $255 million from negative $190 million. The leverage ratio (Non-U.S. GAAP measure, see reconciliation table below) improved from 1.6x in the first quarter 2023 to 1.3x, impacted by lower net debt and higher adjusted EBITDA. A dividend of $0.66 per share was paid, and 0.48 million shares were repurchased and retired in the quarter.

Business and market condition update

Supply Chain

Global light vehicle production growth year-over-year was 15.5% (according to S&P Global July 2023) mainly due to supply chain disruptions easing and the impact on Q2 2022 LVP from the Covid-19 shutdowns in China. Apart from several isolated supply chain disruptions in Europe and Americas in the quarter, we saw continued gradual improvement in call-off volatility as supply chains are less strained. However, volatility is still significantly higher than pre-pandemic levels, and low customer demand visibility and changes to customer call-offs with short notice still had a negative impact on our production efficiency and profitability in the quarter. We expect the current industry-wide supply chain disruptions to gradually fade in the second half of 2023, but not enough to return to pre-pandemic levels of efficiency.

Inflation

In Q2 2023, cost pressures from labor, logistics, utilities and other items had a negative impact on our profitability. Most of the inflationary cost pressure was offset by customer price and other compensations in the quarter. Raw material cost inflation and its impact on our profitability was limited in Q2 2023. We expect the raw material price changes in 2023 will largely be reflected in price changes in our products, albeit with delays of several months. We also expect continued cost pressure from broad based inflation relating to labor, logistics, utilities and other items, especially in Europe. We continue to execute on productivity and cost reduction activities to offset these cost pressures, and we continue to have challenging discussions with our customers on non-raw material cost inflation.

Other matters

In July 2023, we executed settlement agreements, without admitting liability, that resolved the previously disclosed Andrews wrongful death product liability litigation with all interested parties. The Company's out-of-pocket costs, including self-insurance retention costs and deductibles for the settlement, is $8 million. See below for the reconciliation of non-U.S. GAAP measures tables.

RESULTS OF OPERATIONS

Overview

The following table shows some of the key ratios management uses internally to analyze the Company's current and future financial performance and core operations as well as to identify trends in the Company’s financial conditions and results of operations. The Company has provided this information to investors to assist in meaningful comparisons of past and present operating results and to assist in highlighting the results of ongoing core operations. These ratios are more fully explained below and should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K and the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

The Company's management uses the Return on capital employed (ROCE) and Return on total equity (ROE) measures for purposes of comparing its financial performance with the financial performance of other companies in the industry and providing useful information regarding the factors and trends affecting the Company’s business. As used by the Company, ROCE is annualized operating income and income from equity method investments relative to average capital employed. The Company believes ROCE is a useful indicator of long-term performance both absolute and relative to the Company's peers as it allows for a comparison of the profitability of the Company’s capital employed in its business relative to that of its peers.

ROE is the ratio of annualized income (loss) relative to average total equity for the periods presented. The Company’s management believes that ROE is a useful indicator of how well management creates value for its shareholders through its operating activities and its capital management.

KEY RATIOS

(Dollars in millions, except per share data)

	Three Months Ended						Six Months Ended
	or As of June 30,						or As of June 30,
	2023			2022			2023			2022
Trade working capital1)		1,292			1,379			1,292			1,379
Trade working capital relative to sales, %2)		12.3	%		16.6	%		12.3	%		16.6	%
Receivables outstanding relative to sales, %3)		20.8	%		21.4	%		20.8	%		21.4	%
Inventory outstanding relative to sales, %4)		9.0	%		10.8	%		9.0	%		10.8	%
Payables outstanding relative to sales, %5)		17.5	%		15.7	%		17.5	%		15.7	%
Gross margin, %6)		17.0	%		15.7	%		16.1	%		14.6	%
Operating margin, %7)		3.6	%		6.0	%		4.3	%		6.1	%
Capital employed8)		3,856			3,876			3,856			3,876
Net debt9)		1,299			1,318			1,299			1,318
Return on total equity, %10)		8.2	%		12.1	%		9.8	%		12.4	%
Return on capital employed, %11)		9.5	%		13.1	%		11.4	%		13.8	%
Headcount at period-end12)		71,200			64,700			71,200			64,700

1) Outstanding receivables and outstanding inventory less outstanding payables. See calculation of this non-U.S. GAAP measure in the table below.

2) Outstanding receivables and outstanding inventory less outstanding payables relative to annualized quarterly sales.

3) Outstanding receivables relative to annualized quarterly sales.

4) Outstanding inventory relative to annualized quarterly sales.

5) Outstanding payables relative to annualized quarterly sales.

6) Gross profit relative to sales.

7) Operating income relative to sales.

8) Total equity and net debt.

9) Net debt adjusted for pension liabilities in relation to EBITDA. See tabular presentation reconciling this non-U.S. GAAP measure to U.S. GAAP below.

10) Net income relative to average total equity.

11) Operating income and income from equity method investments, relative to average capital employed.

12) Employees plus temporary, hourly personnel.

three months period ended June 30, 2023 COMPARED WITH three months period ended June 30, 2022

Consolidated Sales Development

(dollars in millions)

	Three Months Ended June 30,							Components of change in net sales
	2023		2022		Reported<br>change			Currency<br>effects 1)			Organic 3)
Airbags, Steering Wheels and Other2)	$	1,757	$	1,336		32	%		(0.2	)%		32	%
Seatbelt products 2)		878		746		18	%		0.5	%		17	%
Total	$	2,635	$	2,081		27	%		0.0	%		27	%
Asia	$	968	$	732		32	%		(5.0	)%		37	%
Whereof: China		497		363		37	%		(5.7	)%		43	%
Asia excl. China		471		369		28	%		(4.3	)%		32	%
Americas		916		738		24	%		3.1	%		21	%
Europe		751		611		23	%		2.3	%		21	%
Total	$	2,635	$	2,081		27	%		0.0	%		27	%

1) Effects from currency translations.

2) Including Corporate and Other sales.

3) Non-U.S. GAAP measure.

Sales by product - Airbags, Steering Wheels and Other

Sales for all major product categories increased organically (Non-U.S. GAAP measure, see reconciliation table above) in the quarter. The largest contributor to the increase was inflatable curtains and steering wheels, followed by side airbags and passenger airbags.

Sales by product - Seatbelts

The main contributor to Seatbelt products organic sales growth (Non-U.S. GAAP measure, see reconciliation table above) was Europe, followed by China and Americas.

Sales by region

Our global organic sales (Non-U.S. GAAP measure, see reconciliation table above) increased by 27% compared to the global LVP increase of 15.5% (according to S&P Global, July 2023). The 11pp outperformance was driven by new product launches and price increases.

Autoliv outperformed LVP by 23pp in China, by 18pp in Asia excl. China, by 7pp in Americas and by 6pp in Europe.

Second quarter of 2023 organic growth1)

	Americas	Europe	China	Asia excl. China	Global
Autoliv	21%	21%	43%	32%	27%
Main growth drivers	Honda, GM	VW, Stellantis, BMW	Honda, GM, Lixiang	Toyota, Hyundai, Subaru	Honda, Toyota, GM
Main decline drivers	BMW, Ford, VW		Nissan, Renault	Renault, KG Mobility

1) Non-U.S. GAAP measure.

Light Vehicle Production Development

Change second quarter of 2023 versus second quarter of 2022

	Americas	Europe	China	Asia excl. China	Global
LVP1)	14 %	14 %	19 %	14 %	16 %

1) Source: S&P Global, July 2023.

Earnings

	Three Months Ended June 30,
(Dollars in millions, except per share data)	2023			2022			Change
Net Sales	$	2,635		$	2,081			27	%
Gross profit		447			326			37	%
% of sales		17.0	%		15.7	%		1.3	pp
S, G&A		(129	)		(112	)		15	%
% of sales		(4.9	)%		(5.4	)%		0.5	pp
R, D&E, net		(120	)		(112	)		7.3	%
% of sales		(4.6	)%		(5.4	)%		0.8	pp
Amortization of Intangibles		(0	)		(0	)		24	%
Other income (expense), net		(103	)		22		n/a
Operating income		94			124			(24	)%
% of sales		3.6	%		6.0	%		(2.4)pp
Adjusted operating income1)		212			124			71	%
% of sales		8.0	%		6.0	%		2.1	pp
Financial and non-operating items, net		(11	)		(7	)		65	%
Income before taxes		83			117			(30	)%
Income taxes		(30	)		(38	)		(22	)%
Tax rate		35.8	%		32.2	%		3.5	pp
Net income		53			79			(33	)%
Earnings per share, diluted2)		0.61			0.91			(32	)%
Adjusted earnings per share, diluted1,2)		1.93			0.90			115	%

1) Non-U.S. GAAP measure, excluding effects from capacity alignment, antitrust related matters and the Andrews litigation settlement.

2) Assuming dilution, when applicable, and net of treasury shares.

Second quarter of 2023 development

Gross profit increased by $121 million and the gross margin increased by 1.3pp compared to the same quarter 2022. The gross profit increase was primarily driven by price increases, volume growth and lower costs for premium freight. This was partly offset by increased costs for personnel related to volume growth and wage inflation, as well as adverse effects from unfavorable exchange rates and energy costs.

S,G&A costs increased by $17 million compared to the prior year, mainly due to increased costs for personnel and projects. S,G&A costs in relation to sales decreased from 5.4% to 4.9%.

R,D&E, net costs increased by around $8 million compared to the prior year, mainly due to higher costs for personnel. R,D&E, net, in relation to sales decreased from 5.4% to 4.6%.

Other income (expense), net was negative $103 million compared to $22 million in the prior year. The prior year was positively impacted by $21 million from a patent litigation settlement while Q2 2023 was negatively impacted by around $109 million in accruals for capacity alignments

Operating income decreased by $30 million compared to the same period in 2022, mainly as a consequence of accruals for capacity alignments and the higher costs for S,G&A and R,D&E, net, partly offset by the higher gross profit.

Adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below) increased by $88 million compared to the prior year, mainly due to higher gross profit, partly offset by the higher costs for S,G&A and R,D&E, net.

Financial and non-operating items, net, was negative $11 million compared to negative $7 million a year earlier, mainly due to increased interest expense as an effect of higher debt and higher interest rates.

Income before taxes decreased by $35 million compared to the prior year, mainly due to the lower operating income.

Tax rate was 35.8% compared to 32.2% in the same period last year. Discrete tax items, net, decreased the tax rate this quarter by 4.5pp. Discrete tax items increased the tax rate by 1.5pp in the same period last year.

Earnings per share, diluted decreased by $0.29 compared to a year earlier. The main driver were $1.32 from capacity alignments and other adjustments, partly offset by $0.69 from higher adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below) and $0.35 from taxes.

SIX MONTHS PERIOD ENDED JUNE 30, 2023 COMPARED WITH SIX MONTHS PERIOD ENDED JUNE 30, 2022

Consolidated Sales Development

(dollars in millions)

	Six Months Ended June 30,							Components of change in net sales
	2023		2022		Reported<br>change			Currency<br>effects 1)			Organic 3)
Airbags, Steering Wheels and Other2)	$	3,430	$	2,716		26	%		(2.0	)%		28	%
Seatbelt products 2)		1,698		1,489		14	%		(1.5	)%		16	%
Total	$	5,127	$	4,206		22	%		(1.8	)%		24	%
Asia	$	1,904	$	1,589		20	%		(6.5	)%		26	%
Whereof: China		950		810		17	%		(6.6	)%		24	%
Asia excl. China		954		779		22	%		(6.5	)%		29	%
Americas		1,747		1,431		22	%		2.8	%		19	%
Europe		1,476		1,186		24	%		(1.1	)%		26	%
Total	$	5,127	$	4,206		22	%		(1.8	)%		24	%

1) Effects from currency translations.

2) Including Corporate and Other sales.

3) Non-U.S. GAAP measure.

Sales by product - Airbags, Steering Wheels and Other

Sales by product - Seatbelts

The main contributor to Seatbelt products organic sales growth (Non-U.S. GAAP measure, see reconciliation table above) was Europe, followed by Americas, Asia excl. China, and China.

Sales by region

Our global organic sales (Non-U.S. GAAP measure, see reconciliation table above) increased by 24% compared to the global LVP increase of 11.3% (according to S&P Global, July 2023). The 12pp outperformance was driven by new product launches and price increases.

Autoliv outperformed LVP by around 17pp in China, by 15pp in Asia excl. China, by 9pp in Europe, and by 7pp in Americas.

First six months 2023 organic growth1)

	Americas	Europe	China	Asia excl. China	Global
Autoliv	19%	26%	24%	29%	24%
Main growth drivers	Honda, GM, Nissan	VW, Stellantis, Renault	Honda, Lixiang, BYD	Toyota, Hyundai, Subaru	Honda, Toyota, Hyundai
Main decline drivers	Ford, BMW	Mitsubishi	Nissan, Renault, Xpeng	Renault, KG Mobility	Ford, Xpeng

1) Non-U.S. GAAP measure.

Light Vehicle Production Development

Change first six months of 2023 versus first six months of 2022

	Americas	Europe	China	Asia excl. China	Global
LVP1)	12 %	16 %	6.7 %	14 %	11 %

1) Source: S&P Global, July 2023.

Earnings

	Six Months Ended June 30,
(Dollars in millions, except per share data)	2023			2022			Change
Net Sales	$	5,127		$	4,206			22	%
Gross profit		826			614			34	%
% of sales		16.1	%		14.6	%		1.5	pp
S, G&A		(261	)		(227	)		15	%
% of sales		(5.1	)%		(5.4	)%		0.3	pp
R, D&E, net		(237	)		(219	)		8.0	%
% of sales		(4.6	)%		(5.2	)%		0.6	pp
Amortization of Intangibles		(1	)		(2	)		(50	)%
Other income (expense), net		(107	)		92		n/a
Operating income		221			258			(15	)%
% of sales		4.3	%		6.1	%		(1.8)pp
Adjusted operating income1)		343			192			79	%
% of sales		6.7	%		4.6	%		2.1	pp
Financial and non-operating items, net		(29	)		(22	)		35	%
Income before taxes		191			237			(19	)%
Income taxes		(64	)		(74	)		(14	)%
Tax rate		33.4	%		31.3	%		2.1	pp
Net income		127			163			(22	)%
Earnings per share, diluted2)		1.47			1.85			(20	)%
Adjusted earnings per share, diluted1,2)		2.82			1.36			107	%

1) Non-U.S. GAAP measure, excluding effects from capacity alignment, antitrust related matters, the Andrews litigation settlement, and gain on sale of property in the first quarter of 2022.

2) Assuming dilution, when applicable, and net of treasury shares.

First six months 2023 development

Gross profit increased by $212 million and the gross margin increased by 1.5pp compared to the same period 2022. The gross profit increase was primarily driven by price increases, volume growth and lower costs for premium freight. This was partly offset by increased costs for personnel related to higher volumes and wage inflation as well as adverse effects from higher costs for raw materials, unfavorable FX effects and higher costs for energy.

S,G&A costs increased by $33 million compared to the prior year, mainly due to increased costs for personnel and projects, partly offset by positive currency translation effects. S,G&A costs in relation to sales decreased from 5.4% to 5.1%.

R,D&E, net costs increased by around $18 million compared to the prior year, mainly due to higher costs for personnel, partly offset by positive currency translation effects. R,D&E, net, in relation to sales decreased from 5.2% to 4.6%.

Other income (expense), net was negative $107 million compared to $92 million in the prior year. The prior year was positively impacted by around an $80 million gain from the sale of a property in Japan and around $20 million from a patent litigation settlement, partly offset by around $10 million in capacity alignment provision for the closure of a plant in South Korea while first half 2023 was negatively impacted by around $112 million in accruals for capacity alignments.

Operating income decreased by $37 million compared to the same period in 2022, mainly as a consequence of the changes in Other income (expense) and the higher costs for S,G&A and R,D&E, net, partly offset by the higher gross profit.

Adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below) increased by $151 million compared to the prior year, mainly due to higher gross profit, partly offset by the higher costs for S,G&A and R,D&E, net.

Financial and non-operating items, net, was negative $29 million compared to negative $22 million a year earlier, mainly due to increased interest expense as an effect of higher debt and higher interest rates.

Income before taxes decreased by $45 million compared to the prior year, mainly due to the lower operating income and increased interest expense.

Tax rate was 33.4% compared to 31.3% in the same period last year. Discrete tax items, net, decreased the tax rate in this year by 1.5pp. Discrete tax items increased the tax rate by 1.0pp in the same period last year.

Earnings per share, diluted decreased by $0.38 compared to a year earlier. The main drivers were $1.83 from capacity alignments and other adjustments, partly offset by $1.20 from higher adjusted operating income (Non-U.S. GAAP measure, see reconciliation table below) and $0.29 from taxes.

LIQUIDITY AND CAPITAL RESOURCES

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on its financial position, results of operations or cash flows. The Company’s future contractual obligations have not changed materially from the amounts reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 16, 2023.

Second quarter of 2023 development

Trade working capital (Non-U.S. GAAP measure, see calculation table below) decreased by $87 million compared to the same period last year, where the main drivers were $541 million in higher accounts payable partly offset by $410 million in higher receivables and $44 million in higher inventories. Compared to Q1 2023, trade working capital was reduced by $117 million, driven by $161 million in higher accounts payable and $39 million in lower inventories partly offset by $83 million in higher receivables.

Operating cash flow improved by $430 million to $379 million compared to the same period last year, mainly due to improved adjusted operating income and a reversal of the negative working capital effects from the first quarter 2023.

Capital expenditure, net decreased by $14 million compared to the same period the previous year. Capital expenditure, net in relation to sales was 4.7% vs. 6.7% a year earlier.

Free cash flow (Non-U.S. GAAP measure, see calculation table below) was $255 million, compared to negative $190 million in the same period prior year. The improvement was due to the higher operating cash flow and lower capital expenditure, net.

Cash conversion (Non-U.S. GAAP measure) defined as free cash flow (Non-U.S. GAAP measure, see calculation table below) in relation to net income, was 481% in the period, positively impacted by significant capacity alignment accruals in the quarter.

Net debt (Non-U.S. GAAP measure, see reconciliation table below) was $1,299 million as of June 30, 2023, which was $19 million lower than a year earlier.

Liquidity position. As of June 30, 2023, our cash balance was around $0.5 billion, and including committed, unused loan facilities, our liquidity position was around $1.6 billion.

Leverage ratio (Non-U.S. GAAP measure, see calculation table below). As of June 30, 2023, the Company had a leverage ratio of 1.3x compared to 1.7x as of June 30, 2022, as the net debt (Non-U.S. GAAP measure, see reconciliation table below) decreased and the 12 months trailing adjusted EBITDA (Non-U.S. GAAP measure, see reconciliation table below) increased.

Total equity decreased by $1 million compared to June 30, 2022. This was mainly due to $226 million in dividend payment and stock repurchases of $157 million as well as $30 million in adverse currency translation effects, partly offset by $390 million from net income.

First six months of 2023 development

Operating cash flow increased by $315 million compared to the same period last year to $334 million, mainly due to higher adjusted operating income and positive working capital effects.

Capital expenditure, net increased by $112 million, mainly due to the impact on the prior year of $95 million from the sale of property, plant and equipment. Capital expenditure, net in relation to sales was 5.2% vs. 3.7% a year earlier.

Free cash flow (Non-U.S. GAAP measure, see reconciliation table below) was $66 million, compared to negative $137 million in the same period prior year. The improvement was due to the higher operating cash flow partly offset by higher capital expenditure, net.

Cash conversion (Non-U.S. GAAP measure, see reconciliation table below) defined as free cash flow (Non-U.S. GAAP measure, see reconciliation table below) in relation to net income, was 52% in the period.

NON-U.S. GAAP MEASURES

The Company believes that comparability between periods is improved through the exclusion of certain items. To assist investors in understanding the operating performance of Autoliv's business, it is useful to consider certain U.S. GAAP measures exclusive of these items.

With respect to the Andrews litigation settlement, the Company has treated this specific settlement as a non-recurring charge because of the unique nature of the lawsuit, including the facts and legal issues involved.

Accordingly, the tables below reconcile from U.S. GAAP to the equivalent non-U.S. GAAP measure.

Reconciliation of U.S. GAAP financial measures to “Adjusted operating income”, “Adjusted operating margin” and “Adjusted Earnings per share, diluted”

(Dollars in millions, except per share data)

	Three Months Ended June 30, 2023									Three Months Ended June 30, 2022
	Reported<br>U.S.<br>GAAP			Adjustments1)			Non-U.S.<br>GAAP			Reported<br>U.S.<br>GAAP			Adjustments1)			Non-U.S.<br>GAAP
Operating income	$	94		$	118		$	212		$	124		$	0		$	124
Operating margin, %		3.6	%		4.5	%		8.0	%		6.0	%		0.0	%		6.0	%
Earnings per share, diluted	$	0.61		$	1.31		$	1.93		$	0.91		$	(0.00	)	$	0.90

1) Effects from capacity alignment, antitrust related matters and the Andrews litigation settlement.

	Six Months Ended June 30, 2023									Six Months Ended June 30, 2022
	Reported<br>U.S.<br>GAAP			Adjustments1)			Non-U.S.<br>GAAP			Reported<br>U.S.<br>GAAP			Adjustments1)			Non-U.S.<br>GAAP
Operating income	$	221		$	122		$	343		$	258		$	(66	)	$	192
Operating margin, %		4.3	%		2.4	%		6.7	%		6.1	%		(1.6	)%		4.6	%
Earnings per share, diluted	$	1.47		$	1.35		$	2.82		$	1.85		$	(0.49	)	$	1.36

1) Effects from capacity alignments, antitrust related matters and the Andrews litigation settlement, including gain on sale of property in the first quarter of 2022.

Items included in Non-U.S. GAAP adjustments

(Dollars in millions, except per share data)

	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	Millions			Per share			Millions		Per share
Capacity alignments	$	109		$	1.26		$	0	$	0.00
The Andrews litigation settlement		8			0.09			—		—
Antitrust related matters		1			0.01			—		—
Total adjustments to operating income		118			1.36			0		0.00
Tax on non-U.S. GAAP adjustments1)		(5	)		(0.06	)		0		0.00
Total adjustments to net income	$	113		$	1.30		$	0	$	0.00

1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s).

	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
	Millions			Per share			Millions			Per share
Capacity alignments1)	$	112		$	1.29		$	(66	)	$	(0.76	)
The Andrews litigation settlement		8			0.09			—			—
Antitrust related matters		2			0.02			—			—
Total adjustments to operating income		122			1.41			(66	)		(0.76	)
Tax on non-U.S. GAAP adjustments2)		(6	)		(0.07	)		23			0.27
Total adjustments to net income	$	116		$	1.34		$	(43	)	$	(0.49	)

1) Whereof gain on sale of property of $80 million in first quarter of 2022.

2) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s).

The Company uses the non-U.S. GAAP measure “Trade working capital,” as defined in the table below, in its communications with investors and for management’s review of the development of the trade working capital cash generation from operations. The reconciling items used to derive this measure are, by contrast, managed as part of the Company’s overall cash and debt management, but they are not part of the responsibilities of day-to-day operations’ management.

Calculation of “Trade working capital”

(Dollars in millions)

	June 30, 2023			March 31, 2023			June 30, 2022
Receivables, net	$	2,189		$	2,106		$	1,779
Inventories, net		947			986			903
Accounts payable		(1,844	)		(1,683	)		(1,303	)
Trade working capital	$	1,292		$	1,409		$	1,379

Management uses the non-U.S GAAP measure "Net debt" to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. The Company, from time to time enters into “debt-related derivatives” (DRDs) as a part of its debt management and as part of efficiently managing the Company’s overall cost of funds. Creditors and credit rating agencies use net debt adjusted for DRDs in their analyses of the Company’s debt, therefore the Company provides this non-U.S. GAAP measure. DRDs are fair value adjustments to the carrying value of the underlying debt. Also included in the DRDs is the unamortized fair value adjustment related to a discontinued fair value hedge that will be amortized over the remaining life of the debt. By adjusting for DRDs, the total financial liability of net debt is disclosed without grossing debt up with currency or interest fair values.

Reconciliation of U.S. GAAP financial measure to “Net debt”

(Dollars in millions)

	June 30, 2023			March 31, 2023			June 30, 2022
Short-term debt	$	481		$	577		$	559
Long-term debt		1,290			1,601			1,060
Total debt		1,771			2,179			1,619
Cash and cash equivalents		(475	)		(713	)		(327	)
Debt issuance cost/Debt-related derivatives, net		4			12			26
Net debt	$	1,299		$	1,477		$	1,318

The non-U.S. GAAP measure “Net debt” is also used in the non-U.S. GAAP measure “Leverage ratio”. Management uses the non-U.S. GAAP measure “Leverage Ratio” to analyze the amount of debt the Company can incur under its debt policy. Management believes that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage its operations. The Company's long-term target for the leverage ratio (sum of net debt plus pension liabilities divided by EBITDA) is 1.0x with the aim to operate within the range of 0.5x to 1.5x. For details and calculation of leverage ratio, refer to the table below.

Calculation of “Leverage ratio”

(Dollars in millions)

	June 30, 2023			March 31, 2023			June 30, 2022
Net debt1)	$	1,299		$	1,477		$	1,318
Pension liabilities		152			159			155
Debt per the Policy		1,451			1,636			1,473
Net income2)		390			416			338
Income taxes 2)		168			176			143
Interest expense, net2,3)		67			60			51
Other non-operating items, net2)		1			4			2
Income from equity method investments2)		(4	)		(4	)		(3	)
Depreciation and amortization of intangibles2)		363			359			381
Capacity alignments, antitrust related matters and the Andrews litigation settlement2)		127			10			(59	)
EBITDA per the Policy (Adjusted EBITDA)	$	1,112		$	1,021		$	854
Leverage ratio		1.3			1.6			1.7

1) Net debt (non-U.S. GAAP measure) is short- and long-term debt and debt-related derivatives, less cash and cash equivalents.

2) Latest 12-months.

3) Interest expense, net including cost for extinguishment of debt, if any, less interest income.

Management uses the non-U.S. GAAP measure free cash flow to analyze the amount of cash flow being generated by the Company’s operations after capital expenditure, net. This measure indicates the Company’s cash flow generation level that enables strategic value creation options such as dividends or acquisitions. For details on the calculation of free cash flow, see the table below.

Calculation of “Free Cash Flow”

(Dollars in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net income	$	53		$	79		$	127		$	163
Changes in operating working capital		230			(239	)		28			(257	)
Depreciation and amortization		94			90			186			186
Gain on divestiture of property		—			—			—			(80	)
Other, net		2			19			(8	)		7
Operating cash flow		379			(51	)		334			19
Capital expenditure, net		(124	)		(139	)		(267	)		(156	)
Free cash flow1)	$	255		$	(190	)	$	66		$	(137	)
Cash conversion2)		481	%	n/a				52	%	n/a
1) Operating cash flow less Capital expenditures, net.
2) Free cash flow relative to Net income.

Headcount


Total headcount	71,200		71,300		64,700
Whereof:
Direct personnel in manufacturing	52,600		52,700		46,500
Indirect personnel	18,600		18,600		18,200
Temporary personnel	11	%	11	%	9.6	%

At June 30, 2023, total headcount increased by 6,500 compared to a year earlier. The indirect workforce increased by 2% while the direct workforce increased by 13%, reflecting that sales grew organically by 27% in the second quarter compared to a year earlier.

Compared to March 31, 2023, total headcount was virtually unchanged. Our headcount reductions announced on July 13, 2023 is not yet reflected in the totals.

Full year 2023 indications

The Company's outlook indications for 2023 are mainly based on its customer call-offs, a full year 2023 global LVP growth of around 4%, that the Company achieves its targeted cost compensation effects and that customer call-off volatility is reduced.

Financial measure	Full year indication
Organic sales growth	Around 15%
Foreign currency impact on net sales	Around 1% positive
Adjusted operating margin 1)	Around 8.5%-9%
Tax rate 2)	Around 32%
Operating cash flow 3)	Around $900 million
Capital expenditures, net % of sales	Around 6%
1) Excluding effects from capacity alignments, antitrust related matters, the Andrews litigation settlement and other discrete items.
2) Excluding unusual tax items.
3) Excluding unusual items.

The forward-looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. The Company has not provided a U.S. GAAP reconciliation of these measures because items that impact these measures, such as costs and gains related to capacity alignments and antitrust matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and the Company is unable to determine the probable significance of the unavailable information.

Other recent events

Key launches in the six months period ended June 30, 2023

• Kia EV9: Side Airbags, Head/Inflatable Curtain Airbags, Front Center Airbag

• Hyundai MUFASA: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Steering Wheel

• Zeekr-X: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Seatbelts

• Nio ES6: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Front Center Airbag, Seatbelts

• WEY Blue Mountain: Driver/Passenger Airbags, Steering Wheel, Seatbelts

• Mercedes E-class: Driver/Passenger Airbags, Side Airbags, Head/Inflatable Curtain Airbags, Steering Wheel

• Ford Mustang: Driver/Passenger Airbags, Side Airbags, Steering Wheel, Seatbelts

• Toyota Alphard: Driver/Passenger Airbags, Head/Inflatable Curtain Airbags, Seatbelts

• VW ID.7: Driver/Passenger Airbags, Side Airbags, Steering Wheel, Front Center Airbag, Seatbelts, Pedestrian Airbag

Other Items

• On May 2, 2023, Autoliv announced that it presented several new safety solutions at the Shanghai Automobile Industry Exhibition 2023. The new safety solutions include an integrated cockpit, a zero-gravity seat, and the Star steering wheel. The new products are designed to provide safety, comfort, and an improved driving experience.

• On May 19, 2023, Autoliv announced that Autoliv China and NIO Inc., a leading electric vehicle company based in China, signed a strategic cooperation framework agreement. The collaboration includes several new safety technologies for electric vehicles with an overarching focus on sustainable solutions.

• On May 24, 2023, Autoliv announced that Petra Albuschus will join the company as Executive Vice President, Human Resources and Sustainability and will become a member of the Autoliv Executive Management Team. She will succeed Per Ericson who will retire. Ms. Albuschus joins Autoliv from Swedish retail company ICA Gruppen AB where she serves as Chief Human Resources Officer and a member of the ICA Gruppen executive management team. Over her career, Ms. Albuschus has accumulated valuable leadership and logistics experience from ICA Gruppen and from Procter & Gamble. Ms. Albuschus is expected to begin her employment with Autoliv no later than November 15, 2023.

• On May 30, 2023, Autoliv announced that it has appointed Magnus Jarlegren, then Executive Vice President, Operations, as the next President Autoliv Europe effective June 1, 2023. Mr. Jarlegren brings extensive experience from leading development and change management in global operations and driving operational excellence, leading the step change of the Autoliv Production System and plant improvement.

• On June 2, 2023, Autoliv announced that it will launch its first motorcycle airbag in 2025. The first new motorcycle safety product to reach the market will be the bag-on-bike airbag, with production beginning in Q1 2025. The bag-on-bike airbag can significantly reduce the risk of serious injury for powered two-wheeler riders in frontal crashes.

• On June 8, 2023, Autoliv announced it is accelerating its global structural cost reductions, particularly within its European operations. These actions support Autoliv's medium- and long-term financial targets. The accelerated structural cost reduction initiatives include further optimization of the Company’s geographic footprint and organizational structure, including a substantial reduction of its total direct and indirect workforce by up to 11%.

• On June 12, 2023, Autoliv hosted an Investor Day where Autoliv management outlined the Company's strategy, growth opportunities, financial plans and targets as well as its contribution to sustainable mobility.

• On July 13, 2023, Autoliv announced its aims to close sites in Elmshorn, Germany and Congleton, United Kingdom, as part of its global structural cost reduction initiatives.

• In Q2 2023, Autoliv repurchased and retired 0.48 million shares of common stock at an average price of $85.20 per share under the Autoliv 2022-2024 stock purchase program.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, 2023, there have been no material changes to the information related to quantitative and qualitative disclosures about market risk that were provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 16, 2023.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

An evaluation has been carried out, under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.

(b) Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of our business, we are subject to legal proceedings brought by or against us and our subsidiaries.

See Part I, Item 1, "Financial Statements, Note 9 Contingent Liabilities" of this Quarterly Report on Form 10-Q for a summary of certain ongoing legal proceedings. Such information is incorporated into this Part II, Item 1—"Legal Proceedings" by reference.

ITEM 1A. RISK FACTORS

As of June 30, 2023, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company’s Form 10-K for the year ended December 31, 2022 filed with the SEC on February 16, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Stock repurchase program

The following table provides information with respect to common stock repurchases by the Company during the three months period ended June 30, 2023.

	New York Stock Exchange (NYSE)
Period	Total Number of Shares Purchased (1)		Average Price Paid per Share () (2)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)		Maximum Number of Shares that Yet May Be Purchased Under the Plans or Programs (3)
April 1-30, 2023		17,400			1,908,131		15,091,869
May 1-31, 2023		388,275			2,296,406		14,703,594
June 1-30, 2023		69,617			2,366,023		14,633,977

All values are in US Dollars.

(1) The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. For accounting purposes, shares repurchased under our stock repurchase programs are recorded based upon the settlement date of the applicable trade.

(2) Average price paid per share includes costs associated with the repurchases.

(3) On November 16, 2021, the Company announced that its Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to $1.5 billion or up to 17 million common shares, whichever comes first, between January 2022 and the end of 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the three months period ended June 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS

Exhibit No.	Description
3.1	Autoliv’s Restated Certificate of Incorporation, as amended, incorporated herein by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date April 22, 2015).
3.2	Autoliv’s Third Restated By-Laws, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-12933, filing date December 18, 2015).
4.1	Indenture, dated March 30, 2009, between Autoliv, Inc. and U.S. Bank National Association, as trustee, incorporated herein by reference to Exhibit 4.1 to Autoliv’s Registration Statement on Form 8-A (File No. 001-12933, filing date March 30, 2009).
4.2	Second Supplemental Indenture (including Form of Global Note), dated March 15, 2012, between Autoliv, Inc. and U.S. Bank National Association, as trustee, incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-12933, filing date March 15, 2012).
4.3	Form of Note Purchase and Guaranty Agreement dated April 23, 2014, among Autoliv ASP, Inc., Autoliv, Inc. and the purchasers named therein, incorporated herein by reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date April 25, 2014).
4.4	Amendment and Waiver 2014 Note Purchase and Guaranty Agreement, dated May 24, 2018, among Autoliv, Inc., Autoliv ASP, Inc. and the noteholders named therein, incorporated herein by reference to Exhibit 4.4 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
4.5	General Terms and Conditions for Swedish Depository Receipts in Autoliv, Inc. representing common shares in Autoliv, Inc., effective as of May 30, 2018, with Skandinaviska Enskilda Banken AB (publ) serving as a custodian, incorporated herein by reference to Exhibit 4.5 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
4.6	Agency Agreement dated June 26, 2018 among Autoliv, Inc., Autoliv ASP, Inc. and HSBC Bank PLC, incorporated herein by reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
4.7	Amended and Restated Agency Agreement, dated February 22, 2022, among Autoliv, Inc., Autoliv ASP, Inc. and the dealers named therein, incorporated herein by reference to Exhibit 4.14 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date April 22, 2022).
4.8	Base Listing Particulars Agreement, dated February 17, 2023, among Autoliv, Inc., Autoliv ASP, Inc. and the dealers named therein, incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-12933, filing date March 16, 2023).
4.9	Amended and Restated Programme Agreement, dated February 17, 2023, among Autoliv, Inc., Autoliv ASP, Inc. and the dealers named therein, incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 001-12933, filing date March 16, 2023).
10.1*+	Employment Agreement, dated May 17, 2023, by and between Autoliv, Inc. and Petra Albuschus.
10.2*+	Amendment No. 1, dated June 1, 2023, to the Employment Agreement, dated February 15, 2019, by and between Autoliv, Inc. and Magnus Jarlegren.
10.3*+	Mutual Separation Agreement, dated July 10, 2023, by and between Autoliv, Inc. and Frithjof Oldorff.
10.4*+	Autoliv, Inc. Non-Employee Director Compensation Policy effective May 1, 2023.
10.5*+	Form of Non-Employee Director Restricted Stock Units Grant Agreement (2023) to be used under the Autoliv, Inc. 1997 Stock Incentive Plan, as amended and restated.
31.1*	Certification of the Chief Executive Officer of Autoliv, Inc. pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of the Chief Financial Officer of Autoliv, Inc. pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1*	Certification of the Chief Executive Officer of Autoliv, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of the Chief Financial Officer of Autoliv, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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* Filed herewith.

Management contract or compensatory plan.

SIGNATURE

Pursuant to the requirements 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.

Date: July 21, 2023

AUTOLIV, INC.

(Registrant)

By:	/s/ Fredrik Westin
	Fredrik Westin
	Chief Financial Officer
	(Duly Authorized Officer and Principal Financial Officer)

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into by and between Autoliv Inc., a Delaware corporation (the “Company”), and Petra Albuschus, personal number XXXXXXXXXXXXX (the “Executive”), to be effective as of the Effective Date, as defined in Section 1. References herein to the “Company” shall, as applicable, be deemed to include the Company’s affiliates.

BACKGROUND

The Company desires to engage the Executive as the Executive Vice President, Human Resources and Sustainability of the Company from and after the Effective Date, in accordance with the terms of this Agreement. The Executive is willing to serve as such in accordance with the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Effective Date. The effective date of this Agreement (the “Effective Date”) shall be latest November 15, 2023. The parties may agree on an earlier start date.

2. Employment. The Executive is hereby employed on the Effective Date as the Executive Vice President, Human Resources and Sustainability of the Company. In this capacity, the Executive shall have the duties, responsibilities and authority commensurate with such position as shall be assigned to him by the President and CEO of the Company (the “President and CEO”). The principal workplace for the Executive shall be Stockholm, Sweden.

3. Employment Period. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company from the Effective Date and thereafter unless and until terminated by the Company or the Executive (the “Employment Period”); provided, however, that (i) the Company must give the Executive written notice of termination of the Executive’s employment not less than six (6) calendar months prior to such date of termination, and (ii) the Executive must give the Company written notice of termination of her employment not less than six (6) calendar months prior to such date of termination; provided, further, however, that in the event of a termination by the Company for Cause pursuant to Section 10(b) hereof, the 6-month notice requirement provided in clause (i) of the foregoing provision shall not apply and the Executive’s termination of employment shall be effective immediately. Notwithstanding the foregoing, the Executive’s employment shall automatically terminate on the earlier occurrence of the last day of the month preceding the Executive’s 65th birthday (“Retirement”).

4. Extent of Service. During the Employment Period, the Executive shall use her best efforts to promote the interests of the Company and those of any parent, subsidiary and associated company of the Company, and shall devote her full time and attention during normal business hours to the business and affairs of the Company and any parent, subsidiary and associated company. In addition, the Executive shall devote as much time outside normal business hours to

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the performance of her duties as may in the interests of the Company be reasonably necessary; provided, however, that the Executive shall not receive any remuneration in addition to that set out in Section 5 hereof in respect of her work during such time. During the Employment Period, the Executive shall not, without the consent of the President and CEO, directly or indirectly, either alone or jointly with or as a director, manager, agent or servant of any other person, firm or company, be engaged, concerned or interested in any business in a manner that would conflict with the Executive’s duties under this Section 4 (including holding any shares, loan, stock or any other ownership interest in any competitor of the Company), provided that nothing in this Section 4 shall preclude the Executive from holding shares, loan, stock or any other ownership interest in an entity other than a competitor of the Company as an investment.

5. Compensation and Benefits.

(a) Base Salary. During the Employment Period, the Executive shall receive a gross salary at the rate of SEK 3,600,000 per year (“Base Salary”), less normal withholdings, payable in equal monthly or other installments as are or become customary under the Company’s payroll practices for its employees from time to time. The Leadership Development and Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) shall review the Executive’s Base Salary annually during the Employment Period, the first review to take place as of January 1, 2024. Any adjustments to the Executive’s annual base salary shall become the Executive’s Base Salary for purposes of this Agreement.

(b) Bonus. During the Employment Period, the Executive shall be eligible to participate in the Company’s bonus plan for executive officers, if any, pursuant to which she will have an opportunity to receive an annual bonus based upon the achievement of performance goals established from year to year by the Compensation Committee (such bonus earned at the stated “target” level of achievement being referred to herein as the “Target Bonus”). Until otherwise changed by the Compensation Committee, the Executive’s Target Bonus shall be thirty-five percent (35%) of her Base Salary.

(c) Equity Incentive Compensation. During the Employment Period, the Executive shall be eligible for equity grants under the Autoliv, Inc. Amended and Restated 1997 Stock Incentive Plan or any successor plan or plans, having such terms and conditions as awards to other peer executives of the Company, as determined by the Compensation Committee in its sole discretion, unless the Executive consents to a different type of award or different terms of such award than are applicable to other peer executives of the Company. Nothing herein requires the Compensation Committee to grant the Executive equity awards or other long-term incentive awards in any year. For the year 2023, the Company shall award the Executive the annual grant upon joining (“2023 Grant”) in the form of Restricted Stock Units (“RSUs”). The annual stock incentive grant value for the 2023 Grant will be 185,000 USD. The actual grant value of 2023 Grant will be calculated based on proration of the period between the Effective Date and December 31, 2023 to full calendar year 2023. The 2023 Grant shall have such terms and conditions of the Company’s stock incentive grant as provided to other executives.

(d) Sign-on Stock Incentive Grant. In addition to 2023 Grant, the Executive shall be eligible to receive a grant of restricted stock units (the “Sign-on RSUs”) having a value on the grant date equal to 1,000,000 SEK (the “Sign-on Grant Value”). The grant will be made on the

Effective Date (the “Sign-on RSU Grant Date”), pursuant to, and subject to the terms and conditions of, the 1997 Plan. The Sign-on RSUs will vest annually over a three-year period, in three equal installments on each anniversary of the Sign-on RSU Grant Date, provided that the Executive remains employed by the Company or a designated assignee on each vesting date. The Sign-on RSUs shall have such other terms and conditions as provided in the Company’s standard form of restricted stock unit agreement.

(e) Automobile. The Company shall provide the Executive with a company car. The Executive and her immediate family may also use the company car for personal purposes. The Company shall bear all petrol, maintenance and repair costs, as well as insurance costs and vehicle tax related to the Company car. The Executive shall, however, be liable for the payment of tax on the taxable benefit resulting from the right to use the company car for personal purposes.

(f) Medical Benefits. The Executive and her spouse or significant other are entitled to a medical care insurance made available by the Company to the Executive.

(g) Expenses. The Executive shall be entitled to receive payment or reimbursement for all reasonable traveling, hotel and other expenses incurred by him in the performance of her duties under this Agreement, in accordance with the policies, practices and procedures of the Company as in effect from time to time. The Executive shall provide the Company with receipts, vouchers or other evidence of actual payment of the expenses to be reimbursed, as requested by the Company.

(h) Conditions of Employment. Normal conditions of employment as issued by the Company apply to the receipt of benefits under this Section 5.

6. Holidays. The Executive shall be entitled to yearly holidays amounting to 30 days.

7. Pension. The Company shall pay pension premiums for defined contribution pension insurance in Sweden, with an amount equal to thirty-five percent (35%) of the Executive’s Base Salary. The pension premiums shall include premiums under the ITP plan, giving the Executive certain benefits in the event of her temporary or permanent illness. The insurance shall be taken out at a reputable insurance company, to be approved of in advance by the Company.

8. Business or Trade Information. The Executive shall not during or after the termination of her employment hereunder disclose to any person, firm of company whatsoever or use for her own purpose or for any purposes other than those of the Company any information relating to the Company (including any parent, subsidiary or associated company of the Company) or its business or trade secrets of which she has or shall hereafter become possessed. These restrictions shall cease to apply to any information which may come into the public domain (other than by breach of the provisions hereof). In the event that the Executive does not comply with this Section 8, the Company shall be entitled to damages equal to six (6) times the average monthly Base Salary that the Executive received during the preceding twelve (12) months, if the Executive continues to be employed, or during the last twelve (12) months prior to her Date of Termination, if the Executive’s employment has terminated; provided, however, that nothing in this Section 8 shall preclude the Company from pursuing arbitration in accordance with Section 16 herein and seeking additional damages from the Executive in the event that the Company is able to demonstrate to the arbitrators

that the value of the damages incurred by the Company due to the Executive’s violation of this Section 8 exceed the aggregate value of the damages paid by the Executive to the Company pursuant to the foregoing provision.

9. Company Property. The Executive shall upon the termination of her employment hereunder for whatever reason immediately deliver to the Company all designs, specifications, correspondence and other documents, papers, the car provided hereunder and all other property belonging to the Company or any of its affiliated companies or which may have been prepared by him or have come into her possession in the course of her employment.

10. Termination of Employment.

(a) Death; Retirement. The Executive’s employment shall terminate automatically upon her death or Retirement.

(b) Termination by the Company. The Company may terminate the Executive’s employment during the Employment Period with or without Cause. “Cause” for termination by the Company of the Executive’s employment shall mean (i) willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Executive by the Board of Directors of the Company (the “Board”), which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Chairman of the Board establishes to the Board by clear and convincing evidence that Cause exists, subject to Section 10(f) hereof.

(c) Termination by the Executive. The Executive may terminate her employment during the Employment Period with Good Reason or without Good Reason. “Good Reason” shall mean the occurrence, without the Executive’s express written consent, of any of the following “Good Reason Events”:

(i) the assignment to the Executive of any duties inconsistent with the Executive’s status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect on the Effective Date other than any such alteration primarily attributable to the fact that the Company may no longer be a public company;

(ii) a reduction by the Company in the Executive’s annual base salary as in effect on the Effective Date or as the same may be increased from time to time;

(iii) the relocation of the Executive’s principal place of employment to a location more than 45 kilometers from the Executive’s principal place of employment on the Effective

Date or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(iv) the failure by the Company to pay to the Executive any portion of the Executive’s current compensation within seven (7) days of the date such compensation is due;

(v) the failure by the Company to continue in effect any compensation plan in which the Executive participates on the Effective Date which is material to the Executive’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed on the Effective Date; or

(vi) the failure by any successor to the business of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

A termination by the Executive shall not constitute termination for Good Reason unless the Executive shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 90 days after the initial occurrence of such event), and there shall have passed a reasonable time (not less than 30 days) within which the Company may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by the Executive. The Executive’s termination for Good Reason must occur within a period of 160 days after the occurrence of an event of Good Reason. The Executive’s right to terminate employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. Good Reason shall not include the Executive’s death.

(d) Notice of Termination. Any termination by the Company or the Executive of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) specifies the termination date. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s

counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. The failure by the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder.

(e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated other than by reason of death or Retirement, the end of the notice period specified in Section 3 hereof (if applicable), or (ii) if the Executive’s employment is terminated by reason of death, the Date of Termination shall be the date of death of the Executive, or (iii) if the Executive’s employment is terminated by reason of Retirement, the Date of Termination shall be the date of Retirement.

(f) Dispute Concerning Termination. Any disputes regarding the termination of the Executive’s employment shall be settled in accordance with Section 16 hereof (including, without limitation, the provisions regarding costs and expenses related to arbitration). If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 10(f)), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of the arbitrators (which is not appealable or with respect to which the time for appeal there from has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

(g) Compensation During Dispute. If the Date of Termination is extended in accordance with Section 10(f) hereof, the Company shall continue to provide the Executive with the compensation and benefits specified in Section 5 hereof until the Date of Termination, as determined in accordance with Section 10(f) hereof. Amounts paid under this Section 10(g) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement; provided, however, that in the event that the arbitration results in a determination that the Executive is not entitled to the severance payments set forth in Section 11(a) hereof, then the Executive shall be obligated to promptly repay to the Company the compensation received by the Executive during the extended period pursuant to this Section 10(g).

11. Obligations of the Company Upon Termination of Employment.

(a) Termination by the Company Other Than for Cause; Termination by the Executive for Good Reason. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause, or the Executive shall terminate employment for Good Reason, then, and only if within forty-five (45) days after the Date of Termination the Executive shall have executed a separation agreement containing a full general release of claims and covenant not to sue, in the form provided by the Company, and such separation agreement shall not have been revoked within such time period, within sixty (60) days after the Date of

Termination (or such later date as may be required pursuant to Section 21(c) herein), the Company shall pay to the Executive a lump sum severance payment, in cash, equal to one and a half times (1.5x) the Executive’s Base Salary as in effect immediately prior to the Date of Termination. In addition, the Company shall pay all relevant social costs attributable to such lump sum severance payment, in accordance with relevant Swedish law.

(b) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive or the Executive’s legal representatives under this Agreement, other than such death benefits he or they would otherwise be entitled to receive under any plan, program, policy or practice or contract or agreement of the Company or its affiliated companies.

(c) Retirement. If the Executive’s employment is terminated in connection with her Retirement during the Employment Period, this Agreement shall terminate without further obligations to the Executive; provided, however, that the Executive shall nonetheless be subject to the covenants set forth in Section 13 herein.

(d) Cause; Voluntary Resignation. If the Executive’s employment is terminated by the Company for Cause during the Employment Period, or the Executive voluntarily resigns her employment without Good Reason, this Agreement shall terminate without further obligations to the Executive; provided, however, that the Executive shall nonetheless be subject to the covenants set forth in Section 13 herein.

12. Non-Duplication of Benefits. Notwithstanding anything to contrary in this Agreement, the aggregate of any amounts payable to the Executive by the Company pursuant to Section 5 (including any compensation and benefits paid pursuant to such section during any applicable termination notice period pursuant to Section 3), Section 10(g) or Section 11 herein shall be offset and reduced to the extent necessary by any other compensation or benefits of the same or similar type, including those payable under local laws of any relevant jurisdiction, so that such other compensation or benefits, if any, do not augment the aggregate of any amounts payable to the Executive by the Company pursuant to Section 5 (including any compensation and benefits paid pursuant to such section during any applicable termination notice period pursuant to Section 3), Section 10(g) or Section 11 herein. It is intended that this Agreement not duplicate compensation or benefits the Executive is entitled to under country “redundancy” laws, the Company’s severance policy, if any, any related or similar policies, or any other contracts, agreements or arrangements between the Executive and the Company.

13. Non-Competition Covenant; Payment for Non-Competition Covenant.

(a) Except as provided in Section 13(b), during the twelve (12) months immediately following the termination of her employment with the Company, the Executive shall not (i) accept employment with a competitor of the Company in a capacity in which such competitor can make use of the confidential information relating to the Company that the Executive has obtained in her employment with the Company, (ii) engage as a partner or owner in

such competitor of the Company, nor (iii) act as an advisor to such competitor (the “Non-Competition Covenant”).

(b) The Non-Competition Covenant shall not apply:

(i) in the event the Executive’s employment is terminated by the Company other than for Cause; or

(ii) in the event the Executive resigns for Good Reason.

(c) If the Executive does not comply with the Non-Competition Covenant when applicable, then (i) the Executive shall not be entitled to any benefits pursuant to Section 13(d) below during the period in which the Executive is not in compliance with such Non-Competition Covenant, and (ii) the Company shall be entitled to damages equal to six (6) times the average monthly Base Salary that the Executive received during the last twelve (12) months prior to the Date of Termination.

(d) If the Non-Competition Covenant becomes operative, then the Company shall pay to the Executive, as compensation for the inconvenience of such Non-Competition Covenant, up to twelve (12) monthly payments equal to the Executive’s monthly Base Salary as in effect on the Date of Termination, less the monthly salary earned during such month by the Executive in a subsequent employment, if any; provided, however, that the aggregate monthly payments from the Company pursuant to this Section 13(d) shall not exceed sixty percent (60%) of the Executive’s annual Base Salary as in effect on the Date of Termination, and once the 60% aggregate amount has been paid, no further payments will be made under this Section 13(d). As a condition to the receipt of such payments, the Executive must inform the Company of her base salary in her new employment on a monthly basis. No payments shall be made under this Section 13 if the Executive’s employment is terminated in connection with her Retirement.

14. Inventions.

(a) The general nature of any discovery, invention, secret process or improvement made or discovered by the Executive during the period of the Executive’s employment by the Company (hereinafter called “the Executive’s Inventions”) shall be notified by the Executive to the Company forthwith upon it being made or discovered.

(b) The entitlement as between the Company and the Executive to the Executive’s Inventions shall be determined in accordance with the current Act (1949:345) on the Right to Inventions made by Employees and the Executive acknowledges that because of the nature of her duties and the particular responsibilities arising therefrom she has a special obligation to further the interests of the Company’s undertaking.

(c) Where the Executive’s Inventions are to be assigned to the Company, the Executive shall make a full disclosure of the same to the Company and if and whenever required to do so shall at the expense of the Company apply, singly or jointly with the Company or other persons as required by the Company, for letters patent or other equivalent protection in Sweden and in any other part of the world of the Executive’s Inventions.

Entire Agreement. This Agreement supersedes the Prior Agreement and any other previous agreements and arrangements whether written, oral or implied between the Company or Autoliv and the Executive relating to the employment of the Executive, without prejudice to any rights accrued to the Company or the Executive prior to the commencement of her employment under this Agreement.

16. Disputes. Disputes regarding this Agreement (including, without limitation, disputes regarding the existence of Cause or Good Reason) shall be settled by arbitration in accordance with the Swedish Arbitration Act. The arbitration shall take place in Stockholm and, unless otherwise agreed to by both parties, there shall be three (3) arbitrators. The provisions on voting and cumulation of parties and claims in the Swedish Procedural Code shall be applied in the arbitration. All costs and expenses for the arbitration, whether initiated by the Company or by the Executive, including the Executive’s costs for solicitor, shall be borne by the Company, unless the arbitrators determine the Executive’s claim(s) to be frivolous and in bad faith, in which case the arbitrators may allocate costs as they deem fit. Any payments due to the Executive pursuant to the preceding sentence shall be made within fifteen (15) business days after delivery of the Executive’s written request for payment accompanied with such evidence of costs and expenses incurred as the Company reasonably may require.

17. Governing Law. This Agreement shall be governed by and construed in accordance with Swedish law and, where applicable, the laws of any applicable local jurisdictions.

18. Amendment. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board.

19. Notices. All notices and other communications hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive: Petra Albuschus

XXXXXXXX

If to the Company: Autoliv Inc.

WTC, Klarabergsviadukten 70,

111 64 Stockholm, Sweden

Attention: Secretary

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

20. U.S. Tax Code Section 409A. This Section 20 shall apply only in the event that the Executive is or becomes a taxpayer under the laws of the United States at any time during the Employment Period.

(a) General. This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder. Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive as a result of the application of Section 409A of the Code.

(b) Definitional Restrictions. Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable hereunder, or a different form of payment of such Non-Exempt Deferred Compensation would be effected, by reason of the Executive’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to the Executive, and/or such different form of payment will not be effected, by reason of such circumstance unless the circumstances giving rise to such termination of employment, as the case may be, meet any description or definition of “separation from service,” as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). This provision does not prohibit the vesting of any Non-Exempt Deferred Compensation upon a or termination of employment, however defined. If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service,” as the case may be, or such later date as may be required by subsection (c) below. If this provision prevents the application of a different form of payment of any amount or benefit, such payment shall be made in the same form as would have applied absent such designated event or circumstance.

(c) Six-Month Delay in Certain Circumstances. Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which she is a “specified employee” (as defined in Code Section 409A and the final regulations thereunder), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A‑3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes), (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following the Executive’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following the Executive’s separation from service (or, if the Executive dies during such period, within thirty (30) days after the Executive’s death) (in either case, the “Required Delay Period”); and (ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.

(d) Treatment of Installment Payments. Each payment of termination benefits under this Agreement shall be considered a separate payment, as described in Treas. Reg. Section 1.409A‑2(b)(2), for purposes of Section 409A of the Code.

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(e) Timing of Release of Claims. Whenever in this Agreement a payment or benefit is conditioned on the Executive’s execution and non-revocation of a release of claims, such as the separation agreement referenced in Section 11(a) hereof, such release must be executed and all revocation periods shall have expired within 60 days after the Date of Termination; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then, subject to subsection (c) above, such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60th day after the Date of Termination provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such 60-day period.

(f) Timing of Reimbursements and In-kind Benefits. If the Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement and if such payments or reimbursements are includible in the Executive’s federal gross taxable income, the amount of such expenses payable or reimbursable in any one calendar year shall not affect the amount payable or reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. The right to any reimbursement for expenses incurred or provision of in-kind benefits is limited to the lifetime of the Executive, or such shorter period of time as is provided with respect to each particular right to reimbursement in-kind benefits pursuant to the preceding provisions of this Agreement. No right of the Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit.

IN WITNESS whereof this Agreement has been executed as of the later of the two dates below.

Petra Albuschus

Date:

Mikael Bratt

President and CEO

Date:

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EX-10.2

Exhibit 10.2

Amendment No. 1

Employment Agreement

This Amendment No. 1 is made to the employment agreement by and between Autoliv Inc., a Delaware corporation (the “Company”), and Magnus Jarlegren (the “Executive”), that was made and entered into on February 15, 2019 (the “Agreement”).

This amendment to the Agreement is made between the Parties.

1. Section 2 of the Agreement is amended and replaced with the following:

Employment. As of June 1, 2023 (the “Promotion Date”), the Executive is hereby employed as the President, Autoliv Europe of the Company. In this capacity, the Executive shall have the duties, responsibilities and authority commensurate with such position as shall be assigned to him by the President and CEO of the Company (the “President and CEO”). The principal workplace for the Executive shall be Stockholm, Sweden until, at the sole option of the Company, the principal workplace shall become either Dachau, Germany or Zug, Switzerland.

2. Section 5(a) of the Agreement is amended to set the base salary at SEK 4,600,000 as of the Promotion Date.

3. Section 5(b) of the Agreement is amended to set the Target Bonus as fifty percent (50%) as of the Promotion Date.

All other terms and conditions of the Agreement and any additional agreements that may exist between the Executive and the company shall remain valid.

In WITNESS WHEREOF this Amendment No. 1 has been executed effective June 1, 2023.

AUTOLIV, INC. EXECUTIVE:

………………………… ………………………

Mikael Bratt Magnus Jarlegren

President & CEO

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EX-10.3

Exhibit 10.3

MUTUAL SEPARATION AGREEMENT

This agreement regarding termination of employment, the ”Agreement”, is entered into

BETWEEN:

(1) Autoliv Inc. and its affiliates and subsidiaries, referred to as the “Company”; and

(2) Frithjof Oldorff, referred to as “the Employee”; together referred to as “the Parties”.

1- Background

1.1 The Employee is employed by the Company pursuant to the terms and conditions outlined in the Employee’s employment agreement dated April 23, 2019, the “Employment Agreement.”

1.2 The Company and the Employee have agreed that the employment of the Employee shall cease on the terms set out in this Agreement.

The Employee shall be released from all duties linked to the Company on May 31, 2023 the “Release Date”, except for being reasonably available over the phone and email to answer any questions that the Company may have. Apart from what is explicitly stated below, the Agreement supersedes all earlier oral and written agreements between the Company, or any associated company, and the Employee, relating to the employment of the Employee. For the purpose of this Agreement, “associated company” means a legal entity directly or indirectly controlling or controlled by or under common control with the Company, irrespective of the country of registration of such legal entity.

The provisions of this Agreement shall not waive or terminate any rights to indemnification the Employee may have under the Company’s Restated Certificate of Incorporation, Re-stated Bylaws or the Indemnification Agreement between the Employee and the Company.

2- Termination of the Employment

2.1 The Employee’s employment with the Company shall cease on November 30, 2023, the “Termination Date”. Any change to be requested by the Employee to apply an earlier termination date due to new employment is subject to the written approval of the Company.

3- Compensation

3.1 The Employee shall be entitled to his current base salary (579,460 Euro gross per annum), pension contribution (10% of base salary) and other current perquisites until the Termination Date.

3.2 If an early termination is granted according to section 2.1, the Company agrees to pay a lump sum payment equivalent to the base salary for the remaining notice period between the new termination date and November 30, 2023. This payment will be made no later than one month after the termination date.

3.3 Not later than December 31, 2023, the Company shall pay a severance payment in the amount of EUR 869,190 gross.

3.4 The Employee’s 2023 short-term incentive will be calculated and paid in March 2024 based on the actual outcome of the associated performance targets. The payout amount will be prorated for the service time through the Termination Date.

3.5 The Company shall withhold income tax for all the compensation components and in addition thereto pay any statutory social security charges, as applicable.

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3.6 Not later than one month following the Termination Date, the Company shall pay any unused vacation days accrued until the Termination Date in line with the regulatory requirements.

4- Undertakings

4.1 The Employee has an obligation of loyalty that follows by an employment relationship. Accordingly, the Employee has a duty to be loyal to the Company until the Termination Date and thus carry out, inter all, the remaining tasks and assignments the Employee is instructed to carry out as well as not being engaged in any business competing with the Company or its associated companies.

4.2 The Employee will continue to be bound by the confidentiality undertaking under section 8 of the Employment Agreement. The Employee is thereby not allowed to in any way disclose sensitive or otherwise confidential information regarding the Company or any of its associated companies to any other company or individual not employed by the company or its associated companies. This confidentiality undertaking is not limited in time and ramifications are as described in the Employment Agreement.

4.3 The Parties agree that the Non-Competition Covenant as described in section 13 of the Employment Agreement is canceled with immediate effect.

5- Mutual Non-disparagement.

5.1 Employee agrees that Employee will not make or cause to be made any statements that disparage or damage the reputation of the Company, its affiliates, or any of their officers, directors or employees (together, the “Company Parties”), including but not limited to making such statements to the media, public interest groups, publishing companies, and/or through internet posting. Employee also agrees that Employee will not encourage or incite other current or former employees of the Company to disparage or damage the reputation of the Company Parties.

5.2 Company agrees that Employee’s supervisors and the Company Parties will not make or cause to be made any statements that disparage or damage the reputation of Employee, including but not limited to making such statements to the media, public interest groups, publishing companies, and/or through internet posting.

6- Other Issues and Final Settlement

6.1 The Employee participates in Autoliv, Inc. 1997 Stock Incentive Plan (the “Incentive Plan”). The Parties agree that the Employee’s entitlement under the Incentive Plan will be handled in accordance with the rules and regulations prescribed by the Incentive Plan and the associated grant agreements.

6.2 As noted above in paragraph 1.2, the Employee is released from all duties as of May 31, 2023, and shall immediately return the Company all keys, credit cards, documents, laptop computer and all other property the Employee may have in his possession and which belongs to the Company or its associated Companies. The employee may continue to use the Company car and cell phone until the Termination Date at which time both shall be returned to the Company.

6.3 The Employee shall resign from all board of director, similar directorship and Managing Director roles in the Company or in any of the associated companies. The Employee acknowledges that he has no claim whatsoever outstanding against either the Company, its associated companies or any of their respective officers, directors and employees in connection with the position as a director. To the extent that any such claim exists or may exist, the Employee irrevocably waive such claim and release the Company, its associated companies and each of their respective officers, directors and employees from any liability whatsoever in respect of such claim.

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6.4 Through the signing of this Agreement and fulfillment of the provisions herein, all unsettled matters between the Parties shall be deemed to be finally settled and the Employee shall have no claims against the Company or any of its associated companies as regards to salary, vacation pay, incentives, pension contributions, damages or otherwise.

7- Governing Law and Disputes

This Agreement shall be governed by and construed in accordance with the laws of Germany.

This Agreement has been duly executed in two original copies, of which each of the Parties has taken a copy.

July 10, 2023

On behalf of Autoliv Inc.: The Employee

Per Ericson Frithjof Oldorff

EVP Human Resources & Sustainability

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EX-10.4

Exhibit 10.4

AUTOLIV, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

Effective May 1, 2023

I. Adoption Date; Effective Date. On May 10, 2023 (the “Adoption Date”), the Board adopted this Non-Employee Director Compensation Policy, to be effective May 1, 2023.

II. Retainers. The following retainers, subject to proration as described below, shall remain in effect until changed by the Board:

	Cash	RSUs<br><br>(Grant Date Value)	Total Retainer
Annual Base Retainer
All Non-Employee Directors	$127,500	$147,500	$275,000
Annual Supplemental Retainers
Non-Executive Chairman	$85,000	$85,000	$170,000
Lead Independent Director	$40,000	-	$40,000
Audit and Risk Committee Chair	$30,000	-	$30,000
Leadership Development and Compensation Committee Chair	$20,000	-	$20,000
Nominating and Corporate Governance Committee Chair	$20,000	-	$20,000
Audit and Risk Committee Member	$10,000	-	$10,000
Leadership Development and Compensation Committee Member	$7,500	-	$7,500
Nominating and Corporate Governance Committee Member	$7,500	-	$7,500

III. Payment Schedule

Annual Base Retainer

1) Payment in Cash. The cash portion of the applicable retainer will be paid (a) bi-annually, (b) at the end of each 6-months to cover services during such period and (c) prorated as described below.

“Bi-Annual Service Period”	Payment Date
June 1 to November 30	November 30
December 1 to May 31	May 31

• If a non-employee director is newly appointed or elected to the Board at the AGM, then his or her first bi-annual cash payment will be made on November 30 to cover the 6-month period during June-November.

• If a non-employee director is newly appointed or elected to the Board at any time other than at an AGM, then his or her first bi-annual cash payment will be prorated to reflect the number of full calendar months of service between the effective date of the non-employee director’s appointment or election through the last day of the respective bi-annual service Period (e.g. if

Exhibit 10.4

a non-employee director is appointed to the Board on July 15, then his or her first bi-annual cash payment will be with respect to service during August to November of such bi-annual Service Period), and will be paid on the abovementioned payment date.

• If a non-employee director is not re-elected at the AGM, then he or she will receive any cash payment for services during the month of such AGM.

• If a non-employee director leaves the Board of Directors at any time other than at an AGM, the cash payment for the respective bi-annual service period will be prorated to reflect the number of full calendar months of service between the beginning of the bi-annual service period and the termination date.

*If the payment date is not a business day, then the applicable payment shall be made on the first business day immediately following the payment date.

2) Payment in Stock. Subject to share availability under the amended and restated Autoliv, Inc. 1997 Stock Incentive Plan, as the same may be amended from time to time (the “Plan”), a portion of the applicable retainer(s) may be paid in the form of restricted stock units (the “Annual RSU Award”) granted on the date that the AGM is held (or, if the person becomes a non-employee director at any time other than at an AGM, the first business day following the effective date on which the person becomes a non-employee director) (in either case, a “RSU Grant Date”). The Annual RSU Awards will be granted under, and subject to the terms and conditions of, the Plan, and will vest on the earlier of (i) date of the next AGM, or (ii) the one-year anniversary of the RSU Grant Date (the “RSU Vesting Date”), subject to the non-employee director’s continued service on the Board on the RSU Vesting Date. If a non-employee director’s service on the Board terminates for any reason prior to the RSU Vesting Date, then he or she will forfeit the Annual RSU Award. The number of RSUs granted pursuant to the Annual RSU Award will be determined by (A) dividing the RSU Grant Date Value amount in the table above by the closing price of a share of Common Stock on the RSU Grant Date and (B) rounding to the nearest whole number. If a non-employee director is newly appointed or elected to the Board at any time other than at an AGM, then the dollar value of his or her Annual RSU Award will be prorated based on the number of full calendar months between the effective date of the non-employee director’s appointment or election through the month in which the next AGM will be held.

Annual Supplemental Retainers

Annual supplemental retainers will be paid in cash bi-annually at the end of the 6-month service period, as set forth in the table above, and subject to proration as described under the “Annual Base Retainer” section above. In the event a non-employee director is serving as Committee Chair or Member during a Service period and leaves such appointment to be appointed as a Committee Chair or Member with a higher retainer or as Lead Director during the same Service Period, the retainer for such director will be re-calculated pro-rated for days of service in each role during the period and the difference is paid on either of the two abovementioned payment dates.

Stock Ownership Policy. Non-employee directors are required to hold shares of Common Stock granted pursuant to the Annual Stock Grants until he or she has met the ownership requirements set forth in the Autoliv, Inc. Stock Ownership Policy for Non-Employee Directors. Compliance with this policy is monitored by the Nominating and Corporate Governance Committee.

EX-10.5

Exhibit 10.5

RESTRICTED STOCK UNITS GRANT AGREEMENT

For Non-Employee Directors

Applicable to Restricted Stock Units promised under the Autoliv, Inc. 1997 Stock Incentive Plan

(as amended and restated)

Your above-described grant of restricted stock units (“RSUs”) is subject to the following provisions in addition to those set forth in the attached Notice of Grant (the “Grant Notice”) and the Autoliv, Inc. 1997 Stock Incentive Plan, as amended and restated (the “Plan”):

1. Defined Terms: Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.

2. Vesting: The RSUs have been credited to a bookkeeping account (“Account”) on your behalf as of the grant date specified in the Grant Notice (the “Grant Date”). Your Account will reflect the number of RSUs awarded to you as set forth in the Grant Notice, as well as any additional RSUs credited as a result of dividend equivalents, as described in Section 9 below. Each RSU represents an unfunded, unsecured right to receive Common Stock, subject to the terms and conditions stated in the Plan and this Grant Agreement. Your RSUs will vest and become non-forfeitable on the earliest to occur of the following (each, a “Date of Vesting”):

(a) as to all of the RSUs, on the Date of Vesting specified in the Grant Notice, provided that you are then still providing services as a member of the Board of Directors of the Company (the “Board”); or

(b) as to all of the RSUs, upon the occurrence of a Change in Control as described in Section 5 below, provided that you are then still providing services as a member of the Board.

If your service on the Board terminates for any reason other than death, disability, or a Change-in-Control as described in Section 5, you will forfeit all right, title and interest in and to the unvested RSUs as of the date of such termination, and the unvested RSUs will be re-conveyed to the Company without further consideration or any act or action by you.

3. Conversion to Shares of Common Stock; Procedure at Date of Vesting:

a. Unless the RSUs are forfeited prior to the Date of Vesting as provided in Section 2 above, the RSUs will be converted on the Date of Vesting to actual shares of Common Stock. The shares of Common Stock to be issued pursuant to this Grant Agreement shall be issued in the form of book-entry shares of Common Stock in your name as the beneficial owner as of the Date of Vesting.

b. You will, if requested, within the specified time set forth in any such request (not to exceed 30 days), deliver to the Company such written representations and undertakings as may, in the opinion of the Company’s legal counsel, be necessary or desirable to comply with tax and securities laws.

4. Securities Law Restrictions; Insider Trading Policy:

Exhibit 10.5

You may not offer, sell or otherwise dispose of any shares of Common Stock in a manner which would violate any applicable laws, including, without limitation, the laws of Sweden, U.S. federal and state securities laws, U.S. federal law, the requirements of any stock exchange or quotation system upon which the Common Stock may then be listed or quoted and any laws of any other country or jurisdiction that may be applicable to you.

In connection with receipt of this Grant Agreement, you acknowledge that you are subject to the Company’s AS 314 Insider Trading Policy which may be found in the “Director Library” within the board information portal (currently BoardVantage) and is also available upon request to the Legal department of the Company.

5. Change in Control of the Company:

Notwithstanding any provision herein to the contrary, your RSUs shall immediately vest in full under the following situations:

a. If (i) a Change in Control occurs prior to the Date of Vesting and while you are an Autoliv Board member, and (ii) the surviving entity is not a public company with shares listed on a public stock exchange, then as of the effective date of the Change in Control, RSUs shall immediately vest in full.

b. If (i) a Change in Control occurs prior to the Date of Vesting and while you are an Autoliv Board member, (ii) the RSUs are assumed and equitably converted by the surviving entity which is a publicly traded company with shares listed on a public stock exchange, and (iii) you will be asked to leave the Board by the Company without cause before the date of vesting, then as of your date of termination, your equitably converted RSUs shall immediately vest in full if they have not vested by that date.

6. Non-Transferability:

Your RSUs are personal to you and shall not be transferable by you otherwise than by will or the laws of descent and distribution.

7. Conformity with Plan:

Your RSUs are intended to conform in all respects with the Plan, including any future amendments thereto. Inconsistencies between this Grant Agreement and the Plan shall be

resolved in accordance with the terms of the Plan. All definitions stated in the Plan shall be fully applicable to this Grant Agreement.

8. Service and Successors:

Nothing herein or in the Grant Notice or in the Plan confers any right or obligation on you to continue providing services to the Company or shall affect in any way your right or the right of the Company or any subsidiary, as the case may be, to terminate your service at any time. This Grant Agreement, the Grant Notice and the Plan, including any future amendments thereto, shall be binding upon you, your estate, any person succeeding to your rights hereunder and any successor or successors of the Company. The RSUs do not confer to you or any person succeeding to your rights hereunder any rights of a shareholder of the Company unless and until shares of Common Stock are in fact issued to you or such person in connection with the settlement of the RSUs.

9. Dividend Equivalent Rights:

Subject to share availability under the Plan, any cash dividend paid with respect to the Common

Exhibit 10.5

Stock for which the record date occurs on or after the Grant Date and the payment date occurs on or before the Date of Vesting will result in a credit to your Account of additional RSUs equal to (a) the dollar amount of the dividend per share of Common Stock multiplied by the number of RSUs credited to your Account as of the applicable record date, divided by (b) the closing price per share of the Common Stock on the New York Stock Exchange on the applicable dividend payment date. The additional RSUs credited pursuant to this Section 9 will be subject to the same vesting schedule, forfeiture and other terms that apply to the original RSUs. On the Date of Vesting, the aggregate number of any additional RSUs credited pursuant to this Section 9 over time shall be rounded down to the nearest whole share. RSUs that, at the relevant dividend payment date, previously have been settled or forfeited will not be eligible to receive dividend equivalents pursuant to this Section 9.

10. Tax:

You are totally responsible for paying all taxes that you incur in respect of this Grant Agreement. The Company has the authority and the right to deduct or withhold, or require you to remit, an amount sufficient to satisfy all applicable taxes required by law to be withheld with respect to any taxable event arising as a result of vesting or settlement of the RSUs. The withholding requirement may be satisfied, in whole or in part, by withholding from the settlement of the RSUs, shares of Common Stock having a fair market value on the date of withholding equal to the minimum amount (and not any greater amount unless such other withholding rate will not cause an adverse accounting consequence or cost) required to be withheld for tax purposes, all in accordance with such procedures as the Company establishes. The obligations of the Company hereunder will be conditional on such payment, and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to you.

11. Governing Law:

This Grant Agreement, the Grant Notice and the Plan shall be construed in accordance with and governed by the laws of the State of Delaware, USA, and, to the extent relevant, the local laws of your home country.

12. Severability:

If any one or more of the provisions contained in this Grant Agreement are invalid, illegal or unenforceable, the other provisions of this Grant Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

13. Director Stock Ownership Requirements:

In connection with receipt of this Grant Agreement, you acknowledge that you are subject to the Company’s policy regarding “Stock Ownership Policy for Directors”.

14. Fractional Shares:

No fractional shares of Common Stock, nor the cash value of any fractional shares of Common Stock, will be issuable or payable to you pursuant to this Agreement.

EX-31.1

Exhibit 31.1

CERTIFICATION

of the Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Mikael Bratt, certify that:

I have reviewed this quarterly report on Form 10-Q of AUTOLIV, INC.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a -15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 21, 2023
/s/ Mikael Bratt
Mikael Bratt
President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

of the Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Fredrik Westin, certify that:

I have reviewed this quarterly report on Form 10-Q of AUTOLIV, INC.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a -15(f) and 15d-15(f)) for the registrant and have:

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 21, 2023
/s/ Fredrik Westin
Fredrik Westin
Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of Autoliv, Inc. (the “Company”) for the period ended June 30, 2023, filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mikael Bratt, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 21, 2023

/s/ Mikael Bratt
Mikael Bratt
President and Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of Autoliv, Inc. (the “Company”) for the period ended June 30, 2023, filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Fredrik Westin, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 21, 2023

/s/ Fredrik Westin
Fredrik Westin
Chief Financial Officer